NYISOnelson

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

Presentation Overview

 Introduction

 Market Overview

 Day-Ahead Market

 Real-Time Market

 Installed Capacity

 Transmission Congestion Contracts

 Cost-Based Products









2

NYISO in the Northeast



Hydro-

Ontario IESO Québec

27,005 MW* 35,137 ISO-

MW* New

England

28,021

MW*

New York ISO

33,939 MW*









PJM

Interconnect

144,796 MW*







Graphic not to scale * Record Peak Loads

3

NYISO Roles





 Reliability



 Markets



 Planning





4

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.



5

Markets

 Administering &

monitoring New

York’s wholesale

electricity markets

totaling $11 Billion

annually -- running

auctions that match

the buyers and

sellers of power.





6

Planning



 Conducting long-

term assessments

of New York

State’s electricity

resources and

needs and

evaluating the

feasibility of

proposed projects

to meet those

needs.



7

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









8

LBMP Zones

Hydro D

Quebec E

A - WEST

B - GENESSE

IESO C - CENTRAL

D - NORTH

B E – MHK VL

F F - CAPITL

G – HUD VL

A

H - MILLWD

I - DUNWOD

J – N.Y.C.

G K - LONGIL

B C E H

G

ISO NE

I

PJM

K

J

9

NY Capability by Fuel Type









SOURCE: NYISO 2009 Load and Capacity Data report

10

NY Generation by Fuel Type









SOURCE: NYISO 2009 Load and Capacity Data report



11

Chateauguay

New York State

Willis

Moses

Transmission System

Massena

(230 kV and above) Plattsburgh









Adirondack

Oswego

Complex

Somerset

Marcy Rotterdam

Niagara

Sta.80

New

Pannell Edic Scotland

Clay Porter Athens

Huntley Stolle Rd. Lafayette Alps

Gilboa

Leeds

Meyer



Dunkirk

Watercure Fraser

Hillside Oakdale Coopers

Pleasant

Corners

Valley

Roseton Cross

Rock

B uc hanan Sound

T avern

Legend: Millwood Cable

Homer City

Ramapo

765 kV S prainbrook

500 kV ConEd Upgrades Dunwoodie

W49St /Rainey

345 kV S hore Rd.

Farragut

230 kV G oethals

E .G arden City







Neptune



12

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

13

NYISO

Markets

NY Electricity Markets





Bilateral Day-Ahead

(forward) Market

Contracts 51 %

45%



Real

Time

4%



NYISO Markets

 Day-Ahead

 Real Time

$55+ billion in transactions since 1999

15

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)





16

ENERGY MARKET TIMELINE



Who Market Participants NYISO Market Participants NYISO

Load Forecast, Load Posting of Real-time bid submission Dispatch

What Energy Bids, Generator day-ahead deadline signals and

Offers for Energy, Reserve schedules and calculation

and Regulation and LBMPs of RT LBMPs

DADRP bids submitted for

the day-ahead market









Day Ahead Real Time

When 75 Min. Operating

5 A.M. 11 A.M.

prior to Hour

Op. Hr.



How SCUC RTC & RTD



17

DAY AHEAD MARKET



Output

Input • Least Cost

• Bids/Offers Solution

• Forecasts

SCUC • Meet reliability

requirements



Bids & Offers Post Results

Security • Clearing Prices

• GEN Supply Constrained

• LSE • LBMP (GEN & Zonal)

Economic • Reserve

• Virtual Commitment

• Regulation • Regulation

and Dispatch • GEN Schedule

• Reserve

• Bi-laterals • Transmission Schedule

• Import/Exports • Bilateral Transactions

• Demand Response • Reserve Commitment

• Regulation Commitment

18

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

19

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









20

Four Pass Methodology



 Bid load pass (Including LRR

evaluation)

 BPS Forecast pass

 Forecast Re-dispatch pass

 Bid Re-dispatch pass









21

REAL TIME MARKET



Input Output

• RT Offers • Least Cost

• Updates RTC Solution

• DAM • Meet reliability

Commitments

RTD requirements



Post Results

Offers

Real Time Commitment • Clearing Prices

• RT Supply

Real Time Dispatch • LBMP (GEN & Zonal)

• Imports/Exports

Software • Reserve, Regulation

• Commitments, x15min, 3hrs

Updates

• Transactions

• Transmission Model

• Generator---15min

• Zonal Load Forecast

• Dispatch, x5min, 1 hr

• Changes in Operation

• Energy---5 min

• Reserve---5 min

• Regulation---6 sec

22

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)

23

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



24

RT/DAM LBMP Results

DAM LBMP (hourly): RT LBMP (RTD - 5 min):

Generator Bus Generator Bus

NYISO Zone 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

25

RT/DAM AS Results

DAM AS (hourly): RT AS (RTD - 5 min):

Location Location

Product 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

26

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





27

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

28

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





29

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









30

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

* Denotes locational reserve 30 Minute Reserve – 270-540 MW

categories that reflect a desire for

dispersed reserves but are not

operational requirements under the

NYSRC reliability rules.









31

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 NYISO’s 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







32

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.





33

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

34

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



35

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





36

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

37

Cost-Based Products





 Voltage Support Services



 Black Start Service









38

Voltage Support Service (VSS)

 Reactive Power Service

 VSS Suppliers Receive Monthly

Payments based on Annual

Rate of $3,919/MVar

 Requirements:

 Generator’s MVAR testing and capability established

 Auto Voltage Regulator required

 NYISO coordinates bus voltage profiles

 TOs responsible for local control in their network





39

Black Start Service

 Black Start Restoration Plan

 Fixed payment based on provider’s costs

 NYISO selects generating resources with black

start capability based on:

 Electrical location in the grid

 Startup time St. Lawrence

Chateauguay

Willis

Moses





 Maximum Response rate Massena

Plattsburgh









 Maximum Power output Oswego

Complex

Adirondack





Niagara Somerset



 Currently three providers Sta.80

Pannell Clay

Marcy





Edic Porter

Rotterdam



New

Scotland

Huntley Stolle Rd.

Meyer

Lafayette Gilboa Alps

Leeds





Dunkirk

Watercure Fraser

Hillside Oakdale Coopers

Corners Pleasant

Valley

Roseton

Rock

Buchanan

Tavern

Legend: Millwood

Homer City Ramapo

765 kV Sprainbrook

500 kV Dunwoodie

W49St/Rainey

345 kV Shore Rd.

Farragut

230 kV Goethals

E.Garden City









40

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)







41

More Information



 NYISO Home Page

 www.nyiso.com





 New York Market Orientation Course

(NYMOC)

 www.nyiso.com/public/services/market_training









42

The New York Independent System Operator (NYISO) is a not-for-profit

corporation that began operations in 1999. The NYISO operates New

York’s bulk electricity grid, administers the state’s wholesale electricity

markets, and conducts resource and reliability planning for the state’s

bulk electricity system.

__________________________________________________________





www.nyiso.com