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Day Ahead Market Working Group

Day Ahead Market Working Group. March 31, 2003. Agenda. Review minutes - March 24 Coral Proposal - Working Group Discussion Loads/LDCs and DAM. DAM Design Requirements. Design requirements - at a high level what we want the DAM to look like

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Day Ahead Market Working Group

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  1. Day Ahead Market Working Group March 31, 2003

  2. Agenda • Review minutes - March 24 • Coral Proposal - Working Group Discussion • Loads/LDCs and DAM

  3. DAM Design Requirements • Design requirements - at a high level what we want the DAM to look like • Lead to development of detailed design and how the DAM will be built • DAM from the perspective of different classes of MPs • Financial Market Participants - March 24 • Loads/LDCs - March 31 • Generators - April 7 • Importers/Exporters - April 14

  4. Loads/LDC’s • Buy/Sell in DAM - Close out position in RT • DA MCP and MCQ set based on DA generation offers and load bid • Two Settlement System equation: QDA(PDA-PRT) + QRT PRT can also be expressed as QDA PDA+ PRT (QRT- QDA ) • If QDA =QRT then PRT is not relevant

  5. Non-Dispatchable Load with no Physical Bilateral Contract Bids DAM 100MW @ $100 and 50MW @ $75 • DA MCP = $90 • QDA scheduled 100MW @ PDA$90 = Profit of $10/MW • If 100MW consumed then load pays: • QDA PDA+ PRT (QRT- QDA ) = • 100MW x $90 + PRT(100MW-100MW) = $ 9,000 • Note: when QRT = QDA, PRT is not relevant

  6. Non-Dispatchable Load with no Physical Bilateral Contract • If 175MW consumed and PRT is $120 then load pays: • 100MW x $90 + $120(175MW-100MW) = $18,000 • If 175MW consumed and PRT is $60 then load pays: • 100MW x $90 + $60(175MW-100MW) = $13,500 • If 80MW consumed and PRT is $120 then load pays: • 100MW x $90 + $120(80MW- 100MW)) = $6,600 • If 0MW consumed and PRT is $120 then load pays: • 100MW x $90 + $120(0MW- 100MW)) = -$3,000 that is, the load receives +$3000

  7. Dispatchable Load • Submits bids into DAM and RTM (for this example, they submit the same bid curve into both markets) • Dispatched according to bid curve in RT market • QRT can be responsive to and consistent withPRT drivers • Examples: Bids DAM 100MW@ $40 and additional 50 MW @ $30; say DA MCP = $35 and QDA = 100 MW • Say RT MCP = $38, QRT = 100 MW 100MW x $35 + $38(100MW - 100MW) = pays $3500 • Say RT MCP = $50, QRT = 100 MW (dispatched off) 100MW x $35 + $50(0MW - 100MW) = receives $1500 • Say RT MCP = $20, QRT = 150 MW 100MW x $35 + $20(150MW - 100MW) = pays $4500

  8. Non-dispatchable load with a Physical Bilateral Contract • Load has 2 production lines - each consumes 100 MW • Load has PBC with another participant to buy 100MW @ $100 • Typically operates production line 1: • Can stop production line 1 and consume 0 MW • Can start production line 2 and consume 200 MW • Submits to DAM: • Offer to sell 100MW @ $200 • Bid to buy 100MW @ $50

  9. Physical Bilateral Contracts Example 1 DA MCP = $250; load is accepted to sell 100MW and chooses to consume 0 MW based upon the DAM result Load pays: QDA PDA QRT QDA -100MW x $250 + PRT ((0MW-100MWPBC) - (-100MW)) = -$25,000 • Load actually receives $25,000 from IMO • Load pays $10,000 to PBC counter-party • Load receives net $15,000 for not running production line 1

  10. Physical Bilateral Contracts Example 2 Say, DA MCP = $40; QDA = 100 MW based upon DAM bid In RT load consumes 200MW to run production line 2 based upon PBC and DAM result QDA PDA QRT QDA (100MW)($40) + PRT((200MW-100MWPBC) - (100MW)) = $4,000 • Load pays IMO $4,000 • Load pays PBC $10,000 to PBC counter-party • Load pays net $14,000 to run production lines 1& 2 (200 MW)

  11. Discussion Points • LDCs • Bill 210 • Multi-part - Bid/Offer Structure • Energy, OR, Intertie trading • Ramp Rate impact • Positions closed out next day - 5 minute/HOEP • Prudentials - Exposure due to PRT not known until next day • Settlement - Financial vs. Physical schedule • Other Markets - i.e., NYISO

  12. Next Meetings • Generators - April 7 • Importers/Exporters - April 14

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