Comprehensive Scarcity Pricing

Transcription

1 Comprehensive Scarcity Pricing Ethan Avallone Associate Market Product Specialist Energy Market Design New York Independent System Operator MIWG April 23, 2015 Krey Corporate Center 2014 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY

2 Agenda Background Market Design Overview Scarcity reserve region(s) Scarcity reserve requirement(s) Scarcity reserve demand curve(s) Example SENY Reserve Demand Curve Next Steps 2

3 Background The purpose of this presentation is to provide more detail on the Comprehensive Scarcity Pricing proposal, including: Technical implementation Interaction with the SENY 30-Minute reserve demand curve 3

4 Background Comprehensive Scarcity Pricing will improve upon the current implementation See the appendix to this presentation for more information on the current implementation Proposal will incorporate the value of SCR/EDRP resources into the pricing software where prices and schedules are established Benefits of Comprehensive Scarcity Pricing Appropriately reflects resource lost opportunity costs in energy, reserve, and regulation prices Maintains consistent scheduling and pricing Reduce the potential for uplift from units when directed by the NYISO to buy out of a scarcity-priced reserve product to provide non-scarcity priced energy or vice versa During scarcity events, aligns prices paid by exports with prices paid by internal NYCA load, and prices paid to imports with prices paid to internal generators Potomac Economics (2013 SOM) recommended the NYISO extend scarcity pricing to the External Proxy Buses 4

5 Scarcity Reserve Region(s) Effective during SCR/EDRP events, create scarcity reserve regions to reflect activations Operations will specify the activated zone or zones and the activation reason(s) Each scarcity reserve region will be created from the zone or zones that are part of the same activation reason Not necessary to create a new scarcity reserve region if the activated zone or zones are part of an existing reserve region 5

6 Scarcity Reserve Requirement(s) Create a 10-Minute or 30-Minute scarcity reserve requirement for each scarcity reserve region Specifying a 10-Minute or 30-Minute product is consistent with current operational practice Procuring the type of reserve product needed by Operations allows more accurate modeling of system conditions It is anticipated that most SCR/EDRP activations would result in additional 30-Minute Total reserves When possible, RTC and RTD will model the scarcity reserve requirement in the look ahead to allow for RTC and RTD to pre-position the system for an event 6

7 Scarcity Reserve Requirement(s) Scarcity reserve requirement will be based on the expected load reduction of SCR/EDRP resources for the scarcity reserve region Apply an adjustment to the total enrolled SCR/EDRP MW in each zone used to create the scarcity reserve region ( Expected SCR/EDRP MW ) Based on whether the activation was a voluntary or mandatory event; intended to reflect expected performance of SCR/EDRP resources The NYISO is continuing to evaluate an appropriate adjustment methodology Ensures the market model will more accurately reflect system conditions during SCR/EDRP activations 7

8 Scarcity Reserve Demand Curve(s) Price the scarcity reserve requirement with a scarcity reserve demand curve Price the Expected SCR/EDRP MW used for the scarcity reserve requirement at $500 8

9 Example Operations calls total enrolled MW of SCR/EDRP resources in Zone J from HB 13:00 to HB 17:00 to protect 30-Minute reserves. For purposes of this example, assume that the total enrolled MW of SCR/EDRP in Zone J is 250 MW A scarcity reserve region is created from 13:00 to 17:00 Scarcity reserve region contains the activated zone(s) with same activation reason Zone J in this example A 30-Minute scarcity reserve requirement is created for the scarcity reserve region Scarcity reserve requirement set at an amount equal to the Expected SCR/EDRP MW the Expected SCR/EDRP MW would represent an adjustment to the 250 MW value in this example A 30-Minute scarcity reserve demand curve is created for the scarcity reserve region Expected SCR/EDRP MW, priced at $500 The market software will now consider the value of the Expected SCR/EDRP MW in establishing prices and schedules 9

10 SENY Reserve Demand Curve Historically, SCR/EDRP activations have been called to protect 30-Minute reserves in SENY SCR/EDRP resources are valued at $500 However, subject to FERC approval, SENY 30-Minute reserves are valued at $25 The NYISO proposes, as part of this project, to revise the SENY 30-Minute reserve demand curve price to $500 at all times This will value reserves in SENY consistent with Operator action and past recommendations from Potomac Economics 10

11 SENY Reserve Demand Curve Flows over lines into SENY are reduced during Thunder Storm Alert ( TSA ) events SENY 30-Minute reserves are effectively carried on the transmission system during a TSA event Could increase line flow to deliver more Energy in the event of a generator trip in SENY The NYISO proposes, as part of this project, to decrease the proposed 1,300 MW SENY 30- Minute reserve requirement to zero during TSA events This will allow for more accurate modeling of system conditions during a TSA 11

12 Next Steps April 23, 2015 MIWG Discuss Comprehensive Scarcity Pricing Present further details and provide examples Review interplay with Shortage Pricing May / June 2015 MIWG Discuss Comprehensive Scarcity Pricing Present Consumer Impact Analysis July 2015 BIC/MC Seek market design / tariff approval August 2015 Seek board approval Q Development Complete 12

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14 Appendix: Current Scarcity Pricing Implementation 14

15 Background Currently, SCR/EDRP activations are priced by an after the fact process SCR/EDRP resources reduce load for a per MWh payment of max ($500, LBMP) Schedules and prices are then determined by RTD; however, today s expost scarcity pricing mechanism may adjust final settlement prices independently from schedules Today s ex-post Scarcity Pricing determines whether the NYCA would have been short of reserves but for the SCR/EDRP activation Energy prices incorporate the $500 price if the amount of called SCR/EDRP MW are greater than the MW of available reserves in the called load zone Reserve clearing prices incorporate the $500 price if the amount of called SCR/EDRP MW are greater than the MW of available reserves in a reserve region that includes an activated zone 15

16 Background Scarcity pricing does not currently apply to the External Proxy Buses During SCR/EDRP activations, intervals that pass the but for test, internal load may pay LBMPs incorporating the $500 price while exports from the NYISO could pay significantly less Likewise, internal generators may receive LBMPs incorporating the $500 price while imports to the NYISO could receive significantly less 16