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Treatment of Intertie Failures

Treatment of Intertie Failures. Intertie Trading Subcommittee November 24, 2003. Purpose. Update on source and volume of intertie transaction failures Focus on ‘economic’ failures with NYISO subject to review under 7/7.5.8A of the market rules

emmanuel-frank
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Treatment of Intertie Failures

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  1. Treatment of Intertie Failures Intertie Trading Subcommittee November 24, 2003

  2. Purpose • Update on source and volume of intertie transaction failures • Focus on ‘economic’ failures with NYISO subject to review under 7/7.5.8A of the market rules • Assess impact of existing MACD guidelines and propose change

  3. Intertie Failures Generally: • Volume of intertie trading 1,567,000 MWh average monthly from May to Sept./03 • 787,000 MWh imports, 780,000 MWh exports • On average, 132,000 MWh (8.4%) fail monthly for all reasons (security, TLRs, uneconomic, NERC tag discrepancies) • Exports failures predominant in recent months • 17,800 MWh imports, 114,500 MWh exports failed • NERC tagging failures are a small portion of the overall intertie failure rate.

  4. Monthly Failures

  5. Intertie Failures - Reliability Imports • Failed imports have an effect on reliability during on-peak hours • During the day, most units that have committed to run are, thus, all scheduled energy must be delivered as promised or demand could exceed supply Exports • Failed exports tend to have an effect on reliability during off-peak hours • Thermal units left online overnight in anticipation of exports may be forced into UBG state if transactions fail • Hydroelectrics may not be available to be constrained down due to their inability to safely spill • In summary, resources are less maneuverable which limits the options available to stay out of an over-generated state

  6. Intertie Failures - Market Impact Imports • When import transaction fails, IMO must find more expensive generation to compensate for failure • This tends to raise HOEP relative to pre-dispatch price Exports • When export transaction fails, IMO may constrain off domestic generation to compensate for failure • This tends to lower HOEP relative to pre-dispatch price and cause increase in CMSC payments

  7. Intertie Failures Imports - On Peak • Of the 17,800 MWh of all failed imports, 11,100 MWh of imports failed during peak hours • Of those on-peak import failures, 1,700 MWh failed for economics (15% of all failed on peak imports) Exports - Off Peak • Of the 114,500 MWh of all failed exports, 78,000 MWh failed during off peak hours • Of those off-peak export failures, 18,700 MWh failed for economics (24% of all failed off peak exports)

  8. Current Guidelines • Current Guidelines allow 3 safe harbours: • 1,000 MWh or 3% failure rate • No further review if HAM is volatile • Bid or offers within $10 or 20% of HAM price

  9. Economic Failures - July 2003 PASSEDTest #1, Test #2 and Test #321,405 MWh PASSEDTest #115,308 MWh PASSEDTest #1 and Test #216,797 MWh Investigation Closed Total NYISO Economic Failures22,316 MWh FAILEDTest #17,008 MWh FAILEDTest #1 and Test #25,519 MWh FAILEDTest #1, Test #2 and Test #3175 MWh Subject to further review

  10. Proposal Single safe harbour • acceptable failure ratio of 3% • measured according to time and direction of failure: • on-peak imports • on-peak exports • off-peak imports • off-peak exports

  11. Interties by the Numbers - Sanctionable MWh Guidelines MW failed for MW failed for 3% Failure Volatility/ PIT Sanctionable all reasons economics Ratio Stability Import - On peak 12,300 1,700 700 400 40 40 Import - Off peak 11,100 1,000 300 200 0 0 Export - On peak 26,600 4,400 2,200 1,700 200 200 Export - Off peak 52,500 18,700 6,500 4,300 300 300 These are monthly averages to illustrate the impact of the existing Guidelines.

  12. Interties by the Numbers - Sanctionable MWh These are monthly averages to illustrate the impact of the proposed Guidelines had they been in place for the previous period.

  13. Going Forward • Consultation with market participants on proposed changes - Intertie Trading Subcommittee • Decision on revised guidelines • Continued monitoring of intertie performance

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