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System Analysis Advisory Committee FAQ Questions

System Analysis Advisory Committee FAQ Questions. Michael Schilmoeller Friday, January 25, 2013. Review Panel’s List. Market vs. Region: A boundary on the analysis needs to be drawn somewhere. Is the model optimizing for the region or for a broader market?

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System Analysis Advisory Committee FAQ Questions

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  1. System AnalysisAdvisory Committee FAQ Questions Michael Schilmoeller Friday, January 25, 2013

  2. Review Panel’s List • Market vs. Region: A boundary on the analysis needs to be drawn somewhere. Is the model optimizing for the region or for a broader market? • Open system model: A key principle is that RPM is an open-system model, in which the electricity price is decoupled and other outcomes are not forced to be completely consistent. 2

  3. Review Panel’s List • Decoupling by Price: The mathematical formulation gives the appearance of power going to the market, which is disconcerting to some. RPM seems to be using independent power producer (IPP) logic to solve a utility problem. • Accounting for IPP Capacity: What is the appropriate accounting for IPPs that are not committed to regional loads? 3

  4. Review Panel’s List • Strategic risk mitigation. The methodology by which RPM seeks plans that reduce strategic risk for the region need to be better understood. • Optimizer: The optimizer’s role may be unclear. • Optioning: Optioning is hard to understand. 4

  5. Review Panel’s List • Game changers: A short history of game changers to justify considering cases outside of the mainstream could be added. • User control: How does the user have control over the results? 5

  6. Staff List • Basic Model Concepts and Algorithms • What problem is the RPM trying to solve? • Is the RPM an hourly model? • Isn’t the RPM really a model for IPPs? Doesn’t the RPM just value all resources in the market? • Is the RPM a “market fundamentals” model? • Can the RPM produce cost estimates? 6

  7. Staff List • Risk • What is the notion of and metric for risk in RPM simulations? • Why do we still plan for risk? Aren’t the choices simple? • If I have a firm contract in place with a reliable counterparty, where is the risk? 7

  8. Staff List • Resource Options • The Council tried the idea of options for building power plants was tried in the 1980s, and the region decided it wasn’t a good idea. Why are we still talking about siting options? • Why do power plants have construction optioning while conservation does not? • What would the plan look like if there were no optioning in the model? 8

  9. Staff List • Capacity Expansion and Resource Strategies • How does the RPM arrive at resource strategies? • If resource strategies are the result of trial and error, why does the RPM simulate decisions to build within futures? • How do we use the efficient frontier? How do we interpret the cost and risk that appear on the axes? 9

  10. Staff List • Capacity Expansion and Resource Strategies • Under some futures, the model’s choice to build plants turns out to be a bad one. Does this mean there is something wrong with the model? • Some stakeholders have compared the RPM resource strategy selection to game theory. Is this a valid comparison? 10

  11. Staff List • Conservation • Is the cost-effectiveness premium for energy efficiency input or output? • What is the difference between a cost-effectiveness premium and a risk premium? 11

  12. Staff List • Model Validation • How do you validate a risk model when the future is unknown? • The Role of the Council • How does the model support the Council’s work? 12

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