Annual report on market issues and performance Eric Hildebrandt, Director Department of Market Monitoring Board of Governors Meeting General Session June 28, 2016
Market performance remains highly competitive. Total market costs down by about 6 percent after accounting for natural gas and greenhouse gas prices . $70 $7 Average cost (nominal) Average cost normalized to gas price, including greenhouse gas adjustment $60 $6 Average annual gas price ($/MMBtu) Average daily gas price, including greenhouse gas adjustments ($/MMBtu) Average annual cost ($/MWh) Avg daily gas price ($/MMBtu) $50 $5 $40 $4 $30 $3 $20 $2 $10 $1 $0 $0 2011 2012 2013 2014 2015 Page 2
Hourly prices have begun to reflect the impact of renewables on the net load curve. Average hourly prices (2015) $80 5-minute 15-minute Day-ahead $70 $60 $50 Price ($/MWh) $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 Page 3
Energy imbalance market prices were highly competitive. Special price discovery mechanism kept prices competitive while market performance improved over 2015. $50 EIM price without price discovery EIM price Bilateral trading hub range Average annual price ($/MWh) $40 PG&E price SCE price $30 $20 $10 $0 15-minute market 5-minute market 15-minute market 5-minute market 15-minute market 5-minute market PACE PACW NEVP Page 4
Congestion revenue rights auction revenues have averaged less than 50% of congestion payments. $500 100% Auction revenues received by ratepayers $450 90% Payments to auctioned CRRs $400 80% Auction revenues as percent of payments Percent of auctioned payments $350 70% Average percent 2012-2015 $ million $300 60% $250 50% $200 40% $150 30% $100 20% $50 10% $0 0% 2012 2013 2014 2015
Financial participants receive most profits from congestion revenue rights purchased in the auction. Congestion revenue rights auction (2015) Payments as a Entity type Auction costs CRR payments Net Revenue percent of costs Financial $48 $94 $47 196% Marketer $61 $53 ($8) 87% Physical gen $17 $24 $7 141% Physical load ($16) ($2) $14 13% Total $110 $169 $60 154% Total w/o load $126 $171 $46 136%
Key recommendations • Congestion revenue rights • Eliminate auction and let transmission ratepayers keep congestion rents. • Resource adequacy imports • Clarify/revise rules concerning how “physical” or “firm” imports used to meet resource adequacy requirements must be. • Start-up and minimum load costs • Begin developing and testing opportunity cost model. • Begin review of contract limits to ISO plans to allow under exemption. Page 7
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