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April 2014

April 2014. Henry Yoshimura. Director, Demand resource strategy. NEPOOL Markets Committee. Full Integration of Demand Response Resources into the Energy and Reserves Markets. Full Integration of Demand Response Resources into Energy and Reserve Markets.

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April 2014

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  1. April 2014 Henry Yoshimura Director, Demand resource strategy NEPOOL Markets Committee Full Integration of Demand Response Resources into the Energy and Reserves Markets

  2. Full Integration of Demand Response Resources into Energy and Reserve Markets • On September 26, 2013, the ISO issued a whitepaper describing how Demand Response Resources will be able to provide Real-Time Reserves and participate in the Forward Reserve Market • The purpose of today’s presentation is to kick-off the stakeholder process to review the market design and associated market rules for Demand Response Resources providing reserves • This presentation will introduce the project scope, areas of market rule changes, and project schedule • The ISO plans to fully integrate Demand Response Resources into the energy and reserve markets on June 1, 2017

  3. Important Background • Relevant ISO filings: • August 19, 2011: the ISO committed to fully integrate Demand Response Resources into the energy markets in response to Order No. 745 • April 26, 2012: the ISO committed “to develop market rules to allow Demand Response Resources that participate in the energy market to participate in the reserve market” • The ISO is seeking to have market rules for Demand Response Resources providing reserves in place before February 2015 so that demand response providers have this information before participating in FCA 9 • The proposed project schedule (on slide 10) accommodates this intent

  4. Scope of the Project • Market rule changes will be needed in the following areas: • Demand Response Model • Baseline & Measurement • Energy Market • Forward Reserve Market • Forward Capacity Market

  5. 1. Demand Response Model • Remove the Net Supply Generator Asset construct and replace with a common dispatch model • Modeling a single facility that can reduce load and provide Net Supply as two separate assets – a Demand Response Asset and a Net Supply Generator Asset – may result in an incorrect accounting of the MW designated as reserves or provided in response to a Dispatch Instruction • Define rules for the treatment of Demand Response Resources in Dispatch Zones that span Reserve Zones • Demand Response Resources are aggregations of assets within a Dispatch Zone. If a resource provides reserves, its assets must also be located in the same Reserve Zone. Because Dispatch Zones and Reserve Zones are determined at different times, it is possible for a Dispatch Zone to span more than one Reserve Zone – e.g., the Western CT Dispatch Zone spans SWCT & CT Reserve Zones. A market rule is needed to resolve potential mismatches between Dispatch Zones and Reserve Zones

  6. 2. Baseline & Measurement • Develop a baseline adjustment method that produces a better short-term forecast of a Demand Response Resource’s baseline energy consumption in real-time • To maintain baseline accuracy, estimated baselines need to be adjusted to reflect actual load conditions within the Operating Day. The present method adjusts baselines once a day and after the Operating Day is over, which is inadequate for reserve designation purposes • Modify the frequency of telemetry data for Demand Response Resources providing 10-minute reserves • For Demand Response Resources providing a 10-minute reserve product, more frequent telemetry data is needed to assess and monitor the resource’s ability to provide its energy within 10 minutes after dispatch

  7. 3. Energy Market • The energy market rules need to be modified to allow Demand Response Resources to provide real-time reserves as of June 1, 2017: • Define additional offer characteristics for Demand Response Resources to provide reserves • E.g., the resource must include CLAIM10/30 values in its energy offer at levels less than or equal to its demonstrated CLAIM10/30 capability • Define how real-time reserves are designated for Demand Response Resources • Establish real-time reserve settlement rules for Demand Response Resources

  8. 4. Forward Reserve Market • The Forward Reserve Market (“FRM”) rules need to be modified to allow Demand Response Resources to participate in the FRM as of June 1, 2017: • Allow Market Participants to meet Forward Reserve Obligations using Demand Response Resources • Define auditing rules for Demand Response Resources providing reserves • Rules must be established that define how Demand Response Resources demonstrate CLAIM10/30 capability and how audit values are adjusted to reflect actual resource performance when dispatched • Establish FRM settlement rules for Demand Response Resources

  9. 5. Forward Capacity Market • With the above-mentioned market rule changes, conforming changes to the FCM design/rules are needed: • Conform the FCM design to the revised Demand Response Model, which will require changes across several aspects of the FCM rules (e.g., auditing, availability) • Modify FCM shortage event availability calculations and pay-for-performance rules (in a manner consistent with any Commission order on FCM Performance Incentives) to reflect the ability of Demand Response Resources to provide reserves

  10. Project Schedule • April 2014 (today): • Introduce project scope, areas of market rule changes, and project schedule • May 2014: • Present market design changes for: (1) Demand Response Model, (2) Baseline & Measurement, and (3) Energy Market • June 2014: • Present market design changes for: (4) Forward Reserve Market • July 2014: • Present market design changes for: (5) Forward Capacity Market • August 2014: • Review complete text of market rule changes • September 2014: • Markets Committee vote • October 2014: • Participants Committee vote and filing with the Commission

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