Demand Response Task Force PRR 176

1. SPP MWG Meeting February 19, 2008 Dallas, TX Demand Response Task ForcePRR 176

2. Types of Demand Response • Variable Dispatch Demand Response • Offer and Deployment Identical to Current Generation Resources • Requires Real-time Telemetry of DRR output same as a Generator Resource • Meter Data submitted same as Generator Resources • URD calculated same as Generator Resources • In other words, operationally, you can’t tell the difference between VDDR and Generator Resources

3. Types of Demand Response • Block Dispatch Demand Response • Offer is for fixed MW blocks at a price • Dispatch is hourly, but will also receive 5-minute signals • Hourly Load Profiles of the associated Load Zone must be submitted for the Available hours. These will be the ‘baseline’ for determining performance. • Requires Interval Metering submitted after-the-fact but it will be used for Market Monitoring and evaluation of performance at this point with no Settlement implications • URD will also be determined after the fact on an hourly basis using the Hourly Load Profile. Historical accuracy of the Hourly Load Profile will be performed and potential adjustments made.

4. Types of Demand Response • For both VDDR and BDDR • Have an Associated Load Zone • BA Actual is grossed up for use in Load Forecasting • Associated Load Zone will be grossed up for Settlements also. VDDR by submitted Resource meter data and BDDR by dispatched MW. (Use of Hourly Load Profile as meter data during dispatched hours may be another alternative.) • Somewhat comparable to MISO Type I (BDDR) and Type II (VDDR) • No special Emergency Only type demand response at this point

5. Resource Plans • Essentially identical to all other generators • MW values represent the amount of interruption instead of the amount of load consumed • For BDDR Resource there is a requirement for minimum to be 0. Otherwise, there are gaming opportunities due to the use of the forward submitted Hourly Load Profile as the baseline. • No restrictions on VDDR Resources since they operate exactly like a generator resource.

6. Load Forecast Implications • BA Actual Load must be grossed up by the amount of DRR energy supplied. Proposal uses Real-time SCADA for VDDR component and dispatched MW for BDDR component. • That forces the MOS system to continue to forecast assuming the load needs to be met and not artificially reduce the forecast causing price fluctuations • Additional Hourly Load Profile to be submitted for BDDRs which indicates the expected Load profile of the associated Load Zone in the absence of the BDDR being deployed • The profile will be used to help assess the performance of the BDDR

7. Offers • VDDR – Identical to Generator Resources • Monotonically INCREASING curves still • MW values indicate interrupted load • Up to 10 MW/Price pairs just like generator Resources • BDDR – Block Offers • MW Blocks with Prices • MW values indicate interrupted load • Entire Block will be taken if struck • Real-Time becomes Fixed Price taker

8. Uninstructed Resource Deviation • VDDR – Identical to Generator Resources • Dispatch instruction compared to SCADA Actual on 5-minute basis • URD averaged over the hour to send to Settlements • BDDR – After the Fact Hourly Assessment • No Real-time SCADA so can’t be the same as VDDR • Hourly Load Profile values to determine URD • URD Calculation similar to that in Real-time • If Profile has historically been accurate or above actual when BDDR Resource not dispatched, no adjustment is made • If Profile has historically been below actual when BDDR Resource not dispatched, there is an adjustment to the profile based on the average deviation

9. Modeling • VDDR • Must be added to the SPP EMS Model as a Generator • Also added to the Commercial Model • Must be co-located with the Load Zone it is associated with • Cannot be used with Distributed Load Response • BDDR • Resource is modeled in the Commercial Model only • The same Pnodes as the associated Load Zone make up the definition (i.e. co-located commercially) • Can be used for Distributed Load Response

10. BDDR Resource Deployment • Selection decision 30-minutes in advance from Hour-ahead Balancing Study • HAB contains four study intervals (:15, :30, :45 and :00) • Available Resources considered connected to the grid and start first interval at current hour dispatch level. • Subsequent interval starting points will be the previous interval projected dispatch

11. BDDR Resource Deployment • Average LIP of the 4 intervals will be compared to block offer prices. If Avg LIP > Offer, block will be committed. • Dispatch instructions will be issued for each 5-minute interval • Any ramp-rate limitations will be observed. • Dispatch will be considered a fixed MW in real-time and as such be a price taker

12. How Demand Response Settles • Equations the same as those for other Resources • EI Settlement = (Actual - Scheduled) * LIP • Meter value determinant different for BDDR Resources • Associated Load Zone meter data value grossed-up to prevent double settlement • For a DRR, the output is considered an injection (-) • Assuming no schedules at the DRR, the EI Settlement would be the amount of Load Reduction * LIP

13. VDDR Resource Settlement Example Load Zone = 100 MW Actual before VDDR dispatched Scheduled Load @ Load Zone = 100 MW DRR offered @ 10 MW for $75 VDDR Resource deployed and is marginal Resource Actual Real-time Load at Load Zone = 90 MW Settlement Actual would be: VDDR Resource: -10 MW (submitted by Meter Agent) Load Zone: 100 MW (Load Meter data of 90 plus VDDR meter of 10) VDDR = (-10 – 0) * $75 = -$750 credit Load Zone = (100 – 100) * $75 = 0

14. VDDR Resource Example – Without Load Gross-up Load = 100 MW Actual before DRR Scheduled Load = 100 MW DRR offered @ 10 MW for $75 VDDR Resource deployed and is marginal Actual Real-time Load = 90 MW Settlement Actual Data would be: VDDR Resource: -10 MW (submitted by Meter Agent) Load Zone: 90 MW (submitted by Meter Agent) DRR = (-10 – 0) * $75 = -$750 Credit Load Zone = (90 – 100) * $75 = -$750 Credit Double dips the credit

15. BDDR Example Load at Load Zone = 100 MW Actual before BDDR dispatched Hourly Load Profile of Load Zone = 100 MW for the hour Scheduled Load at Load Zone = 100 MW DRR offered @ 10 MW for $75 Hourly Average LIP = $80 DRR deployed to 10 MW and performs Settlement Actual data would be: BDDR Resource: -10 MW (Metered Load Actual – Hourly Load Profile) Load Zone: 100 MW (90 Actual plus 10 MW dispatched) BDDR Resource = (-10 – 0) * $80 = -$800 Credit Load Zone = (100 – 100) * $80 = $0 LIP higher than strike price, Resource makes additional revenue above offer

16. BDDR Example Load at Load Zone = 100 MW Actual before BDDR dispatched Hourly Load Profile of Load Zone = 100 MW for the hour Scheduled Load at Load Zone = 100 MW DRR offered @ 10 MW for $75 Hourly Average LIP = $70 DRR deployed to 10 MW and performs Meter Data BDDR Resource: Hourly Load Profile – Load Actual = 10 MW Load Zone: 100 MW (90 Actual plus 10 MW dispatched) BDDR Resource = (-10 – 0) * $70 = -$700 Credit Load Zone = (100 – 100) * $70 = $0 LIP lower than strike price. Resource paid additional make-whole for Difference between Offer and LIP = (-10 - 0) * ($75-$70) = -$50 make whole

17. What about Scheduling a DRR • As with any other resource, the scheduled amount will be compared against the actual for Energy Imbalance • With a DRR, scheduling will shift the credit to the load zone instead of the DRR • If the same party owns both, not really a big deal • Assume the previous VDDR example …

18. Scheduled VDDR Example Load Zone = 100 MW Actual before VDDR Resource dispatched Scheduled Load = 110 MW Scheduled DRR = 10 MW DRR offered @ 10 MW for $75 VDDR deployed and is Marginal Resource Actual Real-time Load = 90 MW Settlement Actual Data would be: VDDR Resource: -10 MW (submitted by Meter Agent) Load Zone: 100 MW (after gross up) DRR = (-10 – (-10)) * $75 = 0 Load Zone = (100 – 110) * $75 = -$750 Credit Shifts the credit from the DRR to the sink end of the schedule

19. Issues for Discussion • Should there be a provision for Revenue Guarantee (Make Whole) for Block Dispatch if Settlement LIP is lower than Offer Price? Current Protocols have it but need MWG input

20. Issues for Discussion • Determining Settlement meter value using a Submitted Hourly Load Profile as opposed to a ‘Baseline’ derived strictly from historical data is unique from other markets. Thought was that historical baselines are only adequate for very flat or repeating daily load patterns. Distributed Load Response and other industrial processes may be able to provide demand response but may have a more dynamic daily profile. A historical average baseline would be hit or miss and their process may be more dynamic but could be forecast with accuracy.

21. Issues for Discussion • BDDR Resource methodology opens the door for additional use for Semi-Quick Start generation (< 30 minute notification). • There was conflict between the new Quick Start PRR and the 10-minute dispatch cycle PRR that the shorter time frame may reduce the amount of quick start that could be offered.

22. Jarrett FriddleUtilicast, LLCMarket Implementation Consultant