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Winter Reliability Solution Overview | NEPOOL Markets Committee

This presentation reviews the expanded winter program details, eligibility categories, cost allocation, and payment methodology for winter seasons 2015-2018. Requirements, eligibility, and determination processes are outlined for participation. In-depth slides provide insights for fuel oil, LNG, and other resources.

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Winter Reliability Solution Overview | NEPOOL Markets Committee

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  1. May 5-6, 2015 | NEPOOL Markets CommitteeWestborough, ma Winter Periods Prior to June 1, 2018 Winter Reliability Solution Andrew Gillespie Principal analyst Market development

  2. Overview • Review the details of the expanded program, including tariff sheets as necessary • The ISO will request a vote at the June Markets Committee meeting, and file after the second June Participants Committee meeting

  3. expanded winter program Except where highlighted, the following slides were previously presented at the April 2015 Markets Committee meeting

  4. Expanded Winter Program • The basic structure is the same as the 2014-15 Winter Program; i.e., generators are compensated for unused ‘fuel’ at the end of the winter season • For winters 2015-2016, 2016-2017, and 2017-2018 • Similarities to the 2014-15 Winter Program: • Program compensation rate methodology the same: • The same methodology would be used, i.e., a rate that would offset the fuel carrying cost of an oil fired resource, but re-calculated on July 15 for each subsequent winter • Resource availability metrics and adjustment to payments the same • Reporting requirements the same; for the ISO and all resources • Cost allocation and billing mechanisms the same

  5. Resource Eligibility Categories • Fuel Oil (barrels) – (Tariff Section K.2) • Liquefied Natural Gas (BCF) – (Tariff Section K.3) Both Fuel Oil and LNG use the same resource eligibility and eligible inventory mechanisms as the 2014-2015 program • Other (MWh) – (Tariff Section K.4) • This category is structured very similar to the fuel oil category, details on following slides A resource can only be in one category

  6. General Participation Requirements– All Categories • Participants must : • Request to have a resource participate in one category of the program • Report the resource’s fuel inventory (in barrels, mmbtus, or MWhs as applicable) • Submit Supply Offers in both the Day-Ahead Energy Market and Real-Time Energy Market whether or not the resource has a Capacity Supply Obligation • The following applies to all requests to participate in the program: • For resources with a shared fuel supply, all resources at that station must participate in the program, unless otherwise approved by the ISO

  7. Program Payment – All Categories • The program payment is calculated as: Unused Inventory Rate x Eligible Unused Inventory • Unused Inventory Rate (specified in $/bbl) shall be converted for the LNG and Other category • For LNG, the rate shall be in $/mmbtu • $/bbl divided by 6.0 mmbtu/bbl • For Other, the rate shall be in $/MWh • The product of 10 times the $/bbl rate, divided by 6.0 mmbtu/bbl

  8. Summary of Eligible Unused InventoryCategory: ‘Other’ - Requirements • Eligibility Any dispatchable (or self-scheduled) resource that has on-site ‘fuel’ storage (i.e., input energy source; coal, oil, etc.) • Requirements Resources must have a minimum initial usable inventory as of December 1 of at least the lesser of: • 10 days’ supply of fuel to sustain full load operation based upon the resource’s winter SCC, or • 85% of the usable fuel storage capacity on-site or dedicated storage facility at an adjacent location

  9. Summary of Eligible Unused InventoryCategory: ‘Other’ - ISO Review • Like Fuel Oil, Other ‘fuel’ delivered during February will be monitored through the following November to ensure that this additional fuel remains available for use, or is used, for the production of electricity • The ISO will review the December 1 inventory, net of any fuel used for the production of electricity from November 15, to determine if the resource meets the participation requirements • Participating resources that do not achieve the minimum level of on-site inventory required by January 1 (net of any fuel used from November 15) will be withdrawn from the program

  10. Summary of Eligible Unused InventoryCategory: ‘Other’ – Determination • Eligible Unused Inventory, measured in MWh, will be the lesser of: • Maximum Usable Inventory, • Adjusted Usable Inventory(December 1), • Usable Inventory(March 15) – Post February Added Inventory)* Description of each on next slide • Where: • Usable Inventory shall be the equivalent energy that could be produced by the resource using the inventory on site as of that date

  11. Summary of Eligible Unused InventoryCategory: ‘Other’ – Determination, continued • Maximum Usable Inventory is the lesser of: • The energy that could be produced by the resource at 10 days’ full load operation, based upon the resource’s most recent winter SCC, or • The energy that could be produced by the resource using 95% of the usable fuel storage capacity on-site (or dedicated facility at an adjacent location) • Adjusted Usable Inventory (December 1)is: • Usable Inventory(December 1) + the energy produced from November 15 to December 1 at the request of the ISO • Post February Added Inventory is: • The equivalent energy that could be produced by the resource for any ‘fuel’ added to inventory between March 1 and March 15

  12. Estimated Maximum Potential Contribution Notes:1) Equivalent barrels based on 10 days operation at winter SCC (6.0 mmbtu/bbl)2) Wood/wood waste resources only3) Estimated storage capability4) The same participation level as observed in the 2014-15 Winter Program5) Maximum eligible amount (6 BCF)

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