The power law distribution (and the associated long tail) is a much-discussed statistical phenomenon. I’ve been looking at wholesale electricity transactions, and it appears the the wholesale power business is also well described by the Pareto principle.
I’ve been working with the FERC‘s Electric Quarterly Report database. This database contains details of most physical power transactions in the United States outside of Texas, Alaska, and Hawaii. Those details include a total charge amount for every sale, which lets us compute the total sales for every respondent, and then rank respondents by their share of total reported sales for a given period.
Here’s the market share distribution for Q1 2007. (Sorry about the presentation; click on the image for a better view.)
Here’s a list of the top 20 respondents, by dollar volume, for the quarter. If you want more information, you can always visit the database and explore it for yourself.
|Respondent||Reported Sales ($)||Market Share|
|Constellation Energy Commodities Group, Inc.||5236915905.70||7.68%|
|Exelon Generation Co LLC||4499357280.45||6.59%|
|Sempra Energy Trading LLC||3798058439.32||5.57%|
|Morgan Stanley Capital Group, Inc.||3193130087.66||4.68%|
|PPL Services Corporation||2155503792.46||3.16%|
|American Electric Power Service Corporation||2049348778.09||3.00%|
|FPL Energy Power Marketing, Inc.||1755783363.62||2.57%|
|Edison Mission Marketing & Trading, Inc.||1565401296.21||2.29%|
|J. Aron & Company||1405098823.24||2.06%|
|Ameren Energy Resources Company||1353327920.53||1.98%|
|Coral Power L.L.C.||1159948113.01||1.70%|
|Merrill Lynch Commodities, Inc.,||956435713.45||1.40%|
|Dominion Energy Marketing, Inc.||866148814.26||1.27%|
|BP Energy Company||827521224.40||1.21%|
|PSEG Energy Resources & Trade LLC||808858491.12||1.19%|
|Allegheny Energy Supply Company, LLC||791268484.16||1.16%|
|Mirant Energy Trading LLC||747660039.92||1.10%|
|Southern Company Services, Inc.||672549074.15||0.99%|
Not every non-gaussian distribution is a power law; this fellow goes into the matter at some length. For the purposes of this post, I’m being sloppy, and using the term “power law” to simply describe the fact that the U.S. wholesale electricity market is dominated, in terms of total reported transaction value, by a surprisingly small percentage of the market participants.