This paper discusses the procurement of ancillary services in acompetitive electricity market. The paper assumes the existence of anunderlying market for energy and explains why this energy market mustbe accompanied by a market for ancillary services. ancillary servicesinclude services such as the provision of operating reserves andAutomatic Generation Control (AGC) both of which can requireinfra-marginal generators to choose between supplying energy, oroperating reserves and AGC. Ancillary services are crucial for thereliable operation of an electric power system under a regime ofcompetitive generation. Structures for organizing competitiveauctions for ancillary services are examined. Initial experience andpotential pitfalls from a market using such auctions is alsoreported.
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