Congestion Metrics Background

1. Congestion Metrics Background Wally Gibson, NWPCC TAS Meeting - Portland February 20, 2008

2. Overview • Goal of studies: indication of value of expanding transmission system • Kinds of congestion • Historical analysis • What the TEPPC studies produce • Simulated flows • High levels without constraint binding indicate potential congestion • Nodal and Shadow prices • Nodal and shadow prices • Limitations on interpretation • What DOE used last time

3. Kinds of Congestion • Excess: • Requests for transmission service • Requests to schedule • Real time flow • TEPPC studies show (as congestion) something like a mix of the last two • Potential flow from economic dispatch exceeding path constraints • Shown by differential nodal prices and associated non-zero shadow prices on path constraints

4. Historical Analysis • Historical flow analysis: flow vs. OTC • Useful for benchmarking simulated flows • Useful for highlighting high usage paths • Western usage limits schedules and flows to OTC • Limited flow does not clearly demonstrate lack of demand • Future analysis of ATC and schedule data by HAWG will illuminate this issue

5. Nodal and Shadow Prices • Change in value of total production cost for one unit (MW) change in value of constraint • Nodal prices: from change in load or generation level • Shadow prices: from change in level of path constraint • Load nodal prices typically affected by multiple generation changes in constrained system • Limitations: • Cannot extrapolate to large changes in constraint value • Cannot assume values of nodal/shadow prices are additive • Changing one constraint could change multiple prices

6. Congestion Metrics Using Nodal and Shadow Prices – Congestion Rent • Index based on multiplying path shadow price by total flow or path limit • Pros: Easy, some models produce automatically, distinguishes between effect on large and small lines • Cons: Doesn’t answer question (with exception), extrapolates beyond range of shadow price • Exception: • In full nodal pricing framework (CAISO), congestion rent is useful metric • Not applicable in rest of West

7. Congestion Metrics Using Nodal and Shadow Prices – Added Flow Calculation • Index based on multiplying shadow price by additional flow from unconstrained case • In SSG-WI modeling, unconstrained case was problematic due to loss treatment (generic losses added to loads) • In Promod, the problem may be less severe • Does not address issue of extrapolating shadow prices outside of their range • A version of this is the right answer for any specific path • Looking at change in total production cost for specific increase in an individual path size

8. Congestion Metrics Using Nodal and Shadow Prices – Simple Inspection • Looking only at high shadow prices suggests potential high value • Looking a large path size suggests potential high value, especially if coupled with high shadow price • Can only be confirmed with further study, and should not be directly used for broader purposes

9. What Did DOE Do in Last Study? • In 2006 Congestion Report, DOE looked at: • For West as a whole: • Primarily, historical path flow information • Secondarily, an unspecified approach that ranked based on usage and economic (shadow price) information • For individual congestion category designations in West: • Other reports than the SSG-WI report