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A Vision for Trasmission: How the RTOs Stand

And where the trouble spots lie in FERC's grid plan.
Fortnightly Magazine - August 2002

the impression that its new Day One congestion management plan will replace TLRs with a true market mechanism for managing congestion that will provide the same types of benefits as LMP/FTRs, this is simply not the case," said Duke.

Cinergy added that any attempt to value congestion without underlying energy bids and locational energy prices would prove fruitless. "Under PJM's LMP model," Cinergy advised, "the bids that determine congestion costs are bids into energy markets, which are robust and actively traded markets … The congestion costs derived from these markets are essentially a secondary effect of the energy bids," according to Cinergy. "Absent such a bid-based energy market, development of a full-fledged bid market solely to support relatively infrequent events of congestion and redispatch would be artificial."

New York: Better Monitoring Through Software

This spring FERC OK'd new automatic mitigation procedures (AMP) for the New York ISO for market monitoring and price mitigation. But the jury is still out, as FERC acknowledged potential limitations with the current software in place in New York, and warned that it might revisit the issue after release of its formal SMD rule. (Docket No. ER01-3155, 99 FERC 61,246, 5/31/02)

New York's AMP model involves a complex series of computer SCUC (security-constrained unit commitment) runs. The first SCUC run compares bids with market-clearing zonal prices (the "conduct" test). If the gap is too great (which might suggest improper bidding), the ISO conducts a second SCUC run to calculate how prices would have differed if suppliers instead had bid closer to their historic pattern. If that difference is great enough (the "impact" test), then the software triggers price mitigation.

The problem, however, lies in deciding how far to extend the relief. If improper bidding in one zone in a certain hour triggers offending price impacts in neighboring zones in that hour and perhaps others, should mitigation then apply in the bid zone, the neighboring zones, or across the state? And in what hours?

And can the software sort that out?

In practice, New York has opted for a simpler solution that requires less complicated software. Here is how the ISO explains it:

"A consequence of using a single SCUC run (the second pass) for the impact test is that units breaching conduct thresholds in any hour in any location will be mitigated for all of the hours and zones … .

"That is, while the SCUC implements a highly sophisticated and comprehensive unit commitment and pricing algorithm, a single SCUC pass cannot limit mitigation only to the particular hours and location in which there was a material price impact."

The ISO then adds that this situation "was known to stakeholders prior to the initiation of the AMP."

The ISO suggests that with software improvements, it may be able to add a third SCUC run to solve the problem, without imposing too many delays on the final posting of day-ahead market prices beyond the normal 11 a.m. deadline.

But it would not plan to run a third SCD (security-constrained dispatch) pass for real-time markets:

"The SCD must be re-run