Download
1 / 10
100 likes | 214 Vues
This document details the April 2002 discussion among the ISO-NE Markets Committee regarding the Reliability Must Run (RMR) amendments and the proposed Constraint Relief Offer Mitigation (CROM) pricing mechanism. Key points include staff guidance on market rule changes, the importance of developing a Connecticut Proxy option, and the comparison of various market approaches. The committee discussed concerns over incentives for new investments and the approach to mitigating offers in congested areas while ensuring competitiveness among generators.
E N D
MR 17 Discussion Bob Ethier, ISO-NE NEPOOL Markets Committee Westborough, MA April 17, 2002
Commission Staff Guidance • Pre-filing meeting 4/11 on RMR Amendments to MRP 17 • Outlined rule as approved by MC • Outlined generator alternative and NPC motion to table
Commission Staff Guidance • FERC Staff reaction • Encouraged development of CT Proxy option • Noted that existing precedent is not the “final word” • PJM approach not sufficient • Apparent interest in MISO proposal (150% of Reference price or LMP average) • Standard market design guidance will come later • Staff sees Commissioners as • Ready to referee policy issues • Not expecting NPC consensus on “hard” issues • Very concerned about incentives for new investment
Plan for Action • ISO will lead Markets Committee discussion of alternative proposed rule • New “Proxy CT” screen price for areas identified in advance • Mitigation agreements available only for units with incremental operating costs above “Proxy CT” screen price • Cost-of-Service option still available • Default measures for infrequent constraints
Alternative Proposal • Idea: Limit offer mitigation in congested areas to cost of alternative solution for alleviating constraint • Caveat: Idea fleshed out by ISO Staff for discussion only • Calculate ‘Constraint Relief Offer Mitigation’ price (CROM) • Per MWh CROM would be marginal production cost of generic CT plus all net fixed costs levelized over hours during which a constraint has been binding • CROM would mean that all offers in constrained areas below CROM threshold would not be mitigated • Offers above threshold would be mitigated to MC+10%
Alternative Proposal: An example • CT capital cost of $72k/MW-yr • ICAP revenues of $14k/MW-yr • Reserve market revenues of $4k/MW-yr • Assume CT only runs for congestion and reserves • If reserve payments reflect opportunity costs, unit should be indifferent between providing reserves and energy • Net fixed cost requirement of $72k-$14k-$4k=$54k • This fixed cost requirement is divided by the annual number of constrained hours for each interface to determine the interface-specific CROM
Alternative Proposal: An example • Calculation of CROM for a range of annual hours for which a constraint is binding:
Alternative Proposal: Some questions • Will congested areas always pay CROM price? • If congestion is uncertain, generators must balance offering at CROM price with foregoing potential in-merit revenues => incentive to offer below CROM price, though not at MC • Presence of one or more competitors will provide competition (assuming each has MC below COMF) • Will generators be limited to CROM revenues? • No, potentially will receive LMPs above CROM on days of high pool prices
Alternative Proposal: Some questions • What about interfaces which are seldom constrained? • Probably should have a limit on the minimum annual hours used for CROM calculation • Special rules for transmission maintenance or infrequent constraints which cause temporary congestion (NYISO plan?) • What number of annual hours should be used? • A three year average of hours the interface is constrained • Can units game the system by extending minimum run times, low operating limits, etc.? • Annual hours used in COMF calculation could be hours that units ran for congestion in each area, or physical parameters requirement.
