Annual report on market issues and performance Eric Hildebrandt, - - PowerPoint PPT Presentation

Annual report on market issues and performance

Eric Hildebrandt, Director Department of Market Monitoring Board of Governors Meeting General Session June 28, 2016

Market performance remains highly competitive.

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$0 $1 $2 $3 $4 $5 $6 $7 $0 $10 $20 $30 $40 $50 $60 $70 2011 2012 2013 2014 2015 Average annual gas price ($/MMBtu) Average annual cost ($/MWh) Average cost (nominal) Average cost normalized to gas price, including greenhouse gas adjustment Average daily gas price, including greenhouse gas adjustments ($/MMBtu) Avg daily gas price ($/MMBtu)

Total market costs down by about 6 percent after accounting for natural gas and greenhouse gas prices.

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Hourly prices have begun to reflect the impact of renewables on the net load curve.

$0 $10 $20 $30 $40 $50 $60 $70 $80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Price ($/MWh) 5-minute 15-minute Day-ahead

Average hourly prices (2015)

Energy imbalance market prices were highly competitive.

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Special price discovery mechanism kept prices competitive while market performance improved over 2015.

$0 $10 $20 $30 $40 $50 15-minute market 5-minute market 15-minute market 5-minute market 15-minute market 5-minute market PACE PACW NEVP Average annual price ($/MWh) EIM price without price discovery EIM price Bilateral trading hub range PG&E price SCE price

Congestion revenue rights auction revenues have averaged less than 50% of congestion payments.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2012 2013 2014 2015 Percent of auctioned payments $ million Auction revenues received by ratepayers Payments to auctioned CRRs Auction revenues as percent of payments Average percent 2012-2015

Financial participants receive most profits from congestion revenue rights purchased in the auction.

Entity type Auction costs CRR payments Net Revenue Payments as a percent of costs Financial $48 $94 $47 196% Marketer $61 $53 ($8) 87% Physical gen $17 $24 $7 141% Physical load ($16) ($2) $14 13% Total $110 $169 $60 154% Total w/o load $126 $171 $46 136% Congestion revenue rights auction (2015)

Key recommendations

• Congestion revenue rights
• Eliminate auction and let transmission ratepayers keep congestion

rents.

• Resource adequacy imports
• Clarify/revise rules concerning how “physical” or “firm” imports

used to meet resource adequacy requirements must be.

• Start-up and minimum load costs
• Begin developing and testing opportunity cost model.
• Begin review of contract limits to ISO plans to allow under

exemption.

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