Transcript Zonal Demand Curve

FEBRUARY 9-10, 2016 | NEPOOL MARKETS COMMITTEE| WESTBOROUGH MA
Forward Capacity Market (FCM)
Zonal Demand Curves
Chris Geissler
ECONOMIST
MARKET DEVELOPMENT
[email protected] | 413.535.4367
ISO-NE PUBLIC
FCM Zonal Demand Curves
WMPP ID:
63
Proposed Effective Date: FCA 11
• ISO is proposing new zonal demand curves for the Forward
Capacity Auction (FCA)
– Improve locational price signals in the FCM
– Better reflect incremental reliability impact of capacity than existing
(fixed) zonal requirements
– Derived using a methodology that satisfies three core design principles
– Robust to zonal configuration changes
– Comply with FERC Order requiring zonal curves for FCA 11
• This meeting:
– Additional numerical results
– Conforming changes to pricing and Descending Clock Auction (DCA)
rules
– Tariff language
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Agenda For Today
• Timing and Schedule Updates
– Requested fifteen day filing extension, updated project schedule, and
possible transition period for system curve
• Additional Results
– Response to stakeholder requests
• Zonal Demand Curves: Pricing Rules
– Pricing rules to incorporate congestion demand curves
• Demand Curves: Tail Truncation
– Proposal truncates long demand curve tails
• DCA Changes: Round Closing Conditions & Pre-Closing Excess
Supply
– Modified conditions account for interdependencies between system and
zonal cleared quantities
• Tariff Edits
– Overview of Tariff sections modified under ISO proposal
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Additional Materials Available
• Tariff Redlines
• ISO Memo ‘Sloped Demand Curves: Guide to Market Rule
Changes’
– Summarizes Tariff redlines
• Updated FCM Simulator Excel file
– Allows market participants to see market clearing prices under a range of
demand curves, supply conditions, and zonal configurations
– Includes graphics
• Updated ‘Indicative Demand Curve Values File’
– Includes LOLE values for FCA 9 system and zones
• Model 6 Simulation Data
– Stakeholders requested more information on prices, cleared quantities,
and entry/exit in these simulations
• ISO Technical Memo on Demand Curve Methodology (12/7/15)
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TIMING AND SCHEDULE UPDATES
Possible transition period for system curve, requested fifteen
day filing extension, and updated project schedule
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ISO and NEPOOL Jointly Filed for an Extension
• On January 27, the ISO, NEPOOL, and NESCOE submitted a
joint filing to FERC requesting that the filing deadline be
pushed back to April 15
• If accepted, this would allow for a March MC vote and April
PC vote as initially discussed (next)
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Potential Project Schedule 2016 (1 of 3)
Tentative 2016 Markets Committee (MC) Schedule
Feb. 2016
March 2016
Continued discussion and results; Tariff language;
potential amendments raised
Continued discussion and results; final Tariff language
(ISO proposal and amendments); Markets Committee
vote
Potential for an additional MC meeting on March 18 if needed
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Updated Committee Schedule (2 of 3)
Tentative 2016 Reliability Committee (RC) Schedule
Jan. 2016
Feb. 2016*
March 2016
Discussion of reliability outcomes and zonal capacity
transfer capability assumptions under ISO proposal
Continued discussion; Tariff language
Reliability Committee vote
* To occur on February 23 after Transmission Committee meeting.
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Potential Project Schedule (3 of 3)
Tentative Filing Schedule
April 2016
April 15
PC vote
FERC filing. Tentative effective date June 2016.
Implementation February 2017
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Committee Discussions To-Date
Oct. MC
Overview of ISO’s revised approach
Nov. MC
Details of ISO’s method; assumptions and computed
demand curves for FCA 10 zones; process and timing for
annual updates
Dec. MC
ISO’s results for other zonal possibilities (e.g., FCA10
zones with an added export zone)
Jan. MC
Administrative pricing rules; further quantitative and
qualitative results for ISO’s and stakeholders’ proposals
Jan. RC
Reliability impacts associated with ISO’s proposal
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Transition Period for System Demand Curve
• Stakeholders have expressed concern with changing the
existing system demand curve for FCA 11
• ISO understands that some stakeholders may prefer a
transitional period using a ‘hybrid’ approach before
implementing the ISO’s system curve proposal
• The ISO would consider a transitional approach if it had
consensus support from stakeholders
– Such an approach could not present implementation concerns or delay
implementing the proposed system curve for too long
• We welcome further feedback from stakeholders on their
preferred approach to implementing the ISO’s system demand
curve
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ADDITIONAL RESULTS
Response to stakeholder requests
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Additional Analysis Requested by Stakeholders
• Stakeholders have requested additional numerical analysis
including:
– How much of the reported system Loss of Load Expectation (LOLE)
value is due to internal interface limits
– Information on the likelihood of outcomes where an importconstrained zone procures less capacity than Local Sourcing
Requirement (LSR)
– Additional information on the Model 6 (stepped supply model) prices
and quantities in each simulation, and the entry and exit quantities
– Modifications to Model 6 to increase the reported quantity volatility
• Remainder of this module addresses these requests
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Zonal Contribution to Reported System LOLE
Numbers
• Stakeholders requested that the ISO report how much of the
system LOLE value is due to internal interface limits
• These numbers have been added to the constrained zone
results in the ‘Constraint’s Contribution to LOLE’ column in the
updated tables provided in Appendices 3 through 6
• The values are low across all models and zonal configurations
relative to total system LOLE
• Suggests that under the supply models studied, majority of
expected system events occur due to insufficient system
capacity, not zonal interface limits
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Probability of Import-Constrained Zones
Clearing Below LSR in ISO Supply Models
• Updated tables in Appendices 3 through 6 now include a
‘Freq. below LSR’ column for import-constrained zones
reporting percentage of cases where zone clears below LSR
for Models 3 and 6
• With Southeast New England (SENE) zone, these numbers are
very low (0.6 percent for Model 3, 0 percent for Model 6 in
Appendix 3)
• With FCA 9 zones, probability of being below LSR is higher in
Northeast Massachusetts (NEMA)/Boston and SEMA/RI zones
with the historical data
– 32 and 53 percent for Model 3 (see Appendix 5)
– Estimated LOLE impact associated with these zones remains modest
– Model 6 is not constructed to evaluate the FCA 9 zones
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Additional Information on Simulations
• Stakeholders requested additional information on simulation
inputs and results
• The ISO has posted an Excel file ‘Model 6 Simulation Data’
with the following data for each of the 1000 Model 6
simulations:
– Cleared Rest-of-System and SENE MW quantities
– Clearing prices in Rest-of-System and SENE
– Net change in total MWs offered relative to baseline
• Draws with a positive net MW change tend to have lower
clearing prices
– Relationship between net change and price is not perfectly correlated
because entry and exit are priced
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Modifications to Model 6 to Increase Standard
Deviation of Cleared Capacity
• Stakeholders requested the ISO study a version of Model 6 with
greater variation in the year-to-year entry and exit levels
• ISO made two adjustments to this model
– Increased the average slope of the supply curves in Rest-of-Pool (ROP) and
SENE
– Tripled the number of units potentially entering and exiting the market
• With these adjustments, standard deviation of cleared system
capacity increases to 167 MWs
– This is less than the corresponding standard deviation reported in the
Brattle model
– Reflects improved clearing methodology, which inherently yields less
volatile outcomes even with substantial entry/exit
• Price volatility remains comparable between ISO proposal and
current rules
– Standard deviation of system prices is $1.55 under ISO proposal, $1.28 for
current rules
• Full results under ISO proposal in Appendices 3 and 6 (Model 6c)
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Lower Volatility is Consistent with Modeling
Differences
• Brattle model evaluated a flatter system curve which will tend
to produce higher quantity volatility (and lower price
volatility)
– ISO’s model estimated a standard deviation of 295 MWs on cleared
system capacity with existing system curve
• Other factors that may decrease quantity volatility relative to
Brattle model:
– Use new interdependent clearing rules which allow more capacity to
clear in SENE when ROP is ‘short’ and vice versa
– Evaluate system configuration with one large import zone rather than
three small import zones
– Do not include ‘demand shocks’ in simulations
– Entry and exit occur at positive prices and therefore only shift a
portion of the supply curve, rather than occurring at a price of $0
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ZONAL DEMAND CURVES: PRICING RULES
Pricing rules to incorporate congestion demand curves
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Proposal Modifies FCA Capacity Zone Pricing
Rules to Be Consistent With Zonal Curves Design
Ahead next:
• Clearing prices are determined by intersection of supply and
demand curves
– Ensures zonal clearing prices cover highest bid/offer awarded a CSO
• Account for congestion-price-based zonal demand curves
• Addressed in MR1, Sec. III.13.2.3.3
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Quick Review: Pricing with Sloped Demand
• With the introduction of the sloped system curve for FCA 9,
ISO modified pricing rules for the Rest-of-System clearing
price
• Concept is to set price where supply crosses demand
• In effect, the system price is set to the greater of:
1.
2.
The system demand curve price corresponding to the total awarded
system Capacity Supply Obligation (CSO) MWs; or
The highest priced offer awarded a CSO (in rest-of-pool or an exportconstrained zone)
• Proposal modifies the zonal pricing rules similarly, with an
adjustment to account for congestion-based zonal curves
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Review: System Curve Price Set by Demand Curve
• Assume supply and
demand intersect at
‘vertical’ segment of
system supply curve
• Cleared price and
quantity determined
by intersection point
(Q*, P*)
• Supply offers to left
of intersection point
awarded CSOs
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Review: System Curve Price Set by Highest
Offer Awarded a CSO
• Clearing non-rationable
offer (A) in Rest-of-Pool
zone maximizes social
surplus
• Price (PL) corresponding
to cleared quantity Q* is
lower than A’s bid/offer
price
• Therefore Rest-of-Pool
clearing price (P*) is set
to A’s offer price
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Apply Same Pricing Principles in Constrained
Zones
• Prices in constrained zones reflect the sum of
– The rest-of-system price, and
– The congestion price specified by the zonal demand curve
• Congestion price will be:
– Positive or zero for import-constrained zones,
– Negative or zero for export-constrained zones
• Zonal Capacity Clearing Price follows the same logic as
system, with congestion adjustment. It is the greater of:
1.
2.
The zonal demand curve (congestion) price corresponding to the
total awarded zonal CSO MWs, plus the Rest-of-Pool Price; or
The highest priced offer awarded a CSO in the zone
• See revised Tariff Sec. III.13.2.3.3
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Zonal Price Set by Zonal Demand Curve
• System clears at price of
Psys* (i.e. the ROP price)
• Shift zonal curve up by this
amount to get ‘total price
demand curve’
• Curves intersect at ‘vertical’
segment of supply curve
• Cleared total price and
zonal quantity determined
by intersection point (Qz*,
Pz*)
• Supply offers to left of
intersection point awarded
CSOs
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Zonal Price Set by Highest Offer Awarded a CSO
• System clears at price of
Psys* (i.e. the ROP price)
• Shift zonal curve up by
this amount to get ‘total
price demand curve’
• Price on demand curve
corresponding to
cleared quantity Qz* is
lower than A’s bid/offer
price
• Therefore set zonal
price Pz* to A’s bid/offer
price
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DEMAND CURVES: TAIL TRUNCATION
Proposal truncates long demand curve tails
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Tail Truncation for Sloped Demand Curves
Ahead next:
• Demand curve ‘tails’ are truncated to prices of $0 at ‘high’
capacity levels, avoiding unneeded long ‘thin’ tails
• Applied to all capacity zones curves and system curve
• Addressed in MR1, Sec. III.13.2.2
– System curve: III.13.2.2.1
– Import zone curves: III.13.2.2.2
– Export zone curves: III.13.2.2.3
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Tail Truncation for System Demand Curve
• ISO proposed system curve falls
below $1.00 at approximately
107.5 percent of the Net Installed
Capacity Requirement (NICR)
• Approaches price of $0 to right of
NICR, but does not reach this value
until system has very large excess
• Propose truncating system curve so
that at capacity quantities in excess
of 110 percent of NICR, the system
demand curve has a price of $0
– Value implied by MRI curve is
approximately $0.30
– Current system curve hits $0 price
near 108 percent of NICR
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Tail Truncation for Zonal Demand Curves
• Propose truncating curves
for import-constrained zones
for quantities greater than
$0.01/kw-mo price point
• Retains positive congestion
prices ‘as is’ above $0.01; set
to $0 above truncation point
• In SENE, occurs at 10,770
MWs (107.4 percent of LSR)
• Propose $0.01 rather than
percent of LSR because low
but positive prices more
likely in constrained zones
(where it represents a
congestion price)
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Tail Truncation for Zonal Demand Curves
• Propose truncating curves
for export-constrained zones
for quantities less than
$-0.01/kw-mo price point
• Retains negative congestion
price ‘as is’ on sloped
portion above this point
• In Northern New England,
occurs at 8,440 MWs (95.6
percent of MCL)
• Propose $-0.01 rather than a
percent of MCL because low
but positive prices more
likely in constrained zones
(where it represent a
congestion price)
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DCA CHANGES: ROUND CLOSING
CONDITIONS & PRE-CLOSING EXCESS SUPPLY
Modified conditions account for interdependencies between
system and zonal cleared quantities
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Interdependent Clearing Requires Changes to
the DCA Round Closing Conditions
Ahead Next:
• Overview of DCA format
• Because of interdependence in clearing, current zone closing
conditions not compatible with ISO’s proposed methodology
• ISO proposes modified zone closing conditions that are
compatible with the design, and prevent zones from closing
prematurely
• Round closing revisions are in MR1, Section III.13.2.3.3
(Step 3: Determination of the Outcome of Each Round)
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Closing Zones in the DCA
• After DCA is concluded, all supply bids/offers are entered into
the Market Clearing Engine (MCE) to determine capacity
awards and prices
– On December 2, the ISO held a forum discussing the DCA format with
stakeholders; more information is available at http://www.isone.com/event-details?eventId=128563
• DCA must not close zones until it has collected a sufficient
quantity of priced supply bids/offers to clear the market and
determine the zone’s Capacity Clearing Price
• The DCA round closing rules impact how long the DCA
continues (how many rounds)
• The DCA closing rules are not directly used by the MCE, which
calculates the final CSO awards and Capacity Clearing Prices
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Closing Import-Constrained Zone Today:
When Supply < Demand
• Assume fixed demand
equal to LSR
• Can close importconstrained zone
because end of round
supply (SEOR) is less
than end of round
demand (LSR)
• Logic: Have enough
information about
supply stack to
determine which
suppliers are awarded
CSOs
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Cannot Close Zone When Supply > Demand
• Cannot close importconstrained zone
because end of round
supply (SEOR) exceeds
end of round demand
(LSR)
• Logic: Do not know
which set of suppliers
should be awarded CSOs
• In this instance ,should
clear all of A’s offer and
portion of B’s
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Current Rules for Closing Rest-of-System
• Rest-of-System is
closed using same
logic
• Close rest-of-system
when end of round
supply is less than
end of round demand
(SEOR < DEOR):
– End of round demand
is no longer a fixed
quantity
– Count at least LSR
capacity from import
zones
– Capacity in export
zone capped at MCL
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Interdependent Clearing Necessitates Changes
to Closing Conditions
• Clearing outcomes in each zone are interdependent because
of capacity substitution between zones and rest-of-system
– Outcomes in each zone depend on the prices of resource bids/offers in
the other zones as well
• Current rules do not fully account for interdependencies
when determining whether to close rest-of-system or a
constrained zone, and must therefore be modified
• These DCA round closing rule changes would be the same for
any curve ‘shape’ that uses interdependent clearing
• Implication: The DCA closing rule changes are needed for the
MRI-based system curve, a transition system curve, or other
(hybrid-type) alternatives.
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Accounting for Interdependencies in Import
Zones
• Issue: When can the import-constrained zone be closed if we
don’t yet know the rest-of-system clearing price?
• Do not want to close zone prematurely where do not have
enough information about capacity bids to clear market
• Recall: the zone’s ‘total price demand curve’ is the zonal
congestion curve shifted up by the rest-of-system clearing price
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Interdependencies Example – Import Zone
• If rest-of-system clearing price
is ‘high’ (PHSYS), the import
zone’s ‘total price demand
curve’ will be ‘high’ (DH)
– End of round zonal supply is
less than demand
– Can close zone
• If rest-of-system clearing price
is ‘low’ (PLSYS), the ‘total price
demand curve’ will be ‘low’
(DL)
– End of round supply exceeds
demand
– Cannot close zone
• Whether the zone can be
closed is therefore dependent
on rest-of-system outcome
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Interdependence Requires Conservative Closing to
Prevent Import Zone from Closing Prematurely
• At end of round, will not know whether total price demand
curve will be ‘low’ or ‘high’
• Need conservative rules to ensure that if ‘low’ case could
occur, do not close import zone prematurely
• Proposed conditions assume the ‘lowest’ possible case using
system supply information (next)
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Interdependence Requires Conservative Closing to
Prevent Import Zone from Closing Prematurely
• Calculate total system
capacity at start of round
price
• Observe: PLSYS is lowest
possible final price for restof-system
• Recall: as rest-of-system
price decreases, import
zone shifts left
• Using PLSYS in evaluating
whether to close import
zone will therefore assume
lowest possible zonal
demand at end of round
price
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Closing Conditions For Import-Constrained Zones
• After calculating PLSYS at end of each DCA round, the importconstrained zone is closed if either of the conditions is met:
1. End of round supply in the constrained zone is less than end
of round demand when we assume the rest-of-system
clearing price is as low as could occur (PLSYS), given DCA’s
supply stack in system and the zone after this round
2. Rest-of-System is closed
• If neither condition is met, zone remains open for next round
• The modification (in red) to the existing round closing
conditions prevents the import zone from closing prematurely
– See Tariff Sec. III.13.2.3.3
• Numerical example provided in Appendix 2
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Closing the Rest-of-System Zone
• Similar principle behind methodology for closing rest-ofsystem zone
• Key difference: System demand curve is not dependent on
clearing price in other zones, but system supply is dependent
on cleared quantities in constrained zones
– E.g. May clear additional capacity in import-constrained zones that
bids/offers above system clearing price
• Proposal accounts for maximum capacity that could still clear
in each constrained zone, given DCA’s supply stack after
round, before closing the Rest-of-System zone (next)
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Closing Conditions in ROS
• In import-constrained zones, must account for possibility that
auction will clear capacity from an import zone offered above
rest-of-system clearing price
– Methodology considers (1) total qualified capacity in the import zone
and (2) at high capacity quantities, MWs in the zone are equivalent to
those in ROP
• In export-constrained zones, may know that not all capacity
offered below end of round price can be cleared
– At some MW quantity in the export zone, (negative) congestion price
will fully offset rest-of-system price
– Count lesser of offered zonal capacity and quantity at which total zonal
price reaches zero if rest-of-system clears at end of round price
• Close rest-of-system if, ‘adjusted system supply’ is less than
system demand at the end of round price
• Otherwise, rest-of-system remains open for next round
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Calculating Excess System Supply
• If rest-of-system continues to next round, publish excess
supply accounting for these adjustments
– Excess supply modified to be calculated as ‘adjusted system supply’
minus system demand (both as of the end of round price)
– Accounts for all capacity supply that could be cleared in rest-of-system
or a constrained zone
• Effectively, this tells DCA participants the maximum potential
supply that is still competing to meet system demand at the
end of round price
• Calculating excess supply in this manner is consistent with the
round closing conditions, and ensures the published excess
supply will always be positive
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Closing Conditions in Export-Constrained Zones
• Issue: When can the export-zone be closed given that clearing
in zone and system are interdependent?
• Propose conservative approach to ensure that the export
zone does not close prematurely
• Know that the export-constrained zone can be closed if:
1.
2.
Capacity supplied in export-constrained zone at the end of round
price is less than the (highest) MW quantity on the zone’s congestion
demand curve at a price of $0 and
The rest-of-system capacity zone is closed
• To meet these conditions, rounds in an export-constrained
zone continue until both conditions are met
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Excess Supply in Export-Constrained Zones
• If either condition is not met, the export constrained zone
continues to the next round, and adjusted excess supply in the
export zone is published (as of the end of round price)
• Modify excess supply calculation to equal the zone’s supply at
the end of round price minus the highest MW quantity with a
congestion price of $0
– Adjusted excess supply calculation is consistent with the export zone’s
round closing conditions
• Effectively, this tells remaining (export zone) DCA participants
the maximum potential supply that is still competing to meet
the export zone demand
• Ensures the published excess supply cannot be negative while
zone is open
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Summary: Modified DCA Closing Conditions Ensure
Zones Do Not Close Prematurely
• Current closing conditions cannot be applied to the proposal
because of interdependencies between zones
• Issue occurs with any proposal using congestion prices
• ISO’s proposed modifications address this concern by
accounting for these interdependencies when determining
whether to close zones
• Continue to allow zones to potentially close at different
rounds of the DCA, based on the supply stack in each zone
• Excess supply rules are modified to be consistent with zone
closing conditions
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Chris Geissler
(413) 535-4367 | [email protected]
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APPENDIX 1
Results table footnotes
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Results table footnotes with FCA 10 zones plus
indicative NNE export-constrained zone
1.
These results model one import zone in southeast New England ("SENE") and one export zone in
northern New England (“NNE”). NICR is 34,151 MW, SENE LSR is 10,028 MW, and NNE MCL is
8,830 (see August PSPC materials at http://www.iso-ne.com/staticassets/documents/2015/08/pspc_082715_a3.2_2019_20_fca_icr_resuts.pdf).
2.
Models 1 and 2 assume market participants submit bids consistent with the full Pay for
Performance design, so supply offers are at Net CONE. No random bids are simulated for Models
1 or 2.
3.
Demand curves derived for the Model 1 Base Case assume the FCA 10 estimated
("administrative") Net CONE value of $10.81 per kw-month
4.
Model 2 Sensitivity Cases use the same demand curves as in the Model 1 Base Case, and report
performance results for the FCA if bid/offer prices are above/below est. Net CONE.
5.
Model 3 uses the same demand curves as in the Model 1 Base Case, but evaluates performance
and payments by simulating 1000 hypothetical supply curves using supply bid/offers from the
three most recent Forward Capacity Auctions (FCA7 - FCA9)
6.
Results in (B) use the same assumptions as in the Model 1 Base Case, except the demand curves
are derived using the estimated ("administrative") Net CONE values shown.
7.
Model 6a assumes a slope of 0.003 in Rest-of-Pool and a slope of 0.0045 in SENE. It randomly
allows up to 10 resources to enter and exit and runs 1000 simulations.
8.
Model 6b assumes a slope of 0.005 in Rest-of-Pool and a slope of 0.0075 in SENE. It randomly
allows up to 10 resources to enter and exit and runs 1000 simulations.
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APPENDIX 2: ADDITIONAL ROUND CLOSING
CONDITIONS EXAMPLES
Round closing examples under a range of zonal
configurations and demand conditions.
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Examples of Closing Conditions: Overview
• Three numerical examples showing a series of auction rounds
and when each zone closes
• Example 1: No constrained zones
• Example 2: System has a Northern New England exportconstrained zone
• Example 3: System has a Southeast New England importconstrained zone
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Example 1: No Constrained Zones
Round
0
1
2
3
4
End of
Round
Price
$17.30
$15.00
$11.00
$10.00
$9.00
"Adjusted
System
System Supply" Demand at
at End of Round
End of
Price
Round Price
34500
33510
34500
33710
34450
34120
34450
34250
34000
34390
Close
ROP?
No
No
No
No
Yes
• In each round, evaluate ‘adjusted system supply’ and system
demand at the end of round price
• ‘Adjusted System Supply’ is equal to system supply since there
are no constrained zones
• Close the auction when demand is greater than supply
• Occurs in round 4
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Example 2: NNE Impact on ROP Closing
Round
0
1
2
3
4
End of
Round
Price
$17.30
$15.00
$11.00
$10.00
$9.00
ROP Supply
at End of
Round Price
25000
25000
24950
24950
24500
"Adjusted
System
NNE Supply
System
Demand at
at End of
Supply" at End
End of
Round Price of Round Price Round Price
9500
34500
33510
9500
34500
33710
9500
34450
34120
9500
34430
34250
9500
33920
34390
Close
ROP?
No
No
No
No
Yes
NNE Demand
Highest MW
Where Congestion Quantity in NNE
Price Offsets End with Congestion
of Round Price
Price of $0
10010
8440
9747
8440
9530
8440
9480
8440
9420
8440
Close
NNE?
No
No
No
No
No
• With export zone, ‘adjusted system supply’ may discount how much
capacity is counted in NNE to account for possibility that at high MW
quantities, NNE’s congestion price will fully offset ROP end of round
price
• NNE capacity counted towards system supply is minimum of supply at
end of round price and ‘NNE Demand Where Congestion Price Offsets
End of Round Price’
• ROP again closes in fourth round when adjusted system supply falls
below system demand
• NNE does not close, auction continues (next)
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Example 2: NNE Closing
Round
0
1
2
3
4
5
6
7
End of
Round
Price
$17.30
$15.00
$11.00
$10.00
$9.00
$8.00
$7.00
$6.00
ROP Supply
at End of
Round Price
25000
25000
24950
24950
24500
24500
24500
24500
"Adjusted
System
NNE Supply
System
Demand at
at End of
Supply" at End
End of
Round Price of Round Price Round Price
9500
34500
33510
9500
34500
33710
9500
34450
34120
9500
34430
34250
9500
33920
34390
9500
33860
34540
9500
33755
34710
8000
32500
34900
Close
ROP?
No
No
No
No
Yes
-
NNE Demand
Highest MW
Where Congestion Quantity in NNE
Price Offsets End with Congestion
of Round Price
Price of $0
10010
8440
9747
8440
9530
8440
9480
8440
9420
8440
9360
8440
9255
8440
9228
8440
Close
NNE?
No
No
No
No
No
No
No
Yes
• NNE curve begins yielding negative congestion price at 8,440 MWs
• Close NNE once supply falls below this value
• Occurs in round 7
ISO-NE PUBLIC
57
Example 3: SENE Closing
Round
0
1
2
End of
Round
Price
$17.30
$15.00
$11.00
"Adjusted
System
ROP Supply SENE Supply at
System
Supply at Minimum Max SENE SENE Demand at
at End of
End of Round Supply" at End Beginning of System Congestion
Maximum
Round Price
Price
of Round Price Round Price
Price
Price
Congestion Price
24950
9550
34500
34500
$0.00
$17.30
9020
24950
9550
34500
34500
$8.27
$6.73
9400
24950
9500
34500
34500
$8.27
$2.73
9690
Close
SENE?
No
No
Yes
System
Demand at
End of
Round Price
33510
33710
34120
Close
ROP?
No
No
No
• To determine when to close SENE, compare ‘SENE Supply at End
of Round Price’ to ‘SENE Demand at Maximum Congestion Price’
• Demand value is calculated assuming lowest possible system
clearing price (and therefore ‘lowest’ total price demand curve
for SENE)
• Therefore represents lowest possible demand for capacity in
SENE at end of round price
• Occurs in round 2
• Auction continues for rest-of-system (next)
ISO-NE PUBLIC
58
Example 3: SENE Impact on ROP Closing
Round
0
1
2
3
4
End of
Round
Price
$17.30
$15.00
$11.00
$10.00
$9.00
"Adjusted
System
ROP Supply SENE Supply at
System
Supply at Minimum Max SENE SENE Demand at
at End of
End of Round Supply" at End Beginning of System Congestion
Maximum
Round Price
Price
of Round Price Round Price
Price
Price
Congestion Price
24950
9550
34500
34500
$0.00
$17.30
9020
24950
9550
34500
34500
$8.27
$6.73
9400
24950
9500
34500
34500
$8.27
$2.73
9690
24950
9500
34500
34500
9880
24500
9500
34050
34500
10090
Close
SENE?
No
No
Yes
-
System
Demand at
End of
Round Price
33510
33710
34120
34250
34390
Close
ROP?
No
No
No
No
Yes
• ‘Adjusted system supply’ must account for possibility of clearing
capacity in SENE offered above the end of round price
• In this example, count total qualified capacity in SENE (9550)
• Close ROP when ‘adjusted system supply’ falls below system
demand
• Occurs in Round 4
ISO-NE PUBLIC
59
APPENDIX 3: RESULTS WITH FCA 10
DEMAND PARAMETERS
With SENE modeled as an import-constrained zone. Revisions
from prior versions boxed in red.
ISO-NE PUBLIC
New Results
ISO Proposal (1 of 3) – System-Level Results
Reliability Results
Zonal Configuration:
SENE (import) and Rest Of System 1
Sys tem
LOLE
Sys tem
1-da y-i n
(events/yr)
Total Market Payments
Avg.
Cl ea red
Freq.
Sys tem
Ca pa ci ty Bel ow 1Cl ea red
Std. Dev
i n-5
Ca pa ci ty
(MW)
(MW)
Freq.
Bel ow
NICR
(% of draws) (% of draws)
Avera ge
Avera ge
of
Bottom
20%
Avera ge
of Top
20%
($mil/yr)
($mil/yr)
($mil/yr)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
34,151
-
-
-
$4,431
-
-
0.071
14.0
34,712
-
-
-
$2,916
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
11.0
34,314
-
-
-
$3,932
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
34,012
-
-
-
$4,898
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
9.2
34,151
-
-
-
$4,559
-
-
0.077
12.9
34,596
280
0.0%
4.4%
$3,254
$2,366
$4,283
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
34,151
-
-
-
$3,544
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
34,151
-
-
-
$5,316
-
-
0.100
10.0
34,389
-
-
-
$4,716
-
-
Model 6a (Modest Slope) 7
0.102
9.8
34,127
75
0.0%
37.4%
$4,517
$4,306
$4,927
Model 6b (Steep Slope)8
Model 6c (Steeper Slope, More Entry and Exit)
0.103
9.7
34,113
119
0.0%
37.1%
$4,571
$4,273
$5,240
0.106
9.4
34,078
167
0.0%
45.5%
$4,704
$4,115
$5,686
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
61
New Results
ISO Proposal (2 of 3) – SENE Import Zone Results
Reliability Results
Zonal Configuration:
SENE (import) and Rest Of System 1
Sys tem
LOLE
SENE Clearing Price
Avg.
Cons tra i nt's
Cl ea red
SENE
Contri bution
Ca pa ci ty
Cl ea red
to LOLE
Std. Dev
Ca pa ci ty
Freq.
Bel ow
LSR
Avera ge
Cl ea ri ng
Frequency
Frequency
Pri ce
of Pri ce
a t Ca p
Std. Dev
Sepa ra tion
(events/yr)
(events/yr)
(MW)
(MW)
(% of draws)
($/kW-m) ($/kW-m) (% of draws) (% of draws)
0.100
0.000
10,840
-
-
$10.81
-
-
-
0.071
0.000
10,840
-
-
$7.00
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
0.000
10,840
-
-
$9.55
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
0.000
10,840
-
-
$12.00
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
0.008
9,950
-
-
$11.89
-
-
-
0.077
0.000
11,053
463
0.6%
$7.88
$1.81
0.0%
41.7%
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
10,840
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
10,840
-
-
$12.97
-
-
-
0.100
0.014
9,816
-
-
$12.97
-
-
-
0.102
0.000
10,807
164
0.0%
$11.04
$0.66
0.0%
68.8%
0.103
0.000
10,809
151
0.0%
$11.18
$1.11
0.0%
70.6%
0.106
0.000
10,800
245
0.1%
$11.54
$1.55
0.5%
76.4%
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
Model 6a (Modest Slope) 7
8
Model 6b (Steep Slope)
Model 6c (Steeper Slope, More Entry and Exit)
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
62
New Results
ISO Proposal (3 of 3) – Rest-of-System Results
Reliability Results
Zonal Configuration:
1
SENE (import) and Rest Of System
Sys tem
LOLE
Sys tem
1-da y-i n
(events/yr)
ROS Clearing Price
Avg. ROS Cl ea red
Freq.
Cl ea red Ca pa ci ty Bel ow 1Ca pa ci ty Std. Dev
i n-5
(MW)
(MW)
(% of draws)
Avera ge
Cl ea ri ng
Frequency
Pri ce
a t Ca p
Std. Dev
($/kW-m) ($/kW-m) (% of draws)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
23,311
-
-
$10.81
-
-
0.071
14.0
23,872
-
-
$7.00
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
11.0
23,474
-
-
$9.55
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
23,172
-
-
$12.00
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
9.2
24,201
-
-
$10.81
-
-
0.077
12.9
23,543
418
0.0%
$7.84
$1.77
0.0%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
23,311
-
-
$8.65
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
23,311
-
-
$12.97
-
-
0.100
10.0
24,574
-
-
$10.81
-
-
0.102
9.8
23,320
177
0.0%
$11.03
$0.64
0.0%
0.103
9.7
23,304
187
0.0%
$11.17
$1.09
0.0%
0.106
9.4
23,278
246
0.0%
$11.50
$1.52
0.4%
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
Model 6a (Modest Slope) 7
8
Model 6b (Steep Slope)
Model 6c (Steeper Slope, More Entry and Exit)
ISO-NE PUBLIC
Footnotes are included in Appendix 1.
63
APPENDIX 4: RESULTS WITH FCA 10 DEMAND
PARAMETERS AND EXPORT-CONSTRAINED ZONE
With SENE modeled as an import-constrained zone and NNE
modeled as an export-constrained zone. Revisions from prior
versions boxed in red.
ISO-NE PUBLIC
ISO Proposal (1 of 4) – System-Level Results
Total Market Payments
Reliability Results
Sys tem
LOLE
Zonal Configuration:
SENE (import), NNE (export) and Rest Of System 1
Sys tem
1-da y-i n
(events/yr)
Avg.
Freq.
Cl ea red
Sys tem
Ca pa ci ty Bel ow 1Cl ea red
i n-5
Std. Dev
Ca pa ci ty
(MW)
(MW)
Freq.
Bel ow
NICR
(% of draws) (% of draws)
Avera ge
Avera ge
of
Bottom
20%
Avera ge
of Top
20%
($mil/yr)
($mil/yr)
($mil/yr)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
34,151
-
-
-
$4,430
-
-
0.071
14.1
34,712
-
-
-
$2,915
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
11.0
34,314
-
-
-
$3,932
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
34,012
-
-
-
$4,897
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
9.2
34,151
-
-
-
$4,559
-
-
0.086
11.7
34,554
255
0.0%
4.5%
$3,162
$2,350
$4,164
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
34,151
-
-
-
$3,544
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
34,151
-
-
-
$5,316
-
-
0.100
10.0
34,389
-
-
-
$4,715
-
-
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
65
New Results
ISO Proposal (2 of 4) – SENE Import Zone Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
SENE (import), NNE (export) and Rest Of System 1
SENE Clearing Price
Avg.
Cons tra i nt's
Cl ea red
SENE
Contri bution
Ca pa ci ty
Cl ea red
to LOLE
Std. Dev
Ca pa ci ty
Freq.
Bel ow
LSR
Avera ge
Cl ea ri ng
Frequency
Frequency
Pri ce
of Pri ce
a t Ca p
Std. Dev
Sepa ra tion
(events/yr)
(events/yr)
(MW)
(MW)
(% of draws)
($/kW-m) ($/kW-m) (% of draws) (% of draws)
0.100
0.000
10,840
-
-
$10.81
-
-
-
0.071
0.000
10,840
-
-
$7.00
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
0.000
10,840
-
-
$9.55
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
0.000
10,840
-
-
$12.00
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
0.008
9,950
-
-
$11.89
-
-
-
0.086
0.000
11069
468
0.6%
$8.11
$1.70
0.0%
41.1%
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
10,840
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
10,840
-
-
$12.97
-
-
-
0.100
0.014
9,816
-
-
$12.97
-
-
-
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
66
New Results
ISO Proposal (3 of 4) – NNE Export Zone Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
1
SENE (import), NNE (export) and Rest Of System
NNE Clearing Price
Cons tra i nt's Avg. NNE Cl ea red
Freq.
Contri bution Cl ea red Ca pa ci ty Bel ow 1to LOLE
Ca pa ci ty Std. Dev
i n-5
(events/yr)
(events/yr)
0.100
0.000
(MW)
Avera ge
Cl ea ri ng
Frequency
Frequency
Pri ce
of Pri ce
a t Ca p
Std. Dev
Sepa ra tion
(MW)
(% of draws)
($/kW-m) ($/kW-m) (% of draws) (% of draws)
8,440
-
-
$10.81
-
-
-
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.071
0.000
8,440
-
-
$7.00
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
0.000
8,440
-
-
$9.55
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
0.000
8,440
-
-
$12.00
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
0.000
8,440
-
-
$10.81
-
-
-
0.086
0.007
8805
218
0.0%
$6.36
$2.15
0.0%
94.8%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
8,440
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
8,440
-
-
$12.97
-
-
-
0.100
0.000
8,440
-
-
$10.81
-
-
-
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
67
ISO Proposal (4 of 4) – Rest-of-System Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
SENE (import), NNE (export) and Rest Of System 1
Sys tem
1-da y-i n
(events/yr)
ROS Clearing Price
Avg. ROS Cl ea red
Freq.
Cl ea red Ca pa ci ty Bel ow 1Ca pa ci ty Std. Dev
i n-5
(MW)
(MW)
(% of draws)
Avera ge
Cl ea ri ng
Frequency
Pri ce
a t Ca p
Std. Dev
($/kW-m) ($/kW-m) (% of draws)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
14,871
-
-
$10.81
-
-
0.071
14.1
15,432
-
-
$7.00
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
11.0
15,034
-
-
$9.55
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
14,732
-
-
$12.00
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.109
9.2
15,761
-
-
$10.81
-
-
0.086
11.7
14680
408
0.0%
$8.07
$1.66
0.0%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
14,871
-
-
$8.65
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
14,871
-
-
$12.97
-
-
0.100
10.0
16,134
-
-
$10.81
-
-
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
68
APPENDIX 5: CURVES AND RESULTS WITH
FCA 9 DEMAND PARAMETERS
With Connecticut, NEMA/Boston, and SEMA/RI modeled as
import-constrained zones. Revisions from prior versions
boxed in red.
ISO-NE PUBLIC
Demand Curves in Smaller Constrained Zones
• Stakeholders requested additional information on shape of
curves in smaller zones
• Indicative demand curves for Connecticut, NEMA and SEMA
import constrained zones
• Results tables for a system with these zones
• Posted an Excel file with the curve data for each zone
ISO-NE PUBLIC
70
Demand Curve Assumptions
• Estimated Net CONE is $10.81
• FCA 9 input assumptions
• Net ICR = 34,189
• CT LSR = 7,331 (TSA)
• NEMA LSR = 3,572 (TSA)
• SEMA LSR = 7,479 (LRA)
• For more information see http://www.iso-ne.com/staticassets/documents/2014/08/201819_fca_icr_values_pspc_08282014.pdf
ISO-NE PUBLIC
71
Indicative System Demand Curve
Using FCA 9 Inputs
Notes: NICR = 34,189 MW for FCA 9.
ISO-NE PUBLIC
72
Indicative Connecticut (Congestion Pricing) Demand Curve
Using FCA 9 Inputs
Capacity Quantities and Slopes at Selected Prices
Congestion Price
$1.00 $2.00 $5.00 $10.00
MW Quantity
7,157 6,969 6,721 6,514
Slope (per 100 MW)
-$0.35 -$0.77 -$1.75 -$3.16
ISO-NE PUBLIC
Notes: LSR = 7,331 MW for CT in FCA 9.
73
Indicative NEMA (Congestion Pricing) Demand Curve
Using FCA 9 Inputs
Capacity Quantities and Slopes at Selected Prices
Congestion Price
$1.00 $2.00 $5.00 $10.00
MW Quantity
3,411 3,296 3,130 2,984
Slope (per 100 MW)
-$0.59 -$1.19 -$2.60 -$4.39
ISO-NE PUBLIC
Notes: LSR = 3,572 MW for NEMA in FCA 9.
74
Indicative SEMA/RI (Congestion Pricing) Demand Curve
Using FCA 9 Inputs
Capacity Quantities and Slopes at Selected Prices
Congestion Price
$1.00 $2.00 $5.00 $10.00
MW Quantity
7,398 7,376 7,029 6,859
Slope (per 100 MW)
-$0.41 -$0.90 -$2.18 -$3.92
ISO-NE PUBLIC
Notes: LSR = 7,479 MW for SEMA/RI in FCA 9.
75
Observations for Indicative Curves in Smaller
Import Zones
• Shape is similar to SENE import zone curve presented earlier
• Price at LSR varies slightly between zones, ranges from $0.42
to $0.73
• Design produces reasonable curves across a range of importconstrained zones of different ‘sizes’
ISO-NE PUBLIC
76
ISO Proposal (1 of 5) – System-Level Results
Reliability Results
Zonal Configuration:
CT (import), NEMA (import), SEMA/RI (import) and Rest Of System 1
Sys tem
LOLE
Sys tem
1-da y-i n
(events/yr)
Total Market Payments
Avg.
Cl ea red
Freq.
Sys tem
Ca pa ci ty Bel ow 1Cl ea red
Std. Dev
i n-5
Ca pa ci ty
(MW)
(MW)
Freq.
Bel ow
NICR
(% of draws) (% of draws)
Avera ge
Avera ge
of
Bottom
20%
Avera ge
of Top
20%
($mil/yr)
($mil/yr)
($mil/yr)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
34,189
-
-
-
$4,438
-
-
0.071
14.1
34,731
-
-
-
$2,921
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.090
11.1
34,347
-
-
-
$3,939
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
34,054
-
-
-
$4,907
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.129
7.8
34,189
-
-
-
$4,533
-
-
0.104
9.6
34,616
272
0.1%
5.6%
$3,462
$2,396
$4,616
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
34,189
-
-
-
$3,548
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
34,189
-
-
-
$5,322
-
-
0.100
10.0
34,847
-
-
-
$4,982
-
-
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
77
New Results
ISO Proposal (2 of 5) – CT Import Zone Results
Reliability Results
Zonal Configuration:
CT (import), NEMA (import), SEMA/RI (import) and Rest Of System 1
Sys tem
LOLE
CT Clearing Price
Avg.
Cons tra i nt's
Cl ea red
SENE
Contri bution
Ca pa ci ty
Cl ea red
to LOLE
Std. Dev
Ca pa ci ty
(events/yr)
(events/yr)
0.100
0.000
(MW)
Freq.
Bel ow
LSR
Avera ge
Cl ea ri ng
Frequency
Frequency
Pri ce
of Pri ce
a t Ca p
Std. Dev
Sepa ra tion
(MW)
(% of draws)
($/kW-m) ($/kW-m) (% of draws) (% of draws)
7,810
-
-
$10.83
-
-
-
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.071
0.000
7,810
-
-
$7.02
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.090
0.000
7,810
-
-
$9.57
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
0.000
7,810
-
-
$12.02
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.129
0.012
7,135
-
-
$10.83
-
-
-
0.104
0.000
9,289
300
0.0%
$7.86
$1.75
0.0%
0.0%
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
7,810
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
7,810
-
-
$12.97
-
-
-
0.100
0.023
7,090
-
-
$12.97
-
-
-
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
78
New Results
ISO Proposal (3 of 5) – NEMA Import Zone Results
NEMA Clearing Price
Reliability Results
Zonal Configuration:
CT (import), NEMA (import), SEMA/RI (import) and Rest Of System 1
Sys tem
LOLE
Avg.
Cl ea red
Cons tra i nt's
SENE
Ca pa ci ty
Contri bution
Cl ea red
Std. Dev
to LOLE
Ca pa ci ty
Freq.
Bel ow
LSR
Avera ge
Frequency
Cl ea ri ng
Frequency
of Pri ce
Pri ce
a t Ca p
Sepa ra tion
Std. Dev
($/kW-m) ($/kW-m) (% of draws) (% of draws)
(MW)
(% of draws)
4,050
-
-
$10.82
-
-
-
0.000
4,050
-
-
$7.01
-
-
-
0.090
0.000
4,050
-
-
$9.56
-
-
-
0.110
0.000
4,050
-
-
$12.01
-
-
-
0.129
0.008
3,398
-
-
$10.82
-
-
-
0.104
0.012
3,592
297
32.4%
$9.35
$2.96
0.0%
100.0%
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
4,050
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
4,050
-
-
$12.97
-
-
-
0.100
0.012
3,371
-
-
$12.97
-
-
-
(events/yr)
(events/yr)
0.100
0.000
0.071
(2b) Marginal Offer at $ 9.55 / kw-mo.
(2c) Marginal Offer at $12.00 / kw-mo.
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
(MW)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
79
New Results
ISO Proposal (4 of 5) – SEMA/RI Import Zone Results
SEMA/RI Clearing Price
Reliability Results
Zonal Configuration:
CT (import), NEMA (import), SEMA/RI (import) and Rest Of System 1
Sys tem
LOLE
Avg.
Cl ea red
Cons tra i nt's
SENE
Ca pa ci ty
Contri bution
Cl ea red
Std. Dev
to LOLE
Ca pa ci ty
Freq.
Bel ow
LSR
Avera ge
Frequency
Cl ea ri ng
Frequency
of Pri ce
Pri ce
a t Ca p
Sepa ra tion
Std. Dev
($/kW-m) ($/kW-m) (% of draws) (% of draws)
(events/yr)
(events/yr)
(MW)
(MW)
(% of draws)
0.100
0.000
10,840
-
-
$10.81
-
-
-
0.071
0.000
10,840
-
-
$7.00
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.091
0.000
10,840
-
-
$9.55
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
0.000
10,840
-
-
$12.00
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.129
0.010
9,950
-
-
$11.89
-
-
-
0.104
0.015
7,481
359
53.1%
$9.55
$3.07
1.6%
86.6%
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
0.000
7,900
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
0.000
7,900
-
-
$12.97
-
-
-
0.100
0.017
7,340
-
-
$12.97
-
-
-
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values
6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
80
ISO Proposal (5 of 5) – Rest-of-System Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
SENE (import), NNE (export) and Rest Of System 1
Sys tem
1-da y-i n
(events/yr)
ROS Clearing Price
Avg. ROS Cl ea red
Freq.
Cl ea red Ca pa ci ty Bel ow 1Ca pa ci ty Std. Dev
i n-5
(MW)
(MW)
(% of draws)
Avera ge
Cl ea ri ng
Frequency
Pri ce
a t Ca p
Std. Dev
($/kW-m) ($/kW-m) (% of draws)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.100
10.0
14,429
-
-
$10.81
-
-
0.071
14.1
14,971
-
-
$7.00
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.090
11.1
14,587
-
-
$9.55
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.110
9.1
14,294
-
-
$12.00
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.129
7.8
16,277
-
-
$10.81
-
-
0.104
9.6
14,253
464
0.1%
$7.86
$1.75
0.0%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.100
10.0
14,429
-
-
$8.65
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.100
10.0
14,429
-
-
$12.97
-
-
0.100
10.0
17,046
-
-
$10.81
-
-
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
81
Observations from Results Tables
• Satisfy reliability criteria in base case
• Performance in forward-looking models is comparable to that
with FCA 10 zones
• When capacity is more expensive in import-constrained
zones, substitute from zones to rest-of-system
ISO-NE PUBLIC
82
Indicative Demand Curve for Maine Export Zone
• Stakeholders have requested additional information on what
a demand curve may look like if Maine were to return as an
export-constrained zone
• Provide curve using indicative FCA 9 MCL value of 3,913 MWs
ISO-NE PUBLIC
83
Indicative Demand Curve for Maine Export Zone
Using FCA 9 Inputs
Capacity Quantities and Slopes at Selected Prices
Notes: Indicative MCL = 3,913 MW for Maine in FCA 9.
Congestion Price
-$1.00 -$2.00 -$5.00 -$10.00
MW Quantity
4,007 4,150 4,460 4,844
Slope (per 100 MW)
-$0.60 -$0.79 -$1.13 -$1.50
ISO-NE PUBLIC
84
APPENDIX 6: RESULTS USING ‘HYBRID
METHOD’
Uses existing system curve, and ISO proposed zonal curves.
FCA 10 demand parameters with SENE modeled as an
import-constrained zone. Revisions from prior versions boxed
in red.
ISO-NE PUBLIC
85
New Results
Hybrid Method (1 of 3) – System-Level Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
SENE (import) and Rest Of System 1
Sys tem
1-da y-i n
(events/yr)
Total Market Payments
Avg.
Cl ea red
Freq.
Sys tem
Ca pa ci ty Bel ow 1Cl ea red
Std. Dev
i n-5
Ca pa ci ty
(MW)
(MW)
Freq.
Bel ow
NICR
(% of draws) (% of draws)
Avera ge
Avera ge
of
Bottom
20%
Avera ge
of Top
20%
($mil/yr)
($mil/yr)
($mil/yr)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.077
13.0
34,567
-
-
-
$4,484
-
-
0.071
14.1
34,712
-
-
-
$2,915
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.064
15.5
34,857
-
-
-
$3,995
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.092
10.9
34,294
-
-
-
$4,938
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.085
11.8
34,567
-
-
-
$4,613
-
-
0.061
16.4
34,985
382
0.0%
2.5%
$3,773
$3,018
$4,744
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.077
13.0
34,567
-
-
-
$3,587
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.077
13.0
34,567
-
-
-
$5,381
-
-
0.094
10.7
34,567
-
-
-
$4,737
-
-
Model 6a (Modest Slope) 7
0.089
11.2
34,347
137
0.0%
6.3%
$4,851
$4,529
$5,120
Model 6b (Steep Slope)8
Model 6c (Steeper Slope, More Entry and Exit)
0.095
10.6
34,266
226
0.0%
23.0%
$4,983
$4,506
$5,508
0.097
10.3
34,241
295
0.1%
37.1%
$5,023
$4,404
$5,743
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
ISO-NE PUBLIC
Footnotes are included in Appendix 1.
86
New Results
Hybrid Method (2 of 3) – SENE Import Zone Results
Reliability Results
Zonal Configuration:
SENE (import) and Rest Of System 1
Sys tem
LOLE
SENE Clearing Price
Avg.
Cons tra i nt's
Cl ea red
SENE
Contri bution
Ca pa ci ty
Cl ea red
to LOLE
Std. Dev
Ca pa ci ty
Freq.
Bel ow
LSR
Avera ge
Cl ea ri ng
Frequency
Frequency
Pri ce
of Pri ce
a t Ca p
Std. Dev
Sepa ra tion
(events/yr)
(events/yr)
(MW)
(MW)
(% of draws)
($/kW-m) ($/kW-m) (% of draws) (% of draws)
0.077
0.000
10,840
-
-
$10.81
-
-
-
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.071
0.000
10,840
-
-
$7.00
-
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.064
0.000
10,840
-
-
$9.55
-
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.092
0.000
10,840
-
-
$12.00
-
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.085
0.008
9,950
-
-
$11.89
-
-
-
0.061
0.000
11,096
478
0.7%
$9.03
$1.70
0.0%
39.6%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.077
0.000
10,840
-
-
$8.65
-
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.077
0.000
10,840
-
-
$12.97
-
-
-
0.094
0.014
9,765
-
-
$12.97
-
-
-
0.089
0.000
10,894
183
0.0%
$11.78
$0.60
0.0%
64.4%
0.095
0.000
10,867
182
0.0%
$12.13
$1.00
0.0%
78.9%
0.097
0.000
10,864
267
0.0%
$12.26
$1.31
0.0%
67.1%
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
Model 6a (Modest Slope) 7
8
Model 6b (Steep Slope)
Model 6c (Steeper Slope, More Entry and Exit)
Footnotes are included in Appendix 1.
ISO-NE PUBLIC
87
New Results
Hybrid Method (3 of 3) – Rest-of-System Results
Reliability Results
Sys tem
LOLE
Zonal Configuration:
1
SENE (import) and Rest Of System
Sys tem
1-da y-i n
(events/yr)
ROS Clearing Price
Avg. ROS Cl ea red
Freq.
Cl ea red Ca pa ci ty Bel ow 1Ca pa ci ty Std. Dev
i n-5
(MW)
(MW)
(% of draws)
Avera ge
Cl ea ri ng
Frequency
Pri ce
a t Ca p
Std. Dev
($/kW-m) ($/kW-m) (% of draws)
(A) Zones and Est. Net CONE at FCA10 Values
Forward-Looking (Full PFP-based) Supply Models2
Model 1 (Base Case): All Capacity Bids/Offers at Est. Net CONE 3
Model 2 (Sensitivity Cases): Marginal Offer Priced Above/Below Net CONE 4
(2a) Marginal Offer at $ 7.00 / kw-mo.
0.077
13.0
23,727
-
-
$10.81
-
-
0.071
14.1
23,872
-
-
$7.00
-
-
(2b) Marginal Offer at $ 9.55 / kw-mo.
0.064
15.5
24,017
-
-
$9.55
-
-
(2c) Marginal Offer at $12.00 / kw-mo.
0.092
10.9
23,454
-
-
$12.00
-
-
(2d) Marginal Offer in Import Zone 10% Above Est. Net CONE
0.085
11.8
24,618
-
-
$10.81
-
-
0.061
16.4
23,889
448
0.0%
$8.99
$1.66
0.0%
Historic (FCA7/8/9-based) Supply Model
Model 3: Historic Supply-based Simulated Bidding 5
(B) Additional Sensitivity Cases: Alternative Net CONE Values 6
Model 4: All Capacity Bids/Offers at Alternative Hypothetical Net CONE Values:
(4a) If Est. Net CONE is revised to 20% below FCA10 Value
0.077
13.0
23,727
-
-
$8.65
-
-
(4b) If Est. Net CONE is revised to 20% above FCA10 Value
0.077
13.0
23,727
-
-
$12.97
-
-
0.094
10.7
24,803
-
-
$10.81
-
-
0.089
11.2
23,453
205
0.0%
$11.77
$0.60
0.0%
0.095
10.6
23,399
227
0.0%
$12.12
$0.98
0.0%
0.097
10.3
23,377
290
0.1%
$12.23
$1.28
0.0%
Model 5: Different Zonal Est. Net CONE Values Scenario
(5a) Import Zone Est. Net CONE revised to 20% above FCA10 Value
(C) Stepped Supply Model
Model 6a (Modest Slope) 7
8
Model 6b (Steep Slope)
Model 6c (Steeper Slope, More Entry and Exit)
Footnotes are included in Appendix 1.
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APPENDIX 7: COST IMPACT BY LOAD ZONE
Material previously provided at the January MC Meeting
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Cost Impact by Load Zone: Model and Results
In this Appendix:
• Stakeholders requested additional analysis showing how
costs-to-load (i.e., payments) are impacted by the ISO’s
proposal, across a range of clearing prices
• Modeling assumptions
• Results across a range of prices for ISO’s proposed curves and
status quo (existing system curve and fixed zonal
requirements)
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Modeling Approach -- Overview
• Employed (an approximate version of) the existing FCA Cost
Allocation rules to assess cost-to-load by load zone
• Main simplifications include:
– Omitted cost adjustments for multi-year lock-ins at prior FCA prices
– Omitted certain specifically-allocated CTRs (difficult to model in time)
– Assume uniform price paid in each capacity zone
• Peak load in each load zone based on five year average
• Estimated total FCA payments by load zone under a range of
clearing conditions under both ISO’s proposal, and status quo
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Modeling Scenarios and Assumptions
• Case 1, Low Price Separation: System clears at $10.81, SENE
clears at $11.81, NNE clears at $9.81
• Case 2, Medium Price Separation: System clears at $10.81,
SENE clears at $12.81, NNE clears at $8.81
• Case 3, High Price Separation: System clears at $10.81, SENE
clears at $15.81, NNE clears at $5.81
• For each case, show payments by load zone under (a) ISO
proposal and (b) status quo
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Case 1: Low Price Separation
System at Net CONE, SENE + $1, NNE - $1
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Case 2: Medium Price Separation
System at Net CONE, SENE + $2, NNE - $2
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Case 3: High Price Separation
System at Net CONE, SENE + $5, NNE - $5
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Observations from Analysis
• Costs to consumers in all load zones decrease with ISO
proposal across all three cases
• Occurs because status quo tends to procure more system and
SENE capacity
• In Case 3, the higher payments under status quo include:
– $34 million in NEMA
– $23 million in CT
– $106 million for the system
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