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September 12, 2012 | Markets Committee

September 12, 2012 | Markets Committee. Aleks Mitreski. Market Development amitreski@iso-ne.com (413) 535-4367. Hourly Offer and Intraday Reoffers. Overview of Current Market Components. Presentation Objective .

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September 12, 2012 | Markets Committee

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  1. September 12, 2012 | Markets Committee Aleks Mitreski Market Development amitreski@iso-ne.com (413) 535-4367 Hourly Offer and Intraday Reoffers Overview of Current Market Components

  2. Presentation Objective • This presentation is intended to provide high level overview of the current Day-Ahead and Real-Time Energy Market offer rules with focus on: • Timing and offer requirements in the DAM • Parameters used to formulate an offer in the DAM • Modification of offers during the Re-Offer Period • Supplemental commitments during the Resource Adequacy Assessment • Commitment and Dispatch of generators in real-time • Parameter re-offer/re-declaration in real-time

  3. Energy Markets Overview EnergyMarkets Day-Ahead Energy Markets (DAM) Real-Time Energy Markets DAM produces financially binding schedules for the production and consumption of electricity (occurs on the day before the operating day) Real-Time Energy Market balances differences between the Day-Ahead scheduled amounts of electricity and the actual real-time requirements

  4. Energy Markets Overview (cont.) Day-Ahead Energy Market Real-Time Energy Market DA Energy Market offer and bid period closes DA Energy Market results published Real-Time Energy Market starts ―12:00 ―16:00 ―00:00 OPERATING DAY -1 OPERATING DAY 16:00― 18:00― 22:00― Re-Offer Period Initial RAA is performed to finalize operating plan for next day RAA is performed throughout the operating day

  5. Day-ahead energy market Review of offer structure, clearing, obligations

  6. Day-Ahead Energy Market • The DAM allows participants to sell/purchase energy on a forward basis • Load/Asset Related Demand • Virtual Transactions (Increments/Decrements) • Dispatchable Asset Related Demand • External Transactions (Imports/Exports) • Generators • The DAM produces financially binding positions that are satisfied through: • Physical performance (i.e. delivery/consumption) in real-time, or • Cash settlement at the Real-Time Price for Day-Ahead quantities not delivered/consumed

  7. Price Taker versus Price Sensitive Behavior • Participants have the ability to participate in the energy market as price-sensitive or a price taker (i.e.,fixed) • A fixed demand in the market effectively represents a bid to consume energy at any cost below $1,000 MWh • A fixed supply in the market effectively represents an offer to sell energy at $0 MWh

  8. Participation – Load/ARD • Load/ARD participate through Demand Bids only in the DAM • Demand Bids can be submitted as: • Fixed Demand Bid specifying quantity and location (one per hour) or • An individual priced Demand Bid specifying price, quantity and location • Participants can submit up to 10 individual demand bids per location, per hour • The price range can be between $0 and $1,000 MWh

  9. Participation – External Transactions • External Transactions are submitted to capture energy flow into New England (Import) or out to one of the neighboring areas (Export) in the DAM and RTM • External Transactions can be submitted as: • Fixed External Transaction specifying quantity and external node ranging in duration from one hour to 24 hours • An individual priced External Transaction specifying price, quantity and external node ranging in duration from one hour to 24 hours • The price range can be between $0 and $1,000MWh

  10. Participation – Virtual Transactions • Virtual Transactions are a virtual supply Increments (INCs) and virtual demand Decrements (DECs) only in the DAM • Virtual Transactions can be submitted as; • Up to 50 priced bid blocks per location, per participant • The price range can be between $0 and $1,000MWh

  11. Participation – Generators • Generators participate by submitting Supply Offer with physical and financial parameters in the DAM and RTM

  12. Generator’s Financial Parameters • Start Up Fee is the cost a generator incurs when started. Separate cost can be designated when coming on-line from the following three states (in $) • Cold • Intermediate • Hot • No Load Fee is the cost a generator incurs for each hour it remains on-line (in $/hr) • Incremental Offers are the blocks of energy quantities paired with particular prices that reflect what a generator can produce at certain incremental cost (price/quantity pairs) • Quantity must be monotonically increasing • Cost must be between $0 MWh and $1,000 MWh • Identical price/pair blocks are used for the entire day

  13. Example: Incremental Energy Offer

  14. Generator’s Physical Parameters • Emergency Minimum is the lowest value at which the generator can be dispatched during Minimum Generation Emergency • Economic Minimum (“EcoMin”) is the lowest value at which the generator can be dispatched during normal conditions • Economic Maximum (“EcoMax”) is the highest value at which the generator can be dispatched during normal conditions • Manual Response Rate is the rate at which the generator can ramp its output

  15. Generator’s Physical Parameters (cont.) • Notification Time is the time needed for generator to synchronize once informed to come on-line • Start Up Time is the time the generator needs to reach its Economic Minimum once synchronized to the system • Minimum Run Time is the shortest duration the generator has to remain on-line (after reaching Economic Minimum and available for ISO dispatch) prior to being asked to come off-line, • Minimum Down Time is the shortest duration between the time the generator has gone off-line and the time to come on-line, reach Economic Minimum and is available for ISO dispatch

  16. Example: Generation Physical Parameters

  17. Example: Financial & Physical Parameters

  18. Generator Self Scheduling • Resource can chose to self-schedule (i.e., fixed) their output and become a price taker. A self-schedule “overrides” the resources financial parameters effectively reflecting a desire to operate at zero price, assuming no reliability issues. • There are two key aspects of self-scheduling; • Self-Commitment: A request for a resource to come online for a duration (e.g., Minimum Run Time) at its EcoMin and be economically dispatched between its EcoMin and EcoMax • Self-Dispatch: An adjustment of a resource’s EcoMin to a desired minimum output level. Resources will continue to be dispatched between their EcoMin and EcoMax

  19. Self Scheduling in DAM • Generator can Self-Schedule which will result in clearing the Day Ahead Energy Market as a price taker • Equivalent to an offer to produce at the EcoMin at no cost (zero price offer), and compensated at the Day-Ahead Clearing Price (set by another generator) • This is achieved by setting the Must Run flag and the parameters are treated as: • Start Up Fee = $0 • No Load Fee = $0 • Energy price pair blocks below the Economic Minimum offered at $0 • Generator will clear the Day Ahead Energy Market with at least the energy below the Economic Minimum (unless there is a reliability issue)

  20. Example: Self-Schedule in DAM • Generator Self-Schedules in the DAM and sets its Economic Minimum at 150MW • At a minimum, generator A will clear 150MW for all 24hr of the day at the Day-Ahead clearing price • Clearing/dispatch of output above 150MW will be on economic merit

  21. Example: Self-Scheduling & Dispatchable Range • A generator that is not constrained by its physical parameter is eligible to set the Real Time Price • When self-scheduled, participants often increase the Economic Minimum from their DAM offer, which naturally decreases the range in which a generator is eligible to set the Real-Time Price

  22. Re-Offer Period and the Resource Adequacy Assessment Modification of financial parameters as previously submitted in the DAM, supplemental commitments

  23. Re-Offer Period • Between 16:00 and 18:00 prior to the operating day, Participants may modify certain financial Supply Offer parameters that were submitted in the DAM • The Incremental Offer (price/quantity pairs) can be modified for all generators • For generators that have not cleared the DAM, the Start Up and No Load fee can be modified • Generators that did not clear the DAM can also request to self-schedule • Physical parameters can be re-declared only through phone call to the Control Room

  24. Resource Adequacy Assessment • Between 18:00 and 22:00, the ISO performs the initial Resource Adequacy Assessment to ensure that resources committed in the DAM can meet the operational requirements (e.g., forecasted load, operating reserves) • During this time, supplemental commitments are considered using offers submitted in the DAM (or modified during the Re-Offer Period)

  25. Real-Time energy market Dispatching resources, settling Day-Ahead positions

  26. Real-Time Energy Market Redeclaration • Participants cannot change the financial parameters of their Supply Offers • Participants have the ability to self-schedule (self-commit) in real-time, with 30 minute advance notice • If approved, the generator will be permitted to come on-line • If approved, the generator will at least be operated at its Economic Minimum parameter • Participant can also self-scheduled its output by re-declaring their the Economic Minimum (self-dispatch) or to request release to go off-line. • Physical parameters in real-time can only be re-declared through phone call to the Control Room

  27. Real-Time Energy Market • The ISO is evaluating system needs throughout the operating day and will commit additional generators as needed • During the operating day, economic dispatch of committed generators is done based on the incremental offer submitted in the DAM (or modified during the Re-Offer period)

  28. Settlement • Generators that clear in the DAM and produce energy up to their cleared schedule are not impacted by the Real-Time Price for that energy • During an hour, if a generator produces less energy than its Day-Ahead cleared schedule then it must procure the shortfall at the Real-Time Price • If a generator is dispatched above its Day-Ahead schedule then the additional energy is settled based on the Real-Time Price • Generators which were committed/dispatched out of merit for system needs are made whole through NCPC (i.e., indifferent regarding Real-Time Prices)

  29. Summary • As discussed, participants do not have an opportunity to update financial parameters after the Re-Offer Period • The Incremental Offer blocks must be identical for each hour of the day • The price of the Incremental Offer blocks can range between $0 and $1,000 • During upcoming meetings, the ISO will discuss the observed problems with the current market rules and the proposed enhancements

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