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Water Heaters to teh Rescue: Demand Bidding in Electric Reserve Markets

With just a few changes in reliability rules, regulators could call on consumer loads to boost power reserves for outages and contingencies.
Fortnightly Magazine - September 1 2003

to respond as rapidly as required, and that the ISO can meet the disturbance control standard (DCS), as defined by the North American Electric Reliability Council (NERC), in its Policy 1, "Generation Control and Performance." This policy specifies two standards that control areas must meet to maintain reliability in real time. 2 The Control Performance Standard (CPS) covers normal operations and the DCS deals with recovery from major generator or transmission outages. Three contingency reserves are deployed throughout the Northeast: the 10-minute spinning reserve, 10-minute nonspinning (supplemental) reserve, and 30-minute (replacement) reserve. The three services are used to help control-area operators meet the DCS. For our purposes, note only that DCS requires that the system recovers from a major outage-one between 80 percent and 100 percent of the largest single contingency-within 15 minutes. 3 For more details, see Table 1, "Definitions of Real-Power Ancillary Services."

The three reserve services provide responses of different quality. Spinning reserve is the most valuable service, and therefore generally the most expensive because it requires the generator to be on line and synchronized to the grid. Because such generators are on line, they can begin responding to a contingency immediately; that is, their governors sense the drop in interconnection frequency associated with the outage and begin to increase output within seconds. Supplemental reserve, which could include generators that are already on line, is less valuable because it does not necessarily provide an immediate response to an outage. Both spinning and supplemental reserves must reach their committed output within 10 minutes of being called on by the system operator. Replacement reserve is less valuable still because it need not respond fully until 30 minutes after being deployed. Replacement reserves are used to permit the restoration of the 10-minute reserves so that these faster-acting resources are, once again, able to respond to a new emergency.

NERC's DCS is a performance measure; it specifies what must be accomplished (recovery within 15 minutes) without specifying how that goal must be reached. 4 The 10 regional reliability councils, on the other hand, set prescriptive requirements for each type of reserve. For example, the "Operating Reserve Criteria" of the Northeast Power Coordinating Council (NPCC) require that the resources providing reserves be able to sustain full output for at least 60 minutes (see Table 2). 5 The system operator uses this time to acquire and deploy replacement reserves. Further, NPCC requires the system operator to restore the 10-minute reserves within 105 minutes of when the DCS event occurred, to be ready to respond to another major outage.

Current Practice at the ISOs

Perhaps because of these extensive and expensive technical requirements, none of the three ISOs in the northeastern United States (PJM, New York, and New England) now provides for retail customer load to supply contingency reserves. Only in California do some retail loads (large water-pumping loads, to be specific) provide contingency reserves.

New England. Since ISO New England began operating real-time markets for energy and ancillary services in May 1999, it has experienced problems with its markets for the reserve services. Complications in