Reliability Demand Response Product

Transcription

1 Reliability Demand Response Product CAISO Response to Stakeholder Comments on the RDRP Straw Proposal Prepared for The Reliability Demand Response Product Stakeholder Initiative September 1, 2010

2 Comments Received from Seven (7) Stakeholders: CDWR DRA Dynegy EnerNOC PG&E SCE SDG&E CAISO Response to Comments: Product Description RDRP Setting Price: Dynegy: Will RDRP be dispatched in merit order? CAISO: RDRP resources, once released for dispatch, will be committed and dispatched like any other resource, i.e. based on the resource s bid price and operating constraints, with the objective of minimizing total commitment cost. If the CAISO calls on RDRP to address a local transmission emergency how will the CAISO determine which nodal prices will be set to the RDRP price? For example, if the CAISO calls on RDRP to address an overload on Path 26 will the CAISO set all nodal prices on the constrained side of Path 26 to the RDRP price? CAISO: No special LMP pricing goes into effect as a result of dispatching RDRP resources. A RDRP resource will be modeled as a generator and will impact nodal prices like a generator. Thus, a RDRP resource that is dispatched can impact the LMP of a node if it is the marginal resource and increases the System Marginal Energy Cost. The LMP at a particular node will also be impacted by the Marginal Cost of Congestion and the Marginal Cost of Losses. Re: Local Transmission & Distribution Emergencies: Dispatching resources to address reliability needs but not allowing those resources to set price, even a local price, is simply a variation of the use of exceptional dispatch, which, at FERC s direction, the CAISO has been working to reduce. Dynegy appreciates the CAISO s efforts to move the out-of-market RDRP into the CAISO s markets. Consistent with the philosophy that every action taken to ensure reliability should be done transparently, and, if at all possible, within, not outside the CAISO s markets, the use of RDRP should always set price. RDRP Straw Proposal 2 California ISO

3 CAISO: The CAISO has desired greater transparency and integration of retail DR programs into the ISO markets and operations. RDRP is significant step in the right direction. A key design objective for the CAISO for the RDRP is the ability to reflect the value of emergencytriggered DR in the market. The CAISO significantly achieves this objective with this product, which enables the value of these resources to be reflected in the LMP during a system or transmission emergency. Saying this, these emergency-triggered DR programs have long been used to address local transmission & distribution issues within a utility s system. The CAISO believes that by attempting to also integrate a utility s use of these programs to address a local system concern only adds complexity and cost. As Dynegy states, the CAISO would have to issue an exceptional dispatch to a RDRP resource so that the utility could address their local system concern. An exceptional dispatch will only add additional cost to the system in the form of uplift and it will not have the intended effect of reflecting the value of the emergency-triggered DR in the LMP. For this reason, the CAISO finds that the costs far outweigh the benefits of attempting to impose CAISO dispatch on a utility s use of their emergency-triggered DR to address a local system constraint. Residual Unit Commitment Exclusion of RDRP from Residual Unit Commitment ( RUC ). The proposal should be modified to state that RDRP will not be committed in RUC before any other resource adequacy qualifying resources. CAISO: RDRP resources that can participate in the day-ahead market will not be eligible to participate in the RUC process due to the complexity associated with co-mingling the Energy bid into the HASP associated with awarded RUC capacity and RDRP Energy, and due to the different dispatch parameters between RUC and RDRP. Furthermore, RDRP resources that are configured to operate only in the Day-of timeframe and can only respond to a reliability event are neither suitable, nor eligible to be considered in the ISO s Day-Ahead Residual Unit Commitment process. Resource Adequacy/Must Offer Obligation: Are the tariffs in this section applicable to RDRP in their entirety, or are they references only in part. CAISO: RA qualifying RDRP resources will have special designation like that of Hydro and Non-Dispatchable Use-Limited Resources as specified in ISO Tariff section , but without an obligation to bid in the day-ahead market. During the ISO Tariff development stage for the RDRP, the ISO will determine whether or not to weave RDRP resources into or, if necessary, craft a new sub-section entirely. MDRP:JDG 3 Sept. 1, 2010

4 Registration RDRP Term: Selection of the winter term commencing in November may cause availability and or testing problems. CAISO: No modification contemplated to change the winter term as running from November to April. These seem to be the logical months for the winter term, thus slight modifications may need to be made to retail program enrollment or adjustment windows. The ISO addresses SCE s other concern about testing early in a RDRP Term. The ISO has addressed this concern by stating in the Draft Final Proposal if no events have been called within the year, then the expectation is one test event will be performed annually, toward the end of a RDRP Term, to determine RDRP resource availability and performance. Notifications Outage Reporting: Concern expressed about ISO reliance on SLIC for outage reporting CAISO: At this juncture, the ISO proposal is to continue to rely on SLIC, using the same process as PDR, for outage reporting. Future enhancements to the ISO s DRS may accommodate outage reporting directly, but this is not in-scope of the enhancements the ISO plans to make with the RDRP implementation. Understanding that outage reporting could come through another system in the future, the CAISO has changed the language in the Draft Final Proposal from the term SLIC to the ISO s outage management system. Metering: The meter data requirements do not appear to be compatible with IOU DR programs. The RDRP requires 5 to 15 minute meter data. This requirement precludes hourly interval meters in reliability programs from participating in RDRP. CAISO: The CAISO does not envision the possibility of using hourly interval meter data to settle wholesale real-time energy transactions. The CAISO has outlined a process in the Draft Final Proposal for the DRP to provide the ISO with a Proxy Meter Data Plan that will be reviewed and approved by the CAISO. Assuming accurate results can be derived, the CAISO is open to proposals that would leverage the existing infrastructure that is in place for deriving the Load Impact Protocol results. Other options may be taking a sample of 15- MDRP:JDG 4 Sept. 1, 2010

5 minute interval meter data, using SCADA data, and other potential methods that are still under investigation over this next year or more. However, at this juncture, flexibility is important and there is not enough certainty to state a specific approach in the Draft Final Proposal for how Proxy Meter Data will be derived. Performance & Compliance Performance Incentive/Availability: Dynegy: The CAISO s proposal highlights the challenges of conflating energy performance with capacity availability. Performance incentives and penalties and availability penalties and incentives apply in different ways. The Federal Energy Regulatory Commission has allowed the CAISO to grant demand response a temporary exemption from SCP availability standards. The CAISO s proposed performance standards are not availability standards. However, it appears that the CAISO may not develop availability standards for demand response for some time to come. If the only choice is between having no availability standards apply to demand response for an extended period of time, or implementing performance standards as a surrogate for availability standards until such time as availability standards are developed and applied, Dynegy would prefer the latter, even if performance standards are not availability standards. Dynegy understands that RA counting values for demand response, including RDRP, are outside of the scope of the CAISO s RDRP stakeholder process. As the CAISO moves towards developing true availability standards for demand response something FERC expects to happen in a timely fashion, and something Dynegy urges the CAISO to begin as soon as possible the CAISO should also examine and propose demand response counting rules ways that ensure that the demand response RA values are set in ways that do not overstate the true availability of demand response to meet RA needs. EnerNOC: If Performance Incentive was to apply, generally support staged penalty approach. A Penalty should only be applied to the MW that the resource underperformed outside of the % target. PG&E opposes any performance incentives associated with RDRP resources for performance or penalties for non-performance. PG&E recognizes the CAISO s desire for performance assurance for RDRP resources, but does believe that this proposal is inappropriate for five reasons. The issues of penalties for these programs should be discussed in the third phase of Standard Capacity Product (SCP). The availability performance standards and performance charges/incentives should not be included in the current RDRP design. It is more appropriate to develop those standards and MDRP:JDG 5 Sept. 1, 2010

6 incentives in the SCP, given that SCP is the CAISO's forum for consideration of the performance standards and incentives for all RA resources. SDG&E: SDG&E strongly disagree with the timing, rationale for and design of the proposed performance incentive. Preliminarily, from a purely procedural standpoint, SDG&E argues that the proposed incentive/penalty scheme is outside the scope of the all-party settlement that forms the basis of D The parties simply did not expressly or impliedly agree to performance penalties. Testing: CAISO: The CAISO will develop availability standards for demand resources under the Standard Capacity Product Initiative and forego the concept of a performance incentive for RDRP resources. The proposal should be modified to include test events within the availability limits of the resource. CAISO: The CAISO has modified the Draft Final Proposal to count test events toward the Availability Limits. SDG&E: SDG&E believes that events called by both the CAISO and the utility should preclude the need for an annual test. CAISO: The CAISO Draft Final Proposal states: The ISO s preference will be to rely on actual events to determine the availability and performance of RDRP resources to avoid the burden of a test event on end-use customers; however, if no events have been called within the year, then the expectation is one test event will be performed annually, toward the end of a RDRP Term, to determine RDRP resource availability and performance. Other: Wholesale Dual Participation EnerNOC: EnerNOC supports dual participation in both emergency and economic DR programs, which is allowed by all other ISOs. The fact that DR resources can earn a capacity payment in other ISO markets while CAISO does not have this market construct only increases the need to allow resources the flexibility to participate in both emergency and economic DR programs. MDRP:JDG 6 Sept. 1, 2010

7 The current proposal does not address the issue of dual participation of a customer in a price responsive Demand Response program and a reliability Demand Response program. This lack of wholesale dual participation precludes a market participant from realizing the full economic value of a retail dual participation customer. For PG&E, a customer is required to sign up for both the Demand Bidding Program (DBP) and the Base Interruptible Program (BIP), where DBP is a day-ahead notification and BIP is a 30-minute reliability program. Thus, PG&E has resources capable of participating in both PDR and RDRP and would be required to decide on whether these resources should participate in a PDR or an RDRP. CAISO: The CAISO has modified the RDRP proposal to incorporate DA Energy, enabling a dual participation capability. Exceptional Dispatch The CAISO needs to ensure that a RDRP resource cannot be called for exceptional dispatch. Ideally, this exclusion would be included in the operational procedures of the CAISO. CAISO: The ISO will endeavor to consistently dispatch RDRP resources through the ISO s market applications. However, all resources are subject to exceptional dispatch, including, for example, Proxy Demand Resources. Similarly, the ISO cannot exempt RDRP resources from these same tariff provisions. If system conditions are dire and a market application fails or does not commit a required RDRP resource that can resolve the reliability concern, the ISO cannot forego its ability to dispatch a RDRP resource under its exceptional dispatch authority and allow the situation to worsen. Thus, the ISO will preserve its exceptional dispatch capability with the expectation that this authority will be used judiciously and infrequently for RDRP resources. Specific Language Modifications/Additions DRA: DRA is concerned about the statement in the proposal that under the RDRP settlement the load-serving entity (LSE) neither benefits from, nor is harmed by, the load curtailment actions of the DRP that is providing demand response services to that load-serving entity's customers because the LSE may over-procure when a third-party DRP curtails LSE s load via RDRP by enlisting LSE s customers for this purpose. Unless a separate settlement is obtained between the LSE and the third-party DRP to compensate the LSE for the overprocurement, the LSE and, therefore, the LSE s ratepayers could be harmed. PG&E believes that the following language should be removed from the RDRP straw proposal: In this way, the load serving entity neither benefits from, nor is harmed by, the load curtailment actions of the DRP that is providing demand response services to that loadserving entity's customers. MDRP:JDG 7 Sept. 1, 2010

8 CAISO: Acknowledging this retail concern, the CAISO removed this language from the Draft Final Proposal. CDWR: SWP requests that CAISO specify the system events that trigger RDRP resources dispatch to clarify the process of dispatching RDRP resources when economic bids are still available in the bid stack. CAISO: The CAISO added additional clarifying language to further describe for what purposes the RDRP can be used and how RDRP resources are dispatched. In Section 3.1- Overview, the CAISO included the following description: The Reliability Demand Response Product has multiple reliability-only eligible uses, including for: 1) System emergencies: a. Transmission emergencies For example, the loss of a transmission asset that is part of the CAISO Controlled Grid b. Mitigating imminent or threatened operating reserve deficiencies Specifically, the ISO may access RDRP resources as specified in its Emergency Operating Procedure E-508B, at a Warning Notice, prior to the ISO having to seek Exceptional Dispatch energy/capacity from other Balancing Area Authorities 2) Local transmission and distribution emergencies: For example, to resolve a utility distribution circuit overload or to maintain a piece of electrical equipment within its emergency rating And in Section Real-Time Dispatch, the CAISO included the following language: RDRP resources are eligible for dispatch by the ISO for Energy in the Real-Time only in the event of an imminent or actual System Emergency as specified in ISO Operating Procedure E-508B or a transmission emergency. Once system conditions occur that enable the use of RDRP resources, the ISO operator will release the RDRP resources for Real-Time Dispatch. Depending upon the nature of the emergency, the ISO s Real-Time Dispatch application will evaluate the RDRP resources for commitment in either the Real-Time Economic Dispatch mode or the Real-Time Contingency Dispatch mode. Language Changes to the RDRP Straw Proposal for Reliability Resource Coordination CAISO: The ISO responded in the Draft Final Proposal that it will update and maintain its emergency operating procedures and processes, including updates to its emergency MDRP:JDG 8 Sept. 1, 2010

9 operating procedure E-511- Interruptible Load Programs- to incorporate the RDRP. Notifications between the ISO and the Participating Transmission Owners will be as specified in procedure E-511. E-511 specifies coordination between the CAISO and the PTO in operating interruptible load programs. MDRP:JDG 9 Sept. 1, 2010