Transcript Slide 1

MISO’s Midwest Market Initiative
APEX
Ron McNamara
October 31, 2005
Who We Are
The Midwest ISO is an independent, non-profit entity that monitors the
transmission grid of high voltage electricity across much of the Midwest.
Operational Since December 15, 2001
•23 Transmission Owners
•36 Control Areas
•119,207 MW of peak load
•137,000+ MW generating capacity
•97,000+ miles of transmission lines
•947,000 square miles
•15.1 million customers
• 1,504 generating units in the reliability footprint
• Carmel and St. Paul Control Centers
Midwest ISO Membership
The Role of RTOs
 Monitor flow of power over the grid
 Schedule transmission service
 Perform transmission security analysis for the
Reliability Area footprint
 Manage power congestion through LMPs
 Approve transmission & coordinate generation
maintenance outages
 Perform long term planning & analysis for region
 Operate Real-Time & Day-Ahead Markets
MISO Day 1 Operations
Bilateral transactions facilitated by “physical” transmission
service provided under regional OATT
MISO’s primary responsibilities related to the market
include:
• Acceptance and analysis of requests to reserve transmission
capacity for future scheduling of transactions
• Acceptance of schedules for approved reservations
• Monitoring transmission usage
• Providing reliability coordination
• Invoicing participants monthly for use of transmission lines as
well as other associated services
MISO Day 2 Operations
In addition to the “Day 1” activities, MISO began operating
energy markets on 1 April 2005:
• Implementation of market-based congestion management
system through LMP
• Day Ahead Market
• Real Time Spot Market
• Financial Transmission Rights
Midwest ISO Energy Markets
Some critical design elements:
 Real-Time Centralized Security Constrained Economic Dispatch
with Locational Marginal Pricing (LMP)
 Day-Ahead Security Constrained Economic Dispatch with
Locational Marginal Pricing (LMP)
 Security Constrained Unit Commitment in Day-Ahead Market
 Financial Transmission Rights that settle against Day-Ahead
Market
 Reliability Assessment Commitment (RAC)
 Seams with other markets
 *Ancillary service markets including Resource Adequacy
Midwest ISO Energy Markets
Market design accommodates:
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Self-Schedules and Bilateral Schedules
Pre-OATT Contracts (grand fathered agreements)
Ancillary Service Procurement
Control Area Activities
Use Limited and Demand Response Resources
Accommodate Retail Access Programs
Load Aggregation and Trading Hubs
Market Power Mitigation
Real-Time Centralized
Dispatch
MISO uses the Security Constrained Economic Dispatch (SCED)
program every 5 minutes of each operating hour
MISO sends control areas Net Scheduled Interchange (NSI) and
basepoints for generators
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NSI and resource basepoints sent every 5 minutes
Dynamic Schedules sent every 5 minutes
Ramped Control Area NSI sent every 4 seconds
Ramped Dynamic Schedule values sent every 4 seconds
Control Areas will be responsible for regulation between dispatch
interval and for operating reserves
MISO calculates ex-post Real-Time LMPs based on actual
system activity
Day-Ahead Market
MISO uses a Security Constrained Unit Commitment programs
and a Security Constrained Economic Dispatch (SCED)
program to find the least cost-commitment and schedule
MISO calculates Day-Ahead LMPs based on schedule
Day-Ahead Market accommodates:
Multi-part generation offers (Start-up cost, no-load cost,
incremental cost curve)
Fixed and price sensitive demand bids
Virtual supply offers and virtual demand bids
Transmission Rights
• MISO allocates Financial Transmission Rights to participants based
on existing OATT transmission service.
– 4 tiers…with a restoration step.
– Yearly, seasonal, peak/off peak.
– Monthly “true up” process.
• FTRs allow parties to hedge congestion costs in the Day-Ahead
Market
• MISO also runs FTR auctions in which participants can bid to buy
and offer to sell FTRs
• In addition to FTRs for OATT transmission service, MISO
accommodates scheduling under pre-OATT transmission service.
RAC Process
The following principles have guided development of
this RAC process:
 The RAC process should allow the Midwest ISO to commit the
capacity it deems necessary to reliably operate the grid at the
least commitment cost;
 The RAC process should have a transparent and equitable
implementation process;
 The RAC process is not intended to create any ‘new’ markets
outside of the existing proposed energy markets; and
 The RAC process should be incentive compatible with the
Midwest ISO’s proposed Day-Ahead and Real-Time Energy
Markets;
Midwest ISO Seams
In co-operation with our neighbors
we developed and implemented
seams agreements that result in
improved information sharing,
communications, and
coordination:
– RTO to other RTO/ISO’s
(PJM,SPP,IMO)
IMO
MAPP
PJM
– RTO to other Reliability
Coordinators (TVA)
– RTO to other Control Areas
(MAPP)
SPP
TVA
The Reliability Charter
Midwest ISO & Balancing Area roles and responsibilities:
Real-Time Energy Market
 Multi-Balancing Area Implementation
 The Midwest ISO will not directly control generation
 5-minute LMP Base-points produced by the Midwest ISO and sent to
Market Participants using 5-minute Load Forecast at Balancing Area
granularity
 Net Scheduled Interchange calculated by the Midwest ISO and sent
to each Balancing Area continuously
 Balancing Area performs regulation between 5 minute LMP basepoints
 Generation limits sent by market participants has generation set
aside for regulation and operating reserves “blocked off” from LMP
dispatch
Improved Reliability Functions Center Around System Operations
Dispatch
Maintain Voltage
and Frequency
Coordinate
Inter-utility
Flows w/Others
Grid Operating
Instructions
Monitor Flows,
Limits &
Contingencies
SecurityConstrained
Economic
Dispatch
Manage Operating
Reserves
Real-Time
Balancing
Congestion
Redispatch
Keep Flows
Within Limits
Benefits for participants
Reduced barriers to trade
– Elimination of pancaked transmission rates
– Uniform access -- one stop shopping for transmission service
and interconnection
– TLR replaced with market-based redispatch
Coordinated markets
– Liquidity/transparency
– Expanded choices
• Self-scheduled generation or load
• Bilateral transactions
• Spot purchases or sales
• Forward hedging
• Virtual transactions
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$/MWh
Actual Results Real Time Peak Prices
Real-Time Peak Price Trend of MISO and Neighboring Markets
MISO_AvgPeak_RT
PJM_AvgPeak_RT
NYISO_AvgPeak_RT
Time
IMO_AvgPeak_RT
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Actual Results Average Peak Prices
7-Day Rolling Average of Real-Time Peak Prices of MISO and Neighboring Markets
MISO_AvgPeak_RT
PJM_AvgPeak_RT
NYISO_AvgPeak_RT
IMO_AvgPeak_RT
180.00
160.00
140.00
100.00
80.00
60.00
40.00
20.00
Time
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$/MWh
120.00
Concluding Remarks
• Just the beginning:
– Commitment process
– Capacity Mechanism
– Ancillary Services
– Multiple control areas
– Joint and Common Market Activities
– Enough to keep us busy for several years to come!
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Questions?
– [email protected]
– 317.249.5774