peter wong manager, resource adequacy

DRAFT

Local Sourcing Requirement (LSR) and Maximum Capacity Limit (MCL) Calculation Methodology – Revised from June 15, 2009 Presentation

Peter WongManager, Resource Adequacy

RC MeetingJuly 13, 2009

RC Meeting – July 13, 2009LSR and MCL Calculation Methodology

© 2009 ISO New England Inc. DRAFT

What is Local Sourcing Requirement and Maximum Capacity Limit?

• Local Sourcing Requirement (LSR) is the minimum amount of capacity that must be electrically located within an import-constrained Load Zone to meet the Installed Capacity Requirement (ICR)

• Maximum Capacity Limit (MCL) is the maximum amount of capacity that can be procured in an export-constrained Load Zone to meet the ICR

2

DRAFT

LSR and MCL Calculated According to Section III.12.2 of Market Rule 1, Local Sourcing Requirements and Maximum Capacity Limits*

* For details, please see http://www.iso-ne.com/regulatory/tariff/sect_3/09-4-1_mr1-sect_1-12.pdf



Calculation Steps for LSR and MCL

• Model the Load Zone under study vs. the rest of the New England Control Area using the GE MARS simulation model

– Reflect load and resources electrically connected to them, including external Control Area support from tie benefits

– Model the transmission interface constraint between the Load Zone under study and the rest of the New England

– If the system is less reliable than 0.1 days/year Loss of Load Expectation (LOLE), add proxy units that are required in New England to meet the resource adequacy planning criterion of 0.1 days/year LOLE

– If the system LOLE with proxy units added is less than 0.1 days/year

• Firm load is added (or unforced capacity is subtracted)

• Ensure New England system LOLE equals 0.1 days/year

– If the system is more reliable than 0.1 days/year, then keep the system LOLE as is

4



Calculation Steps for LSR and MCL, cont.

• Beginning with the New England system days/year – either “as is” or “at criterion” if proxy units are required

– Adjust the firm load within the Load Zone under study

• Until the LOLE of the New England Control Area LOLE reaches 0.105 days/year

• As firm load is added to the Load Zone under study, an equal amount of firm load is removed from (or added to) the rest of the New England Control Area

• Note that New England’s share of tie benefits from New York, New Brunswick and Quebec are considered pre-existing in the rest of New England

5



Methodology for Calculating Local Sourcing Requirement

Calculate the LSR for the import-constrained Load Zone in accordance with the following formula

LSRz = Resourcesz + Proxy Unitsz – (Proxy Units Adjustmentz/ (1-FORz)) – (Firm Load Adjustmentz/ (1-FORz))

in which

– LSRz = MW of Local Sourcing Requirement for Load Zone Z

– Resourcesz = MW of resources electrically located within the Load Zone Z, including Import Capacity Resource on the import-constrained side of the interface, if any

– Proxy Unitsz = MW of proxy unit additions in the Load Zone Z

– Proxy Units Adjustmentz = MW of firm load added to (or unforced capacity subtracted from) Load Zone Z until the system LOLE equals 0.1 days/year

– Firm Load Adjustmentz = MW of firm load added (or subtracted) within the Load Zone Z to make the LOLE of the New England Control Area equal to 0.105 days per year

– FORz = Capacity weighted average of the forced outage rate modeled for all resources within the Load Zone Z, including any proxy unit additions to the Load Zone Z

6



Methodology for Calculating Maximum Capacity Limit

Calculate the MCL for the export-constrained Load Zone Y in accordance with the following formula

Maximum Capacity LimitY = ICR – LSRRestofNewEngland

in which

–Maximum Capacity LimitY = Maximum amount of resources, including import Capacity Resources on the export-constrained side of the interface, if any that can be procured in the export-constrained Load Zone Y under study to meet the ICR

–ICR = MW of Installed Capacity Requirement for the New England Control Area

–LSRRestofNewEngland = MW of Local Sourcing Requirement for the rest of the New England Control Area, which for the purposes of this calculation is treated as an import-constrained region. LSRRestofNewEngland is determined in accordance with the methodology presented in prior slides

7

DRAFT

LSR and MCL Calculation ExampleUsing ISO Recommended Values for 2012/13 Capability Year



Calculation ProcedureLSR for Connecticut

~Existing

37,059 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

~Existing

27,948 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

Rest of NECT

~Existing

9,111 MW

System LOLE < 0.1 with existing resourcesmodeled, proxy units are NOT needed, andno Proxy UnitsAdjustment (PUAz)is required.

Model the transmission interface between CT and Rest of NE. System LOLE remains at 0.001.Because LOLE is less than 0.105, Firm Load Adjustment (FLAz)will be made.

After adding 2,325 MW load to CT and subtracting 2,325 MW from Rest of NE, system LOLE reaches 0.105. LSR for CT is then determined as LSRz = Resourcesz + Proxy Unitsz – (PUAz/ (1 – FORz)) – (FLAz/ (1 – FORz)) = 9,111 + 0 – 0 /(1 – 0.0592) – 2,325/(1 – 0.0592) = 6,640 MW

~Existing

27,948 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.105

Rest of NECT

~Existing

9,111 MW

FLA-2,325 MW

FLA2,325 MW

Note: PUAz is the Proxy Units AdjustmentFLAz is Firm Load Adjustment

9



Calculation ProcedureLSR for NEMA/BOSTON

~Existing

37,059 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

~Existing

33,246 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

Rest of NEBOS

~Existing

3,813 MW


Model the transmission interface between NEMA/BOSTON and Rest of NE. System LOLE remains at 0.001. Because LOLE is less than 0.105, Firm Load Adjustment (FLAz)will be made.

After adding 1,620 MW load to NEMA/BOSTON and subtracting 1,620 MW from Rest of NE, system LOLE reaches 0.105. LSR for NEMA/BOSTON is then determined as LSRz = Resourcesz + Proxy Unitsz – (PUAz/ (1 – FORz)) – (FLAz/ (1 – FORz)) = 3,813 + 0 – 0 /(1 – 0.0970) – 1,620/(1 – 0.0970) = 2,019 MW

~Existing

33,246 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.105

Rest of NEBOS

~Existing

3,813 MW

FLA-1,620 MW

FLA1,620 MW


10



Calculation ProcedureMCL for Maine

~Existing

37,059 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

~Existing

3,616 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

Rest of NE

ME

~Existing

33,443 MW


Model the transmission interface between Maine and Rest of NE. System LOLE remains at 0.001. Because LOLE is less than 0.105, Firm Load Adjustment (FLAz)will be made.

After adding 4,455 MW load to Rest of NE and Subtracting 4,455 MW from Maine, system LOLE reaches 0.105. LSR for Rest of NE isdetermined as LSRrestofNewEngland = Resourcesz + Proxy Unitsz – (PUAz/ (1-FORz)) – (FLAz/ (1 – FORz)) = 33,443 + 0 – 0 /(1 – 0.0591) – 4,455/(1 – 0.0591) = 28,708 MWMCL for Maine is then determined as MCL = ICR – LSRRestofNewEngland

= 31,965 – 28,708 = 3,257 MW


~Existing

3,616 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.105

Rest of NE

ME~Existing

33,443 MW

FLA-4455 MW

FLA4,455 MW

11

DRAFT

Issue with the Existing LSR and MCL Calculation Methodology



Issue with the Existing Calculation Methodology

• The current methodology used to calculate LSR and MCL does not adjust for surplus capacity unless the surplus is associated with the use of a “proxy unit”

• This is equivalent to calculating LSR and MCL using possible “as is” system conditions

• Some are concerned that using possible “as is” system conditions may understates LSR and overstates MCL when the system has surplus capacity

• The following tables show the results of the 2012/13 LSR and MCL using “as is” and “at criterion” conditions to illustrate the point

13



2012/13 vs. 2011/12 LSR – Connecticut

Connecticut Zone

2011 FCA (FERC

Approved) 2012 FCA2012 (If Calculated At Criterion)

50/50 Peak Load 7,750 7,650 7,650 Resourcez [1] 8,189 9,111 9,111 Proxy Unitsz [2] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [3] 0 0 0 Firm Load Adjustmentz [4] 1,285 2,325 1,680 FORz [5] 0.0637 0.0592 0.0592 LSRz [6]=[1]+[2]-([3]/(1-[5]))-([4]/(1-[5])) 6,817 6,640 7,325Rest of New England Zone resource [7] 26,567 27,948 27,948 Proxy Units [8] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [9] 0 0 4,585 Firm Load Adjustment [10] = -[4] -1,285 -2,325 -1,680Total System Resource [11]=[1]+[2]-[3]-[4]+[7]+[8]-[9]-[10] 34,756 37,059 32,474

Note: resource number for Rest of New England Zone excludes Hydro-Québec Interconnection Capability Credits (HQICCs)

14



2012/13 vs. 2011/12 LSR – NEMA/BOSTON

Note: resource number for Rest of New England Zone excludes HQICCs

NEMA/BOSTON Zone

2011 FCA (FERC


50/50 Peak Load 5,815 5,885 5,885 Resourcez [1] 3,753 3,813 3,813 Proxy Unitsz [2] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [3] 0 0 0 Firm Load Adjustmentz [4] 1,570 1,620 1,110 FORz [5] 0.0964 0.0970 0.0970 LSRz [6]=[1]+[2]-([3]/(1-[5]))-([4]/(1-[5])) 2,016 2,019 2,584Rest of New England Zone resource [7] 31,003 33,246 33,246 Proxy Units [8] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [9] 0 0 4,585 Firm Load Adjustment [10] = -[4] -1,570 -1,620 -1,110Total System Resource [11]=[1]+[2]-[3]-[4]+[7]+[8]-[9]-[10] 34,756 37,059 32,474

15



2012/13 vs. 2011/12 MCL – MaineLocal Sourcing Requirements - RestofNewEngland (for Maine MCL calculation)

Rest of New England Zone

2011 FCA (FERC


50/50 Peak Load 27,200 26,855 26,855 Resourcez [1] 31,185 33,443 33,443 Proxy Unitsz [2] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [3] 0 0 4,585 Firm Load Adjustmentz [4] 1,935 4,455 -200 FORz [5] 0.0568 0.0591 0.0591 LSRz [6]=[1]+[2]-([3]/(1-[5]))-([4]/(1-[5])) 29,133 28,708 28,783Maine Zone resource [7] 3,571 3,616 3,616 Proxy Units [8] 0 0 0 Proxy Units (or Surplus Capacity) Adjustmentz [9] 0 0 0 Firm Load Adjustment [10] = -[4] -1,935 -4,455 200Total System Resource [11]=[1]+[2]-[3]-[4]+[7]+[8]-[9]-[10] 34,756 37,059 32,474

Maximum Capacity Limit - Maine

Commitment Period

2011 FCA (FERC


50/50 Peak Load 2,205 2,165 2,165ICR for New England [1] 32,528 31,965 31,965LSRRestofNewEngland [2] 29,133 28,708 28,783Maximum Capacity LimitY [3]=[1]-[2] 3,395 3,257 3,182

Note: resource number for Rest of New England Zone and ICR value for New England exclude HQICCs

16


© 2009 ISO New England Inc. DRAFT .

17

Why should LSR and MCL should be calculated using “at criteria” system conditions?



Why should LSR and MCL be calculated using “at criteria” system conditions?

With respect to resource adequacy/reliability:

• The Installed Capacity Requirement (ICR) is the minimum amount of installed capacity NE requires to meet the 0.1 days/year LOLE resource adequacy planning criterion. The ICR is calculated assuming that capacity will be installed in transmission import constrained Load Zones to eliminate the impact of transmission constraints on system LOLE.

• The objective of the LSR and MCL is to identify the minimum amount of capacity that is needed in these transmission import constrained Load Zones, so the NE system will meet the 0.1 days/year LOLE criterion given the ICR.

18



Why should LSR and MCL be calculated using “at criteria” system conditions? (cont.)

With respect to the Forward Capacity Market:

• The ICR is the amount of installed capacity the ISO will purchase in the Forward Capacity Auction (FCA).

• The LSR and MCL determine the amount of capacity needed in the Load Zones such that the amount of ICR purchased by the ISO will meet the 0.1 days/year LOLE criterion.

• If resources are inadequate in these Load Zones, then ISO will purchase the minimum amount needed in these Load Zones in the FCA.

19



Why should LSR and MCL be calculated using “at criteria” system conditions? (cont.)

The problem with using “as is” system conditions:

• Calculating the LSR and MCL using “as is” system conditions does not equate to determining the minimum amount of capacity needed in transmission import constrained Load Zones associated with the ICR that the ISO will purchase.

• Calculating the LSR and MCL using “as is” system conditions will determine the minimum amount of capacity needed in transmission import constrained Load Zones using capacity that has no obligation to serve New England.

20

DRAFT

Proposed Changes to Calculate LSR and MCL with “At criteria” System Conditions



Proposal to Modify the Existing Calculation Methodology• ISO-NE proposes that the LSR and MCL be calculated

using “at criteria” system conditions all the time.

• Modifications to Section III.12.2 of Market Rule 1, Local Sourcing Requirements and Maximum Capacity Limits, would be required to accommodate this proposal.– ISO will present the proposed language changes in a future

meeting.

22


© 2009 ISO New England Inc. DRAFT 23

Proposed LSR Calculation Methodology1. Model the Load Zone under study and the rest of the NE Control Area

using the GE MARS simulation model– Reflect load and resources electrically connected to them, including

external Control Area support from tie benefits2. Add proxy units that are required, if any, in the NE Control Area to meet

the resource adequacy planning criterion of once in 10 years disconnection of non-interruptible customers.

3. Calculate the Additional Load Carrying Capability (ALCC) of Load Zone under study, ALCCz, and the rest of NE control Area, ALCCRestofNE, such that:a) NE system LOLE is at 0.1 days/year exactly when the transmission

constraint between the Load Zone under study and the rest of NE Control Area is not enforced, and

b) NE system LOLE is at 0.105 days/year when the transmission constraint between the Load Zone under study and the rest of NE Control Area is enforced.



Proposed LSR Calculation MethodologyCalculate the LSR for the import-constrained Load Zone in accordance with the following formula:

In which,– LSRz = MW of Local Sourcing Requirement for Load Zone Z

– Resourcesz = MW of resources electrically located within the Load Zone Z, including Import Capacity Resource on the import-constrained side of the interface, if any

– ALCCz = Additional Load Carrying Capability of Load Zone Z without causing system LOLE to exceed 0.105 days/year

– APkz = Annual 50/50 peak of Load Zone Z

z

z

zz

APkALCCsources

LSR

1

Re



Methodology for Calculating Maximum Capacity Limit (No Change)

Calculate the MCL for the export-constrained Load Zone Y in accordance with the following formula:

Maximum Capacity LimitY = ICR – LSRRestofNewEngland

In which,

– Maximum Capacity LimitY = Maximum amount of resources, including import Capacity Resources on the export-constrained side of the interface, if any, that can be procured in the export-constrained Load Zone Y under study to meet the ICR.

– ICR = MW of Installed Capacity Requirement for the NE Control Area

– LSRRestofNewEngland = MW of Local Sourcing Requirement for the rest of the NE Control Area, which for the purposes of this calculation is treated as an import-constrained region. LSRRestofNewEngland is determined in accordance with the methodology presented in prior slides.

25



LSR Calculation Methodology

~Existing

37,059 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.001

~

Existing27,948 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.100

Rest of NE

CT~Existing

9,111 MW

ALCCctX MW

ALCCrestofneY MW∞

50/50

load 7

650

MW

50/50

Load

2137

0 MW

~

Existing27,948 MW

~TB-NY

~TB-HQ

~TB-MT

LOLE = 0.105

Rest of NE

CT~Existing

9,111 MW

ALCCctX MW

ALCCrestofneY MW

2500MW

50/50

load

7650

MW

50/5

0 lo

ad

2137

0 M

W



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