1 presentation to the wisconsin industrial energy group (wieg) t. graham edwards president & ceo...
TRANSCRIPT
1
Presentation to the Wisconsin Industrial Energy Group (WIEG)
T. Graham Edwards
President & CEO
August 9, 2007
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Value of the Midwest ISO
Production Costing
Congestion Management
Transparency
ReliabilityReduced Reserve
Requirements
Regional Planning
Enhanced Infrastructure Development
Market Access
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Independent Market Monitor (IMM) 2006 State of the Market Report
IMM stated that the Midwest ISO market has been operating as excellent and continues to improve
IMM specifically pointed to specific areas of performance:• Daily generation commitment – RSG costs decreased by
62%
• Generation dispatch and congestion management
• Reliability – Prices on Midwest ISO seams are well arbitraged
• Midwest ISO/PJM coordination – effectively managed constraints
• Price signals – total congestion costs of $550 million in 2006 vs. $1.07 billion in 2005 (9 months annualized)
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Reliability
Real Time Operations “Scorecard”
NERC Audit
• Awarded 6 “Examples of Excellence”
• Provided 13 Positive Observations
Contingency Reserve Sharing Group
• Started 1/1/07
• Has resulted in a 39% reduction in reserve obligation
• Projected annual savings between $59-118 million
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Direct Quotes from WisconsinMarket Participants
Midwest ISO’s system of dispatch has been very beneficial, especially when not all of our generation resources were available
Our company is now on a level playing ground with other WI utilities now that the Midwest ISO market is in operation
Midwest ISO market provides our company access to lower cost wholesale energy supply and increased flexibility to manage fuel cost increases
We have the ability to import three times as many MW during stress conditions than prior to the market – much more liquid
The Midwest ISO LMP market is more efficient at implementing re-dispatch to address an overloaded transmission line than the NERC TLR system
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Steps to Improve Services
Annual Stakeholders Meeting
Market Operating Committee
IT System Improvements
Ancillary Services Market (ASM)
Improvements to Generator Interconnection Queue
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ISO/RTO Cost Comparison
Cost per megawatt-hour of Load Served ($/MWh)($/M
Wh)
CAISO ERCOT
MISO
NYISO PJM
ISO-NE
0.20
0.40
0.60
0.80
1.00
1.20
1999 2000 2001 2002 2003 2004 2005 2006
0.00
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Looking Ahead
Short-Term Priorities• Improving Operational Performance• Implementation of ASM• Moving forward with Resource Adequacy• Maintaining the Midwest ISO’s credit rating
Long-Term Vision• Strategic Plan - Direction to be adopted by our Board next
week• Plan emphasis
– Operational Performance– Value Creation– Positioning for Growth
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Midwest ISO AspirationsFulfillment of these aspirations drove a new vision,
mission and a series of strategic elements
Vision and Mission
Deliver value to and be valued by our stakeholders
Drive acceptance of market-based mechanisms to minimize congestion costs
Provide requisite stewardship of underlying transmission assets
Become essential to the optimization of infrastructure investments within the region
Enable an efficient wholesale platform
Be integral to further development of the industry
Aspirations
Achieve recognition as the independent infrastructure planning authority
Establish world class market operator credentials
Drive value creation through efficient reliability
/ market operations, planning and innovation
Deliver accurate and timely information to enable improved market performance and investment
Establish a workplace characterized by continual employee development and professional growth
Figure 5
Efficient Wholesale Power
Midwest ISO Aspirations
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Midwest ISO’s Role in Regional Planning
Coordination of Regional Planning
Midwest Transmission Expansion Plan (MTEP)
• Progress
• What it’s NOT
• Challenges
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Demand Response
Board of Directors adopted guiding principals
“The Midwest ISO strives to have an open wholesale market where energy can be bought or sold in fair, efficient and non-discriminatory markets, while providing for reliable grid operations”
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Demand Response – Action Items2007
Remove disincentives to provide demand response in Real Time
• Remove RSG penalty – Complete
• Provide compensation for demand reductions when called during emergency conditions – Stakeholder discussion complete and filing being prepared
Increase accountability and availability of demand response relied upon to satisfy resource adequacy requirements
• Module E update filing in December 2007
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Demand Response – Action Items2008
Expand opportunities for demand participation
• New products tailored to demand resources – ASM
• Improve price signals to better reflect supply and demand conditions
– ASM
– Modified LMP calculation to reflect marginal resource under development
Resolve market design and technical barriers to provide opportunities for direct market participation from dispersed demand response