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Unintended Consequences

Does anyone care about rising redispatch costs?

Fortnightly Magazine - February 2007

brought into action. This is what happened one day in late August 2005. While the dropping of load caused some inconvenience to some customers, the plan has saved huge amounts of money for California ratepayers. This load-dropping plan, which was put in place before the California ISO came into existence, still is being used by the ISO.

Example 4: After ISO. A utility in PJM tells a story about how congestion charges to the company changed after the PJM ISO decided to be more concerned about N-1 contingencies. This company was being charged about $2 million per year for congestion charges. Then one year the ISO decided it needed to start worrying about the possible overload of 69-kV lines under a low-probability, but possible, outage of a higher-voltage line. It appeared the 69-kV line would overload under such possible outage potentiality, so the ISO decided it needed to redispatch the system (even prior to the outage). This change alone appears to have raised the congestion charges to the utility from $2 million per year to about $12 million per year.

Example 5. After ISO. Approximately 755 MW of nameplate wind generation was developed in the vicinity of McCamey, Texas. Three lines existed that move power out of that area. Each has a thermal capacity of 250 MW. However, the Electric Reliability Council of Texas (acting as the ISO) determined that they needed to consider the N-1 contingency of losing one of the lines. Therefore, the wind generators were told not to generate more than 500 MW. This meant that Texas ratepayers were not getting the benefit of zero-cost wind that could have been moved because of a concern about a possible low-probability line outage.

When ERCOT was asked if it had ever considered doing something like choices 2 through 6 above, it indicated it had not because it had decided to build new transmission. However, lots of “congestion charges” were incurred prior to getting the new transmission built!

What ISOs Will Do in the Future

Knowing that treatment of transmission contingencies can have an enormous impact on the amount of congestion charges (redispatch charges) and LMPs, Global Energy has sought to get clarity from ISOs/RTOs about the factors to be assessed for every N-1 contingency possible before deciding what dispatch to accept. Further, we have sought clarity on what lines will be monitored. For example, will the ISO be concerned about overloading even very low-voltage but parallel lines, such as 69-kV lines? We have sought clarity on when an ISO would decide that choices 2 through 6 might be acceptable alternatives to the redispatch required under choice 1 if operating studies show that a low probability N-1 contingency would be problematic for a particular desired dispatch pattern.

What we have learned is that ISOs either don’t know, have not considered, or are not willing to provide clarity to these matters. Most said they let their operators make these decisions on a case-by-case basis from one day to the next.

Without this clarity, and without knowing what decisions operators should be expected to