Dave LaPlante Vice President, Markets Development September 18, 2002

Transcription

1 Northeast Power Coordinating Council 2002 General Meeting ISO New England Perspectives on the FERC SMD NOPR Dave LaPlante Vice President, Markets Development September 18, 2002

2 Restructuring in the Northeast: A Timeline May Wholesale power markets open in New England April ISO New England adopts Standard Market Design November Wholesale power markets open in New York NOPR 7/31/02 Wholesale Rhode Island Retail 1/1/98 Mass. Retail 3/1/98 NY. Retail Varies Maine Retail 3/1/00 Conn. Retail 7/1/00 NH. Retail 5/1/01 Retail 2

3 New England Standard Market Design Major revamp of the current wholesale electricity market, based upon the PJM market design and rules Establishes congestion management/multi-settlement system in New England Locational Marginal Pricing more accurately reflects cost of power delivery and value resources in specified areas Day-Ahead settlement provides market certainty Cost effective approach to complete market redesign On schedule to be implemented in 1Q

4 New England Standard Market Design Consistent With FERC SMD Market Design SMD/NERTO FERC SMD Multi settlement Locational Pricing CRRs/FTRs RTO/ITP Business Practices SMD/NERTO FERC SMD Regional Planning Process?? Governance Market Mitigation?? Resource Adequacy Transmission Cost Allocation Advisory Role for State Regulators?? 4

5 Key Issues for New England Governance Transmission Planning and Cost Allocation Resource Adequacy Load Response Regional Differences Must Be Recognized 5

6 Governance ISO-NE supports core principles in NOPR Independent Board of Directors; accountable to FERC ISO-NE believes stakeholders should not have a decisional role in electing Board members ISO-New England will urge the Commission to allow latitude provided independence and accountability criteria is met Future ITP Boards determine the best form of internal governance 6

7 Resource Adequacy ISO supports: Forward looking requirement Assurances that capacity that is built can be delivered Penalties (both financial and physical) for failure to meet RSAC oversight at the regional level Load shifts in New England retail market must be addressed RSAC jurisdiction should be clearly outlined 7

8 Transmission Planning and Cost Allocation FERC has defined the Northeast as planning region New England s planning process (RTEP), the envisioned NERTO process (NSP) are consistent with the NOPR position Currently, cost of reliability and system benefit upgrades socialized in New England FERC has expressed interest in a cost causation approach 8

9 Transmission Planning and Cost Allocation States should play advisory role in developing pricing mechanisms for needed expansion. In the absence of agreements to fund transmission upgrades, ISO New England supports socialization of 345kv upgrades with parallel carrying capability. 9

10 SMD and Seams Elimination Key objective is to standardize markets to reduce seams Export fees charged for transmission service between regions are considered to be seams. Seams are affected by operating protocols/practices. To eliminate seams, additional detail on transaction protocols between ITPs may be needed Scheduling frequency Data exchange Transaction evaluation methods 10

11 Demand Response Demand response should be built into market design Price transparency and rules that accommodate characteristics of demand response resources are necessary Eliminate retail restrictions that prevent demand response resources from participating effectively in wholesale markets Resolve technical measurement and metering issues and encourage development of demand response technology to enable participation of demand response in the energy markets 11

12 Northeast RTO proposal A common market design to include the six New England states and New York. Expeditious elimination of export fees. Establishment of a single market. Coordination of market design and business practices with Ontario and New Brunswick for greater integration with Canadian resources. 12

13 Potential to improve the Northeast electricity market Formally integrates an already natural electric market, both from a physical assets perspective and from a market policy perspective. Economic assessment reveals significant regional savings from, single dispatch, reserve sharing, and organizational efficiencies Holds the promise of significant operational and security benefits for stakeholders across the Northeast; 13

14 Potential to improve the Northeast electricity market Builds on the longstanding relationship between ISO-NE and NYISO to rapidly bring the benefits of larger market to the Northeast. Improves ability to integrate with Canadian provinces 14

15 NERTO addresses regional differences and Preserves New England Priorities Balanced independent governance structure. Prudent implementation, no risk to power supply.. Future NERTO Board adopts no net harm standard to protect individual sub regions from cost shifting. Fairly allocates transmission upgrade costs ISO-NE providing technical support to NEPOOL, NECPUC group attempting to assure New England not harmed by merger. Some government leaders in New England have expressed concern over the plan. 15

16 In Conclusion ISO New England is supportive of FERC s Standard Market Design SMD 1.0 (New England s SMD; 3/1/03) is consistent with FERC s SMD ISO suggests RTO/ITP Business Practices enhancements Governance Transmission Cost allocation Resource adequacy 16

17 Next Steps Comments on NERTO proposal due 9/27/02 NOPR comment deadline has been extended to 11/15/02 Final SMD rule expected by the end of the year Decision on NERTO formation New England Standard Market Design to be implemented by 1Q