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Seasonal Peak Hours for Demand Resources in the Forward Capacity Market (FCM) Rule

Seasonal Peak Hours for Demand Resources in the Forward Capacity Market (FCM) Rule. Jeff Schlegel ISO-NE Demand Resources Group Meeting October 19, 2006. Four Types of Performance Hours Defined in the Draft FCM Rule.

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Seasonal Peak Hours for Demand Resources in the Forward Capacity Market (FCM) Rule

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  1. Seasonal Peak Hours for Demand Resources in the Forward Capacity Market (FCM) Rule Jeff Schlegel ISO-NE Demand Resources Group Meeting October 19, 2006

  2. Four Types of Performance Hours Defined in the Draft FCM Rule • On-Peak Hours: summer afternoons HE 1400 through 1700 in June, July, and August; winter evenings HE 1800 through 1900 in Dec. and Jan. • Seasonal Peak Hours: hours in which the projected hourly load in the ISO next day forecast is equal to or greater than 95% of the ISO 50/50 peak forecast, for the summer or winter season • Shortage Hours: hours when ISO begins to allow depletion of 30 minute reserve (currently OP4 Action 6 or higher) in the Load Zone • Critical Peak Hours: Seasonal Peak Hours and Shortage Hours

  3. Proposal: For On-Peak Resources, Option of Seasonal Peak Hours • On-Peak Resources may use either: • On-Peak Hours • Seasonal Peak Hours • Critical Peak Resources shall use Critical Peak Hours (consistent with FCM Rule) • This proposal does NOT create another type of resource (Note: RTDR alternative proposal for Shortage Hours and OP4 Action 9/12 is not addressed in this presentation)

  4. Seasonal Peak Hours Proposal: Text Summary Demand Resource Seasonal Peak Hours as distinct from On-Peak Hours and Critical Peak Hours.  A proposal was made to take the ISO's definition of Seasonal Peak Hours (a subset of Critical Peak Hours in the ISO's proposed FCM Rule), and make them a stand-alone optional set of performance hours for On-Peak Resources.  On-Peak Resources could perform during either On-Peak Hours or Seasonal Peak Hours.  The performance of an On-Peak Demand Resource selecting the Seasonal Peak Hours option would be evaluated only during the specific hours for which the ISO next day load forecast projected that the hourly load would be equal to or greater than 95% of the ISO 50/50 seasonal peak forecast.  The performance of these Demand Resources would not be evaluated during Shortage Hours.

  5. Hourly Loads in Summer 2005

  6. Why the Use of On-Peak Hours Does Not Accurately Represent the Value of Some Demand Resources

  7. Residential and Commercial HVAC • Residential air conditioning, which is highly coincident with Summer System Peak (and has been identified by ISO as both a driver of summer peak and a priority for action) • 75% coincidence using Seasonal Peak Hours • 25% coincidence using On-Peak Hours (and Peak Demand Reduction Value of only 1/3 of actual performance in reducing summer peak) • Commercial (Unitary) HVAC: reduction from 82% peak coincidence to 70%, a loss of 15% of the Summer Peak Demand Reduction Value

  8. Example: 30 MW ofResidential Air Conditioning • 40 MW reduction in connected load • 30 MW Peak Demand Reduction Value using Seasonal Peak Hours (75% Coin. Factor) • 10 MW Peak Demand Reduction Value using On-Peak Hours (25% Coincidence Factor) • With On-Peak Hours, and the resulting 20 MW under-valuation, customers would have to pay for an additional 20 MW of capacity (which would be a waste of money), yet the Demand Resource would actually be providing 30 MW of value during summer peak (not 10 MW) • Definitely NOT “fully integrated as Qualified Capacity in the FCM” – which the settlement agreement requires

  9. Options in the FCM Rule and Match to Demand Resources • On-Peak Hours: commercial lighting in the summer (relatively flat load in afternoon) • Seasonal Peak Hours: residential and commercial HVAC, commercial lighting (likely best for state program portfolios) • Critical Peak Hours: load management, dispatchable Demand Resources, possibly some energy efficiency resources Note: Shortage Hours have a significant (but not complete) overlap with Seasonal Peak Hours.

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