MISO Integration Training

Transcription

1 MISO Integration Training (Supply-Side) Target Audience: Executive, Level 1 for MPs Last material update: 10/18/2011

2 Version Control Table 2 Version: Date: Description: Revised by: 0.1 8/31/2011 Initial Draft with content from previous DRWG training decks. S. Bateman 0.2 9/2/2011 Completed draft, ready for initial review S. Bateman 0.3 9/11/2011 Minor updates from consistency check S. Bateman 0.4 9/19/2011 Revised from Worcola review. Ready for SME. S. Bateman /18/2011 Revised from SME review. S. Bateman

3 Course Content and Disclaimer Course Description This is an executive-level overview of MISO s strategic initiative. The following slides present a high-level overview of the purpose, concepts, and a brief reference to MISO s Compliance Filing to FERC Order No This presentation focuses on the Supply-Side of MISO s. This presentation is intended for those individuals seeking a basic understanding of MISO s strategic initiative and is not intended to expand into detail on the concepts presented here. The next available training presentation on is the managerlevel presentation, which includes additional concepts, expanded detail on this presentation s content, and specific examples where applicable. 4 Frequently used terminology, along with reference-links to MISO documentation and contacts, is included in this presentation. Notice The following training materials are intended for use as training materials only and are not intended to convey, support, prescribe or limit any market participant activities. These materials do not act as a governing document over any market rules or business practices manual. The data used in the examples is test data and should not be used to support market analyses.

4 Course Agenda 4 Level-1, Executive Training Introduction Resource Categories Modeling DRR and LMR MTEP and Resource Adequacy Capacity Resources & Load Modifying Resources Qualification & Registration Emergency (EDR) Network Model Commercial Model Market Interaction FERC Order No. 745 Day-Ahead/Real-Time Settlement Examples Credit Exposure MISO Working Groups Important Takeaways List of Reference Materials and Contacts

5 Introduction 5 The Strategic Initiative The ability of a Market Participant ( MP ) to reduce its electric consumption in response to an instruction received from MISO. Improve Market Efficiency Vehicle for MPs to Manage Their Load Help Reduce the Carbon Footprint of our MPs Certified Entities eligible to provide demand response ARC LSE End-use customer w/ MP status

6 Introduction - Purpose 6 MISO Employs to Economic Demand Response Reduce loads whose values to end use customers are less than the costs of serving those loads. Provide regulating or contingency reserves. Operating Reserves Demand Response Planning Resources Demand Response Substitute for generating capacity. Reduce demand during system emergencies. Emergency Demand Response

7 Resource Categories 7 A Note About Terminology and Classification of Resources Demand Resources vs. Resources Several categories use similar words LMR can also provide EDR Definitions are not necessarily exclusive demand resource vs. Demand Resource Same words used both generically and specifically (per Tariff) Classification ultimately depends on two questions: Physical Capabilities of the resource Responsibilities the resource operator is willing to accept

8 Resource Categories 8 Resources in are Also Planning Resources Planning Resource Capacity Resource Load Modifying Resource Generation and External Resources Demand Response Resource 3 BTMG Demand Resource Capacity Verification 1 X X X X Must Offer 1 X X GADS Data Entry 2 X X DADS Data Entry X X Must Respond to EOP X X X X (1) Includes Intermittent Resources with Must Offer Requirement (2) BTMG greater than 10 MW must supply GADS data. (3) Resources that could qualify as Resources need not necessarily qualify as Capacity Resources. Qualification depends, in part, upon the desired market(s) in which the resource will participate.

9 Resource Categories 9 Resources, Categories, and Services DRR refers to a resource type: one that provides service to the energy and ancillary services market EDR is a service that refers to the use of a demand resource under a specific Tariff schedule LMR is a category that refers to the use of a demand resource toward meeting PRMR

10 Resource Categories - Participation 10 Summary of Resource Participation Resource Product Energy Regulation Reserve Spin & Supplemental Reserve Module E (PRC) Emergency Energy DRR- Type I DRR- Type II DR BTMG EDR Key 1 Can Participate 2 Must Participate

11 Modeling DRR and LMR 11 Comparison of DRR and LMR in the Models Network Model Commercial Model Modeled as a regular load Both load and generation are modeled Must be at least 1 MW Required only under certain conditions DRR Type I DRR Type II BTMG Modeled with two CPNodes. Modeled like a generator Will include a reference Load Zone CPNode Load and Generation can be netted Commercial Load Zone may be created Modeled as a regular load DR Modeled as a regular load Note: Refer to the Level-1, Executive and Level-2, Manager training courses for a more detailed understanding of Network and Commercial modeling for all types of resources.

12 MTEP and Resource Adequacy 12 Review of MTEP and RAR Processes DRRs Type I & II that qualify as Capacity Resources, and LMRs RAR Process MTEP Process Incorporating demand response in expansion planning 1 year 20 years

13 MTEP and Resource Adequacy 13 RAR and Resources (DRR Type I and II) DRR I & II DRRs can qualify as Capacity Resources or LMRs or neither Capacity Resources LMRs Resources that can qualify as Capacity Resources are not required to do so LMRs have different obligations than Capacity Resources, but do count toward Planning Resources

14 MTEP and Resource Adequacy 14 LMR Qualification for EDR, Resource Adequacy, and the VCA Demand Resources and Behind-the-Meter Generation LMRs EDRs Emergency Demand Response resources Resource Adequacy Qualification Planning Resource Credits Voluntary Capacity Auction

15 MTEP and Resource Adequacy - Example 15 An Example of an LSE in the Capacity Market LSE Forecast Demand Requirement = 400 MW PRMR = 416 MW ( ) [assume PRM = 1.04] Owns 20 MW of LMR 15 MW (installed capacity) of BTMG 5 MW of DR Can net the 5 MW of DR Reduces Forecast Demand Requirement to 395 Reduces PRMR to ( ) Coverts BTMG into PRCs PRCs are measured in MW of Unforced Capacity (UCAP) 15 MW ICAP 14.8 MW UCAP for this particular BTMG LSE Choice: Apply all, some, or none of these PRCs to reduce its PRMR Sell (offer) surplus PRCs in the VCA for direct compensation

16 Market Interaction 16 Brief Look at Energy & Operating Reserve Products Four Products for Day-Ahead & Real-Time Energy and Operating Reserve Markets Energy Demand Bids and Resource Offers in Day- Ahead System Demand and Offers in Real- Time Regulating Reserve Allows the system operator to physically balance supply and demand on real-time basis Spinning Reserve Provides energy to meet demand in the event of an unexpected loss of a generation or transmission resource Supplemental Reserve Same as Spinning Reserve, but can be from online or offline Resources

17 Market Interaction - Registration 17 A Note on Registration for Demand Resources Registration is required so: Demand resources are appropriately included in capacity-related calculations (e.g. resource adequacy) All MPs are treated fairly and in an unbiased fashion Demand resources can participate in the various markets (submit bids, receive settlements, etc.) In addition to on-line registration, several documents must be provided to MISO: Various certificates of ownership and relationships (e.g. between owner and applicant) Transmission Service Agreement Credit Application and other banking and credit related forms Refer to the Level-3, MP Registration and Level-3, Asset Registration training courses for a detailed understanding of requirements and procedures.

18 Market Interaction - Settlements 18 Brief Look at Market Settlements MPs providing resources that are cleared by the various markets receive compensation through the settlement process. Energy and Operating Reserve settle in two markets: Day-Ahead (DA) and Real-Time (RT) To the extent that actual provision of services differ: Many RT settlement values depend upon DA positions The DA market, is a forward market Assessed a Charge + Receive a Credit -

19 Market Interaction - Settlements 19 Simplified Example: Settlement of a DRR Scenario MP reduced load during HE14 DRR reduced by 5 MW with metered demand of 12 MW MP forecast a demand For HE14 = 17 MW (including the use normally associated with the DRR) MP provided information Forecast cap = 20 MW DRR output Calculation: Output = forecast metered = 5 MW Consumption = reduction + metered = 17 MW Forecast must be less than cap (17 < 20) OK Payment to DRR on output = 5 x LMP Settlement Charge to LSE on consumption = 17 x LMP

20 Market Interaction Settlements 20 How EDR Payments Differ from Standard" Payments DRR/LMR Based on how the resource is used: Energy Operating Reserves Planning Resources EDR Emergency Energy only Payment is greater of: LMP Energy Production Costs

21 Market Interaction Settlements 21 Simplified Example: Settlement of an EDR Scenario A 5 MW EDR provides Shut-Down: Costs = $1000 Curtailment offer = $80/MWh During an emergency, the EDR responds completely as offered for 4 hours For each of the 4 hours: LMP = $150/MWh The EDR would receive the greater of: LMP: (5MW 4HR $150/MWh) = $3,000 Costs: ($ MW 4HR $80/MWh) = $2600

22 Market Interaction Settlements 22 Simplified Example: Settlement of Same EDR Scenario w/penalty EDR called to reduce load by 5 MW; but only reduced by 4 MW 80% (< 95%) Shortfall Penalty (5.95-4)MW 4HR $150/MWh = $450 Payment 4MW 4HR $150/MWh = $2400 Net to EDR $ $450 = $1950

23 Market Interaction Credit Exposure 23 Credit Exposure on Market Participation As a Purchaser Credit Required $ Est. Peak Load MWh 720 Hours Avg DAM Historical Price As a Supplier Credit Required $ Max Capacity MWh 720 Hours Avg DAM Historical Price 5%

24 FERC Order No Overview: Order No. 745 Impact on MISO s Primary Design Elements Under the current FERCapproved tariff Under the proposed 719 tariff language FERC Order No. 745 DRR compensation: above threshold below threshold Credit full LMP Credit full LMP Credit full LMP Credit full LMP Credit full LMP Credit zero Cost-effectiveness condition Competitive markets obviates benefits tests Competitive markets obviates benefits tests Net benefit test Measurement & Verification Difference between forecast and actual Adopt NAESB standards M&V protocols revised from ARC filing [October, 2009] Cost allocation Charge LSE through reconstituted load Charge LSE through reconstituted load Allocate the cost of DRRs to those who benefit Commission Jurisdiction DRR participation through LSEs DRR participation through LSEs and ARCs, with RERRA approval DRR participation through LSEs and ARCs with RERRA approval Note: This slide presents a high-level summary only; detailed content on design element impacts is provided in the Level-2, Manager training materials.

25 FERC Order No Headlines of Proposed Tariff Changes in the August 19, 2011 Filing MODULE A, COMMON TARIFF PROVISIONS Section 1, Definitions Multiple sub-sections affected MODULE C, ENERGY AND OPERATING RESERVE MARKETS Multiple sections and sub-sections: 38.7 Determination of Compensation 39.2 Day-Ahead Energy and Operating Reserve Market 39.3 Day-Ahead Energy and Operating Reserve Market Settlement 40.2 Real-Time Energy and Operating Reserve Market 40.3 Real-Time Energy and Operating Reserve Market Settlement See References slide for links to tariff change filings.

26 MISO Working Groups 26 Working Groups Providing Oversight, Support, and Guidance Demand Response Working Group (DRWG) Evaluates and provides recommendations to the Market Subcommittee on the potential for incorporation of demand response mechanisms into MISO market system. Supply Adequacy Working Group (SAWG) Develops recommendations regarding the use of mechanisms to ensure adequate capacity supply within MISO markets. Reviews existing and proposed mechanisms that could be applied to maintain sufficient capacity reserves in MISO market to ensure the reliability of service in the bulk power system. Market Subcommittee (MSC) Provides input and policy guidance to the Advisory Committee on all market activities including but not limited to: transmission, energy, capacity, FTR, credit and ancillary services. Reviews and considers the elements of existing and future market designs and implementation. Conducts ongoing evaluations of market mechanisms and suggest refinements as necessary.

27 Important Takeaways 27 Important Takeaways From This Presentation Qualification Three types of entities are allowed to provide demand response in MISO: LSEs, ARCs, and End-use customers that have Market Participant status MISO employs demand response in four ways: Economic demand response Operating reserves demand response Emergency demand response Planning resources demand response Classification of resources depends on two key questions: What are the physical capabilities of the resource? and What responsibilities is the resource operator willing to accept? Both DRR Type I and II have a must offer requirement if it registers to qualify as a Capacity Resource. Emergency MISO s Emergency Initiative (EDRI), allows, but does not require, EDR resources to provide Emergency during such events (unless they are also claiming capacity credit as Planning Resources, in which case they must be available to reduce load during emergency events. LMRs are obligated to curtail during emergencies and may be penalized for failure to do so. Market Interaction All Demand Resources qualify to offer energy into the DART markets and can schedule energy, based on market price. DRR qualify to offer Spinning and Supplemental reserves; at present, only some DRR-Type II can qualify for Regulation Reserve. Settlement & Credit EDR payments are the greater of LMP Energy or Production Costs, but not both. EDR resources are penalized if response <95% targeted amount. LMRs are also penalized for failure to respond or to reach target and may be denied participation as a planning resource. The Initial Value Of Total Potential Exposure is determined by formula and differs between Purchaser and Supplier 745 MISO submitted its Compliance Filing to the FERC on August 19, 2011 and proposed changes to the tariff will affect the Demand Response design

28 List of Acronyms 28 ARC BA BPM BTMG CPNode DADS DR DRR EDR EDRI EEA(1, 2, 3) EMT EOP FERC Aggregator of Retail Customers Balancing Authority Business Practices Manual Behind the Meter Generation Commercial Pricing Node Availability Data System Demand Resource Resource Emergency Emergency Initiative NERC Energy Emergency Alert levels Open Access Transmission and Energy Markets Tariff for the MISO Emergency Operations Planning Federal Energy Regulatory Commission

29 List of Acronyms 29 GADS GVTC IMM LBA LMP LMR LSE MECT MFRR Module E MP MTEP NAESB NERC Generating Availability Data System Generation Verification Test Capacity Independent Market Monitor Local Balancing Authority Locational Marginal Price Load Modifying Resource Load Serving Entity Module E Capacity Tracking tool Marginal Foregone Retail Rate MISO EMT module regarding Resource Adequacy Market Participant MISO Transmission Expansion Planning North American Energy Standards Board North American Electric Reliability Corporation

30 List of Acronyms 30 OATT PowerGADS PRC PRMR RA RAR RERRA RSG SAWG TO TP VCA Open Access Transmission Tariff MISO GADS database Planning Resource Credit Planning Reserve Margin Requirement Resource Adequacy Resource Adequacy Requirement Relevant Electric Retail Regulatory Authority Revenue Sufficiency Guarantee Supply Adequacy Working Group Transmission Owner Transmission Provider Voluntary Capacity Auction

31 List of References 31 List of Reference Materials and Contacts Available Training for This Topic px Documents Business Practice Manuals (BPM) Draft BPM (currently in Draft and unavailable) BPM-011 Resource Adequacy BPM-020 Transmission Planning BPM-010 Network and Commercial Models BPM-002 Energy and Operating Reserve Markets MISO Tariff (EMT) NERC EOP-002-2, Capacity and Energy Emergencies MISO FERC Filing [ER , August 19, 2011] Final Order No. 745 Transmittal Letter Redline Tariff Language

32 List of References 32 List of Reference Materials and Contacts WG (DRWG) MISO Compliance Filing on Order 745: Compensation [DRWG Presentation] DRWG Draft Net Benefits Analysis Paper DRWG Comments Received Table_Order Participation [Sept, 2010 Jul, 2011] DRWG Item 04 Forecasting Issues MISO Frequently Asked Questions Contacts MISO Client Relations