Understanding the New York Independent System Operator: Structure and Operations

1. New York Independent System Operator Welcome

2. New York Independent System Operator (Pre-NYISO) Regulated Market • Physical contracts • Regulated industry • Cost Based System • Two Party Deals • Bundled Services • Members sell Firm Transmission Capacity • Losses • Scheduled in MWH’s (megawatt hours) • Fixed % • Balanced (hourly or Monthly)

3. New York Independent System Operator NYISO De-regulated Wholesale Electric Market • Financial • Deregulated • Price Based System • Unbundled Services • NYISO OATT (Open Access Transmission Tariff) • Marginal Losses paid in $’s • Balanced every 5 minutes • Transmission Congestion Contracts (TCC’s)

4. New York Independent System Operator New York Independent System Operator

5. New York Independent System Operator New York Independent System Operator • A not for profit corporation established to: • Maintain safety and reliability of New York State transmission system • Schedule and coordinate power transactions

6. New York Independent System Operator New York Independent System Operator • Provide open access to New York State transmission system • Provide non-discriminatory treatment for all market participants • Provide meaningful involvement by market participants in the oversights of New York State transmission system • Act as a clearinghouse for transactions by market participants

7. New York Independent System Operator Load Serving Entity

8. New York Independent System Operator Load Serving Entity(i.e. Freeport Electric) • Responsible for providing energy, capacity and ancillary services • Retail customers liaison with NYISO • Submits (schedules) forecasted retail loads for which it is responsible to the NYISO two days ahead and five days out • Submits actual metered load data to the NYISO

9. New York Independent System Operator Ancillary Services

10. New York Independent System Operator Ancillary Services • Ancillary Services – necessary to support the transmission of energy from generator to loads, while maintaining reliable operation of the power system • Scheduling, System Contract and Dispatch • Reactive Supply and Voltage Support • Regulation and Frequency Response • Energy Imbalance (mismatches between day ahead schedules and real-time) • Operating Reserve (back-up generation) • Black Start (generators starting without outside electric supply following a system blackout)

11. New York Independent System Operator Locational Based Market Price

12. New York Independent System Operator Locational Based Market Price • The price of energy at each of the 11 zones of the New York State Transmission System • Equivalent to the cost to supply the next increment of load in the zone • Differences in LBMP reflect cost of transmission associated with system congestion • Price for NYISO transmission losses • Energy imbalance charges

13. New York Independent System Operator Day Ahead Market

14. New York Independent System Operator Day Ahead Market • Schedules the most economic units available • Hour by hour load schedules and generator bids • Accepted load schedules and generator bids become forward contracts • Prices locked in • Sets congestion rents for Transmission Congestion Contracts (TCC’s) • Closes at 5:00AM the day before schedule • Accepted bids posted at 11:00AM the day before

15. New York Independent System Operator Hour Ahead Market

16. New York Independent System Operator Hour Ahead Market • Advisory – Generators only • Projection of next hour prices • Prices not locked in • Transaction accepted are settled in Real Time Market (RTM) • Closes 90 minutes prior to the hour • Looks ahead three hours • Accepted bids posted 30 minutes prior to the hour

17. New York Independent System Operator Real Time Market

18. New York Independent System Operator Real Time Market • Dispatches generation to serve the real time load • Real-time computer program adjusts the output of dispatched generators • Final settlement for DAM and HAM schedules where actual generation or sales differ from DAM) • Operated to match actual load to available generation

19. New York Independent System Operator Transmission Congestion Contract

20. New York Independent System Operator Transmission Congestion Contract • A financial hedge of transmission congestion, (I.e. protection from congestion charges) • Financial equivalent of firm transmission rights • Allows holder to collect congestion rent from the NYISO associated with transmitting power from point of injection to point of withdrawal • Associated with the physical capability of transmission system

21. New York Independent System Operator Installed Capacity

22. New York Independent System Operator Installed Capacity • Available resources which ensure that the probability that load exceeds available generation occurs no more than one day in 10 years • ALL LSE’s (load serving entities) in New York must maintain ICAP (locational ICAP) • Each LSE is assigned an ICAP requirement predicated on its peak demand coincident with the transmission District peak demand • If a LSE does not fully meet its ICAP requirement, it must purchase the deficiency through NYISO auctions

23. New York Independent System Operator Thank You