Copyright © 2004 NYISO
INTRODUCTION TO ANCILLARY SERVICES
NEW YORK MARKET ORIENTATION COURSE
JACK VALENTINENYISO MARKET TRAINING
Copyright © 2004 NYISO
ANCILLARY SERVICES MANUAL
• WWW.NYISO.COM/services/documents/manuals/pdf/oper_manuals/ancserv.pdf• Revised 04/06/04
• Manual does not reflect SMD market changes
Copyright © 2004 NYISO
What are Ancillary Services?
• Unbundled services to facilitate market operations
• Help to maintain reliable operation
• Consists of both physical equipment and human resources
GG
Voltage SupportRegulation
Reserves
GTGT
Black Start
LOAD LOAD
Reserves
Copyright © 2004 NYISO
What are Ancillary Services?Unbundled services
to facilitate market operations• Regulation• Reserves• Energy Imbalance
Help to maintain reliable operation• Scheduling• Voltage Support• Black Start
GG
Voltage SupportRegulation
Reserves
GTGT
Black Start
LOAD LOAD
Reserves
Copyright © 2004 NYISO
Six Ancillary Services
• Rate Schedule 1
• Rate Schedule 2• Rate Schedule 3
• Rate Schedule 4• Rate Schedule 5• Rate Schedule 6
• Scheduling, System Control & Dispatch
• Voltage Support• Regulation &
Frequency Response
• Energy Imbalance• Operating Reserve• Black Start
Copyright © 2004 NYISO
Ancillary ServicesEmbedded, Cost Based Services
Copyright © 2004 NYISO
Cost Based Ancillary Services
• Scheduling, System Control & Dispatch (Schedule 1)
• Voltage Control (Schedule 2)• Black Start (Schedule 6)
Copyright © 2004 NYISO
Scheduling, System Control & Dispatch (Schedule 1)
• NYISO Transmission System Operations for Reliability
• NYISO Facilitating the New York Wholesale Electric Market
Copyright © 2004 NYISO
Recovers the costs of operating the NYISOMechanism to recover NYISO startup costs
• Amortized over 5 years• Last Monthly Charge: December, 2004
Uplift Cost Recovery• Bid Production Cost Guarantee Payments
Cost paid by all transmission customers• 15% of fixed costs billed to Generators and other injections
Cost applies to all transactions
Scheduling, System Control & Dispatch Service
Copyright © 2004 NYISO
Scheduling, System Control & Dispatch Service (2)
ISO costs recovered through one of the two tariffs• ISO OATT• ISO Market Services Tariff
Provides for NYISO clearing account adjustment
Copyright © 2004 NYISO
Schedule 1 Cost Recovery-Market Services Tariff
• LBMP Market Administration• Administration of ICAP Market• Control Area Services Administration• Market Monitoring Program• 50% amortized NYISO start-up costs
Copyright © 2004 NYISO
Schedule 1 Cost Recovery-Open Access Transmission Tariff• Transmission Service Market Administration• Transmission System Engineering & Planning• Transmission Service Billing & Accounting• NYISO General & Administrative expense• System Scheduling, Control, & Dispatch costs• NYCA Transmission System Studies• 50% NYISO Start-up Costs• Residual Adjustments• FERC fees
Copyright © 2004 NYISO
Payment for Service
Billing• ISO embedded costs billed monthly based on
costs & expenses from previous month• Current Service Rate: $0.73 /MWH (combined
OATT & Mkt. Serv. Tariffs)• Uplift Charges and Residual Adjustments
billed/credited hourly to ALL in-month load• Bid Production Cost Guarantee charges are calculated
daily and billed hourly.• Average cost for 2003: $1.22/MWH
• Charges billed to all energy withdrawals including wheel-throughs and exports
• Suppliers are charged for 15% of ISO embedded costs and FERC fees
Copyright © 2004 NYISO
Market Residuals
Transmission Customers share in the costs/revenues from market residualsBased on Transmission Customers’ ratio share of NYISO megawatt-hour withdrawals
Copyright © 2004 NYISO
Residual Adjustment Components Defined
Marginal Losses• revenue collected from Transmission Customers in excess of payments to
Power Suppliers as a component of the LBMP or TUCChange in Transfer Capability
• Costs or savings associated with re-dispatch of generators due to changes in Transfer Capability between Forward Market schedules & Real-Time dispatch
Inadvertent Interchange• Costs or savings resulting from inadvertent interchanges between NYCA and
neighborsEmergency Transactions
• Costs or revenues from emergency transactions with neighboring control areas
Copyright © 2004 NYISO
Residual Adjustment Components Defined (2)
Metering Adjustment• Revenue excess/deficiency from metering errors
Forecast VS Actual System Load• Deviations between actual system load & the 5 minute load forecasts used by
RTD, resulting in either more or less Energy needed to meet system loadExcess Energy Amount
• Excess energy supplied to the system by generators that are off scheduleLoad to Bus Distribution
• Revenue excess/deficiency from Transmission Customers due to differences between their actual load and the sub-zonal load allocation used to compute their real-time settlements
Copyright © 2004 NYISO
Voltage Support Services(Rate Schedule 2)
• Generation Reactive Power Resources in the New York Control Area which must be operated to maintain voltages within acceptable limits
• Proper Voltage Support (pressure) is prerequisite for delivery of electrical energy through the transmission grid and is dynamic.
Copyright © 2004 NYISO
Voltage Support Services (Cont.)
The ability to produce or absorb VArs during a Contingency is valued as much or more than during steady-state conditions
Copyright © 2004 NYISO
Generator Reactive Power Capability
Generators submit reactive power info• capability curves with MW values and
associated high and low MVAr limits• Annual testing of capability is required
[see Ancillary Services Manual and Tech Bulletins #103 & #91]
Establishes Reactive Power production capability for unit
Copyright © 2004 NYISO
Responsibilities for Service
NYISO• Coordination of bus voltage profiles• Coordinates voltage and reactive set points
Suppliers• Generators with a functioning Automatic
Voltage Regulators (AVR) that have successfully performed annual MVArcapability testing
• Synchronous Condensers
Copyright © 2004 NYISO
Recipients of Service
LSEs and Transmission Customers serving load in NYCA
Transmission Customers serving load outside NYCA• wheel through transactions• export transactions
Must be purchased from the NYISO
Copyright © 2004 NYISO
Payment for Service
Payments made to Suppliers of service• Current Annual Rate: $3,919/MVAr
• Cost based rates eliminated
• Rate is a FERC approved rate based on previously filed OATTs by the original 8 member utilities of the NYPP.
• Payments made monthly (1/12)
Copyright © 2004 NYISO
Voltage Support Billing
Payments made for this service by• All Transmission customers; LSE’s,
Exports, and wheel-throughs• Rate for 2004: $0.34 /MWH• Under ISO OATT
Copyright © 2004 NYISO
Provision for Lost Opportunity Cost
Bid Cost Curve
D 2 D 1
B 2
B 1
P RT
Real Time LBMP (P RT)
LOC
MW
$
Copyright © 2004 NYISO
ICAP Provisions
• ICAP providers receive payments for voltage support at all times.
• Generators w/o ICAP contracts receive pro-rated payments based on when the unit is online
• Suppliers with Synchronous Condensers receive payments only when the unit is online
Copyright © 2004 NYISO
Failure to Perform By Suppliers
Generators should be aware that there are substantial penalties for failure to provide proper voltage support as requested
See the Ancillary Services Manual for details
Copyright © 2004 NYISO
Black Start Service(Rate Schedule 6)
• Generators capable of starting without an outside electric supply, following a system-wide blackout
• Available to participate in system restoration
Copyright © 2004 NYISO
Black Start Capability ServiceRepresents key selected Generators
• ability to start without availability of outside electric supply
• available to participate in NY power system or bulk power system restoration activities
Desirable operating characteristics• location in the grid• startup time• ramping capability
New York ISO
(230 kV and above)
Legend:
Oswego
OakdaleFraser
Marcy
Massena
Moses
Chateauguay
Plattsburgh
AlpsClay
Lafayette
Watercure
Stolle Rd.
EdicPorter
Rotterdam
PleasantValley
CoopersCorners
RockTavern
Roseton
Buchanan
RamapoSprainbrook
Dunwoodie
765 kV
345 kV230 kV Goethals
Complex
Homer City
Shore Rd.E.Garden City
HuntleyPannell
Sta.80
Transmission System
Somerset
500 kV
Adirondack
Dunkirk
Meyer
Willis
NewScotland
Leeds
Hillside
Millwood
Farragut
W49St/Rainey
Niagara
St. Lawrence
Gilboa
Copyright © 2004 NYISO
Source & Scheduling of ServiceNYISO Manages BS Capability
• identifies generating units in critical areas for NY bulk power system restoration
• has flexibility to seek new resources• develops and periodically reviews Black
Start Restoration Plan
Copyright © 2004 NYISO
Payment for Service(ISO OATT)
Payments made to Generators that are included in Restoration Plan covering• Embedded capital costs of equipment• O&M expenses• Training
Forfeiture of Payment for failure to startLSEs pay monthly black start charge on all
transactions to supply load in NYCA• $15,181 x load’s share of total NYCA load• includes in-state bilateral transactions• includes purchases of energy from LBMP market• includes import transactions
Copyright © 2004 NYISO
Local Black Start Service
Black Start Generators participating in Local Transmission Owner Restoration Plans• ISO makes payments to the participating
Generators• ISO is reimbursed by the LSE’s for Local
Black Start Capability in their area
Copyright © 2004 NYISO
Market Based Ancillary Services
• Operating Reserve• Regulation & Frequency Response• Energy Imbalance
Copyright © 2004 NYISO
Ancillary ServicesOperating Reserve Service
(Rate Schedule 5)
Copyright © 2004 NYISO
Operating Reserve
Backup Generation available in the event of:• Loss of any major Generating Unit• Loss of transmission • Significant “dragging”of the Pool Control Error
Three Markets• 10 Minute Spinning Reserve• 10 Minute Non-Synchronized Reserve• 30 Minute Reserve: non-sync & spinning
Copyright © 2004 NYISO
Generation Reserves
Peak Load Loading
Installed Capability Operating Capability
INSTALLEDINSTALLED OPERATINGOPERATINGTwo Separate Worlds
Real-TimeMw
Seasonal%
Copyright © 2004 NYISO
�600 MW min 600 MW
What is needed in addition to 10 min SYNC (600) to total
1200 MW
SINGLE LARGEST CONTINGENCY 1,200 MWRESERVE REQUIREMENT: 1,800MW
10 MIN SYNC
10 MINUTETOTAL
1,200 MW
30 MIN
10 MIN NON-SYNC
NYISO Operating Reserve Requirements
Copyright © 2004 NYISO
Reserve in the Day-Ahead Market (DAM)
• All dispatchable (flexible) resources will now participate in the reserve market.
• ISO Committed Flexible• Self-Committed Flexible• Available, off-line, 10 & 30 minute startup units
• SCUC continues to commit generation and produce DAM schedules for the co-optimization of energy, reserves and regulation• DAM Schedules are financially binding
Copyright © 2004 NYISO
Suppliers of Ancillary Services• NYCA generating units supplying ancillary services
as indicated in the table below.
30 Min
Regulation
10 MinOff-line
Self Committed
- Fixed
Self Committed- Flexible
ISO Committed
- Fixed
ISO Committed
-Flexible
30 Min Non-Synch
30 Min Spin10 Min Non-Synch
10 Min SpinStartupStatus
Copyright © 2004 NYISO
Reserve in the DAM (2)
• In the DAM, Generator Availability Bids are required • Bids will not be accepted without data
entered in this field (May enter “0”) Generators will no longer bid the amount of reserve offered
• Limited by Emergency ramp rate* and by the applicable Upper Operating Limit (UOL)
*No less than capacity weighted average of normal response rates.
Copyright © 2004 NYISO
Spinning Reserve BidMW
0
Minimum Generation Energy Block
Off-Line
Upper Operating Limit10 Min Spinning Reserve Award
Note: Reserve Pick-up has not been initiated
SCUC/RTD SchedulingRange for 10 min.Spinning
Reserve Generators
KEY
SCUC = Security Constrained UnitCommitment
RTD = Real-Time Dispatch
Copyright © 2004 NYISO
Copyright © 2004 NYISO
Reserve Requirements are Locational
Hourly Payments for Reserve Providers• Locational Pricing
Three Reserve Locations• West of Total East (Zones A-E)• East of Total East (Zones F-J)• Long Island (Zone K)
New York ISO
(230 kV and above)
Legend:
Oswego
OakdaleFraser
Marcy
Massena
Moses
Chateauguay
Plattsburgh
AlpsClay
Lafayette
Watercure
Stolle Rd.
EdicPorter
Rotterdam
PleasantValley
CoopersCorners
RockTavern
Roseton
Buchanan
RamapoSprainbrook
Dunwoodie
765 kV
345 kV230 kV Goethals
Complex
Homer City
Shore Rd.E.Garden City
HuntleyPannell
Sta.80
Transmission System
Somerset
500 kV
Adirondack
Dunkirk
Meyer
Willis
NewScotland
Leeds
Hillside
Millwood
Farragut
W49St/Rainey
Niagara
St. Lawrence
Gilboa
Copyright © 2004 NYISO
Reserve LocationalRequirements
• Locational requirements for reserve remain in effect
• With Total East constrained, separate clearing prices for NYCA (West) and East (East of total East)
• Long Island prices may not exceed East reserve clearing prices when reserve constraint is binding
Copyright © 2004 NYISO
Reserve LocationalRequirements
270-540MW
1,000MW
1800MW
30 Minute Reserve
120MW 1000MW
1200MW
10 Minute Total Reserve
60MW
300 MW
600 MW
10 Minute Spinning Reserve
Long Island Eastern New York New York CA
Copyright © 2004 NYISO
DAM Reserve Clearing Price• Locational Reserve Clearing Prices =
the sum of the shadow prices* of the applicable nested reserve constraints. • Shadow Price = The Lost Opportunity Cost
(LOC) plus the availability bid of the marginal reserve provider selected to meet a given reserve constaint.
• LOC= the margin on the sale of energy or regulation that the unit foregoes to provide reserve (difference between the units energy bid (offer) and LBMP)
• Demand Curves set reserve clearing prices when activated by capacity shortages
*The actual cost to provide the next available MW of reserve
Copyright © 2004 NYISO
Shadow Pricing of Reserve
SP7SP4SP1Total 30 Minute Reserve
SP8SP5SP210 minute Total Reserve
SP9SP6SP310 minute Spinning Reserve
LONG ISLANDEASTWEST
MCP for West 30 Min = SP1MCP for West 10 Min Total Reserve = SP1 + SP2MCP for West10 Min Total Reserve = SP1 +SP2+ SP3MCP for East 30 Minute = SP1 + SP4MCP for East 10 Min Non-Synch = SP1 +SP2 +SP4 +SP5MCP for East 10 Min Spin = SP1 +SP2 + SP3 +SP4 + SP5 + SP6
The shadow price of each locational reserve product is equal to thesum of the relevant shadow prices.
Copyright © 2004 NYISO
Full Two Settlement System for Reserve
• Loads purchase full reserve requirement in the DAM
• Real-time balancing obligation lies with suppliers with a day-ahead schedule• Reserve selected in the DAM must buy back what
is not scheduled in RT, at the RT clearing price• The Day Ahead Margin Assurance Payment is modified
due to the addition of the 2nd settlement for reserve and regulation services to ensure suppliers are “held harmless” when following ISO direction results in financial harm through no fault of their own.
Copyright © 2004 NYISO
Full Two Settlement System for Reserve
• Eliminates additional costs in today’s market due to re-optimization or procurement of replacement services in RT
• Creates additional incentive for suppliers to be available in RT and to perform when called upon in a reserve activation.
• 10-minute reserve shortages are less likely under RTS• 10-minute latent reserves will be available in real-
time.
Copyright © 2004 NYISO
Reserve in Real Time Dispatch(RTD)
• All availability bids are at $0 • All dispatchable capacity is visible
and available for scheduling reserve• Available 10 & 30 minute Spinning reserve• Available 10 & 30 Non Synch• Capability determined by ramp rate and the
applicable Upper Operating Limit (UOL)
Copyright © 2004 NYISO
Reserve Clearing Price in RTD
• RT reserve is scheduled and settled nominally every 5 minutes• Based on RTD’s co-optimization of energy,
reserves and regulation over the next 50-60 minutes
• Like the DAM, the reserve clearing prices are set using shadow pricing• Sum of the shadow prices of the applicable nested
reserve constraints• No availability bids in R-T• Shadow price is the LOC of the marginal units providing
reserve
Copyright © 2004 NYISO
Reserves in Real Time Dispatch Corrective Action Mode
(RTD-CAM)• Operator initiated version of RTD• Used to initiate
• Reserve Pickups• Large event & Small event
• Small event RPU permits basepoints to be lowered to reduce transmission line loading
• Produces 10 minute basepoints• May be followed with additional 5 minute intervals
• Maximum Generation Pickups• Basepoints ASAP
Copyright © 2004 NYISO
Copyright © 2004 NYISO
Reserves in RTD-CAM (Cont.)
• Continues to solve for reserve requirements• Maintained during reserve pickups
• Continues to calculate and set energy & reserve prices• More accurately reflects true condition and prices
become more realistic• Capability to commit 10 minute quick-
starts
Copyright © 2004 NYISO
Reserve – Day-Ahead Example
• In the DAM, Unit 3 sets the energy price @ $45 b/c Unit 4 is at min gen. Unit 2 is backed down for reserves, so the reserve price is this unit’s lost opportunity cost (difference between LBMP and their energy bid) plus the availability bid or 45-35+2 = 12.
Day-Ahead PositionMin Gen
(MW)
Incremental Energy (MW)
Maximum Capacity
(MW)
Spinning Reserve
(MW)
Incremental Energy Offer
Price ($/MW)
DA Spinning Reserve
Availability Offer ($/MW)
Energy Schedule
(MW)
Reserve Schedule
(MW)Unit 1 50 150 200 10 25 1 200 0Unit 2 50 150 200 10 35 2 195 5Unit 3 50 150 200 10 45 3 145 10Unit 4 50 150 200 10 55 4 50 10
590 25
Load (MW) 590LBMP ($/MWh $45
Reserve Requirement (MW) 25
Reserve Clearing Price ($/MW) $12
Fully DispHeld back for Res
Econ Disp@ Min Gen
The table below shows the day-ahead schedules for energy and reserves upon which two scenarios are based.
Copyright © 2004 NYISO
Reserve SettlementScenario 1
The following scenario illustrates the Day-Ahead Market and Real-time Market settlements when an additional generator (#5) self-commits-flexible in real-time. Reserves are moved to generator 5, and unit 2 is fully dispatched for energy.
What is the marginal unit for energy?
What is the marginal unit for reserve?
Copyright © 2004 NYISO
RT Base CaseMin Gen
(MW)
Incremental Energy (MW)
Maximum Capacity
(MW)
Spinning Reserve
(MW)
Incremental Energy Offer
Price ($/MW)
RT Spinning Reserve
Availability Offer ($/MW)
Energy Schedule
(MW)
Reserve Schedule
(MW)Unit 1 50 150 200 10 25 0 200 0Unit 2 50 150 200 10 35 0 200 0Unit 3 50 150 200 10 45 0 90 5Unit 4 50 150 200 10 55 0 50 10Unit 5 50 150 200 10 65 0 50 10
590 25
Load (MW) 590LBMP ($/MWh $45
Reserve Requirement (MW) 25
Reserve Clearing Price ($/MW) $0
RT Reserve SettlementScenario 1
• In day, Unit 5 self-commits as a flexible unit so it is also available for reserve scheduling.
• Unit 2 can be fully dispatched, there is no lost opportunity and availability bids are restricted to 0 in RT.
• Reserve clearing price is now $0 (45-45+0=0).
Fully DispFully DispEcon Disp
@ Min Gen@ Min Gen
Copyright © 2004 NYISO
Reserve – RT Scenario 1
• RT Base Case Settlement• RT load has not changed from day-ahead so there is no RT
settlement on load for either reserves or energy. All additional revenues required to pay generators not scheduled day-ahead is recovered from other generators who were scheduled day-ahead and were not in RT.
Net Energy
Schedule (MW)
Net Reserve Schedule
(MW)RT Energy
Payment ($)
RT Reserve Payment
($)Additional Cost ($) Profit ($)
Unit 1 0 0 -$ -$ -$ -$ Unit 2 5 -5 225$ -$ 175$ 50$ Unit 3 -55 -5 (2,475)$ -$ (2,475)$ -$ Unit 4 0 0 -$ -$ -$ -$ Unit 5 50 10 2,250$ -$ -$ 2,250$
0 0 -$ -$
Load 0 0 -$ -$
$45 (RT LBMP) X 5 MW
$35 (offer) X 5MW
$45(RT LBMP) X –55 MW
$45 (RT LBMP) X 50 MW
Copyright © 2004 NYISO
Reserve SettlementScenario 2
This scenario uses the same DAM schedule and settlement as scenario 1. Generator 5 self-committed flexible however, this time the load has increased by 360 MW.
What is the marginal unit for energy?
What is the marginal unit for reserve?
Copyright © 2004 NYISO
Reserve – Day-Ahead Example
• In the DAM, Unit 3 sets the energy price @ $45 b/c Unit 4 is at min gen. Unit 2 is backed down for reserves, so the reserve price is this unit’s lost opportunity cost (difference between LBMP and their energy bid) plus the availability bid or 45-35+2 = 12.
Day-Ahead PositionMin Gen
(MW)
Incremental Energy (MW)
Maximum Capacity
(MW)
Spinning Reserve
(MW)
Incremental Energy Offer
Price ($/MW)
DA Spinning Reserve
Availability Offer ($/MW)
Energy Schedule
(MW)
Reserve Schedule
(MW)Unit 1 50 150 200 10 25 1 200 0Unit 2 50 150 200 10 35 2 195 5Unit 3 50 150 200 10 45 3 145 10Unit 4 50 150 200 10 55 4 50 10
590 25
Load (MW) 590LBMP ($/MWh $45
Reserve Requirement (MW) 25
Reserve Clearing Price ($/MW) $12
Fully DispHeld back for Res
Econ Disp@ Min Gen
The table below shows the day-ahead schedules for energy and reserves upon which three scenarios are based.
Copyright © 2004 NYISO
Reserve – RT Higher Load Scenario 2
• Again, Unit 5 has self-committed as a flexible unit so it is also available for reserve scheduling.
• Load has come in 360 MWs higher. • Here units 3 & 4 are backed down to maintain the reserve
requirement.• The reserve price is set by Unit 3 and they both get paid the
marginal LOC of Unit 3 which is 65-45+0 = 20.
RT Higher LoadMin Gen
(MW)
Incremental Energy (MW)
Maximum Capacity
(MW)
Spinning Reserve
(MW)
Incremental Energy Offer
Price ($/MW)
RT Spinning Reserve
Availability Offer ($/MW)
Energy Schedule
(MW)
Reserve Schedule
(MW)Unit 1 50 150 200 10 25 0 200 0Unit 2 50 150 200 10 35 0 200 0Unit 3 50 150 200 10 45 0 195 5Unit 4 50 150 200 10 55 0 190 10Unit 5 50 150 200 10 65 0 165 10
950 25
Load (MW) 950LBMP ($/MWh $65
Reserve Requirement (MW) 25
Reserve Clearing Price ($/MW) $20
Fully DispFully Disp
Held back for ResHeld back for Res
Econ Disp
Copyright © 2004 NYISO
Reserve – RT Higher Load Scenario 2
• RT High Load Settlement• Net Real Time load must cover its shortfall in the energy
market. However the load bought sufficient operating reserves day-ahead, so any increases in a generators reserve schedule is offset by another generators reduction
Net Energy
Schedule (MW)
Net Reserve Schedule
(MW)RT Energy
Payment ($)
RT Reserve Payment
($)Additional Cost ($) Profit ($)
Unit 1 0 0 -$ -$ -$ -$ Unit 2 5 -5 325$ (100)$ 175$ 50$ Unit 3 50 -5 3,250$ (100)$ 2,250$ 900$ Unit 4 140 0 9,100$ -$ 7,700$ 1,400$ Unit 5 165 10 10,725$ 200$ 7,475$ 3,450$
360 0 23,400$ -$ 17,600$ 5,800$
Load 360 0 23,400$ -$
$65 (RT LBMP)X 5 MW
$20 (RT RCP) X –5 MW
$35 (offer) X 5 MW
Copyright © 2004 NYISO
Copyright © 2004 NYISO
Average Clearing Pricesfor Reserve:2003 (through
Sept., 2004) 10 Minute Spin
• East: $4.27 ($2.27)• West: $4.16 ($2.24)
10 Minute Non Synch• East: $1.03 ($0.31)• West: $0.99 ($0.30)
30 Minute Reserve: $0.96 ($0.26)
Copyright © 2004 NYISO
Performance Tracking for Reserve Generation
Units response will be measured for full 10 min. reserve pickups only
PTS compares unit’s actual generation with reserve pickup dispatch point.
Units not meeting their reserve obligation within 10 minutes will be penalized• receive proportionally less for availability for all
hours selected during that day• i.e., unit selected to provide 50 MW of Op Res
actually delivers 40 MW –availability payments for day paid at 80%
Removed under
SMD2
Copyright © 2004 NYISO
Failure to Provide Operating Reserve MW
0
Upper Operating Limit
Off-Line
Lower Operating Limit
SCDShortfall Penalty = (SCD - Act Gen) * LBMP
ACT GEN
Removed under
SMD2
Copyright © 2004 NYISO
NYISO Response to Failure to Perform…Penalties
No payment for the shortfall in energy Charged for the shortfall in energy provided,
at real-time LBMPReductions in Availability and Lost
Opportunity Cost payments• Based on Reserve Response
Persistent poor performance may result in• removal from the reserve market• Pass a re-qualification test
Removed under
SMD2
Copyright © 2004 NYISO
Reserve Shortage (Scarcity) Pricing (T.B. #108)
With a NYISO declared reserve shortage, LBMPs are calculated such that the LBMP in NYC (Zone J) is $1,000.• Zonal LBMPs will be the greater of the calculated
value or SCD (dispatch) LBMP• When shortage is only in the East, rule will only
apply to Eastern Zones (F-K)• Does not apply to transitional shortages
• End of Reserve Pickup• Emergency Sales to neighboring control areas• Top-of-the-hour schedule changes
Removed under SMD2
Copyright © 2004 NYISO
Reserve Demand Curve• To implement in our software, a more
robust and tightly integrated method of pricing reserves and energy during scarcity conditions• Replaces manual activation of scarcity pricing
rules• Consistent with our $500 value for EDRP and the
existing $1000 10-minute reserve shortage costs • Reserve Demand curve values set reserve
clearing prices and impacts LBMP when the NYCA is capacity constrained
• When serving the next MW of load creates or increases the shortage of reserve.
• Locational or statewide
• Will be applied in SCUC, RTC and RTD
Copyright © 2004 NYISO
Reserve Demand Curve• Price of Reserves is defined even if not
enough reserves are available at any price to meet the ISO’s reserve target.• In shortage (Capacity Constrained) situations, the
price of reserves is set by the Demand Curve.• Allows the market to clear and set rational prices• Only MWs scheduled as reserves are paid the
reserve clearing price • Demand Curve creates a risk on the supplier of
pricing themselves out of the market.
Copyright © 2004 NYISO
Reserve Demand Curve (Cont.)
• DC values were set high enough to capture with a high degree of certainty, all available reserve
• Implementation of the DC will not impede operator ability to manually procure reserves necessary to meet requirements
Copyright © 2004 NYISO
Demand Curve for Reserves-Normal
600 18001200Reserve Quantity (MW)
Res
erve
Pri
ce ($
)
1,000Demand
Supply
(curve is for demonstration purposes only)
Copyright © 2004 NYISO
Demand Curve for Reserves-Short of 30-Minute
600 18001200Reserve Quantity (MW)
Res
erve
Pri
ce ($
)
1,000Demand
Supply
(curve is for demonstration purposes only)
Copyright © 2004 NYISO
Demand Curve for Reserves-Short of 10-Minute
600 18001200Reserve Quantity (MW)
Res
erve
Pri
ce ($
)
1,000Demand
Supply
(curve is for demonstration purposes only)
Copyright © 2004 NYISO
Reserve Demand Curve
• 9 Demand Curves• One for each category and location of
reserve• Categories: 10 Minute Spin, 10 Minute Total and 30
Minute Total• Locations; NYCA, Eastern (East of Total East), and
Long Island
• Curves will be applied for each reserve constraint
Copyright © 2004 NYISO
Reserve Demand Curve Values ($/MW)
With reserve shortages these values establish reserve clearing prices and are added to the LBMP of energy.
300*25200MW @$50 200MW @ $100
200 MW @ $200
30 Min Total
25500*150*10 Min Total
2525500*10 Min Spin
LIEASTNYCA
*Higher values reflect reserve requirements that must be maintained per reliability rules.
Copyright © 2004 NYISO
Additive Impact on LBMPDemand Curve values are cascading - the value for each
constraint violated is added to the LBMP
$525$225$20030 Min Total
$1,200$875$35010 Min Total
$1,750$1,400$85010 Min Spin
LIEASTNYCA
300*25200MW @$50
200MW @ $100
200 MW @ $200
30 Min Total
25500*150*10 Min Total
2525500*10 Min Spin
LIEASTNYCA
Copyright © 2004 NYISO
Reserve Demand Curve Activation
LBMP = Energy bid of last MW converted to energy + (plus) Applicable Demand Curve Values
$649
$150
Unit 1 Unit 2
Pre-shortage RTDLBMP = $649RCP = $499 ($649 - $150)
Unit 2Unit 1
$150
$649
Post-shortage RTD
LBMP = $650 ($150 + $500)
RCP = $500 (Demand Curve)
• Unit 1 dispatched to meet nextMW of load: Sets LBMP.• Unit 2 held for reserves but mustbe dispatched to meet load.• With reserve shortage DC is activated and applied.
Copyright © 2004 NYISO
Operating Reserve ChargesLSE’sTransmission customers exporting
energyCharges calculated hourly by NYISO
• according to ratio of the LSE load to the sum of ALL load (plus exports) for that hour
• Not locational
Billed monthly under the ISO OATT• Average cost for 2002: $0.26/MWH• Average cost for 2003: $0.28/MWH• Average cost through Sept., 2004: $0.13/MWH
Copyright © 2004 NYISO
Ancillary ServicesRegulation
(Rate Schedule 3)
Copyright © 2004 NYISO
Regulation & Frequency Response
• Balancing Generation with ever-changing electric load
• Generator response to six second signals produced by the NYISO
Copyright © 2004 NYISO
The Need for Regulation & Frequency Response Service
• Assist in maintaining scheduled frequency at 60 Hz
• Compliance with NYSRC, NERC, and NPCC Reliability Requirements
DNIDNI&&
GenGen LoadLoad
Copyright © 2004 NYISO
NYISONYISO
TO TO Control Control CenterCenter
TO TO Control Control CenterCenter
TO TO Control Control CenterCenter
Control Signals to Satellite Control Centers (TOs)
AGC control errors• every 6 seconds• for units providing Regulation
RTD (SCD) Dispatch basepoint signals• nominally every 5 minutes• signal for each unit from RTD (SCD)• ramped at 6 sec. intervals
Copyright © 2004 NYISO
Control Signals to the Generators
• AGC signals are created by NYISO, passed through the TO and on to Regulating Units.• Effectiveness and timeliness may vary from unit to
unit• AGC/RTD (SCD) signals are created by
NYISO and available for direct pass to Generators• See Communications Interface Manual
(nyiso.com/services/documents/manuals/pdf/admin_manuals/communications.pdf)
• Flexible units are dispatched every 5 minutes
Copyright © 2004 NYISO
Regulation Providers
• Market open to generators that have AGC capability WITHIN NYCA...• not obligated to participate
• Suppliers may bid in the Day-Ahead Mkt., Real-Time Mkt., or both
• A single statewide clearing price.
Copyright © 2004 NYISO
Regulation Market
• Bidding and Scheduling• Suppliers must bid as ISO-committed
flexible or self-scheduled flexible in order to be eligible to provide regulation.
• Regulation suppliers must specify both the maximum amount of regulation capacity offered (MW) and an availability offer ($/MW).
• Regulation Capacity = Reg. response rate x 5 minutes
Copyright © 2004 NYISO
Generating Unit Operating CharacteristicsMW
Upper Operating Limit
AGC Desired Generation
RTD Base Point Signal (5 minutes)
Lower Operating Limit = Minimum Generation Point
Off-Line0
RegulationCapacity
RegulationCapacity
RTDBase PointRange
Copyright © 2004 NYISO
Copyright © 2004 NYISO
Copyright © 2004 NYISO
Two Settlement System• Full two-settlement for regulation (SCUC &
RTD).• Day Ahead schedules are financially
binding• Day ahead obligations balanced against
real time schedules.• Suppliers with net real time regulation schedules
will be settled at real time prices.• Suppliers selected Day-Ahead but not scheduled in R-T
will buy back the service at the R-T price• Suppliers scheduled R-T for additional regulation will
receive the R-T clearing price for additional regulation provided.
Copyright © 2004 NYISO
Changes in Regulation• Pricing
• Regulation market clearing prices will be set based on the shadow prices in both DAM and R-T.
• Shadow price= Marginal availability bid + marginal Lost Opportunity Costs (LOC) .
• Real-time regulation service will be scheduled and settled, nominally on a 5-minute basis (RTD).
• Regulation prices impact LBMP ONLY when the NYCA is capacity constrained
• when serving the next MW of load creates or increases the shortage of regulation.
Copyright © 2004 NYISO
Regulation Revenue Adjustment Payment/Charge
• Ensures regulation providers are properly compensated for regulating relative to the LBMP and their economic RTD basepoint
• RRAP-made to ensure full compensation for energy produced
• RRAC-avoids ISO overpayment for energy reserved and paid for in the Regulation Market
• Regulation Clearing Price incorporates the LOC of the marginal unit
• Calculated for each interval
Copyright © 2004 NYISO
Regulation Revenue Adjustment Payment/Charge
• Regulating units settle energy in real-time at the lesser of their actual output or AGC basepoint
Copyright © 2004 NYISO
Average Clearing Prices for Regulation 2003 (Through Sept., 2004)
Regulation (DAM) – $28.32 ($19.92)
Copyright © 2004 NYISO
Regulation Revenue Adjustment Payment/Charge
• When AGC is greater than the RTD• RRA Payment for units with energy bids greater
than R-T LMBP• RRP Charge for units with energy bids less than
R-T LBMP• When AGC is less than the RTD
• RRA Charge for units with energy bids greater than R-T LBMP
• RRA Payment for units with energy bids less than R-T LBMP
Copyright © 2004 NYISO
Regulation PerformanceActual
KEY
RTD = Real-Time Dispatch
MCP = Market Clearing Price for Regulation
MW
0
RegulationBandwidth
Upper Operating Limit
Off-Line
Lower Operating Limit
Max. AGC Basepoint
RTDMin. AGC BasepointPresent AGC Basepoint
Actual Generation{Unit Control Error
Copyright © 2004 NYISO
Incentive BasedRegulation Service
Availability Payment based on Performance Index (PI)
• PIreg= [(Reg Capacity-AAUCE) / (Reg. Capacity)] + 0.10
• AAUCE = Average Absolute Unit Control Error; derived from a unit’s deviation of the actual gen from the 30 second min & max of the desired generation of the unit (see next slide)
• Better Performance = Greater Availability Payments
• Availability Payment= [(PI-PSF) / (1-PSF)] X [MCP$ x Reg Cap]
• PSF= Payment Scaling Factor; initially set at 0
Copyright © 2004 NYISO
REGULATION AVAILABILITY EXERCISE
• A generator bids 10 MWs of Regulation Capacity at $4/MW into the New York market. The clearing price for that hour is $16/MW and the unit is selected to provide regulation.
• Assuming the AAUCE is 2 MW, what does the unit get paid in availability for this hour?
1.
Copyright © 2004 NYISO
Regulation Demand Curve
• There are no locational requirements for regulation
• Price of regulation set by curve when shortages occur and will impact LBMP
25 MW @$250/MW and Remainder @
$300/MW
RegulationNYCA
Copyright © 2004 NYISO
Charges for RegulationService
Billed for Service• LSEs• Payments made by generators not
providing regulation service in the form of Regulation Performance Penalty for persistent under-generation
• Assessed both fixed and flexible generation• Tracked by NYISO’s Performance Tracking System
(PTS)
Copyright © 2004 NYISO
Performance Tracking for Generation
5 minute RTD basepoints are ramped at 6 second intervals
Flexible generators are expected to respond, on average, within their deviation tolerance of the basepoint (RTD) intervals received• the deviation tolerance is 3% percent of the unit’s
Upper Operating Limit (UOL)• e.g.., 600 MW UOL unit and NYISO regulation
performance index at 1.0 * 3% deviation tolerance= 18 MW
Copyright © 2004 NYISO
Performance Tracking for Generation (Cont.)
Generation performance penalties are assessed generators only when they exceed their deviation tolerance* through under generation for more than 3 dispatch intervals• Deviation tolerance: lesser of 3% of unit’s upper operating
limit or 3 times the Response Rate (TB #78)• Regulation MCP (R.T.) x [SCD basepoint - actual generation
output]
Intermittent Renewables, selected NYC steam providers and some PURPA units are exempt.
Copyright © 2004 NYISO
Performance Tracking
Units are paid for over-generation within their deviation tolerance. • limited to 3% of Upper Op Limit bandwidth • Over-Generation in excess of deviation
tolerance is “given” to the market
Copyright © 2004 NYISO
Ancillary ServicesLesson 3 1/2
Energy Imbalance(Rate Schedule 4)
Copyright © 2004 NYISO
Energy Imbalance
• The mismatch between what was scheduled Day-ahead and Real-time actual withdrawals by load and injections from generators
• Inadvertent energy flow between the NY Control Area and External Systems
Copyright © 2004 NYISO
Energy Imbalance
Internal Energy Imbalance• addressed through real-time
market and real-time settlements• deviations between what was scheduled Day-
ahead and the Real time actual withdrawals (loads) and injections (generators)
• includes deviations from bilateral transaction schedules
Copyright © 2004 NYISO
350 MW
500 MW
Day-ahead LBMP
Day-ahead LBMP
400 MW
300 MW
plus 50mw @RTminus 50mw @RT
Forward Contracts
RTD Calls for More
RTD Basepoints
RTD Basepoints
RTD Calls for Less
Forward Contract for GenerationVs. Real Time Dispatch
Forward Contract
Gen Paidfor 350 Mw
at fwd cont $
Gen Paidfor 350 Mw
at fwd cont $
Copyright © 2004 NYISO
Actual Load Exceeds Fwd Contract:
Forward Contract for Covering LoadVs. Real Time Load
Actual Load Less than Fwd Contract:
Fwd Contractfor 60 Mw
Load Paysfor 60 Mw
at fwd cont $Plus10 Mw @RT
Load Paysfor 60 Mw
at fwd cont $
minus10 Mw @RT
70Mw
50Mw
Copyright © 2004 NYISO
Internal Energy Imbalance Services
Transmission Customers taking service under ISO OATT ONLY…• If actual energy withdrawal exceeds scheduled
deliveryadditional energy will be the greater of
• 150% of the real-time LBMP or• $100 / Mwh
• If actual withdrawal is less than scheduled, it will not be paid for the excess energy.
Copyright © 2004 NYISO
Energy Imbalance (External)
External Energy Imbalance• refers to mismatch between
scheduled and actual flows between NYCA and other control areas
• Inadvertent accounting using existing NERC guidelines
• addressed through in-kind energy payback
Copyright © 2004 NYISO
Who Pays for Services?
Ancillary Service InternalLoads
Exports WheelThroughs
Regulation & FrequencyResponseOperating ReserveBlack StartVoltage SupportScheduling, System Control& DispatchEnergy Imbalance
Copyright © 2004 NYISO
Ancillary Service Charges
~$0.001/MWHBlack Start~$0.28/MWH* ($0.13)Operating Reserve--------------Energy Imbalance~$0.34/MWH* ($0.20)Regulation$0.36/MWHVoltage Support
$0.73/MWH (Embedded)~$1.22/MW* ($1.46)(Uplift/Residuals)
Sched.,Sys Control& Dispatch
CostAncillary Service
*Average for 2003 (Through Sept., 2004)