Market Operations Standing Committee Meeting

1
Market Evolution Program

• Market Operations Standing Committee Meeting
• April 23, 2003

2
Overview

• Consultation
• Initiative Status

3
Overview

• Day Ahead Market
• Multi-Interval Optimization
• Short Term Resource Adequacy
• Long Term Resource Adequacy
• Wholesale/Retail Integration
• Environmental Tracking
• Locational Marginal Pricing

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6
Working Groups/Consultation
Working Groups
IMO
Stakeholders
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Working Groups

• Working Groups were formed after an initial
  fact-finding period for initiatives that were
  mature enough to benefit
• Multi-Interval Optimization
• Day Ahead Market
• Long Term Resource Adequacy
• Advisory process to help IMO make informed
  recommendations, particularly with respect to
  stakeholder perspective on issues

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Next Steps

• Stakeholder workshops planned for May/June on the
  Long Term Resource Adequacy and Day Ahead Market
  initiatives
• Dates announced by the end of this week
• Format
• Face - to - Face
• Webcast
• Each consists of an educational component and an
  opportunity for questions/input
• Presentations will be made available in
  PowerPoint and as a Media Player file with audio

9
Locational Marginal Pricing

• Nodal pricing behaviour since market opening is
  being assessed
• Expect decision in the next few weeks on priority
  of continuing this work

Environmental Information Tracking

• RFP for system prepared based on draft
  regulations
• Early stages of assessing training and education
  needs of consumers/participants

10
Day Ahead Market

• Leonard Kula

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Day Ahead Market

• DAM discussion paper
• Examined and ruled-out simple DAM for summer 2003
• Formed DAM Working Group following Feb 18 MAC
• Developed DAM Objectives and Key Principles
• Prepared Feasibility Study - Mar 28 IMO Board
  accepted DAM direction and approved commencement
  of design phase
• Staged approach - high level design to be
  completed by July at which time an assessment
  will be made whether to proceed further

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Day Ahead Market

• Assessment of high level design
• How well it addresses some of the problems
  evident in current market design and operation
• Appropriate linkages to long term resource
  adequacy initiative
• Broad stakeholder consensus on the benefits of
  implementing the proposed design
• Appropriate cost recovery mechanism
• Working Group is engaged in identifying design
  issues and potential solutions
• Stakeholder workshops planned for early June on
  proposed high level design

13
Day Ahead Market

• DAM Working Group
• Principles and Objectives
• DAM and impact on Market Participant Classes
• Reviewed other DAM Options
• Working Group consensus to proceed with SMD-style
  DAM
• Commencing discussions of high-level design
  features

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Day Ahead Market Design

• User Requirements
• WHAT the DAM will look like - complete September
  2003
• Split into high level design and detailed design
• High level design - present to MAC June 11, IMO
  Board July 3
• Detailed design
• Significant portion of participant-facing
  elements
• System Requirements
• HOW the DAM will work - complete November 2003
• Fewer participant-facing elements

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Multi-Interval Optimization

• Mark Wilson

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Multi-Interval Optimization - What have we done?

• Feb 18 MAC Breakout sessions
• Working Group
• Formed with representation from generators and
  loads
• Meets either via conference call or face-to-face
  sessions on a weekly basis
• Focussed on three key issues
• Optimization Function
• Optimization Time Period
• Dispatch Advisories (How,What,When)

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Multi-Interval Optimization Objectives

• Improved Operational Reliability
• Resources will automatically be scheduled in
  advance to allow ramp rate capability to be
  utilized to solve future reliability concerns
• Operational Stability
• Reduced Unit Cycling - The number of start/stop
  sequences for resources will be reduced relative
  to current operation
• Improved Compliance - Non-compliance with
  dispatch instructions will be reduced
• Improved Market Transparency
• IMO manual intervention in the dispatch solution
  will be reduced
• Improve Market Efficiencies
• Constraint payments caused by limited ramp
  capability will be reduced compared to present
  dispatch

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Two Proposals
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Issues/Recommendation

• Issues
• ABB Solution
• Calculation time
• Potential hardware upgrade costs
• IMO Solution
• Solution may not always be optimal
• Recommendation
• Implement IMO solution
• IMO Board approved design stage funds
• Will go back in July for build phase funding

20
Next Steps
21
Resource Adequacy

• Jason Chee-Aloy

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Short Term Resource Adequacy

• Options reviewed, recommended mechanisms being
  implemented
• Emergency Demand Response
• Hour Ahead Dispatchable Load
• Replacement Energy

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Long Term Resource Adequacy

• Discussion paper
• Working Group formed
• Performing feasibility assessment with
  recommendation targeted for July, design to be
  completed by year end
• Six options currently under investigation
• LECG consultants engaged
• Working Group is engaged in identifying issues
  and potential solutions
• Stakeholder workshops planned for early to
  mid-May on draft feasibility assessment

24
Long Term Resource Adequacy

• LTRA Working Group
• Objectives
• Evaluation Criteria
• Draft Feasibility Study

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Wholesale/Retail Integration

• Edward Arlitt

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What is a Wholesale/Retail Issue?

• No formal definition, but generally these issues
  all display four common characteristics

• Both the wholesale and retail markets are
  affected
• It is in the long-term interest of both markets
  to resolve them
• No single governing/regulatory authority has full
  rule-making powers or responsibility over the
  issue
• They are generally complicated by the fact that
  they span the wholesale/retail market boundary -
  particularly in areas such as issue ownership,
  computer systems, business processes and
  financial risk management activities

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Wholesale/Retail Integration

• Issue Areas
• Financial Stresses across the market boundary
• Opening the door to future demand response
  products that retail customers can participate in
  while providing a reliability benefit
• Ensuring that the wholesale/retail market
  boundary keeps pace with emerging technologies
  such as retail-level metering and microgeneration
• Developments
• Wholesale/Retail Integration discussion paper
  soliciting stakeholder feedback to be released
  shortly
• Upcoming Pilot Projects

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Wholesale/Retail Integration

• The Approach
• Avoid overlap with topics being addressed in
  existing stakeholder forums
• Use of Pilot Projects to look ahead to future
  logistical challenges
• Ensure that future solutions do not conflict with
  the evolving role of various market participants
  and retail entities
• Ensure alignment with other MEP initiatives