Power Law

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.

Data Source

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%
FirstEnergy Corp 2164215788.59 3.17%
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%
UBS AG 822220957.44 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%

Technical note

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.

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