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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

installed capacity payments. PJM makes no separate availability payment for such an intra-day call. ...

"However, New York does not expect such an installed capacity generation unit that has not been committed day ahead to necessarily be available intra-day. Thus, under the New York market structure, the ISO has to make additional payments to generators to assure this intra-day availability. As a result, in New York generators make availability bids as part of separate reserve bids. ...

"Similarly, New York has separate bids for ancillary services. PJM honors these same ancillary requirements (e.g., the constraints employed by the SCUC are the same), but the products are not bid separately. ...

"There are reasons to argue that the New York process would be more efficient, as it would seem to create a better match of generators to the reliability needs of the system. However, if this efficiency superiority exists, it is very subtle. ..."

9. REAL-TIME BALANCING. "[S]tatements made ... have suggested that the New York market model simultaneously considers all operating contingencies in the real-time dispatch, while the PJM market doesn't. Again, this simply isn't true. ...

"The actual difference ... is that PJM allows for some discretion by generators in selecting when a specific constraint may become binding based on expected changes in system load - e.g., PJM may 'tighten' a constraint in anticipation of rapid changes in load. ...

"This 'subjective' action by PJM is ... analogous to the look-ahead demand evaluated by the New York BME (balancing market evaluation) process ... [and] ... seems to be very much the same as the type of actions that New York operators taken when thunderstorm contingencies are invoked for News York City. ...

"Indeed ... in many instances operators in New York make the exact same type of subjective interventions in the market. The real difference is that in New York, they simply don't advertise these practices. ...

"For instance, often the New York system operator/dispatcher may keep certain units on line, even when these units are de-committed by the SCD (the New York real-time energy market tool). ... This is done because the unit may be needed at a later time, and due to minimum down time requirements, the unit would then be unavailable if de-committed. The SCD model lacks the ability to consider this near-term system reliability requirement, and as a result the operators intervene. ..."

10. UPDATING THE PLATFORM. "It is indeed true that the New York platform is antiquated, in fact my understanding is that some legacy elements predate 1980. [I]t would be a virtually impossible task to update the New York market platforms to incorporate ... new and faster solution engines.

"However, such inflexibility is not characteristic of the PJM market platform and the RNMC proposal. The PJM market platform is modular, and readily allows for the smooth replacement and updating of analytic elements. In fact, only several years ago PJM replaced its SCUC and real-time analytic engines, moving to state-of-the-art solution techniques 'on the fly.'

"[I]n most aspects the PJM software components have been implemented in

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