Industry Perspectives on FERC Standard Market Design

Transcription

1 Industry Perspectives on FERC Standard Market Design By Dr. Roberto F. Paliza Midwest Independent Transmission System Operator, Inc. IEEE Summer Meeting July 23, 2002 Chicago, IL

2 Overview MISO Markets Effort FERC SMD RTO challenges Market Progress 2

3 MISO Markets Effort Market implementation moving forward Late 2003 is target date Combined MISO/SPP market 150 GW peak load 144,000+ miles of transmission lines 20.9 million customers Markets include five TransCos within MISO Wisconsin ATC, METC, ITC plus TRANSLink, GridAmerica (not yet operational) 3

4 Midwest Markets Scope (with SPP) 150 GW peak load 144,000+ miles of transmission lines 20.9 million customers 4

5 MISO Markets Effort Developing Midwest markets for MISO/SPP footprint Project is underway Will be operational by the end of 2003 Market rules under development will be compliant with FERC SMD Energy markets Ancillary services Transmission rights Inter-RTO coordination Working with PJM on single market to be implemented by

6 The Single Market 213 GW peak load 236 GW generating capacity 158,000 miles of transmission lines 300 members; 33 million customers 1.5 million + square miles 6

7 FERC Standard Market Design Goal: Competitive, efficient markets Provide a level playing field & standard rules of the road and Transparent operation and prices for energy & transmission usage Each region s market must be compatible with SMD (NOPR to be issued on July) Aspects not fully resolved yet: o Regional differences o Transitional issues o Markets Coordination MISO is committed to implementing the SMD Based on LMP and Financial Transmission Rights Will include balanced market rules Will provide flexibility to market participants 7

8 SMD Benefits to RTOs Enhanced reliability Bid-based security constrained dispatch Simultaneous balancing of the system and enforcement of constraint limits on a short time interval basis Critical functions are centralized at the RTO level Transparency of operations and energy prices Aids in the understanding of the system Incentives the right behavior Scheduling integrated with energy markets 8

9 SMD Benefits to RTOs Market monitoring is performed at regional level Coordinated transmission expansion planning In addition to traditional planning function: o Forecast LMPs based on markets simulation o Address congestion issues Regional energy and ancillary markets Short-term markets Administered by the RTO Mechanisms for inter-smd coordination remains to be addressed Implementation of SMD is a first good step 9

10 SMD Markets Day-ahead and Real-time markets Voluntary Bid-based security-constrained dispatch that minimizes cost-as-bid to serve load DAM is financially binding RTM settles based on deviations from day-ahead market Ancillary services Reserves and regulation Financial Transmission Rights Point-to-point rights Flowgate rights Capacity markets (ICAP)? 10

11 MISO Current Challenges Inter-RTO coordination before and after implementation of SMD in the Midwest Intertwined configuration with ComEd, IP, and AEP as a result of their decisions to join PJM Single market will help resolve many issues Transition to single market will require tight coordination with PJM 11

12 MISO Market Effort Progress Stakeholder driven High level design completed Working on the detailed design and infrastructure Implementation alternatives are being studied in parallel with the design Staged approach to achieve ultimate goal 12

13 Increment 1 Functionality FUNCTIONAL AREAS FTRs (A financial contract that entitles holder to a stream of revenues or charges - based on the hourly energy price differences across the path) Request processing Simultaneous deliverability feasibility testing Approval processing Day Ahead Market (Based on scheduled hourly quantities and day-ahead hourly prices) Security Constrained Unit Commitment Security Constrained Economic Dispatch LMP calculation using generation offers, demand bids, and bilateral transaction schedules. Real-Time Energy Market (Based on actual hourly quantity deviations from day-ahead schedule hourly quantities and real-time prices) Security Constrained Centralized Economic Dispatch LMP calculation using real-time SE values S t a k e h o l d e r P r o c e s s SUPPORTING PROCESSES P u b l i s h M a r k e t D a t a S e t t l e m e n t s & B i l l i n g Communications Plan Define Membership Requirements Manage Customer Registration Participant Readiness Manage Customer Relations Manage Training Perform Market Trials 13

14 Market Rollout Options Option 1 Phased Geographic Rollout Option 2 Full MISO Footprint (Rapid Rollout Approach) Option 3 Expand From PJM West 14

15 MISO Staff Recommendation MISO Staff Recommends proceeding with Option 2 - Implementing the rapid rollout approach across the entire MISO footprint from West to East. 15

16 Critical Program Path Schedule Milestones/Projects 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 Conceptual Design Market Rule Definition Develop and Release Rev 1 Develop and Release Rev 2 Construction Market Model Development Develop and Release Network Model For Development Develop and Release Release Network Model Int. Test Develop and Release Network Model Market Trials Technology Deployment System Development Requirements Design Configuration System Test System Integration Test Testing and Implementation Market Trials Execution Market Implementation Area 1 Cutover Area 2 Cutover Area 3 Cutover 16

17 MISO Program Project Schedule Milestones/Projects 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 Startup Establish & Maintain PMO Stakeholder Communications Conceptual Design Market Rule Definition Detailed Design Business Practice Development & Implementation Regulatory Affairs Seams Coordination Construction Financing Participant Readiness & Registration Training Development & Delivery System Operation Readiness Market Network Model Development Transmission Rights Conversion Technology Deployment Testing & Implementation Market Trials Market Implementation Major Milestones Market Rules for System Development System Design Sign-Off Approve System Test Plan System Integration Test Complete Development /Test Complete Market Trials Complete Go-Live 17

18 Cutover Approach Alternative Approach Pros Cons Big Bang Approach Entire footprint implemented at one time Eliminates internal footprint Market Seams issues Reduces roll out scheduling complexity with control areas Equity to participants everyone starts at the same time Just completed footprint-wide market trials just keep going MISO operators not familiar with unit characteristics across region 120,000 MW Market implementation market magnitude never tried to date Reliability concerns Loss of market confidence in the event of failure Rapid Rollout Approach * Rapid rollout from West to East * MISO Recommended Approach Aids in controlling reliability concerns Market MW-size similar to markets implemented to date Incrementally increases the MISO load under the markets Allows for a minimum stabilization period, i.e. new flows, and new constraints Reduce risk of market-wide catastrophic failure Possible Market Gaming opportunity between market and non-market zones Increased complexity in scheduling rollout across control areas Mid Month Settlements Creates internal footprint Market Seams issues Complexity of doing business with market and non-market regions (tariff, tagging, etc) 18

19 MISO/PJM/SPP Single Market To develop a single market for the combined MISO/PJM/SPP region Single market may be implemented as a single dispatch across the entire region One real-time market One day-ahead market One set of financial transmission rights One set of business practices Single tariff? 19

20 Single Market Development Increment Description Owner Coordination Activities Increment 1 (Midwest Markets) Midwest Market Initiative on NewCo Footprint Real time Energy Markets based on Location Marginal Pricing Financial Transmission Rights allocation and auction Day Ahead Energy Market MISO/SPP Seam Coordination Project within Market Initiative Increment 2 (Shared Data Services) Addition of the Ancillary Services markets Security Constrained Unit Commitment to NewCo market (early in Increment 2) Enhancements to meet Standard Market requirements Enhanced Market Portal Joint Align common business rules and practices with PJM MISO-PJM Technical Assessment Enhanced Market Portal Project Increment 3 Fully shared Market and data services between MISO/SPP and PJM Joint On Going Coordination 20

21 Single Market Effort Increment #1 Increment #2 Increment # Q Q Q05 Shared Market Services Integrated with Shared Data Services Functionality Conceptual Design Detailed Design Data Exchange Standards & Protocols Established Bulk Data Transfers Enhanced Market Portal Implemented Multi-Regional Participant Market Interaction Transparency 21