Cold Snap Task Force Update

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Cold Snap Task Force Update
Stephen J. Rourke ISO-New England May 14, 2004
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Cold Snap Task Force

• Formed at March 19, 2004 FDWG-EGWI meeting
• Three meetings held to date
• April 5
• April 15
• April 29
• Broad Stakeholder Representation
• ISO-NE
• NEPOOL Members
• Natural Gas Industry
• Various NE State Agencies

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Cold Snap Task Force

• Issue identification
• Interaction between natural gas and electric
  market timelines and schedules
• Electric market design and products
• Communication requirements during a similar event
• State regulation and limitations on dual fuel
  resources
• Maximize utilization of dual fuel capability to
  support system reliability

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Cold Snap Task Force

• Issue identification
• Review of existing issue list from Fuel Diversity
  Working Group activities
• Issues identified in earlier studies performed by
  Levitan update with 2004 actual events
• ISO Operations coordination with natural gas
  operators

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Cold Snap Task Force

• Several straw proposals presented to begin
  addressing the market timeline issues and
  associated system reliability concerns
• Cold Snap Working Group formed to deal with
  possible market changes to be implemented for
  winter 2004/2005

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Straw Proposal 1Adjust Market Timelines

• Current electric market timeline results in
  generator schedules published at 1600 for the DA
  Market and 2200 for the RT Market
• Natural gas scheduling process requires day ahead
  (timely) nominations to be finalized by 1230
• On very cold days, it is highly unlikely that the
  gas fired unit can procure intra-day gas after
  the 1230 closing of the day ahead gas nomination
  window
• As witnessed on January 14, this can lead to a
  significant loss of operable capacity impacting
  system reliability

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Straw Proposal 1Adjust Market Timelines

• Possible Alternative
• Move up the Market Process by 12 (?) hours
• Event Driven (parameters to be determined)
• DAM Offers in by midnight vs. noon
• DAM clears 0400
• Re-offer window 0400-0600
• RAA completed by 1000

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Straw Proposal 1Adjust Market Timelines

• Advantages
• Generator schedules known in advance of timely
  natural gas nomination requirements
• Stakeholders are fully informed of forecasted
  abnormal system conditions Notice of the
  Event
• Makes use of existing Market Rules and structure
• Minimal disruption to current business practices
  (ISO and Market Participants) event driven not
  a permanent change

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Straw Proposal 1Adjust Market Timelines

• Disadvantages
• Natural gas prices are less evident at the time
  electric market offers are submitted
• Current Market Rules do not result in
  financially firm schedules for RAA market
  commitments, leaving certain market risks with
  gas-fired generators in a constrained and highly
  volatile natural gas market
• No guarantees that generators will operate as
  scheduled if financial risk is not mitigated

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Straw Proposal 1Adjust Market Timelines

• Market Issues
• How can RAA schedules be treated as financially
  or physically firm?
• Which resources can set price?
• What performance penalties should be placed on
  under performance?
• How should mitigation be addressed when an event
  is declared?
• Can units not scheduled in advance of gas
  nomination deadline change market offers to
  reflect intra-day prices?
• Market rule changes
• Manual 11
• Manual 28/Market Rule 1 (?)

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Straw Proposal 1Adjust Market Timelines

• Technical Issues
• E-market software
• Open and Close times
• Unit Manager functionality
• Re-offer in real time
• RAA commitment software
• 24 hour window
• Optimization objective
• External contract scheduling
• OASIS
• EES

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Triggering a Cold Snap Event

• Possible Criteria
• Natural Gas Factors
• Action Alerts
• OFOs
• Force Majeure
• Other
• Electric Power System Factors
• System Load
• System Outages
• Neighboring System Conditions

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Triggering a Cold Snap Event

• Possible Criteria
• Weather Factors
• Temperature
• Wind Speed
• Duration
• Market Factors
• Requests for economic outages
• Natural gas prices vs. power prices

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Cold Snap Event

• How do we enter the process?
• Minimum timeframe for market notice
• Communication plan and process
• Normal business days
• Weekend/Holiday
• Notification list
• Market Participants
• State Officials
• Natural Gas Industry
• Notification methods

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Cold Snap Event

• How do we exit the process?
• Minimum timeframe for market notice
• Communication plan and process
• Normal business days
• Weekend/Holiday
• Notification list
• Market Participants
• State Officials
• Natural Gas Industry
• Notification methods

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Human Factors

• What adjusted market timeline(s) will provide
  minimal disruption?
• 12 hour slide?
• 16 hour slide DA market/12 hour RAA
• ISO Considerations
• Participant Considerations
• Impact on communication plan
• Other

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Next steps

• Schedule next working group meeting(s)
• Continue development of market timeline straw
  proposal, including market impacts
• Detail all technical impediments to be resolved
• Develop trigger mechanisms
• Develop communication plan
• Prepare for Cold Snap Task Force and NEPOOL
  Markets Committee in June

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Questions?