Interjurisdictional Trade: Scheduling and Settlement Overview - PowerPoint PPT Presentation

Interjurisdictional Trade: Scheduling and Settlement Overview Technical Panel 8 Jul 08

2 Ontario Interconnections

3 Wheel-Through Import Types of Interjurisdictional Trade Export

Interjurisdictional Trade Similar to trade inside Ontario: • Everyone must bid and offer to be scheduled • Scheduling is independent of any contracts • Scheduling based on economics and ability to transmit the energy • No need to arrange transmission rights inside Ontario • Most uplifts apply to exports 4

Interjurisdictional Trade Unique features: • Prices are determined for each zone • Transactions are scheduled hourly and in advance of the start of the hour • Must supply NERC tag • Participant must navigate other jurisdictions to successfully complete their transactions • Must have a valid National Energy Board (NEB) authorization to export energy outside Canada 5

Intertie Transaction Timing Last Dispatch Hour Pre-Dispatch Hour Treated as dispatchable up to and Treated as non-dispatchable during the including the last pre-dispatch run dispatch hour: before the start of the dispatch hour: • Locked in for the hour • Compete with dispatchable Ontario • Dispatch algorithm assumes: supply/load to be scheduled • Imports offered at –$2000 (-MMCP) • Competes on basis of “as offered” • Exports bid at +$2000 (MMCP) and “as bid” price • Flows regardless of real-time price • Can set projected price 6

Zonal Pricing • When we refer to “the price in the zone”, we are not referring to the actual price of energy in the other jurisdiction (New York, Michigan, etc.) • “The price in the zone” is an IESO price: – It is set based on offers and bids submitted in the IESO ‐ administered market – The actual price of energy in the other jurisdiction has no direct effect on the calculation of price used to settle transactions in the zone 7

Exports External Market (New York Example) IESO-Administered Markets Ontario NY Ontario New York Intertie Proxy Bus Zone MWs Imported to MWs Exported from Ontario New York Transfer of MWs from one market to the other is achieved when both markets are navigated successfully 8

Wheeling-Through

Wheeling-Through • Wheeling ‐ through involves having an import and an export scheduled during the same hour • Can be: – Linked: The participant offers and bids in such a way that the import and export legs are formally associated – Implied: The two transactions occur in the same hour but are not formally linked 10

Wheeling-Through • The dispatch algorithm considers all imports and exports as independent transactions – linking them has no impact on the dispatch algorithm • Scheduling is based on the relative economics of each import and export • The IESO manually adjusts the schedules of the two linked transactions to the lowest quantity of the pair 11

Wheel-Through: Linked • Input as two separate transactions • Start NERC Tags with: – WI for the import leg – WX for the export leg • Offer import at up to ‐ $50; bid export at $2,000 12

Wheel-Through: Linked • Participants must still navigate other jurisdictions – Failure charges apply • IESO will ensure both legs are equal in size – We will curtail both legs the same amount • No CMSC is payable 13

Intertie Zone Prices

Pricing in the Intertie Zones • Imports and exports are settled at the applicable intertie zone price: – Exports are charged the price of the zone to which they are exporting and imports are paid the price of the zone from which they are importing; e.g.: • Price in the Ontario zone is $25/MWh • Price in the Michigan zone is $35/MWh – Exports from the Michigan zone are charged $35/MWh – Imports from the Michigan zone are paid $35/MWh 15

Different Prices Are Possible • The unconstrained run (which determines prices and market schedules) considers intertie limits – It will only use bids/offers in the intertie zone to the extent that the intertie can physically handle the transactions • Therefore, each intertie zone can have a price that is different than the Ontario energy market price – Price differences are caused by congestion (i.e., by having more energy that is economic trying to enter/leave the intertie zone than the intertie can physically handle) 16

Intertie Zone Prices Summary • Imports and exports are settled at the intertie zone price – This is the intertie congestion price based on the hour ahead pre ‐ dispatch plus each 5 ‐ minute real ‐ time price in Ontario • Intertie zone prices different from Ontario prices indicate congestion: – If the intertie price is lower than the Ontario price, it is import congested – If the intertie price is higher than the Ontario price, it is export congested 17

Settlement

Settlement Price for Imports and Exports Pre-dispatch Projected Intertie Projected Market Clearing - Zone Price Price in Ontario ICP (Intertie ICP (Intertie Congestion Price) Congestion Price) Real-time 5–Min. Ontario Price + Intertie Zone MCP 19

Settlement Price for an Intertie Transaction (Interval 1) Projected Intertie Projected Price in Pre-dispatch Projected Intertie Projected Price - Zone Price = $25 Ontario = $22 Zone Price in Ontario Intertie Congestion Intertie Price = $3 Congestion Price Real-time Intertie Congestion Intertie Interval 1: 5–minute Settlement 5-Minute Ontario Price Price = $3 + Congestion Price Ontario Price = $23 Intertie Zone Price = $26 Intertie Zone Price 20

Linked Wheels – Congestion Pricing Proposed Design

Areas where Technical Panel Feedback is Sought • Is additional information required? • Factors/analysis in resolution of design issue? • Stakeholder consultation forum(s)? • Proposed next steps 22

Design Elements - Offers Single transaction offer • Source and sink • NERC tag • Price ‐ quantity pairs 23

Design Elements – Pre-Dispatch Evaluation and Scheduling • Evaluated as single transaction in PD constrained and unconstrained sequences • Quantity ‘X’ scheduled if: – LW offer price for Qty ‘X’ ≥ [sink PD intertie zone price minus source PD intertie zone price] – Tie line limits not binding • Evaluated against other pure imports and exports on basis of “benefit” • PD constrained schedule quantities to checkout 24

Design Elements – Real-Time Scheduling • PD constrained schedule quantities carried forward to RT (assuming successful checkout) • Potential Design Issue(s) – How is linked wheel included in RT schedule? – Still exposed to RT congestion risk? – Impact on other intertie transactions? 25

Design Elements – Settlements • Energy – Payment = RT unconstrained schedule sink intertie zone price minus RT unconstrained schedule source intertie zone price • No change for other market charges and payments 26

Design Issues • Scheduling on basis of pre ‐ dispatch constrained sequence, settled on basis of prices determined in pre ‐ dispatch (ICP) and real ‐ time (MCP) unconstrained sequences, with no recourse to CMSC, IOG • Could MP end ‐ up in a financially worse position than they were willing to accept? 27

Design Issue - Analysis • New York to Michigan wheels • From June 4 to June 24, 2008, 68 hours where difference in real ‐ time intertie zone prices greater than difference in pre ‐ dispatch intertie zone prices • MP exposed to potential financial risk 14% of the time • Resolution? – Factors to consider? Analysis required? – Locational pricing for intertie transactions initiative – Stakeholder forum? TP? MPWG? IJTSC? 28

Proposed Next Steps • Incorporate Panel feedback: update design document, SE plan, work plan • Report back to IJTSC and MPWG • Proceed with work: resolve design issues, finalize design, draft market rules, implement 29

Supplementary Slides – Intertie Zonal Pricing

Zone Prices – No Congestion ONA 100 MW NYA 100 MW @$20 @$15 NYC 75 MW ONC 50 MW NYB 50 MW ONB 75 MW 250 MW @$30 @$40 @$22 @$25 Limit ON Load 215 MW Ontario New York Intertie Zone 31

Ontario Market Clearing Price – No Congestion Offers available to meet demand ONC: 50 MW @ $40 NYC: 75 MW @ $30 ONB: 75 MW @ $25 Ontario PD MCP = $22 NYB: 50 MW @ $22 ONA: 100 MW @ $20 ON Load 215 MW NYA: 100 MW @ $15 32

NY Zone Price – No Congestion • The price in an intertie zone is determined by the cost of satisfying an additional increment of demand in the zone (easiest to think of as one more MW) • This MW can be satisfied by energy from either an intertie zone transaction or a transaction in the Ontario zone, depending on what is most economic 33

New York Zone Price – No Congestion How can we satisfy one additional MW of demand in the NY zone most economically? Offers from NY intertie zone ONC: 50 MW @ $40 ONB: 75 MW @ $25 NYB: 50 MW @ $22 NYC: 75 MW @ $30 ONA: 100 MW @ $20 NY Zone MCP = $22 NYB: 50 MW @ $22 NYA: 100 MW @ $15 NYA: 100 MW @ $15 115 MW imported into Ontario 34

Ontario Market Clearing Price – No Congestion Offers available to meet demand ONC: 50 MW @ $40 NYC: 75 MW @ $30 ONB: 75 MW @ $25 Ontario PD MCP = $22 NYB: 50 MW @ $22 ONA: 100 MW @ $20 ON Load 215 MW NYA: 100 MW @ $15 35