Black-Start
in a Market
Howard F. Illian, President
Energy Mark, Inc.
July 23, 2002
Vertically Integrated Utility
• All business functions necessary for
delivery of Black-Start are contained
and coordinated from within a single
VIU.
• Cost-Plus Regulation insures that all of
the costs associated with delivery of
the Black-Start Service are recovered.
Restructured Industry
• Technical Requirements for delivery of
the Black-Start Service are the same.
• Coordination of many independent
businesses is required to deliver the
Black-Start Service.
• Compensation for many independent
businesses is required to motivate
them to deliver the Back-Start Service.
Commodity Services
• Most Ancillary Services can be defined
as commodities.
• Commodity Services are deliverable
from many market participants.
• Limited competition for delivery of the
Black-Start Service components makes
them unsuitable commodities.
NERC Reliability Model
• The Players
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NERC Compliance Monitor
Security Authority
Interchange Authority
Balancing Authority
Transmission Service Provider
Transmission Owner
Transmission Operator
Distribution Provider
Generator
Load Serving Entity
Purchasing Selling Entity
Black-Start Delivery Players
• The Players
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NERC Compliance Monitor
Security Authority
Interchange Authority
Balancing Authority
Transmission Service Provider
Transmission Owner
Transmission Operator
Distribution Provider
Generator
Load Serving Entity
Purchasing Selling Entity
Compensation Components
• Revenue
Requirements
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Planning Expenses
Equipment Investments
Maintenance Expenses
Training Expenses
Simulation Expenses
Testing Expenses
Practice Drill Expenses
Additional Risk of Damage
Service Delivery Expenses
Other Stand-Ready-to-Supply
Expenses
Conclusions
• Restructuring has not increased the
complexity of the technical problem.
• Restructuring has increased the
complexity of the business problem.
• Both the technical and the business
problems must be effectively solved to
deliver the Black-Start Service in a
Market.
Questions