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The Rules of the Grid: Transmission Policy and Motives Gehind It

Making sense of RTO Week, the mediation talks, and FERC's promised new rulemaking.
Fortnightly Magazine - December 2001

the formulations ... in the SCUC software are virtually identical ... PJM's SCUC is able to run faster in general than New York's ...

"PJM solves the problem in an iterative fashion, starting from a reduced set of monitored operating contingencies in a DC representation of the [AC] system. Using this reduced set allows for quick and efficient solution times. "When the problem solves, PJM then subjects the DC solution to a full AC security analysis that incorporates all relevant contingencies. If this AC evaluation 'solves' (finds no security violations), the commitment process if finished. If it doesn't solve (i.e., there are violations of some security contingencies), PJM then utilizes software that analyzes the AC security violations to create modified constraints to be added to the original SCUC problem, and the entire process is repeated. ...

"[Thus] PJM settles the day-ahead market after that initial run, [and] as noted above, mitigation is conducted within that single run. ...

Alternatively, because of the multiple pass process in New York, four or five SCUC runs are needed to complete market settlement [for the] day ahead. This is a major impediment. ... My personal perspective is that while market mitigation requirements for New York City may require two SCUC passes, the current New York multiple pass structure isn't necessary when coupled with full financial bidding. []

"Certainly, a single SCUC run coupled with financial bidding and supplementary security commitments is a reasonable basis for the RNMC design. It couples computational speed with a superior market design approach, while not sacrificing any security requirements."

5. EX POST PRICE ADJUSTMENTS. "Where a difference does exist ... it is not with respect to physical security, but rather with respect to the associated business rules, and [their] impact ... on pricing. Perhaps this is where the confusion arises.

"In the New York ISO market structure, there is no virtual or financial bidding capability in the day-ahead markets. [Editor's Note: The New York ISO has been working to correct this shortcoming, and in fact financial bidding (bidding by buyers and sellers other than physical generators or load-serving entities) was approved for New York by the FERC on Oct. 24.

"As a result, it is necessary to reflect the pricing impacts of additional additional commitments." [i.e., to impose "artificial" or ex post adjustments to market-clearing prices to reflect the impact of generating plants not actually dispatched but dedicated and on call to meet special security requirements.]

"This process is employed because the absence of financial bidding instruments in the New York market would result in a structural arbitrage between the day-ahead and real-time market without it.

"This simply isn't needed in the PJM design ... [with] ... a full set of financial bidding tools. ... In the PJM market structure, the day-ahead market prices clear based solely on participant bids. Any additional security commitments not met through the day-ahead bidding are implemented as needed, but do not affect the day-ahead market-clearing prices."

6. MITIGATING MARKET POWER. "The New York ISO suggests through its Option 1-M plan that the PJM market model,

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