Credit for Redispatch Small Group Review of Unconstrained MFs

1. Credit for Redispatch Small GroupReview of Unconstrained MFs NAESB BPS Meeting September 13-14, 2011

2. Unconstrained MFs • Represents theoretical value had the market not redispatched to meet its relief obligation during TLR. • Directional value that is provided to the IDC for the current hour and the next hour (both down to 0% values and 5% and greater values are reported. • Used to determine relief obligations –forward value that is 5% and greater is used to assign market flow relief obligations. • Used to determine reload component – difference between the forward unconstrained value down to 0% and the forward constrained value down to 0% is the reload component used in the Target MF calculation. • The Credit for Redispatch Small Group recommends that the reload component be computed using the down to 0% values and the 5% and greater values with the higher of the two being used.

3. Problems Determining Unconstrained MF • No mechanism to realistically determine MFs as if the market had not redispatched. • MISO ran a study UDS case with flowgates in TLR not constrained. • Over time, the markets adjust to TLR by changing their bidding behavior. • Representative of the market not binding for first couple of binding intervals. • Freeze constrained MFs at time of TLR Level 3 or higher. • Probably ok for the first couple binding intervals. Beyond that, there are other factors that come into play such as changes in load, generation coming on and off the system, changes in tags/schedules and changes in topology. • Situation can occur where constrained MF is greater than unconstrained MF. When this happens, IDC considers this illogical condition and sets unconstrained MF equal to constrained MF.

4. Problems Determining Unconstrained MF (cont.) • Situation can occur where constrained MF is greater than unconstrained MF. When this happens, IDC considers this illogical condition and sets unconstrained MF equal to constrained MF. • Increase relief obligation. • Removes reload component (credit for redispatch) in Target MF calculation.

5. Problem Assigning Priorities to Unconstrained MFs • Using flowgate allocations, hourly firm and non-firm allocations are known in advance. • Even though the unconstrained flows are frozen, the mix of firm and non-firm is recognized each hour. This affects relief obligation by priority bucket in each hour, not the reload component. • For hybrid option, no way of knowing in-advance the breakdown of firm and non-firm (based on generator output in real-time). • Could freeze the GTL flows in the priority buckets at the start of the TLR. • This seems unreasonable because even though you may take all non-firm generators off-line, your relief obligation is based on the mix when unconstrained flows are frozen.

6. Options for Changes to Unconstrained MFs Used in IDC • Option 1 – Continue to use unconstrained MF but change method used to determine value. • Option 2 – No longer use unconstrained MF in TLR process.

7. Option 1-Continue to Use Unconstrained MF but Change Method Used to Determine Value • Assume market fully met their relief obligation in previous hour by adding constrained MF by priority bucket with the amount of curtailment by priority bucket and calling this unconstrained MF. • Going on blind faith that always met relief obligation is not good. What is incentive to meet relief obligation? • Adding constrained MF and relief obligation by priority bucket does not recognize that firm generators could be used on a least cost basis to meet non-firm relief obligation. • How do you assign sub-priorities for failing to meet relief obligation?

8. Option 2-No Longer Use Unconstrained MF in TLR Process • As in the NNL calculation, BA generator output always sums to BA load. There is no attempt to come-up with unconstrained GTL flow in the NNL calculation because the full amount of load is always being served. • There is a difference in the treatment of tags by the IDC where their impacts are either there or are gone versus the NNL calculation that assumes the load is always being served by some mix of generators. • This could be justification why reloaded tags would be treated differently than GTL flows. • As an alternative to the use of unconstrained flows, could use constrained flows (both current and next hour) to assign relief obligations. • This would work with the hybrid option because the GTL flows would reflect the priority of the transmission service granted to generators.

9. Option 2-No Longer Use Unconstrained MF in TLR Process (cont.) • As an alternative to the use of unconstrained flows, could use constrained flows (both current and next hour) to assign relief obligations. • This would work with the hybrid option because the GTL flows would reflect the priority of the transmission service granted to generators. • This would also get rid of the reload component since no longer have an unconstrained flow. • However, would still need to be a recognition that a shifting of priority buckets may have occurred.

10. Next Steps • The Credit for Redispatch Small Group is working on the details of how this change could be accomplished and what are the consequences of making this changes. The Small Group will work on examples of this change.

11. Credit for Redispatch Small GroupReview of Unconstrained MFs Questions?