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CMS PHASE 1 DRAFT MARKET RULES

CMS PHASE 1 DRAFT MARKET RULES. “Group 1 Rules Presentation” January 9, 2001 Paul McCurley, Manager Market Rules & Procedures. Overview. Guiding Principles Process & Objectives Functional Scope Relationship to “Group 4” Rules “Group 1” Draft Rules. Guiding Principles.

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CMS PHASE 1 DRAFT MARKET RULES

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  1. CMS PHASE 1 DRAFT MARKET RULES “Group 1 Rules Presentation” January 9, 2001 Paul McCurley, Manager Market Rules & Procedures

  2. Overview • Guiding Principles • Process & Objectives • Functional Scope • Relationship to “Group 4” Rules • “Group 1” Draft Rules

  3. Guiding Principles • Utilize End-state RNA as “backstop” • Utilize current market rules, drawing on initial draft CMS/MSS rules as much as possible • CMS as the primary objective, with as much end-state functionality as feasible • Software development is a primary concern • Phase 1 rules must conform to software development process and schedule

  4. Process and Objectives • 12/1/00 ISO-NE FERC filing sets framework for now • Draft rules posted on ISO web site • Written comments will be considered in updated drafts and discussed at NMC and PMC • All comments on Group 1 rules must be received prior to January 30-31 MC meeting for consideration

  5. Process and Objectives (Continued) . . . • Final drafts of rules will be voted on at the January 30-31 meeting • Settlements rule for Phase 1 will be discussed at later meeting • Groups 2 and 3 rules discussions will begin after Group 1 completion

  6. Functional Scope Design of Phase 1 Market Rules • Day-Ahead activities and functions without multi-settlement • UC process similar to today, utilizing ISO-NE load forecast and Couger software initially • Supply offer bids accepted from “physical generators” (w/3-part offers) and external resources at external nodes (w/1-part offers) • Bidding interface changed to establish first bid block as LOL (CLL still exists in Phase 1)

  7. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Virtual demand bids not accepted in Phase 1 (except that external sales are modeled as demand bids at external nodes) • Bidding closes at noon day-ahead for energy, as it does now, ancillary services also closes at the noon deadline • External sales and dispatchable loads are treated as demand bids and considered in UC

  8. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Ancillary service markets much the same as today, pending interim market improvements • Self-scheduling is permitted through the use of zero or negative price offers

  9. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • External transactions move towards end-state, utilizing supply offers and demand bids at external nodes • E1 and E2 energy product designations eliminated • UC and SPD will recognize external transactions as supply offers and demand bids at external nodes

  10. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • External transactions are not eligible for NCPC (i.e., no 3-part bids or intertemporals for external transactions) • No pre-determined conditions or non-standard provisions for external transactions • Congestion bids will be allowed for through transactions in current draft. (Note: Congestion bids for out transactions could be accommodated, if “Point of Delivery complications can be resolved.)

  11. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Tie-breakers are still under consideration, however current draft uses time stamps • Network model will be developed that models transmission interfaces as external trading nodes for NY, HQ and NB

  12. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Real-Time Market and Intra-day Functionality • Day-Ahead offers are good until real-time • No rebidding in Phase 1, except for Self-schedule quantities • Redeclaration processes and requirements same as today • UC updates performed same as today: • outputs used in Scheduling SPD and as indicative schedules

  13. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • 3-Part offers, NCPC, RMR, VAR and related principles apply to units brought on via intra-day commitment due to lack of rebidding. • Transactions at external nodes, i.e. “Supply Offers and Demand Bids” (including SNTs which will now be dispatchable) are included in clearing during UC updates. • Scheduling and Dispatch • Scheduling SPD will simultaneously co-optimize all energy and AS offerings (will utilize day-ahead offers for generation, dispatchable loads and Supply Offers and Demand bids at External Nodes)

  14. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Scheduling SPD creates hourly schedules for transactions at external nodes and next hour targets for generators and dispatchable loads (includes network and security constraints) • Real-time SPD (five minute clearing) uses Scheduling SPD schedules as inputs, and clears all market (i.e., creates DDPs for all generators and dispatchable loads and calculates LBMPs) • AGC and reserve markets same as today (subject to interim fixes)

  15. Functional ScopeDesign of Phase 1 Market RulesContinued . . . • Publishing requirements • Not yet finalized, but will at least be equivalent today expanded to include nodal prices • Indicative nodal prices will be published for Hub, external nodes and reliability regions, updated by hourly scheduling with a (likely) 6 hour horizon. • All loads served at zonal prices in Phase 1, except for dispatchable loads. • New England Hub in Phase 1 will have no bidding, but can be used for internal bilateral transactions.

  16. Relationship to “Group 4” Rules • “Group 4” and “Group 1” Rules are being developed in parallel • There is considerable overlap between the 2 sets of rules, particularly in the rules related to “3-Part Bidding” and NCPC • An “after-the-fact” true-up of language in Group 1 rules may be required to incorporate final concepts from Group 4

  17. CMS Phase 1 Draft Rules - Summary of Changes to Existing Market Rules as of 12/18/00 • Phase 1 rules use market rules from the current markets as the starting point • Where possible, rules already developed for CMS/MSS are also utilized for consistency with the “end-state”

  18. CMS Phase 1 Draft Rules - Summary of Changes to Existing Market Rules as of 12/18/00Continued . . . • Results are: • All existing market rules modified to incorporate Settlements calculations into a single market rule (MRP 6) • Existing MRP 6 for TMSR, renumbered as MRP 10 • Existing MRPs 4 and 12, combined into new MRP 4 • Other changes may be needed also

  19. Section 2 The “Draft Rules”: Scheduling and Dispatch Process

  20. Changes to Market RulesSection 2 • Used currently effective Rule 2 as starting point • Removed all references to External Transactions and replace with Supply Offer and Demand Bid at External Node terminology (ICAP transactions may be an exception in Phase 1)

  21. Changes to Market RulesSection 2 Continued . . . • Removed all references to Bids and replace with Supply Offer and Demand Bid terms • Couger still in use as UC tool. No Nodal Prices produced day ahead and no day-ahead market in Phase 1 • Added NCPC and RMR Unit identification requirements

  22. Changes to Market RulesSection 2 Continued . . . • Modified Dispatch Principles section to reference Real-Time Market and describe co-optimization objectives of Dispatch Software (Same as end state RNA language) • Added provisions to allow for changes to self-schedules up to 90 minutes before the hour. Self-Schedule changes not limited to submission of SNT’s

  23. Changes to Market RulesSection 2 Continued . . . • SNT’s are dispatchable with both prices and amounts being submitted up to 90 minutes before the hour. Added rules for in-hour curtailments for transactions at External Nodes • EET’s retained and combined with SNT’s. SNT’s become EET’s when the ISO declares an OP-4 condition. EET’s are capped at the Proxy Price. (Note: Control area to control area purchases, regardless of price, and Participant EET’s above Proxy cannot set ECP)

  24. Changes to Market RulesSection 2 Continued . . . • Real-Time Excess Generation procedures modified and based on end state CMS/MSS rules

  25. Section 2-A Unit Commitment Process • Used currently effective Rule as starting point • Removed all references to External Transactions and replace with Supply Offer and Demand Bid at External Node terminology (ICAP Transactions may need exception, and included in MRP 4)

  26. Section 2-AUnit Commitment ProcessContinued . . . • Removed all references to Bids and replace with Supply Offer and Demand Bid terms • Added language to allow for the replacement of Couger as UC tool

  27. Section 3 Submitting Supply Offers and Demand Bids

  28. Section 3Changes to Market Rules • Used currently effective Rule 3 as starting point • Removed all references to External Transactions and replace with Supply Offer and Demand Bid at External Node terminology (w/possible exception for ICAP transaction?)

  29. Section 3Changes to Market RulesContinued . . . • Removed all references to Bids and replace with Supply Offer and Demand Bid terms

  30. Section 3Changes to Market RulesContinued . . . • Added option for created Standing Supply Offers and Demand Bids at External Nodes • Eliminate External Transactions and the ability to specify a start and end time for the transaction, a Standing Supply Offer or Demand Bid at the External Node would allow for transaction to continue for longer than one day without having to submit the data on a daily basis

  31. Section 3Changes to Market RulesContinued . . . • Added rules defining a Self-Scheduled amounts as an amount with a zero or negative incremental Energy Offer. (Start-up and No-load are deemed to be equal to zero if a zero or negative incremental Energy Supply Offer price is submitted.)

  32. Section 3Changes to Market RulesContinued . . . • Added rules setting LOL equal to the first MW block of the Supply Offer • Examples: (see the attached slides)

  33. Self-Schedule Example LOL NE CLL MWs PRICES Assumptions: HOL • CLL = 50 MWs 100 45.0 • LOL = FIRST BID BLOCK = 150 50 31.5 • UNIT DISPATCHED BELOW LOL TO CLL DURING EXCESS GEN AT -10.0 PRICE. PRICE BELOW CLL = -10.0 50 0.0 50 0.0 150 LOL -10.0 • SELF-SCHEDULE AMOUNT = 250 MWs Barker, Dunn & Rossi

  34. Self-Schedule Example LOL = CLL Assumptions: MWs PRICES HOL • CLL = 50 MWs 100 45.0 • LOL = FIRST BID BLOCK = 50 50 31.5 • UNIT DISPATCHED DOWN BELOW 150 MWS DURING EXCESS GEN AT –10.0 PRICE. UNIT DE-COMITTED BELOW 50 MWs AT –500 PRICE. 50 0.0 50 0.0 100 100 -10.0 50 LOL -500 • SELF-SCHEDULE AMOUNT = 250 MWs Barker, Dunn & Rossi

  35. Self-Schedule Example – Self-Schedule Changes in Real-Time Increase in Self-Schedule MWs PRICES Assumptions: HOL • USING PREVIOUS EXAMPLE AS STARTING POINT, INCREASE SELF-SCHEDULE BY 50 MWS • SUPPLY OFFER RE-SUBMITTED WITH ZERO PRICE FOR ADDITIONAL 50 MWs • NEW SELF-SCHEDULE AMOUNT = 300 MWs 100 45.0 PREVIOUS 50 0.0 31.5 50 0.0 50 0.0 100 -10.0 50 LOL -500 Barker, Dunn & Rossi

  36. Self-Schedule Example – Self-Schedule Changes in Real-Time Reduction in Self-Schedule MWs PRICES Assumptions: HOL • USING PREVIOUS EXAMPLE AS STARTING POINT, DECREASE SELF-SCHEDULE BY 50 MWS • SUPPLY OFFER RE-SUBMITTED WITH PRICE OF 31.5 FOR REDUCED MWs. PRICE MUST BE EQUAL TO PREVIOUS NON-ZERO PRICE SUBMITTED DAY-AHEAD • NEW SELF-SCHEDULE AMOUNT = 200 MWs 100 45.0 r r 50 31.5 50 31.5 50 0.0 100 -10.0 50 LOL -500 Barker, Dunn & Rossi

  37. Section 3Changes to Market RulesContinued . . . • Modified rules to allow input of up to 10 incremental MW quantity bands and prices for “each trading interval” • Added rules for submission of Supply Offers and Demand Bids at External Nodes • Link to request for transmission service (i.e., “One-stop shopping”)

  38. Section 3Changes to Market RulesContinued . . . • Allow for submission of Transmission Congestion Bid for through service • Firm Service, willing to pay any amount of Congestion Cost • Non-Firm Service, willing to pay an “up-to” amount of Congestion Cost

  39. Changes to Market RulesContinued . . . • Modified all Appendices (3A, 3B, 3C, 3E), to reflect changes in Sections 3

  40. Section 5 Real-Time Market Energy Product

  41. Section 5Changes to Market Rules • Used currently effective Rule 5 as a starting point. Removed references to Energy Market and replaced with Real-Time Market - Energy Product • The end state Rules refer to a Day-Ahead Market and a Real-Time Market. The Real-Time Market consists of the Energy, AGC and Operating Reserve products

  42. Section 5Changes to Market RulesContinued . . . • Removed all references to External Transactions and replace with Supply Offer and Demand Bid at External Node terminology • Removed all references to Bids and replace with Supply Offer and Demand Bid terms

  43. Section 5Changes to Market RulesContinued . . . • Removed section on Dispatch Process and made references to appropriate section of Section 5 • Added new section which describes how Locational Prices are calculated and is based on the end state RNA language

  44. Section 5Rules and Appendices to be Deleted • Removed all settlements related sections. All Settlements to be addressed in Section 6. • External Transactions Settlement Amounts in Section 5-A • This appendix to be deleted. Move relevant information to Settlements Rule (Section 6)

  45. Section 5Rules and Appendices to be Deleted (Continued. . .) • Excess Generation, Section 5-B • This appendix to be deleted. See Section2 for excess generation rules. Backdown charges no longer required for transmission constrained area as real-time SPD will now be security constrained with nodal prices. See Section2 for special excess generation rules for reduction/de-commitment in the case of a tie on supply offer price

  46. Section 5Rules and Appendices to be Deleted (Continued. . .) • ECP Calculations, Section 5-C • Delete this appendix. Already covered in Section 3 and 5. May need to redocument certain portions of this appendix concerning how SPD is calculating nodal prices once final software is designed and tested. • Minimum Uplift Quantities, Section 5-D • Delete this appendix and move relevant language to Settlements Rule 6

  47. Section 5Rules and Appendices to be Deleted (Continued. . .) • Nodal Price Calculations under Emergency Conditions, Section 5-E • Retain Appendix and modify for Locational Pricing • Nodal Price Calculations During Hardware/Software Failures, Section 5-F • Retain Appendix and modify for Locational Pricing

  48. Section 7 Real-Time Market AGC Product

  49. Section 7Changes to Market Rules • Used currently effective Rule 7 as starting point. Removed references to AGC Market and replaced with Real-Time Market - AGC Product • The end state Rule refer to a Day-Ahead Market and a Real-Time Market. The Real-Time Market consists of the Energy, AGC and Operating Reserve products

  50. Section 7Changes to Market RulesContinued . . . • Removed all references to Bids and replaced with Supply Offer term • Added co-optimization requirements based on end state RNA • Delete settlements section and move to Settlements Rule, Section 6

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