Congestion Management Settlement Credits

1
Congestion Management Settlement Credits

• December, 2002

2
Market Design Principles

• The price of energy at each time and place should
  reflect the marginal cost of producing or not
  consuming one more unit of energy (at that time
  and place)
• Dispatchable market participants should be
  compensated for the effects of constraints

3
Congestion

• Occurs when physical capability of the
  transmission system cannot meet market
  requirements

4
Operating Profit
5
Operating Profit

• Operating Profit is the difference between
  operating cost and revenue
• Market Rules written assuming participants bid
  and offer based on marginal benefit/cost
• Marginal Cost - Cost of producing next MW
• Marginal Benefit - Benefit of consuming next MW

6
OP Revenue - Cost
Price (/MWh)
30
25
MCP 20
15
10
5
100
80
60
40
20
0
MQSI60
Quantity (MW)
7
Skill Check
8
Skill Check

• Generator A offer
• 0-20 MW 15
• 21-30 MW 25
• 31 - 40 MW 100
• Dispatched to 30 MW

• Load B bid
• 0-10 MW 1,000
• 11-20 MW 500
• 21-30 MW 20
• Dispatched to 20 MW

If MCP is 30, what is the OP for A and B?
9
Congestion Management Settlement Credits
10
Congestion Management Settlement Credit

• CMSC payments are based on the difference between
  the Operating Profit that would result from the
  Market Schedule and Operating Profit resulting
  from the Dispatch Instruction

11
Market Schedule
no transmission line limit

• Requirement is
• 190 MW
• Gen 1 100 MW
• Gen 2 90 MW
• MCP 20
• GEN 3 does not run

Region 2
Region 1
12
Transmission Congestion
Generator 1 100 MW 15
Load 190 MW
Generator 2 100 MW 20
Generator 3 100 MW 25
150 MW transmission line limit

• Requirement is
• 190 MW
• Gen 1 100 MW
• Gen 2 50 MW
• Gen 3 40 MW
• MCP 20

Region 2
Region 1
13
CMSC

• For Generator 2 in this case
• MQSI 90 Offer 20
• DQSI 50 MCP 20

14
CMSC

• For Generator 3 in this case
• MQSI 0 Offer 25
• DQSI 40 MCP 20

15
Gen 1- Constrained Off
Load 190 MW
Generator 1 100 MW 15
95 MW limit
Generator 2 100 MW 20
Generator 3 100 MW 25
150 MW transmission line limit

• Requirement is
• 190 MW
• Gen 1 95 MW
• Gen 2 55 MW
• Gen 3 40 MW
• MCP 20

Region 2
Region 1
16
Constrained Off Payment

• Generator 1
• Market Schedule 100 MW
• Dispatch 95 MW
• Offer 15 /MWh
• MCP 20 /MWh

17
Gen 2 - Constrained Off
Load 190 MW
Generator 1 100 MW 15
95MW
Generator 2 100 MW 20
Generator 3 100 MW 25
150 MW transmission line limit
100MW

• Requirement is
• 190 MW
• Gen 1 95 MW
• Gen 2 55 MW
• Gen 3 40 MW
• MCP 20

Region 2
Region 1
18
Constrained Off Payment

• Generator 2
• Market Schedule 90 MW
• Dispatch 55 MW
• Offer 20 /MWh
• MCP 20 /MWh

19
Constrained On Payment

• Generator 3
• Market Schedule 0
• Dispatch 40 MW
• Offer 25
• MCP 20 /MWh

20
Constraint Payments

• When Actual Quantity Different than Dispatch
  Quantity

21
Gen 1- Constrained Off
Load 190 MW
Generator 1 100 MW 15
95 MW limit
Generator 2 100 MW 20
Generator 3 100 MW 25
150 MW transmission line limit

• Requirement is
• 190 MW
• Gen 1 95 MW
• Gen 2 55 MW
• Gen 3 40 MW
• MCP 20

Region 1
Region 2
22
Constraint Payments

• MQSI 0 MW, DQSI40 MW, AQEI 50MW
• MCP 20 Offer 25

23
CMSC for a Dispatchable Load

• Load may be dispatched off or on
• Any time constrained and unconstrained are
  different, possibility exists for CMSC

24
CMSC for a Dispatchable Load

• E.G.
• Load A bids for 100 MW at 2,000
• Market Clearing Price 100
• Load A is dispatched to only 75 MW
• At a bid price of 2,000 Load A will be scheduled
  by the unconstrained algorithm for all 100 MW

25
CMSC for a Dispatchable Load

• Bid 2,000 MCP 100
• MQSI 100 MW, DQSI 75 MW
• CMSC OP(MQSI) - OP(DQSI) (2,000 -
  100) x 100 - (2,000 - 100)
  x 75) 1900 x 100 - 1900 x 75
  47,500
• The lost Operating Profit is 47,500

26
Negative CMSC

• CMSC payments bring the participant back to the
  market schedule operating profit
• Generally CMSC payments will be a top-up to
  restore operating profit
• Sometimes the schedule would lead to lower profit
  than dispatch instructions

27
CMSC

• CMSC payments bring the participant back to the
  market schedule operating profit
• While CMSC can be negative, it is more often a
  payment to participants
• The cost of CMSC is recovered from loads based on
  their activity in the market