Summer Peak Energy Pricing in
New England: The ISO-NE Response
Robert Ethier
Manager, Market Monitoring & Mitigation
ISO New England Inc.
January 18, 2002
1
Patton Report
Recommendations
1. Implement SMD as soon as possible.
– Provide option to self-schedule resources after the
commitment process once the multi-settlement process
under SMD is implemented
2. Reserve Market Changes
- Include real-time replacement reserves in reserve markets
- Include L.O.C. payments for reserves
3. Modify ECP eligibility rules for peaking units and units committed
during reserve shortages
4. Seek improvements in transaction rules and procedures with
NYISO and ISO-NE
5. Seek improvements in congestion management procedures
2
Reserve Market Changes
ISO New England Proposal
•
•
Include replacement reserves in TMOR Market
Implement reserve price cascading TMSR > TMNSR
•
> TMOR
Include opportunity cost payments for all reserve
markets (currently just TMSR)
•
Cap availability bids for reserves at $2.52 (same as
NY)
3
Modify ECP Eligibility Rules
ISO-NE Proposal
•
Evaluate units at LOL for Eligibility to set RTMP during
non-shortage system conditions
•
Applies to Fast Start Resources only
– Min Run, Min Down < 1 Hour
– Qualifies for TMNSR and TMOR
– Start Time < 30 Minutes
•
Basic Criteria - If energy at LOL cannot be replaced
with on-line energy, or unit is required to meet 10minute spin requirement, then eligible to set RTMP
– Units that cannot be replaced will have flag set making
eligible to set RTMP
– Process evaluates all eligible units every five minutes
4
Modify ECP Eligibility Rules
ISO-NE Proposal
External Dispatchable Transactions
• Same criteria as Units - If replacement energy is
not available, or unit is required for reserves,
transaction is eligible to set RTMP
• Applies to non-shortage conditions
• Analysis is performed at same time as units
5
Modify ECP Eligibility Rules
ISO-NE Proposal
During Reserve Shortages (short of 30-minute
operating reserves)
•
•
Any Fast Start Units Committed will set price
Externals will set clearing price
6
Seek Improvements in Transaction Rules
ISO New England Proposal
• Modify the Unit Commitment rule governing
transactions to increase the number of Short
Notice External Transactions (SNT)
•
SNT Definition:
– Either a System Contract for the purchase or sale of
Energy 1 or a System Contract for the sale of Energy 2
– and submitted to the ISO after the Daily Trading
Deadline has passed for the Scheduled Dispatch Period
in which the transaction is to begin
7
Seek Improvements in Transaction Rules
ISO-NE Proposal
•
Increase the number of SNTs that flow in a direction
consistent with economics of NYISO and ISO-NE
dispatch
– SNTs cannot be withdrawn
– SNTs will be supported by Unit Commitment
•
Issues:
– Single settlement SNTs may be used to manipulate market
prices
• Develop Arbitrage Screen to protect against market power
– Out-Service:
• Rationing of available Out-Service under Tariff
• Elimination of Out-Service charge for hourly SNTs
8
Seek Improvements in Transaction Rules
Arbitrage Screen
•
SNTs from high price to low price area subject to
arbitrage screen
•
If the difference in posted prices between NYISO
and ISO-NE exceeds the price in the buyer’s
control area by $X; transactions by participant can
be limited in the future.
•
Design would limit use of uneconomic transactions
to raise prices in NEPOOL
9