Surviving and Thriving in the RTO Revolution

1 A representation of a generic interconnection, with thermal, hydro, and nuclear generation sharing a grid with a winter peaking load.

2 , 93 FERC 61,294, Dec. 15, 2000.

3 For a survey of methods, see J.W. Marangon Lima "Allocation of Transmission Fixed Charges: An Overview,", Vol. 11, No. 3, 1996.

4 Regulation service provides capacity under the grid operator's automatic generation control (AGC), which can respond to incremental or decremental signals in a matter of seconds. Procurement of incremental capacity (Regulation Up) may be separated from the procurement of decremental capacity (Regulation Down), as it is now in California. Payments to generators for the energy delivered by Regulation Up, or by generators for the energy not delivered by Regulation Down, are specified as part of the specific market design.

5 Spinning Reserve represents unloaded capacity that is connected and synchronized to the grid, and that can be dispatched for energy within 10 minutes. In addition to providing backup energy reserves (which allow units providing Regulation Up to be returned to their set points), spinning-reserve capacity provides automatic frequency control to the grid. In the typical case, steam turbines and storage hydro capacity will provide spinning reserves. Rules for dispatching, pricing, and settling the energy capacity of spinning reserves (and for the other reserve ancillary services discussed below) are important elements of the specific market design, with impacts on the broader energy markets.