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October 2003

October 2003. Electricity Markets Regional Evolution Randy Berry (randy.berry@esca.com). Agenda. What we said last year A look at how markets are evolving Conclusions. Predictions from last year . Market monitoring improvements Convergence of market rules and standardization

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October 2003

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  1. October 2003 Electricity Markets Regional EvolutionRandy Berry (randy.berry@esca.com)

  2. Agenda • What we said last year • A look at how markets are evolving • Conclusions

  3. Predictions from last year • Market monitoring improvements • Convergence of market rules and standardization • Increased transparency • Power system and market system coordination • To varying degrees, these predictions did occur

  4. What we did not predict

  5. Another thing we did not predict…

  6. Design Principles for Electricity Markets • Ensure Reliable Physical System Operation • Provide Choices for Market Participants • Facilitate Integrated Market & System Operation • Physical system operation requirements are satisfied (e.g. congestion management,security-constrained MW dispatch targets) • Market incentives directly match system dispatch signals (e.g. natural incentive for following dispatch instructions) • Market-based Congestion Management

  7. Implementation Principles for Electricity Markets • Technology is important • Training, organization and participant management • Power system and Market system operators require extensive training to manage new and larger systems • Organization may change as they transition from market development to market operations • Active participant management to set achievable schedules and capabilities

  8. Common Designs Among Converging Markets • Transmission Access • Transmission rights are financial within market footprint • Cross market / border coordination based on shared physical usage on commercially significant flowgates • Energy Market • Bilateral contracts are financial • Physical resources can be self-scheduled or be scheduled based on spot market bids • Congestion Management • Simultaneous feasibility tests • Locational marginal prices

  9. Market Migration Implementation • Start with the Basics • Maintain reliable system operation • Allow limited range of market trading activities • Target specific areas to gain market experiences • Recognize the maximum rate of change that can be successfully introduced • Financial models • Physical operations • Build on experiences gained • Understand what worked well & not well • Understand why

  10. World wide experience and solutions ALSTOM’s RTOs/ISOs FERC 2000 FERC 888/ 889 NOPR CAISO CRR, Settlements ERCOT ERCOT ISO NE ISO NE PUCT Market Monitoring Real Time Market Fwd Market, FTR, TTSE PJM Market Monitoring PJM PJM PJM PJM PJM PJM Forward Market FTR - Options FTR Real Time Market DMT Market Simulation OASIS SeTrans SPP SPP/MISO MISO NZ AUSTRALIA NZ FTR SeTrans ALBERTA AIMS Market Simulation POS MOS E3 96 03 97 98 99 00 01 02

  11. Electricity Market Terminology

  12. Market Evolution – going from here to there

  13. Diagram of Market Evolution (PJM) 1998 - 2003

  14. Diagram of Market Evolution (ISO-NE) 1998 - 2004

  15. Diagram of Market Evolution (ERCOT) 2000 - 2004

  16. Diagram of Market Evolution (MISO) 2002 - 2004

  17. Diagram of Market Evolution (SPP) 2000 – 2001, 2003-2004

  18. Migration considerations • Market systems evolve • IT should support evolution, not prevent it • The IT and applications must be chosen so that the path of migration can be traveled • You should not have to replace your system to migrate • The Market Participants will place increasing demands for information and capabilities • Market Monitoring and Reliability will also place increasing demands on the systems • Common functions change during the evolution of the markets • bidding, publishing, settlements, database

  19. Conclusions • Market functionality is converging • Markets accommodate regional differences by exception rather than the rule • Developing markets can leverage IT, applications, market rules, business process and other existing capabilities. • The industry is moving from a pioneering era to a cultivating era.

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