Solving The Crisis In Unscheduled Power
This is equivalent to applying the simple formula above. But first constant monetary unit k needs to be estimated on some cost basis; then these formulas need to be tested in an economics laboratory simulation of actual trading of FCC or inadvertent interchange by control operators to ensure the formula mimics the actual price behavior in a market where FCC or inadvertent interchange is traded to get CPS1 compliant. There is strong mathematical reason to believe it would.
Trading of FCC or inadvertent interchange by BAs for CPS1 compliance serves as a reference point and guide to the emergence of markets for the trading of ancillary services as options where operators seek to set their optimum scheduling point between tending to underschedule and tending to overschedule. The NERC JIITF methodology is scalable to apply to the generating and load entities within BAs, and it sets the groundwork for a market in "control services" whereby good operators can market their capability. But the JIITF methodology is open enough that it doesn't require BAs to apply it to their own constituent generating or load entities.
No Real-Time Reliability Incentive From Spot-Energy Markets
Unscheduled power occupies the interface between markets and reliability; real-time is the proper domain for management of honest scheduling error, not for markets for energy. A market for FCC is the only market needed for incenting reliable behavior. Markets for energy alone do not efficiently incent behavior that is compatible with good frequency control. Moreover, allowing suppliers to increase real-time risk by taking real-time energy delivery risks in an energy-only spot market winds up unfairly penalizing customers if there are no resources available.
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- Midwest ISO Control Area Working Group (April 27, 2004). Letter to the Resources