CONNECTION A Newsletter for Market Participants

Transcription

1 FOURTH QUARTER 2010 New York ISO CONNECTION A Newsletter for Market Participants Sufficient Electricity Supply Forecast for Winter Winter can pose many challenges in the Empire State, but a sufficient supply of electricity is not expected to be among those challenges in the winter season. The NYISO forecasts that New York s winter peak usage will reach 24,289 megawatts (MW). The forecast is 215 MW (1%) higher than the winter peak of 24,074 MW that occurred on December 17, In this issue MPs assigned CRD contacts 3 ISO/RTO Report 4 Windpower Thrives 5 Holiday Lights 6 The electric system needs surplus power supplies to guarantee that sufficient electricity is available in the event of unanticipated power plant outages or unexpected increases in power consumption. With a total available supply of 40,619 MW, New York has a capacity margin of 16,330 MW, or 67.2% for the winter season. The New York State Reliability Council (NYSRC) set a minimum installed reserve margin of 18% for the period of March 2010 through April The NYSRC develops the reliability rules that must be complied with by the NYISO and the companies that produce and deliver power in New York State. While the upcoming winter peak is expected to be slightly higher than last winter s peak, this winter s forecast is 1,252 MW (5%) lower than the record winter peak of 25,541 MW set on December 20, New York s electricity system experiences its greatest demand during summer months due in large part to the power consumed by air conditioning and cooling systems. According to the United States Energy Information Administration, fewer than 7% of New York households rely on electricity as the main source of home heating, while nearly 70% use air conditioning.

2 Letter from Steve Whitley President and CEO Stephen G. Whitley Dear Market Participants, As 2010 draws to a close and we take a look back at the past year, we can clearly see the ability of the NYISO -- working in close cooperation with Market Participants -- to adapt and change to the evolving conditions of the economy and energy needs of New York. The NYISO s success is based on open dialog between the NYISO and its stakeholders, and nearly everything we do is a result of this close collaboration. This year we made significant progress in refining and advancing the proposals for Broader Regional Markets. The many technical conferences held throughout the region provided valuable forums to discuss the array of the issues necessary for us to present FERC with a workable framework. We also increased our customer focus in We completed several successful initiatives in the Customer Relations area to better serve Market Participants needs. We created a position of Consumer Interest Liaison as one step in our ongoing effort to raise awareness of consumer interests within the company and in our shared governance process. Another big step for the NYISO in 2010 was the signing of the Smart Grid Investment Grant agreements with the U.S. Department of Energy and New York Transmission Owners. The federal funds will support a $75 million project that involves the creation of a statewide Phasor Measurement Network and the installation of capacitor banks in various locations throughout t the state. It is important to recognize the NYISO s record of reliable system operations in New York. New Yorkers consumed 17,312 gigawatt-hours of electricity ectricity in July, the highest monthly usage on record. July also saw one of the state s highest peaks when demand reached ed 33,452 megawatts atts ts on July 6. The power kept flowing thanks to the skill and dedication of the NYISO s superb system operators. Over the past decade, e, reliability has been en sustained and enhanced with sound market design and comprehensive system stem planning, as the resources available to serve New York s electricity needs have expanded. More than 7,800 MW of new generation capacity, nearly 1,300 MW of new interstate transmission capability and over 2,200 MW of demand response have been added since While 2010 was a busy and productive year, there is a lot on our plate for 2011, and we look forward to another year of success with the active collaboration of our stakeholders. Sincerely, 2

3 CONNECTION Market Participants Assigned CRD Contacts In addition to initiating help tickets through the NYISO website or calling the help-line, Market Participants may now contact an assigned NYISO Customer Relations Department (CRD) representative directly. As of December 1, 2010, each entity registered with the NYISO has been assigned a customer representative. NYISO customer representatives have reached out to the main contacts of their assigned Market Participants to introduce or reintroduce themselves. Any individual working for an entity registered with the NYISO may contact that entity s customer representative directly, or ask to be transferred when calling via the x6060 help desk. A list of representatives and their assigned Market Participants is available on the NYISO website. This is something many Market Participants have asked for, and we are happy to be able to accommodate them, said Roger Kirkpatrick, Manager of the Customer Relations Department. This will give our reps the ability to better understand the companies they work with, prepare them to provide more individualized service, and help them identify adverse trends that may be impacting their customers. This is not the first time the NYISO s customers were assigned CRD representatives. Market Participants had assigned representatives from the Customer Relations Department until December 2006 when the department structure was switched to a tiered system. The department will continue to maintain the tiered approach to expedite the process of responding to customer inquiries. Demand Curve Revisions Filed with FERC On November 30, the NYISO filed tariff revisions with the Federal Energy Regulatory Commission (FERC) to implement revised Installed Capacity (ICAP) Demand Curves for the next three capability years beginning on May 1, A copy of the filing is available on the NYISO website. Demand Curves have been used for many years in the NYISOadministered ICAP Spot Market Auctions and are a central element to the overall design of the NYISO s capacity market. Separate Demand Curves are established for the New York City, Long Island, and NYCA capacity zones. The NYISO is required to perform a review of the Demand Curves every three years to determine the parameters of the Demand Curves for the next three capability years. The capability years covered by the proposed revision are 2011/2012, 2012/2013, and 2013/2014. By providing a mechanism to value additional capacity beyond the minimum requirements, the Demand Curves are intended to reduce price volatility, provide an incentive for the continued development of generation, and ultimately improve power system reliability. The proposed ICAP Demand Curves represent the outcome of an extensive stakeholder process and an exhaustive analysis by the NYISO s consultants, staff, and Board of Directors, as well as input from the NYISO s independent Market Monitoring Unit. The NYISO anticipates that FERC will act on the filing by February 1,

4 ISOs/RTOs Report Performance Metrics to FERC The NYISO was one of six independent system operators (ISOs) and regional transmission organizations (RTOs) that jointly compiled a metrics report for the Federal Energy Regulatory Commission (FERC). The 2010 ISO/RTO Metrics Report was submitted to FERC on December 7, and provides extensive data on grid operations and power markets in the ISO/RTO regions. Prepared at FERC s request, the report includes more than 50 separate metrics providing information on electric system reliability, wholesale electricity market benefits and the organizational effectiveness of the six ISOs/ RTOs under FERC jurisdiction. In addition to the NYISO, the report features information from the California Independent System Operator, ISO New England, Midwest Independent Transmission System Operator, PJM Interconnection, and Southwest Power Pool. The wide array of information provided by the report illustrates the transparency of ISO/RTO operations and markets, said Stephen G. Whitley, NYISO President and CEO and chair of the ISO/RTO Council. Overall, the report shows that ISOs/RTOs are operating the grid reliably, administering markets openly and efficiently, advancing public policy energy objectives, and enabling demand response and energy efficiency. In New York, the metrics will add to our collaborative efforts with stakeholders to continuously measure and enhance the NYISO s performance. The report was compiled as part of FERC s efforts to develop standardized measures to track the performance of grid operations and power markets in ISO/RTOs and other regions of the nation. The ISOs/RTOs noted that the report s data should be viewed in context, given significant differences in the geographic territories served by the grid operators, the regional reliability requirements, the unique components of market designs, the composition of available power resources, and other variables. The report complements other mechanisms in place to measure ISO/RTO performance, including other detailed information submitted to FERC annually including the State of the Market Report for each ISO/RTO, FERC s annual State of the Market Report, and reporting measures developed by the individual ISOs/RTOs. A copy is available for download from the ISO/RTO Council website, ISO/RTO Headquarters Installed Generation (in megawatts) Miles of Transmission Lines Population (in millions) CAISO Folsom, CA 57,124 25, ISO-NE Holyoke, MA 33,700 8, Midwest ISO Carmel, IN 144,132 55, NYISO Rensselaer, NY 40,685 10, PJM Valley Forge, PA 164,895 56, SPP Little Rock, AR 66,175 50,575 15

5 CONNECTION Windpower Thrives in Electricity Markets New Yorkers are seeing evidence of the growth of windpowered generation as wind farms sprout up across the Empire State. To date, over 1,200 MW of wind generation have been developed, with more on the way. Yet not everyone recognizes the role that New York s competitive marketplace for electricity plays in the cultivation of windpower resources. Wind poses challenges for system operators, but thanks to the flexibility and responsiveness of the market design in New York, changes have been made to address these challenges and foster the development of wind and other renewable resources. In October, NYISO Senior Vice President of Market Structures Rana Mukerji was able to highlight these developments on the national stage. Mukerji was among several featured speakers at the briefing, The Nexus between Wind Energy Development and Competitive Wholesale Electricity Markets, co-sponsored by the American Wind Energy Association (AWEA) and the COMPETE Coalition. In his presentation, Mukerji highlighted some of the key strategies the NYISO has implemented to help increase the amount of wind-generated electricity that can be integrated without undermining grid reliability. Wind and other renewable sources provide important environmental and economic benefits. However, the variable nature of the ability to supply electricity presents challenges for grid operators and energy markets that we are addressing through innovative market mechanisms, Mukerji said. The NYISO implemented a wind forecasting initiative based on recommendations from a 2004 study commissioned by the NYISO and the New York State Energy Research and Development Authority. In 2010, the NYISO conducted a follow-up assessment of the potential impact of adding up to 8,000 MW of wind power to the grid, reflecting the steady growth in proposed wind farm projects since the first study was commissioned. In addition to the wind forecasting initiative, the NYISO became the first grid operator to institute a wind dispatch system based on the offers of individual generators and has implemented pioneering changes in market design to integrate new energy storage resources that complement renewable resources. Coupled with the need to install more wind energy capacity to comply with the state s RPS mandate, these market reforms are playing a crucial role in driving new research and investment in the energy storage field. 5 The NYISO s market innovations are allowing developers to evaluate new energy storage technologies that target the variable supply of renewable energy, which often is produced at times of the day or night when demand is lowest. By enabling the development of solutions to store more renewable energy until it is needed, we are showing how markets can help create the conditions for the growth of wind power and other renewable energy resources throughout the country, said Mukerji.

6 Holiday Lights Past and Present New York City, where the modern electricity grid began with Thomas Edison s Pearl Street Station, is also the birthplace of electric Christmas tree lighting. In 1882, Edward Johnson, an associate of Edison, decorated the Christmas tree in his Manhattan home with 80 hand-wired red, white, and blue electric light bulbs. The practice grew in popularity as residential electric service expanded. In 1895, President Grover Cleveland displayed the first electrically lit Christmas tree in the White House. By the turn of the century, the General Electric Company was advertising Edison Miniature Lamps for sale or rental to decorate Christmas trees. Connection is published electronically by the External Affairs Group of the New York Independent System Operator (NYISO) for the benefit of NYISO Market Participants. For more information, or to make comments and suggestions, please contact NYISO External Affairs. Gregor Wynnyczuk, Editor NYISO Senior Writer & Communications Specialist gwynnyczuk@nyiso.com Marilyn Albright NYISO Communications Webmaster Specialist malbright@nyiso.com Debra Murley NYISO Communications Specialist dmurley@nyiso.com Gary Paslow NYISO Manager, Communications gpaslow@nyiso.com Today, it is estimated that the Christmas lighting contributes about 1,000 MW to the New York power system s load during the holiday season. However, as more consumers turn to energy efficient LED lights for holiday decorations, the impact of holiday lighting may decline significantly. According to the Edison Electric Institute (EEI), large, traditional incandescent bulbs (usually labeled C-7 or C-9) use about 7 watts of electricity per bulb. Incandescent minilights use a fraction of the electricity about four tenths of a watt (0.4 Watt) per bulb. New LEDs (light emitting diodes) use only four one-hundredths of a watt (0.04 Watt). Lighting a string of 100 C-7 bulbs costs approximately eight cents per hour (using an average electricity price of 12 cents per kilowatt-hour) and lighting a string of 100 minilights costs a little less than half a cent per hour. The cost of lighting 100 LED lights is significantly lower about $ per hour. Richard Barlette NYISO Manager, Market Participant & Government Relations rbarlette@nyiso.com Tom Rumsey NYISO Vice President, External Affairs trumsey@nyiso.com Disclaimer: Connection is for informational purposes only. The NYISO does not warrant the information contained herein, and Market Participants are referred to NYISO tariffs, manuals, and other technical documents for complete statements of their contents. The New York Independent System Operator (NYISO) is a not-for-profit corporation that began operations in The NYISO operates New York s bulk electricity grid, administers the state s wholesale electricity markets, and performs comprehensive system and resource planning for the state s bulk electricity system. NYISO Governance roster, schedule, and agenda information can be found in the Committee section of the NYISO website. 6