Alternative ICAP Proposal
This proposal by NSTAR, directed by James Daly, outlines a strategy for improving reliability in the New England Power Pool (NEPOOL). The aim is to address the issues of operating reserves, rather than capacity. Key recommendations include implementing a Locational Operating Reserve Market, creating a region-wide ICAP market, and ensuring adequate compensation for generation resources needed for reliability. The proposed approach is expected to enhance overall grid performance while maintaining compliance with NEPOOL reliability standards.
Alternative ICAP Proposal
E N D
Presentation Transcript
Alternative ICAP Proposal NSTAR Strategy James Daly Director Electric and Gas Energy Supply (781) 441-8258
What problem are we trying to solve: Reliability • NEPOOL reliability standard is 1 day outage in 10 years • Translates to Loss Of Load Expectation (LOLE) = 0.1day/year • NEPOOL Installed Reserve is 31% of peak load in 2004-2005 • NEPOOL Required Reserve is 12.4% of peak load in 2004-2005
NEPOOL Load Growth & LOLE Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004
NEPOOL Load Growth: Installed vs. Required Reserves Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004
Boston Area LOLE: Meets criteria over 10 YearsSo does CT Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004
It is not a capacity issue.We have plenty of capacity.It’s an operating reserves issue!
Coalition Alternative Filed at FERC 03/22/2004 • Implement Locational Operating Reserve Market • Ensures that units needed for operating reserve are adequately compensated • Newly implemented region wide Forward Reserves Market cleared at $4.495/kW-month last January • Implement single region-wide ICAP market • NEPOOL historically planned for reliability on a pool wide basis • Integrates transmission planning and operating realities • Compensates all generators for comparable services • Demand curve key points set at: • 100% of Objective Capability, not 106.7% • X-intercept at 112% of Objective Capability, not 118% • Same as NYISO
Coalition Alternative (continued) • Units compensated in the Locational Operating Reserve Market are units needed for: • 2nd contingency reserve coverage • Local voltage support • Or other local operating needs • Existing units receive a transitional payment under cost-of-service type (RMR) agreements • Contract forward for new resources needed for Locational Operating Reserve Market under RFP
Coalition Alternative (Continued) • ISO/NEPOOL provides 3-year notice prior to changing the price signals established in the ICAP demand curve • Participating ICAP resources provide three-year commitment to remain on the system • No delisting allowed • Liquidated damages for failure to perform • ISO approval of maintenance schedule • New generation should be fully integrated into the grid
ISO Vs Coalition Alternative Costs Total 5 Year Costs $M ISO No Cap $2,865 ISO W/ Cap $1,591 ISO Adjusted $597 Coalition Alternative $154
Coalition March 22 filing in support at FERC: • Attorney General of Massachusetts • Attorney General of Rhode Island • Associated Industries of Massachusetts • Massachusetts Division of Energy Resources • New Hampshire Office of Consumer Advocate • NSTAR Electric And Gas Corporation • National Grid USA • Rhode Island Division of Public Utilities and Carriers • Strategic Energy LLC (in part) • Vermont Electric Power Company (in part) Filed separately but supporting in part: • Connecticut Department of Public Utility Control • Connecticut Office of Consumer Counsel
