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Scheduling Coordinators: Market Fears and Profit Margins

Fortnightly Magazine - January 15 1998

Western Area Power Administration

Source: California ISO; applications acknowledged through Nov. 26, 1997.

Sample SC Transaction

SO how can an SC make money in the California market? Here's a simplified example of an electricity purchase of one megawatt-hour, assuming a purchase price of $20/MWh plus associated costs, but not including an SC transaction fee. As shown below, an SC would have to sell the electricity for $22.53 just to break even. The spot price for peak-firm delivery at the California-Oregon border on Dec. 18 was $21.75 to $22.75 per MWh, as reported by Reuters.

SC's energy cost: $20.00 (estimated per MWh price)

SC's coordination fee: + 0.30 (SC's cost to execute transaction)

Grid management fee: + 0.73 (actual tariffed rate charged by ISO)

Congestion fee: + 0 (assuming no congestion)

Ancillary services fee: + 1.50 (varies by hour)

SC's final cost: $22.53 (per MWh)

Note: All figures are estimates except the grid management fee, which is the ISO's administrative fee approved by the California PUC. The SC's coordination fee was based on the PUC-approved 31-cent coordination fee the California PX will charge full-requirements customers to recover its costs. For non-full-requirements customers, the PX will charge between 15 cents and 37 cents per MWh, depending on load. For simplification, losses aren't included. - Elizabeth Striano, managing editor.

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