Alternative Proposal for Real-Time Demand Response in the Forward Capacity Market

ISO New England Demand Resources Group October 19, 2006

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Summary of Existing Rules for RT DR in ISO-NEg

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Category 30 Minute Real-Time Demand Response

Limited to resources with environmental restrictions?

No; open to all dispatchable resources

Trigger OP4, Action 9 or 12; dispatched as last line of defense

Event Window Available for dispatch all non holidays, Monday through Friday, 7 AM to 6 PM

Capacity Payment 100% of capacity value

Energy Payment Greater of $500 per MWh or Real-Time LMP for the duration of each event

Funding Funded outside of market; costs allocated to network load

Ability to Set Price No; price taker

New RT DR Resource Capacity Limitations

No limit to participation

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Summary of ISO-NE Proposed Rules for RT DR in FCMg

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Category of RT DR Critical Peak Hour Real-Time Emergency Generation Demand Resource

Limited to resources with environmental restrictions?

No; applies to resources that can operate without environmental

restrictions

Yes; applies to resources that have significant environmental restrictions to operation

Trigger Seasonal Peak Hours and Shortage Hours (OP4, Action 6 and above)

OP4, Action 12

Event Window All non-holidays, Monday through Friday, 7 AM to 7 PM

All non-holidays, Monday through Friday, 7 AM to 7 PM

Capacity Payment 100% of FCA Clearing Price 50% of FCA Clearing Price 

Energy Payment No No

Funding Funded as integral part of capacity market; included in the ICR; able to

offset FMCC

Funded separately from the FCM; not included in the ICR; not able to offset FMCC; cost

allocation to market participants not specified

Ability to Set Price Yes; offer in to FCA as active bidder able to set price

No; do not offer in to FCA, price taker 

New RT DR Resource Capacity Limitations

No limits to the amount of  capacity able to be offered

Participation limit set by operable capability shortfall minus the tie-line support from external control areas, identified in the most recent Regional System

Plan (“RSP”); lottery to be used if oversubscribed

© 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution4

Summary of Alternative Proposal for RT DR in FCMg

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Category of RT DR Shortage Hour Real-Time Emergency Generation Demand Resource

Limited to resources with environmental restrictions?

No; resources can operate without environmental restrictions

Yes; resources that have significant environmental restrictions to operation

Trigger OP4, Action 9 OP4, Action 12

Event Window All non-holidays, Monday to Friday, 7 AM to 6 PM

All non-holidays, Monday to Friday, 7 AM to 6 PM

Capacity Payment 100% of FCA Clearing Price 80% of FCA Clearing Price

Energy Payment Real-Time LMP Real-Time LMP

Funding Funded as integral part of capacity market; included in the ICR; able to

offset FMCC

Funded as integral part of capacity market; included in the

ICR; able to offset FMCC

Ability to Set Price Yes; offer in to FCA as active bidder able to set price

No; offer in to FCA as price taker

New RT DR Resource Capacity Limitations

No limits to the amount of  capacity able to be offered

Participation limit set by operable capability shortfall minus the tie-line support from external control

areas, identified in the most recent Regional System Plan (“RSP”); lottery to be used if

oversubscribed

Supported by: Commonwealth of Massachusetts Division of Capital Asset Management, Conservation Law Foundation, ConsumerPowerline, Constellation NewEnergy, DemandDirect, Energy Curtailment Specialists, EnerNOC, North America Power Partners, Pinpoint Power, Verso Paper

© 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution5

Next steps

Consider other alternatives– 100% capacity payment of all RT DR– Separate consideration of RT DR from ODR

High priority re-design parameters– Integrate all RT DR in capacity market including FCA– Do not increase hours of RT DR from current well functioning

programs – maximize RT DR capacity provided

Questions:– What is best forum/venue to fairly consider these

alternatives?– What is needed timing for each step in decision making –

working backwards from Feb 2008?

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APPENDIX

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ISO-NE Experience on August 2, 2006

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Operating Procedure 4 Actionsg

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ACTION 6 (An ISO responsibility):

– Begin to allow the depletion of 30-minute reserve.

ACTION 9 (ISO responsible for plants, Local Control Centers for office complexes.)

– Request voluntary load curtailment of Market Participants’ facilities in the New England Control Area.

– Interrupt Real-Time Demand Response – 30 Minutes or Less Notification (that does not require a voltage reduction to be implemented).

– Implement a Power Watch.

ACTION 12 (ISO responsible for Demand Response, Local Control Centers for voltage reduction)

– Implement a voltage reduction of five percent (5%) of normal operating voltage requiring more than 10 minutes to implement.

– Interrupt Real-Time Demand Response – 30 Minutes or Less Notification (that requires a voltage reduction to be implemented).

– (An ISO responsibility) Alert the New York Independent System Operator (NYISO) that sharing of reserves within Northeast Power Coordinating Council (NPCC) may be required.

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OP4 Actions, 2001-2006

 OP4, Action 6-8, 10-11,

13+ OP4, Action 9 OP4, Action 12 Notes  Start End Length Start End Length Start End Length  19-Jun-06 16:50 21:00 4:10       16:50 20:00 3:10 Boston area only1-Aug-06 15:00 20:00 5:00 16:00 18:30 2:30       All of New England, except for the state of Maine2-Aug-06 12:15 20:00 7:45 12:15 18:00 5:45 13:00 16:45 3:45 All of New England                     27-Jul-05 12:33 18:30 5:57 12:33 18:30 5:57 12:33 18:30 5:57 SWCT area only13-Aug-05 16:15 19:00 2:45              25-Oct-05 17:50 20:00 2:10                                   20-Aug-04 15:31 21:35 6:04             Boston area only6-Dec-04 17:06 19:08 2:02              14-Jan-04 17:00 19:00 2:00                                   5-Dec-03 17:30 20:00 2:30              15-Aug-03 8:30 23:45 15:15 8:30 23:45 15:15 7:13 23:45 16:32 Connecticut only                     19-Aug-02 15:30 18:30 3:00 15:30 16:00 0:30        14-Aug-02 12:45 18:00 5:15 12:45 18:00 5:15        13-Aug-02 16:00 18:00 2:00              5-Aug-02 14:40 18:15 3:35              23-Jul-02 13:37 14:50 1:13              26-Jun-02 14:00 17:00 3:00                                   10-Aug-01 11:06 14:30 3:24 11:06 14:15 3:09        9-Aug-01 11:42 21:00 9:18 11:42 21:00 9:18 14:03 21:00 6:57  7-Aug-01 14:45 22:00 7:15              25-Jul-01 11:30 20:00 8:30 11:30 20:00 8:30        24-Jul-01 11:40 18:10 6:30 11:40 18:10 6:30        23-Jul-01 15:45 20:00 4:15              

Source: http://www.iso-ne.com/sys_ops/op4_action_archiv/index.html

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OP4 Actions, 2001-2006

  Total

  OP4, Action 6-8, 10-11, 13+ OP4, Action 9 OP4, Action 12

2006 16:55 8:15 6:55

2005 10:52 5:57 5:57

2004 10:06 0 0

2003 17:45 15:15 16:32

2002 18:03 5:45 0

2001 39:12 27:27 6:57

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CT and SWCT: Real-Time 30 Minute DR, 2004-06

0

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Jan

-04

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No

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Jan

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Jun

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Oct

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MW

CT SWCT

CT SWCTOct-06 395 211Sep-06 441 276Aug-06 424 274Jul-06 N/A N/A

Jun-06 282 172May-06 N/A N/AApr-06 260 166Mar-06 261 167Feb-06 261 167Jan-06 256 165Dec-05 194 159Nov-05 183 158Oct-05 255 231Sep-05 249 225Aug-05 243 219Jul-05 233 210

Jun-05 N/A N/AMay-05 210 183Apr-05 134 107Mar-05 133 106Feb-05 116 91Jan-05 116 91Dec-04 94 68Nov-04 162 137Oct-04 160 135Sep-04 N/A N/AAug-04 146 121Jul-04 147 112

Jun-04 N/A N/AMay-04 53 18Apr-04 62 26Mar-04 61 26Feb-04 61 26Jan-04 62 27

Source: ISO-NE DRWG meeting materials.

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Operable Capacity Margin – Summer, 50/50g

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Operable Capacity Margin – Summer, 90/10g

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Operable Capacity Margin – Winter, 50/50g

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Operable Capacity Margin – Winter, 90/10g

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