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A presentation to the System Operator for the Unified Energy System of Russia Moscow, Russia September 2007

Managing System Reliability in the New York Competitive Energy Markets. A presentation to the System Operator for the Unified Energy System of Russia Moscow, Russia September 2007. Paul Kiernan Reliability Senior Engineer New York Independent System Operator. The NYISO’s Primary Purposes.

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A presentation to the System Operator for the Unified Energy System of Russia Moscow, Russia September 2007

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  1. Managing System Reliability in the New York Competitive Energy Markets A presentation to the System Operator for the Unified Energy System of Russia Moscow, Russia September 2007 Paul Kiernan Reliability Senior Engineer New York Independent System Operator

  2. The NYISO’s Primary Purposes • Reliable Operation of the New York Bulk Power System • Administration of the Wholesale Electricity Markets

  3. Capacity Transmission Congestion Contracts NYISO Markets and Auctions Energy Virtual Trading Ancillary Services

  4. Generate Transmit Distribute Bill Customers Pre-Restructuring Vertically Integrated Utilities • Eight Utility Companies • _____________________________________________________ • Long Island Lighting • Consolidated Edison • Orange and Rockland • Central Hudson • Niagara Mohawk • New York State Electric • Rochester Gas and Electric • New York Power Authority • _____________________________________________________ • New York Power Pool • Coordinated Operations

  5. Pre-Restructuring Power System Operation Each utility operated independently • Scheduled generator and transmission maintenance • Committed and dispatched generation to meet load • Determined interchange schedules • Controlled voltage with mVar resources • Controlled flows with phase angle regulators • Determined switching operations • Solved local transmission security problems • Distributed energy to the customers in its franchise territory

  6. Pre-Restructuring Economic Operation Each utility was: • Regulated by federal and state agencies • Purchased and sold energy • Direct Two Party • New York Power Pool Central Dispatch • Prices determined by production costs • Scheduled transactions on its transmission system for its sole benefit

  7. Pre-Restructuring Coordinated Operations New York Power Pool (Voluntary alliance of the eight utilities) • Reserves • Transaction schedules • Central Energy Dispatch • Interconnection planning/operating studies Principle Directive: Maintain Reliability

  8. Post-Restructuring • Disaggregate Functions • Eliminate Market Power of the Vertical Utilities • Increase Number of Market Participants • Increased Competition Will Drive Down Prices • Open the Transmission Systems • Ensure access to all for competitive use

  9. Pre-restructuring Eight Vertically Integrated Utility Companies New York Power Pool Coordination Central Dispatch Post-restructuring More than 120 Market Participants Disaggregated Market Functions Generating Companies Transmission Companies Power Marketers Load Serving Entities NYISO Operate Power System Administer Markets Comparison

  10. Markets Multiple Market Participants Profit Motive Flexible Market Design Maximum Use of the Transmission System Reliability Need to Maintain the Reliability of the System Highly Constrained System Post-Restructuring Challenge

  11. Independent System Operator • Maintain system reliability • Assume control of the New York transmission system • Comprehensive planning to real-time security • Facilitate fair and open access to the transmission system • Determine commitment of generation resources • Determine transaction schedules • Impartially administer wholesale electricity markets • Bid-based system; bids are confidential • Clearing prices are published

  12. Standard Market Design Two Settlement System • Day Ahead Commitment • Real Time Commitment • Real Time Dispatch

  13. Two Settlement System Day Ahead Market • Opportunity to lock in prices for next day • Loads supply bids to purchase energy • For all, part or none of next day load • Generators supply offers to sell energy • Bilateral transactions accepted • Various pricing hedges available • Clearing prices are made public

  14. First Settlement: Day Ahead Schedule Scheduled Load & Generation become forward sales and purchase contracts…. with financial obligations to provide or consume actual energy.

  15. 11 AM - Day Ahead Results Posted Day 0 HB3 HB4 HB5 HB6 0 15 30 45 0 15 30 45 0 15 30 45 0 15 30 45 0 Day Ahead SCUC 5 AM - Day Ahead Market Bids Due Day 1 Hour Ahead RTC 75 Minutes before Hour Bidding Closes 30 Minutes before Hour Results Posted Market Timing Real Time Dispatch RTD RTD Basepoints Every 5 Minutes AGC Basepoints Every 6 Seconds HB5 0 15 30 45 0

  16. 11 AM - Day Ahead Results Posted Day 0 HB3 HB4 HB5 HB6 0 15 30 45 0 15 30 45 0 15 30 45 0 15 30 45 0 Security Constrained Unit Commitment 5 AM - Day Ahead Market Bids Due Day 1 Real Time Commitment 75 Minutes before Hour Bidding Closes 30 Minutes before Hour Results Posted Market Timing Real Time Dispatch RTD Basepoints Every 5 Minutes AGC Basepoints Every 6 Seconds HB5 0 15 30 45 0

  17. Load Forecasts Load Bids Energy Offers Transaction Bids Virtual Load & Supply System Constraints Outages Day Ahead Security Constrained Unit Commitment Clearing prices Forward Contracts Preliminary Schedule Real Time Commitment Hour Ahead Energy Offers Transaction Bids Advisory prices Preliminary Dispatch Transaction Schedule Market Inputs Real Time Load Real Time Dispatch Real Time Dispatch Real Time prices Real Time Dispatch

  18. Security Constrained Unit Commitment Day Ahead Commitment tool 1. Selects most economic mix of generation and transaction resources as bid • to meet forecasted load and reserve requirements • based on offers provided 2. Schedules are constrained by security evaluations • recognizes all transmission limits • recognizes all interface limits 3. Establishes day-ahead forward contracts for generation, load, and transactions

  19. Chateauguay New York ISO Willis Moses Transmission System Massena (230 kV and above) Plattsburgh Adirondack Oswego Complex Somerset Marcy Rotterdam Sta.80 New Scotland Edic Pannell Clay Porter Huntley Alps Stolle Rd. Lafayette Leeds Meyer Dunkirk Watercure Fraser Oakdale Hillside Coopers Pleasant Corners Valley Roseton Rock Buchanan Tavern Millwood Legend: Homer City 765 kV Ramapo Sprainbrook 500 kV Dunwoodie W49St/Rainey 345 kV Shore Rd. Farragut 230 kV E.Garden City Goethals St. Lawrence Niagara Gilboa CSC Neptune

  20. Dunwoodie Farragut Goethals Chateauguay Stability Constraints Saunders Willis Moses- St. Lawrence Massena Dennison Plattsburgh Moses South Sandbar Colton Blissville Whitehall Adirondack Central - East Bennington Hoosick Oswego Dysinger East Complex Somerset West - Central Marcy Rotterdam Beck Niagara Sta.80 Pannell New Robinson Rd. Scotland Edic Porter Clay Huntley Alps Gilboa Lafayette Stolle Rd. Richfield Springs Inghams Leeds Gardenville Meyer Andover Palmiter Total - East Dunkirk Fraser Watercure Oakdale Hillside Coopers Pleasant Corners Valley Roseton Upny - Con Ed Rock Buchanan Tavern Millwood Legend: Dunwoodie South Homer City 765 kV Ramapo Sprainbrook 500 kV W49St/Rainey 345 kV Shore Rd. 230 kV E.Garden City 115 kV

  21. Real Time Commitment Hour Ahead Real Time Commitment Same software model and structure as Security Constrained Unit Commitment • Runs every 15 minutes, optimizing ten periods – totaling 2 ½ hours • Observes updated load forecast • Evaluatesresource requirements • Generator outages, transaction cuts, changes to topology • Recognizes Hourly Bid Transactions • Commits 10 and 30 Minute start resources • Recognizes unit startup times and costs • Produces advisory prices

  22. Real Time Dispatch Real Time Dispatch Same software model and structure as Security Constrained Unit Commitment and Real Time Commitment • Dispatches generators with basepoints to meet the 5 minute projected load forecast • Adjusts generation to solve security constraints • Maintains reserve requirements • Develops regulation dispatch “basepoints” every 6 seconds to correct Area Control Error • Calculates real-time clearing prices

  23. Second Settlement: Real Time Market More Options • Loads can schedule bilateral transactions • Buy at real time prices • Generators can schedule bilateral transactions • If accepted in the day ahead market • Can lower bid prices • If not accepted in the day ahead market • Can increase, decrease or maintain bid price

  24. Second Settlement: Real Time Balancing Market Paid consistent with their forward contracts • Generators that operate as scheduled • Loads that consume as scheduled Purchase and/or sell supplemental energy, as needed, at real-time clearing prices • Generators that operate differently than scheduled • Loads that consume differently than scheduled

  25. Real Time Actual Load < Day Ahead Load Real Time Actual Load 45 MW Load Buys 5 MW @ Real Time Price Real Time Real Time Load Consumed 40 MW Bought @ Day Ahead Clearing Price Second Settlement First Settlement Day Ahead Load Buys 40 MW @ Day Ahead Clearing Price

  26. Real Time Actual Dispatch 45 MW Generator Sells 5 MW @ Real Time Prices Real Time Real Time Generator Dispatched 40 MW Sold @ Day Ahead Clearing Price Real Time Actual Dispatch < Day Ahead Dispatch Second Settlement First Settlement Day Ahead Generator Sells 40 MW @ Day Ahead Clearing Price

  27. REAL TIME Load Sells 10 MW @ Real Time Price Excess 10 MW Real Time Actual Load 30 MW Load Consumed 30 MW of 40 MW Bought @ Day Ahead Price REAL TIME Real Time Actual Load < Day Ahead Load Second Settlement First Settlement Day Ahead Load Buys 40 MW @ Day Ahead Clearing Price

  28. Real Time Generator Buys 10 MW @ Real Time Price Excess 10 MW Real Time Real Time Actual Dispatch 30 MW Generator Dispatched 30 MW of 40 MW Sold @ Day Ahead Price Real Time Actual Dispatch < Day Ahead Dispatch Second Settlement First Settlement Day Ahead Generator Sells 40 MW @ Day Ahead Prices

  29. The New York Independent System Operator (NYISO) is a federally regulated, 501(c) 3 nonprofit corporation that began operations in 1999 to facilitate the restructuring of New York’s electric industry. The NYISO operates the state’s bulk electricity grid and administers the state’s wholesale electricity markets. __________________________________________________________ For more information: www.nyiso.com

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