2001 Annual Report on the New York Electricity Markets

Transcription

1 2001 Annual Report on the New York Electricity Markets Presented to: New York ISO Management Committee David B. Patton, Ph.D. Independent Market Advisor April 16, 2002

2 Conclusions and Recommendations The markets performed relatively well during Lower fuel prices and reduced generation outages in Eastern New York led to lower prices and substantially less congestion. Analysis of the market conduct of both the suppliers and the load- serving entities indicates that the markets have been workably competitive. Price convergence between the day-ahead ahead and real-time has improved. Prices will likely be slightly higher this summer than last summer, although uplift costs should be substantially reduced. -2-

3 Conclusions and Recommendations The following issues are apparent from the analysis in this report rt and the Summer 2001 report, for which changes are underway. Apparent impediments to trading remain, particularly with New England. Changes in market rules and procedures should reduce these issues s in Poor convergence of prices produced by the BME and SCD models under peak conditions led to reduced real-time prices and considerable uplift. Out-of of-merit dispatch of generation increased in 2001, depressing prices s and raising uplift in NYC. However, concerns are also indicated by this analysis in the following lowing areas that require further work. Relatively low participation in the ancillary services markets remains r an issue that can create significant inefficiencies in the energy market under peak conditions pricing reforms are recommended to improve incentives. The ICAP results in NYC have not been consistent with competitive e expectations consideration of alternative designs is warranted. -3-

4 $80 $70 $60 Monthly Average Day Ahead Prices in New York January to December 2001 Excluding August 9 West Prices East Prices Price/MWh $50 $40 $30 $20 $10 Jan Feb March April May June July Aug Sept Oct Nov Dec -4-

5 Total Congestion Costs: 2000 vs $120 $ Total = $517 Million 2001 Total = $310 Million Monthly Cost (Million $) $80 $60 $40 $20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -5-

6 Estimated Price Increase in NYC Due to Load Pocket Modeling June to December 2001 Dollars per MWh $90 $80 $70 $60 $50 $40 $30 Estimated price increase due to modeling changes. Adjusted Real- Time Price Local Reliability Uplift for NYC per MWh Actual NYC Real-Time Price $20 $10 June July Aug Sept Oct Nov Dec -6-

7 Summer 2002 Energy Price Forecast June to August -- All Hours $80 $70 30% Increase 28% Increase Load Pocket Effect Base Price Price ($ per MWh) $60 $50 $40 $30 3% Increase 2% Increase Price Spike Hours* 2001 Actual = 6 hours 2002 Normal = 2 hours 2002 Extreme = 16 hours $20 $ Actual 2002 Normal Weather 2002 Extreme Weather 2001 Actual 2002 Normal Weather 2002 Extreme Weather New York State East New York * Price spike hours are defined as hours with projected prices greater than $500 per MWh. Hours shown are for East New York. Sources: NYISO actual day-ahead price data and load forecasts; Potomac Economics analysis. All Prices shown are load-weighted. -7-

8 $80 Monthly Average Day Ahead and Real Time Prices East New York Above NYC $70 Day Ahead Real Time $60 Price/MWh $50 $40 $30 $20 $10 Jan Feb March April May June July Aug Sept Oct Nov Dec -8-

9 Relationship of Price Differences to Actual Load Hour Ahead Prices Minus Real Time Prices East New York Above NYC , Peak Hours * $1,000 HAM-RT Price Difference ($/MWh) $500 -$ Actual Load (MW) * Includes hours beginning at 1pm through 5pm, Monday through Friday. -9-

10 Relationship of Price Differences to Actual Load Hour Ahead Prices Minus Real Time Prices New York City , Peak Hours * $1,000 HAM-RT Price Difference ($/MWh) $500 -$ Actual Load (MW) * Includes hours beginning at 1pm through 5pm, Monday through Friday. -10-

11 Real-Time Non-Reliability Uplift Expenses in 2001 Percent of Total Market Expenses 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Uplift Generated on Peak Days* Uplift to External Suppliers Uplift to Internal Suppliers Uplift Generated on Peak Days* 0.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Days where the HAM price exceeded $1000/MWh for more than one hour in a zone other than Long Island. -11-

12 2,500 Relationship of Economic Withholding to Actual Load Day-Ahead Market -- East New York January 1 to December 31, pm Hour Economically Withheld Capacity (MW) 2,000 1,500 1, ,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Actual Load (MW) -12-

13 6,000 Relationship of Deratings to Actual Load Day-Ahead Market -- East New York Summer Peak Hours * Derated Capacity (MW) 5,000 4,000 3,000 2,000 12,000 14,000 16,000 18,000 20,000 22,000 Actual Load (MW) * Includes hours beginning at 1pm through 5pm, Monday through Friday. -13-

14 1,400 Hourly Virtual Bidding of Load and Supply, Scheduled and Unscheduled New York State -- November 2001 to March ,200 Unscheduled Quantities 1,000 Megawatts Scheduled Quantities Net Virtual Purchases Virtual Virtual Load Supp Virtual Virtual Load Supp Virtual Virtual Load Supp Virtual Virtual Load Supp Virtual Virtual Load Supp Nov 2001 Dec 2001 Jan 2002 Feb 2002 Mar

15 Installed Capability Market - New York State May 2001 to April 2002 Internal Capacity Unsold External Capacity SCR and Load Mgt. Internal Capacity Sold Megawatts May June July Aug Sept Oct Nov Dec Strip Jan Price Feb Monthly Mar Price Apr $10 $8 $6 $4 ICAP Price ($/MW-Mo.) $2 May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Summer 2001 Capability Period Winter Capability Period -15-

16 Installed Capability Market - New York City May 2001 to April Internal Capacity Unsold SCR and Load Mgt. Internal Capacity Sold Megawatts $12 $9 $6 $3 ICAP Price ($/MW-Mo.) Strip Price Monthly Price May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Summer 2001 Capability Period Winter Capability Period -16-

17 Ancillary Services Capability and Offers Regulation and 10 Minute Reserves (MW) Average Capability Average Offer Approximate Demand Excl. PURPA All Units Excl. PURPA 30 Minute Reserves (MW) All Units Excl. PURPA All Units Excl. PURPA All Units 0 10 Min Spin* 10 Min Nspin* Regulation 30 Min Reserves *10 minute reserves includes only capability in Eastern New York due to locational reserve requirements. -17-