AUGUST 9, 2013 | MARKETS COMMITTEE

Christopher ParentMARKET DEVELOPMENT

NCPC redesign for Offer Flexibility – proposal to conform other NCPC credit types

NCPC Payments: other credits

ISO proposes to modify some other types of NCPC Credit for Offer Flexibility

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Credit Type Proposal

Day-Ahead External Node NCPC (III.F.2.3/III.F.2.4) No change

Synchronous Condenser NCPC (III.F.2.2) No change

Real-Time External Transactions (III.F.2.3/III.F.2.4) Conforming change

Postured DARD Pump (III.F.2.4) Conforming change

Cancelled Pool-Scheduled Resource (III.F.2.5) Conforming change

Postured Generation (III.F.2.6) Conforming change

Hourly Shortfall (III.F.2.1.17) Conforming change

Minimum Generation Emergency (III.F.2.1.18) Included in RT Dispatch NCPC

Day-Ahead External Node NCPC is not being modified

• No proposed changes to this NCPC compensation

• External Transactions, Decrement Bids and Increment Offers that are cleared out of rate in the day-ahead market at external nodes are eligible for NCPC for the difference between the LMP and the transaction price each hour

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Synchronous Condenser NCPC is not being modified

• No proposed changes to this NCPC compensation

• Resources committed to operate as a synchronous condenser receive NCPC credit for the hourly price to condense each hour and the condensing start-up fee (if applicable) submitted with their Supply Offer

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Minor changes are proposed to the Real-Time External Transactions NCPC

• Hourly evaluation rather than over transaction duration

• Priced transactions with an associated day-ahead cleared schedule will be:– Evaluated based on the real-time scheduled quantity exceeding the

day-ahead scheduled quantity– Evaluated based on the total real-time scheduled quantity for

transactions re-cleared in real-time using a revised offer price

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Real-Time External Transaction NCPC credit

• Priced external transactions that are cleared out of rate in the real-time market are eligible for NCPC for the difference between the LMP and the offer price each hour

• Priced import transaction hourly credit:

Scheduled Quantity x (Transaction Price – Real-Time LMP)

• Priced export transactions hourly credit:

Scheduled Quantity x (Real-Time LMP – Transaction Price)

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Minor changes are proposed to the Real-Time DARD Pump NCPC

• Hourly evaluation rather than over entire day

• DARD Pump with day-ahead cleared demand will be evaluated based on total real-time consumption rather than deviations exceeding the day-ahead demand

• Consumption in excess of ISO dispatch instruction will not be considered

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Real-Time DARD Pump NCPC credit

• DARD Pumps are eligible only when an ISO posturing order causes the resource to consume out of rate

• The hourly demand bids at the time of the posturing order determines the bid price for NCPC compensation

• DARD Pump hourly credit:

MIN (DDP, Metered Output) x (Real-Time LMP – Bid Price)

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Cancelled Start NCPC compensation is unchanged, but proposal modifies eligibility requirements

• Starts scheduled in the day-ahead market are eligible– Day-ahead schedule Start-Up fees are no longer compensated through

DA NCPC so their eligibility is now necessary

• Resources that are cancelled more than two hours after the scheduled synchronization time are not eligible

• Resources that self-schedule a start within their Minimum Down Time after being cancelled are not eligible

• Requirement that resources have a Notification Time not longer than 24 hours remains (no change)

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Cancelled Start NCPC credit

• Each cancelled pool-scheduled commitment is compensated when the ISO cancels a start after Notification Time begins– If cancelled ahead of the Notification Time there is no credit

• Start-Up fee and Notification Time are based upon the offer information used by ISO to make the commitment decision

• Cancelled Start credit:

Start-Up fee x

percentage of Notification Time completed

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Cancelled Start NCPC examples

Cancelled Start credit = $4,000 (= $6k * 1/1.5)

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Commitment OfferStart-Up fee $6,000 Notification Time 1.5 hoursMin Down Time 3 hours

Cancelled Start credit = $0 (cancelled prior to Notification Time)

Cancelled Start NCPC examples (continued)

Cancelled Start credit = $6,000 (if cancelled after 2 hour limit no credit)

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Commitment OfferStart-Up fee $6,000 Notification Time 1.5 hoursMin Down Time 3 hours

Cancelled Start credit = $0 (self-scheduled start within Min Down time)

Minor changes are proposed to the Generator Posturing NCPC Credits

• Determined using greater of the offer in place at the time the resource is postured or the revised offer for each hour

• Actual reserve payments and estimated reserve payments will be included in the revenue calculations

• Start-up fee (when applicable) and No Load fee will be included in the cost calculations

• Non-limited energy resources will be evaluated hourly, rather than for a daily period

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Generator Posturing NCPC

• Only generator resources that are postured by the ISO are eligible for Posturing NCPC– Generators that have limited energy constraints are compensated

over the period of the limited energy constraint not exceeding the end of the day

– Generators without a limited energy constraint are compensated on an hourly basis

• When resources are postured the resource’s expected economic operation will be determined using resource’s physical parameters (e.g., EcoMax, Available Energy) and Supply Offer and the real-time LMPs

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Generator Posturing NCPC credit

• Postured NCPC is calculated per posturing event as:

Economic Operation Margin – Actual Operation Margin

• Economic Operation Margin is calculated as the difference between Potential Revenue and Potential Offered Cost where:

Potential Offered Cost = Start-Up + No Load + Energy Cost@Expected Operation

Potential Revenue = Real-Time LMP x Expected Operation + Potential RT Reserve Payment

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Generator Posturing NCPC credit (continued)

• Actual Operation Margin is calculated as the difference between Actual Revenue and Actual Offered Cost where:

Actual Offered Cost = Start-Up + No Load + Energy Cost@Metered Output

Actual Revenue = Real-Time LMP x Metered Output + RT Reserve Payment + Regulation Opportunity Cost

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Hourly Shortfall NCPC is being modified to accommodate re-offers

• A lost opportunity cost calculation will be used rather than the current approach which evaluates the difference between the day-ahead and real-time LMPs– Eliminates the exclusion of resources that re-offer in real-time

• ISO is also evaluating applying the existing hourly shortfall calculation to non-dispatchable resources

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Hourly Shortfall NCPC credit

• Resources that cleared in the Day-Ahead Market, are offline and available, are not postured, but are not economically dispatched in real-time are eligible for this compensation

• Hourly Shortfall NCPC is calculated using the same approach as postured, non-limited energy generator resource

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Minimum Generation Emergency credit is replaced by RT Dispatch NCPC

• RT Dispatch NCPC credit replaces need for a special credit during Minimum Generation Emergency– Compensates out of rate energy dispatch during normal system

operation and Min Gen

• Hourly No Load fee compensated by RT Commitment NCPC

• During Min Gen the RT Dispatch NCPC cost will be allocated to Real-Time Generation Obligation (III.F.3.1)

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