NYISO Market Overview

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NYISO Market Overview
Emilie Nelson Manager, Operations Performance
Analysis New York Independent System Operator
Transmission and Wholesale Markets School Edison
Electric Institute Washington, DC June 30, 2009
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Presentation Overview

• Introduction
• Market Overview
• Day-Ahead Market
• Real-Time Market
• Installed Capacity
• Transmission Congestion Contracts
• Cost-Based Products

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NYISO in the Northeast
Hydro- Québec 35,137 MW
Ontario IESO 27,005 MW
ISO- New England 28,021 MW
New York ISO 33,939 MW
PJM Interconnect 144,796 MW
Graphic not to scale
Record Peak Loads
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NYISO Roles

• Reliability
• Markets
• Planning

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Reliability

• Managing the efficient flow of power on nearly
  10,900 miles of high-voltage transmission lines
  -- from more than 500 generating units -- on a
  minute-to-minute basis, 24 hours-a-day, seven
  days-a-week.

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Markets

• Administering monitoring New Yorks wholesale
  electricity markets totaling 11 Billion annually
  -- running auctions that match the buyers and
  sellers of power.

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Planning

• Conducting long-term assessments of New York
  States electricity resources and needs and
  evaluating the feasibility of proposed projects
  to meet those needs.

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NY Facts And Figures

• 19.2 million people

• Demand concentrated in metropolitan southeast

• Diverse fuel mix

• Regional wind capacity leader

• Over 400 Market Participants

• Record peak -- 33,939 MW (Aug. 2, 2006)

• Over 500 generating units modeled

• 10,892 miles of high voltage transmission

• 2009 required Installed Capacity -- 39,529 MW

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LBMP Zones
Hydro Quebec
IESO
ISO NE
PJM
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NY Capability by Fuel Type
SOURCE NYISO 2009 Load and Capacity Data report
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NY Generation by Fuel Type
SOURCE NYISO 2009 Load and Capacity Data report
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Athens
Cross Sound Cable
ConEd Upgrades
Neptune
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Reliability Regulation
NYISO must comply with all Reliability Rules
established by

• North American Electric Reliability Corporation
  (NERC)
• Independent, self-regulatory, not-for-profit
  organization with mission to improve the
  reliability and security of the bulk power system
  in the U.S., Canada and part of Mexico
• Compliance with NERC Reliability Standards became
  mandatory and enforceable in the U.S. in 2007

• Northeast Power Coordinating Council (NPCC)
• Includes New York, New England, Ontario,
  Québec, and the Maritimes
• Formed as voluntary, not-for-profit, regional
  reliability organization in 1966
• Restructured in 2007 to act as Regional
  Entity to NERC for the Northeast

• New York State Reliability Council (NYSRC)
• Not-for-profit organization established in
  1999
• Responsible for Reliability Rules specific to
  the New York State Power System
• U.S. law authorizes New York State to impose
  more stringent reliability standards
• New York PSC adopted NYSRC Reliability Rules

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NYISO Markets
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NY Electricity Markets
Day-Ahead Market 51
Bilateral (forward) Contracts 45
Real Time 4

• NYISO Markets
• Day-Ahead
• Real Time
• 55 billion in transactions since 1999

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Market Overview

• Two-Settlement System Day-Ahead and Real-Time
  Markets
• Bid Based Security-Constrained Economic Dispatch
  (SCED) and Commitment (SCUC)
• Locational Based Marginal Pricing (LBMP)
• Co-optimization of Energy, Operating Reserves and
  Regulation
• Scarcity pricing for operating reserves
• Bid Production Cost Guarantees (Uplift)
• Virtual Bidding
• Transmission Congestion Contracts (TCC)
• Installed Capacity Markets (ICAP)
• Demand Side Participation
• Market Power mitigation with conduct and impact
  tests and Automated Mitigation Procedure (AMP)

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ENERGY MARKET TIMELINE
Who
Market Participants
Market Participants
NYISO
NYISO
Real-time bid submission deadline
Load Forecast, Load Energy Bids, Generator Offers
for Energy, Reserve and Regulation and DADRP bids
submitted for the day-ahead market
Posting of day-ahead schedules and LBMPs
Dispatch signals and calculation of RT LBMPs
What
Real Time
Day Ahead
Operating Hour
75 Min. prior to Op. Hr.
When
5 A.M.
11 A.M.
How
SCUC
RTC RTD
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DAY AHEAD MARKET

• Input
• Bids/Offers
• Forecasts

• Output
• Least Cost Solution
• Meet reliability requirements

SCUC

• Post Results
• Clearing Prices
• LBMP (GEN Zonal)
• Reserve
• Regulation
• GEN Schedule
• Transmission Schedule
• Bilateral Transactions
• Reserve Commitment
• Regulation Commitment

• Bids Offers
• GEN Supply
• LSE
• Virtual
• Regulation
• Reserve
• Bi-laterals
• Import/Exports
• Demand Response

Security Constrained Economic Commitment and
Dispatch
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Day-Ahead Market

• Security Constrained Unit Commitment (SCUC)
  scheduling software optimizes for least cost
  solution
• Co-optimizes energy and ancillary service bids
  (reserve regulation)
• Hourly Locational Based Marginal Prices (LBMP)
• Binding forward contracts issued to Suppliers and
  Loads
• Bilateral transaction scheduling
• Installed capacity suppliers are required to bid
• Virtual resources (zonal supply/demand) allowed
  to bid into DAM

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Day-Ahead Market (cont.)

• DAM operations began in December 1999
• Significant redesign in February 2005
• Five pass methodology
• Bid load pass
• BPS Forecast pass
• LRR Forecast pass
• Forecast Re-dispatch pass
• Bid Re-dispatch pass

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Four Pass Methodology

• Bid load pass (Including LRR evaluation)
• BPS Forecast pass
• Forecast Re-dispatch pass
• Bid Re-dispatch pass

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REAL TIME MARKET

• Input
• RT Offers
• Updates
• DAM Commitments

• Output
• Least Cost Solution
• Meet reliability requirements

RTC RTD

• Post Results
• Clearing Prices
• LBMP (GEN Zonal)
• Reserve, Regulation
• Commitments, x15min, 3hrs
• Transactions
• Generator---15min
• Dispatch, x5min, 1 hr
• Energy---5 min
• Reserve---5 min
• Regulation---6 sec

• Offers
• RT Supply
• Imports/Exports
• Updates
• Transmission Model
• Zonal Load Forecast
• Changes in Operation

Real Time Commitment Real Time Dispatch Software
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Real-Time Market

• External transaction and generation suppliers may
  adjust bids hourly for consideration in the
  Real-Time Market evaluation to address in-day
  operating conditions
• Real-Time Market scheduling software re-optimizes
  energy, reserve and regulation bids every 5
  minutes
• Provides for commitment of quick start
  resources including 10 and 30-minute gas turbines
• Produces 5-minute Locational Based Marginal
  Prices (LBMP)

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Real-Time Market (cont.)

• Real-Time Commitment (RTC)
• Security constrained unit commitment dispatch
  software
• Co-optimizes to simultaneously solve load,
  reserves regulation req.
• Runs every 15 minutes, optimizes over next 2 ½
  hour period
• Issues binding commitments for units to start
• Real-Time Dispatch (RTD)
• Multi-period security constrained dispatch
• Co-optimizes to simultaneously solve load,
  reserves regulation req.
• Runs approximately every 5 minutes
• Optimizes over next 60 minute period
• Issues binding dispatch instructions for units to
  operate

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RT/DAM LBMP Results
DAM LBMP (hourly) Generator Bus NYISO Zone
RT LBMP (RTD - 5 min) Generator Bus NYISO Zone

• Generators
• Paid the LBMP (where they inject power) at the
  Generator Bus.
• Load
• Charged the Zonal LBMP based where the Load is
  located.
• Zonal LBMP is a Load Weighted Average for the
  Zone.

The cost to provide the next MW of Load at a
specific location in the grid
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RT/DAM AS Results
DAM AS (hourly) Location Product
RT AS (RTD - 5 min) Location Product

• Generators
• All flexibly dispatched generators must offer
  operating reserves.
• Paid the Clearing Price for the location and
  service provided.
• Performance factors included in real-time
  settlement.
• Load
• Fully purchase AS in Day-Ahead Market. Real-Time
  balancing lies with suppliers.

Clearing prices incorporate both the lost
opportunity cost of the marginal suppliers and
the availability bid
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Guarantee Payments (Uplift)

• BPCG Bid Production Cost Guarantee (BPCG)
• Ensuring recovery of sufficient revenue to cover
  as-offered costs
• Meet qualifying criteria
• Based on Submitted bid costs less Total Revenue
• DAM and/or RT
• Types
• Power Suppliers (internal)
• Transaction Customers (imports)
• DAM Margin Assurance
• Guarantees Generator's DAM margin (profit) is not
  reduced by balancing market settlements in RT due
  to reliability scheduling

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Generator Bidding Flexibility

• Fully featured market bidding capabilities
• Hourly bidding flexibility
• Startup Cost
• Minimum generation bid and MW
• Incremental energy in 11 bid/MW pairs
• Normal and emergency operating limits
• Operating reserve bids
• Regulation reserve bids and availability
• Self-scheduling and economic scheduling options
• Response rates for normal, emergency and
  regulation operation
• Minimum run time, minimum down time, maximum
  starts per day

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Load Bidding Flexibility

• Fully featured market bidding capabilities
• Hourly bidding flexibility
• Fixed load requirements
• Bilateral load
• Price capped load in 3 bid/MW pairs
• Demand Response with all generator bid
  characteristics

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Virtual Trading

• Virtual Supply offers and Virtual Load bids are
  placed in DAM only.
• Financial Transactions only
• No effect on RT physical energy consumption
• Does not compromise physical commitment of energy
  resources for system reliability

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Reserve Regulation Requirements
NYCA Wide Reserve Values Total Spinning Reserve
600 MW Total 10 Min Reserve 1200 MW 30 Minute
Reserve 1800 MW NYCA Wide Regulation
Values Regulation - 175 - 275 MW
Eastern (East of Central East) Reserve Values
Total Spinning Reserve 300 MW Total 10 Min
Reserve 1000 MW 30 Minute Reserve 1000 MW
Long Island Reserve Values Total Spinning
Reserve 60 MW Total 10 Min Reserve 120
MW 30 Minute Reserve 270-540 MW
Denotes locational reserve categories that
reflect a desire for dispersed reserves but are
not operational requirements under the NYSRC
reliability rules.
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Wind Integration

• Summer 2008 Established centralized third-party
  wind power forecasting tools and incorporated
  predictions into Day-Ahead and Real-Time Market
  tools to improve commitment and scheduling of
  resources.
• Summer 2009 Implemented Wind Resource
  Management to incorporate the economic
  preferences of each wind facility within the
  NYISOs real-time dispatch process.
• This modification minimizes necessary energy
  limitations and duration, identifies the most
  efficient resource to limit, incorporates
  instructions into market clearing prices and
  avoids manual out-of-market actions.
• Future Enhancements - NYISO is developing
  internal tools to alert system operators of
  potential for significant wind ramp events.
• Sudden large changes in wind speeds and output
  levels
• High wind speeds approaching turbine cut-out
  levels

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Limited Energy Storage Resources (LESR)

• LESR are generators offering Regulation Service
  only, characterized by limited energy storage or
  the inability to sustain continuous operation for
  a minimum period of one hour.
• Includes flywheel and battery storage
  technologies.
• Energy levels will be managed by ISO to maximize
  market participation within the limits of
  scheduling and operational needs.

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Demand Response

• Reliability-based
• ICAP Special Case Resources (SCR)
• Receive capacity payments in advance to curtail
  power usage on request
• Emergency Demand Response Program (EDRP)
• Provides payments for voluntary power reductions
• Economic-based
• Day-Ahead Demand Response Program (DADRP)
• Allows for load reductions to be bid into the
  Day-Ahead Market
• Demand-Side Ancillary Service Program (DSASP)
• Allows for resources with flexible operation and
  automated controls to participate in Day-Ahead
  and Real-Time Ancillary Services markets

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Installed Capacity (ICAP)

• Role of Capacity Market
• Ensures Resource Adequacy
• Supports market signals for investment
• Suppliers offer capacity based on proven ability
  to supply
• Loads procure capacity based on forecasted peak
  loads, plus reliability margins, with locational
  requirements
• 16.5 Reserve Margin for Capability Year
  2008/2009
• New York City must procure locally 80 of
  forecasted peak
• Long Island must procure locally 97.5 of
  forecasted peak

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Transmission Congestion Contracts (TCCs)

• Financial instrument
• Available between any generator, proxy or zonal
  location
• TCCs are fully funded by TOs
• Financial obligation right to collect and
  obligation to pay congestion rents
• Used to hedge transmission system congestion
  costs
• Settled in the Day-Ahead Market
• Do not have to participate in the energy market

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Transmission Congestion Contracts (TCCs)

• MPs purchase TCCs via NYISO TCC Auctions
• Centralized Auction
• 1 year and 6 month durations available
• Monthly Reconfiguration Auction
• 1 month durations available
• Fixed price TCCs available for 5 and 10 year
  durations for historical loads
• Incremental TCCs may be awarded for transaction
  expansion
• Owners of TCCs can sell TCCs
• Monthly NYISO TCC reconfiguration auctions
• Secondary Market
• NYISO deals with Primary Holders only

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Cost-Based Products

• Voltage Support Services
• Black Start Service

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Voltage Support Service (VSS)

• Reactive Power Service
• VSS Suppliers Receive Monthly
• Payments based on Annual
• Rate of 3,919/MVar
• Requirements
• Generators MVAR testing and capability
  established
• Auto Voltage Regulator required
• NYISO coordinates bus voltage profiles
• TOs responsible for local control in their network

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Black Start Service

• Black Start Restoration Plan
• Fixed payment based on providers costs
• NYISO selects generating resources with black
  start capability based on
• Electrical location in the grid
• Startup time
• Maximum Response rate
• Maximum Power output
• Currently three providers

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NYISO Tariffs
Approved by the Federal Energy Regulatory
Commission (FERC)

• Market Administration and Control Area Services
  Tariff (Services)
• Administration of competitive markets for sale
  and purchase of Energy, Capacity and Ancillary
  Services
• Payments to Suppliers who provide Services,
  including services related to reliability of the
  NYS Power System

• Open Access Transmission Tariff (OATT)
• Addresses terms and conditions of Control Area
  Services and Transmission Services provided by
  the New York ISO
• Sale of Transmission Congestion Contracts (TCCs)

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More Information

• NYISO Home Page
• www.nyiso.com
• New York Market Orientation Course (NYMOC)
• www.nyiso.com/public/services/market_training

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The New York Independent System Operator (NYISO)
is a not-for-profit corporation that began
operations in 1999. The NYISO operates New Yorks
bulk electricity grid, administers the states
wholesale electricity markets, and conducts
resource and reliability planning for the states
bulk electricity system. ________________________
__________________________________ www.nyiso.com