SMD and Efficiency Programs

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SMD and Efficiency Programs

• Standard Market Design (SMD)
• Implemented March, 2003
• Major feature, locational assignment of costs and
  locational price signals
• Location of load and generation can affect total
  revenues to generators and total costs to
  customers
• Goal is to improve system-wide efficiency, and
  hence lower costs, through response of both load
  and generation to locational price signals

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SMD and Efficiency Programs

• NE control area contains about 900 separate,
  geographically dispersed pricing points called
  Nodes.
• A unique Locational Marginal Price (LMP) is
  established at each Node
• LMP at each Node has three components
• Energy
• Losses
• Congestion
• Energy component is the same at each Node but
  congestion and loss components can, and often do,
  vary
• Hence LMP can be different at each Node
• Referred to as geographic price separation or
  geographic basis

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SMD and Efficiency Programs

• Each generator in the ISO NE Control Area (CA)
  delivers its output to a specific Node
• Each generator sells all of its output to the ISO
  at the posted LMP for its delivery Node
• Generators will be paid more or less for the same
  volume of output depending on their location or
  Node

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SMD and efficiency Programs

• Load Zones are aggregations of Nodes
• Each Node is grouped into one of eight Load Zones
• Load Zones cover broader geographical areas
• VT is designated as a single Load Zone
• All Load within a Zone pays the same Zonal LMP
  for energy

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SMD and Efficiency Programs

• Vermont Load Zone comprises about 70 Nodes
• 26 of these Nodes are designated as Pricing Nodes
• Vermont Zonal LMP is calculated as the weighted
  average of LMPs at the 26 Pricing Nodes
• Thus LMP at Pricing Nodes directly affects Zonal
  LMP
• Power flows at non-pricing nodes can indirectly
  affect Zonal LMP via impacts on the LMP at the
  Pricing Nodes

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SMD and Efficiency Programs

• Graph on next slide shows average prices at each
  of the 25 Pricing Nodes contained in VT Load Zone
  
• Prices reflect average hourly LMP over entire SMD
  period starting in March, 2003
• Data show persistent price separation across
  Zonal Pricing Nodes

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SMD and Efficiency Programs

• Pricing Nodes are assigned weights based on load
  share
• Contribution of Pricing Node LMP to Load Zone LMP
  depends on both the Node weight and the Node LMP
• Focusing Efficiency measures at high LMP Pricing
  Nodes can affect Load Zone LMP in two ways
• Can reduce load share at the Node and hence the
  weighted contribution of the Node to Zonal LMP
• Can reduce LMP at the Price Node

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SMD and Efficiency Programs

• Benefits of lowering the LMP at the Load Zone
  redound to all Vermont electricity consumers
• Thus, can create geographically disperse benefit
  by targeting efficiency programs to high LMP
  Pricing Node areas
• Prior graph indicates widest price separation of
  about 2.00 per Mwh
• May not seem like much, but if average Zonal LMP
  could be reduced by .25 per Mwh, Vermont
  electricity consumers would realize annual
  benefit of over 1 Million

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SMD and Efficiency Programs

• Real benefits can be derived from clever response
  of both load and generation to locational price
  signals
• Targeted efficiency can have an impact
• It is difficult to understand and model causal
  chain between changes in load or generation at
  specific Pricing Nodes and ultimate impact on
  Load Zone LMP
• But we do know that
• Pricing Nodes in VT exhibit different prices due
  to congestion and losses
• Changes in amounts of load or generation settled
  at Nodes can affect Nodal prices and/or weights
• Changes in Nodal prices and/or weights will
  affect the Zonal price paid by all VT load
• Along with Zonal price impacts, location
  decisions can affect the level of TD deferral
  benefits

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SMD and Efficiency

• Further analysis will be needed to confidently
  estimate the Zonal price benefits that might
  result from geographically targeting specific
  efficiency measures
• Structured analysis on impacts of locational
  decisions can be conducted to help inform and
  guide the design of efficiency programs
• CV is conducting on-going analysis of SMD
  dynamics to improve its resource decision making
  and is interested in sharing information and
  analysis with other parties

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Nodal Identification

• 2437 LD.BARRE_VT34.5
• 4444 LD.SO_HERO 115
• 4445 LD.BERLINVT34.5
• 4446 LD.STJHNSBY115
• 4447 LD.IRASBURG48
• 4448 LD.HIGHGATE48
• 4449 LD.STALBANS34.5
• 4450 LD.E_FAIRFX34.5
• 4451 LD.ESSEX 34.5
• 4453 LD.EAST_AVE13.8
• 4454 LD.QUEENCTY34.5
• 4455 LD.QUEENCTY13.8
• 4456 LD.NEW_HAVN44
• 4457 LD.MIDLEBRY44

• 4458 LD.BLISVILL115
• 4459 LD.N_RUTLND44
• 4460 LD.ASCUTNEY44
• 4461 LD.FLORNCE 44
• 4462 LD.WINDSOR 115
• 4463 LD.HARTFDVT44
• 4464 LD.CHELSEAV115
• 4466 LD.MIDDLESX34.5
• 4468 LD.BENINGTN115
• 4469 LD.BENINGTN69
• 4470 LD.COLD_RV 115