RTC-RTD Forward Horizon Coordination Improvements

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1 RTC-RTD Forward Horizon Coordination Improvements Dr. Nicole Bouchez Market Design, NYISO MIWG September 29, 2016 Krey Corporate Center New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY

2 Purpose of today s discussion The purpose of today s discuss is to: Review historical NYISO RTC-RTD price convergence and State of the Market Recommendation Review market changes that are expected to impact RTC-RTD convergence Discuss next steps New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 2

3 Background The 2014 and 2015 State of the Market reports includes observations on real time price volatility, the primary driver of RTC-RTD divergence, and potential solutions. The RTC-RTD Forward Horizon Coordination project aims to improve modeling consistency between RTC and RTD and evaluate improvements to RTC and RTD look-ahead evaluations New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 3

4 NYISO RTC-RTD Price Summary Distribution of RTC-RTD price spreads by region (West Zone, NYISO Reference Bus, NYC Zone) 2015-February 2016 In all areas, from 2015-February 2016 spreads fall within +/- $10 ~80% of the time, and within +/- $20 ~90% of the time New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 4

Source: 2014 State of the Market Report for the NYISO Markets, Patton et al, Potomac Economics, May 2015

5 Source: 2014 State of the Market Report for the NYISO Markets, Patton et al, Potomac Economics, May New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 5

Source: 2015 State of the Market Report for the NYISO Markets, Patton et al, Potomac Economics, May 2016

6 Source: 2015 State of the Market Report for the NYISO Markets, Patton et al, Potomac Economics, May New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 6

7 Areas of Improvements The NYISO has implemented market design enhancements and modeling improvements which have helped to improve RTC-RTD convergence; For example: 15 minute interchange has contributed to improving top of the hour convergence More recent changes are also expected to impact RTC-RTD convergence: Niagara Modeling change: the implementation of a composite shift factor at Niagara plant in May Lake Erie Circulation (LEC) assumption changes in June Hybrid pricing changes (voted on at the September 13 BIC) New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 7

8 Areas of Improvements None of these changes on its own is going to drastically improve RTC- RTD convergence but the combined incremental effects need to be evaluated before deciding on the need for additional changes. Recognizing this, the 2017 project list includes the RTC-RTD Forward Horizon Coordination Improvements (SOM) Modeling inconsistencies between RTC and RTD look-ahead evaluations as they evaluate external transactions and the start-up/shut-down of gas turbines, result in unforeseen ramp constraints and undermine the accuracy of prices forecasted by RTC. These inconsistencies may also contribute to transient shortage conditions and unnecessary price volatility. Review and adjustment of the look-ahead RTC and RTD evaluations should be investigated to alleviate unnecessary ramp constraints, reduce unnecessary price volatility, and could also lead to better SCUC-RTC-RTD price convergence New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 8

9 Next Steps Q4 2016/Q Update on the RTC-RTD Forward Horizon Coordination Improvements project Establish project schedule RTC-RTD Forward Horizon Coordination Improvements Study Please any questions or comments to New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 9

10 The Mission of the New York Independent System Operator, in collaboration with its stakeholders, is to serve the public interest and provide benefit to consumers by: Maintaining and enhancing regional reliability Operating open, fair and competitive wholesale electricity markets Planning the power system for the future Providing factual information to policy makers, stakeholders and investors in the power system New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 10

2016 State of the Market Report: Energy & Ancillary Services Market Highlights

2016 State of the Market Report: Energy & Ancillary Services Market Highlights State of the Market Report: Energy & Ancillary Services Market Highlights Pallas LeeVanSchaick NYISO Market Monitoring Unit Potomac Economics Market Issues Working Group June 6, 2017 Overview Schedule