2017 Annual Report June 14, 2018 Amelia Blanke Manager of Market - PowerPoint PPT Presentation

2017 Annual Report June 14, 2018 Amelia Blanke Manager of Market Monitoring & Reporting Department of Market Monitoring CAISO Public CAISO Public

Total wholesale costs increased 25% -- or 4% increase after accounting for 27% increase in gas cost $70 $7 Average cost (nominal) Average cost normalized to gas price, including greenhouse gas adjustment $60 $6 Average daily gas price, including greenhouse gas adjustments ($/MMBtu) Average annual cost ($/MWh) Average annual gas price ($/MMBtu) $50 $5 $40 $4 $30 $3 $20 $2 $10 $1 $0 $0 2013 2014 2015 2016 2017 CAISO Public Page 2

Total wholesale costs by category – excludes costs of meeting resource adequacy requirements. Change '16-'17 2013 2014 2015 2016 2017 Day-ahead energy costs $ 44.14 $ 48.57 $ 34.54 $ 30.70 $ 37.59 $ 6.89 Real-time energy costs (incl. flex ramp) $ 0.57 $ 1.98 $ 0.69 $ 1.03 $ 2.01 $ 0.98 Grid management charge $ 0.80 $ 0.80 $ 0.80 $ 0.81 $ 0.81 $ 0.01 Bid cost recovery costs $ 0.47 $ 0.40 $ 0.39 $ 0.33 $ 0.47 $ 0.14 Reliability costs (RMR and CPM) $ 0.10 $ 0.14 $ 0.12 $ 0.11 $ 0.10 $ (0.01) Average total energy costs $ 46.08 $ 51.89 $ 36.54 $ 32.98 $ 40.99 $ 8.01 Reserve costs (AS and RUC) $ 0.26 $ 0.30 $ 0.27 $ 0.54 $ 0.77 $ 0.24 Average total costs of energy and reserve $ 46.34 $ 52.19 $ 36.81 $ 33.52 $ 41.77 $ 8.25 CAISO Public Page 3

Average hourly prices mirror net load $110 33,000 Day-ahead 15-minute 5-minute Average net load $100 30,000 $90 27,000 Average net system load (MW) $80 24,000 $70 21,000 Price ($/MWh) $60 18,000 $50 15,000 $40 12,000 $30 9,000 $20 6,000 $10 3,000 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 CAISO Public Page 4

Average quarterly system marginal energy prices increased in Q3 and Q4 due to higher gas prices and tighter supply/demand conditions. $45 Day-ahead 15-Minute 5-Minute $40 Price ($/MWh) $35 $30 $25 $20 $15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 CAISO Public Page 5

Average hourly hydro-electric production by month (2015-2017) 6,000 2017 2016 5,000 2015 4,000 MW 3,000 2,000 1,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CAISO Public Page 6

Frequency of day-ahead prices near or below $0/MWh increased significantly in 2017 (January – June) 30% -$15 to $10 -$10 to -$5 -$5 to $0 $0 to $1 25% 20% Percent of hours 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 CAISO Public Page 7

Higher reliance on gas during months with higher loads and less hydro/renewables. 35,000 30,000 Other 25,000 Nuclear 20,000 Hydroelectric MW Renewable 15,000 Import Natural gas 10,000 5,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CAISO Public Page 8

About 3,000 MW of gas generation retirements, while most new capacity from solar. 6,000 Retirements 5,000 Capacity additions/retirements (MW) New generation 4,000 Net yearly total 3,000 2,000 1,000 0 -1,000 -2,000 -3,000 -4,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CAISO Public Page 9

Higher peak loads, but overall energy loads level. 51,000 50,000 49,000 System peak load (MW) 48,000 47,000 46,000 45,000 1-in-10 year peak forecast 44,000 1-in-2 year peak forecast 43,000 Actual peak 42,000 2013 2014 2015 2016 2017 Annual total Average load Annual peak Year energy (GWh) (MW) % change load (MW) % change 2013 231,800 26,461 -1.0% 45,097 -3.7% 2014 231,610 26,440 -0.1% 45,090 0.0% 2015 231,495 26,426 0.0% 46,519 3.2% 2016 228,794 26,047 -1.4% 46,232 -0.6% 2017 228,191 26,049 0.0% 50,116 8.4% CAISO Public Page 10

Gas prices are up in later months of year, especially in the south, frequent location of marginal resource $7 Henry Hub $6 PG&E Cityate SoCal Citygate $5 Gas price ($/MMBtu) $4 $3 $2 Hub 2017 2016 2015 2014 PG&E Citygate $3.24 $2.70 $2.99 $4.84 $1 SoCal Citygate $3.41 $2.55 $2.78 $4.67 _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 2016 2017 CAISO Public Page 11

Frequency of positive 15-minute price spikes (ISO LAP areas) 1.2% $250 to $500 $500 to $750 $750 to $1000 > $1000 1.0% Percent of 15-minute intervals 0.8% 0.6% 0.4% 0.2% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 CAISO Public Page 12

Frequency of under-supply power balance constraint infeasibilities (15-minute market) 0.5% Corrected or invalid infeasibility Load bias limiter resolved infeasibility Percent of 15-minute intervals 0.4% Valid under-supply infeasibility (shortage) 0.3% 0.2% 0.1% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 CAISO Public Page 13

Load adjustment by grid operators increased significantly. 900 2017 Hour-ahead market 2017 15-minute market 800 2017 5-minute market 700 2016 Hour-ahead market 600 2016 15-minute market 2016 5-minute market 500 400 Megawatts 300 200 100 0 -100 -200 -300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 CAISO Public Page 14

Real-time imbalance offset costs increased ~50%. $80 Real-time loss imbalance offset cost Total cost ($ millions) $70 2016 2017 Real-time congestion imbalance offset cost Energy -$3 $46 Congestion $50 $38 $60 Loss $6 -$5 Real-time imbalance energy offset cost Total $53 $79 Total cost ($ million) $50 $40 $30 $20 $10 $0 -$10 -$20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 CAISO Public Page 15

Ancillary service costs increased due to higher requirements and tight supply conditions. $1.00 2.5% Ancillary service cost per MWh of load Cost as a percentage of wholesale energy Ancillary service cost as percent of energy cost Cost per MWh of load served ($/MWh) $0.80 2.0% $0.60 1.5% cost $0.40 1.0% $0.20 0.5% $0.00 0.0% 2012 2013 2014 2015 2016 2017 CAISO Public Page 16

Bid cost recovery payments increased 42% compared to 27% increase in energy cost. $60 Day-ahead Total cost ($ million) 2016 2017 Day-ahead $13 $14 Residual unit commitment RUC $10 $13 $50 Real-time $52 $81 Total $76 $108 Real-time Total cost ($ million) $40 $30 $20 $10 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 CAISO Public Page 17

Total above-market costs due to exceptional dispatch increased 92 percent to $20.6 million in 2017 140 0.2% Exceptional dispatch energy as In-sequence energy Out-of-sequence energy Average hourly exceptional 0.1% 120 dispatch energy (MW) Commitment energy Percent of load 0.1% 100 percent of load 0.1% 80 0.1% 60 0.1% 40 0.0% 20 0.0% 0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 CAISO Public Page 18

Congestion raised prices in southern portion of system. • San Diego Gas and Electric: – Increased day-ahead prices by $0.90/MWh (2.5%) – Increased real-time prices by about $1.50/MWh (4%) • Southern California Edison: – Increased day-ahead prices by $0.40/MWh (1.2%) – Increased real-time prices by about $1.10/MWh (3%) • Pacific Gas and Electric : – Decreased day-ahead prices by $0.60/MWh (2%) – Increased 15-minute prices by about $0.30/MWh (0.8%) • Intertie congestion impact increased, particularly for interties connecting the ISO to the Pacific Northwest CAISO Public Page 19

Transmission ratepayers lost over $100 million from auctioned CRRs in 2017 (>$730 million since 2009) $400 Auction revenues received by ratepayers $350 Payments to auctioned CRRs Total ratepayer losses $300 $250 $ million $200 $150 $100 $50 $0 2012 2013 2014 2015 2016 2017 CAISO Public Page 20

Energy imbalance market expansion improved performance of real-time market. Congested toward ISO Congested from ISO NV Energy 2% 2% Arizona Public Service 5% 2% PacifiCorp East 10% 1% PacifiCorp West 45% 13% Puget Sound Energy 46% 15% Portland General Electric* 59% 16% CAISO Public Page 21

Hourly 15-minute market prices (January – December) $90 PacifiCorp West and Puget Sound Energy PacifiCorp East $80 NV Energy and Arizona Public Service Southern California Edison Average hourly price ($/MWh) $70 $60 $50 $40 $30 $20 $10 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 CAISO Public Page 22

Monthly flexible ramping payments by balancing area $6.00 $0.24 California ISO PacifiCorp East PacifiCorp West NV Energy Payments per MWh load ($/MWh) $5.00 $0.20 Puget Sound Energy Arizona Public Service Total payments ($ million) Portland General Electric Payments per MWh of load $4.00 $0.16 $3.00 $0.12 $2.00 $0.08 $1.00 $0.04 $0.00 $0.00 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 CAISO Public Page 23