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TCR Market Trials Phase 2 Annual Auction SUMMARY

TCR Market Trials Phase 2 Annual Auction SUMMARY. May 31, 2013. Summary. Issue with pre-run logic Summary of phase 2 results Other thoughts. Worst Revenue Case: Winter Off-Peak. “Unintended Consequences” Pre-run Design. Goal: Help provide revenue adequacy

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TCR Market Trials Phase 2 Annual Auction SUMMARY

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  1. TCR Market TrialsPhase 2Annual AuctionSUMMARY May 31, 2013

  2. Summary • Issue with pre-run logic • Summary of phase 2 results • Other thoughts

  3. Worst Revenue Case: Winter Off-Peak

  4. “Unintended Consequences” Pre-run Design Goal: • Help provide revenue adequacy Issue with System Derates and Self-converts: • System derate in combination with ability to self-convert (SC) 100% of ARR causes revenue problem • The severity of issuse is dependent on: • Amount of system derate • MP participation of ARR SC • Market Liquidity (Helps keep prices reasonable)

  5. Error in Pre-Run Logic • “Unintended Consequences” solution not working as intended • Pertains to how software handles SCs • Optimization algorithm is primary contributor • Unequal Curtailment in Pre-Run (not pro rata) • Curtailment is auction based • SCs have same price but compete differently by constraint • Shadow price is dependent on SC’s shift factor on constraint • Curtailment can be “All or Nothing”

  6. Pre-run Logic Fix Will address how curtailment is handled in the pre-run logic • Fixes minimum settled SC amount to derate % (pro rata) • Optimizes any remaining request above derate % • Allows for more equality in pre-run awards • Mitigates revenue adequacy seen in Phase 2 of TCR Market Trials Annual Auction • Consistent with current design intent

  7. Issue with pre-run logic • Summary of phase 2 results • Other thoughts

  8. Overview • Participation • Bids vs. Self-Converts • ARR / Self-Convert Settlement • Exposed ARRs • Self-Convert Curtailment

  9. Participation by Product

  10. Number of Bids & Self-Converts

  11. Auction Award MW

  12. Award Percentages

  13. ARR / Self-Convert Settlements

  14. Exposed ARRs vs SC

  15. Self-Convert Curtailment Settlement

  16. Issue with pre-run logic • Summary of phase 2 results • Other thoughts

  17. Compared Solutions

  18. Participation Impacts Results • Price is driven by participation • Optimization of SCs may cause high prices and can exaggerate revenue inadequacy • Since MP’s can’t depend on market liquidity: • Show up at minimum portion of ARR to be settled via: • Self-convert • Self-bid on owned ARR path (sets a floor price) • MPs leaving ARRs exposed is risky • Holistically impacts market pricing • If an MP does not set a floor price the market will

  19. Next steps • SPP will conduct impact analysis • Time frame • Cost • MP Impact • Results will be shared with stakeholders • SPP will work with vendor to correct the pre-run logic • Detailed timeline to be presented on next Bi-weekly call • Further details to come

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