Conduct and impact vs. state of the market triggers for automatic market mitigation

This paper discusses market mitigation procedure, which is aimed at rectifying market imperfections that may prevent market forces from achieving desired social objectives. However, the unique characteristics of power systems make electricity markets extremely vulnerable to temporal and locational market with potentially severe economic and reliability consequences, which necessitate proactive and timely intervention in addition to long-term structural remedies. From economic point of view electricity markets have inherent structural flaws that prevent competitive forces present in ideal commodity markets from achieving the desired social objectives. Hence, market power mitigation measures are needed to compensate for these structural flaws. Market mitigation must be addressed in conjunctions with mechanisms that will allow prices to reflect legitimate security rents and with mechanisms for generation adequacy assurance.