MR-00323: Day-Ahead Intertie Offer Guarantee Adjustment Technical - PowerPoint PPT Presentation

MR-00323: Day-Ahead Intertie Offer Guarantee Adjustment Technical Panel 6 July 2006 1

Outline • Identify issue • Review proposal • Next steps • Solicit Panel feedback on above three points 2

Issue • A market participant with an import transaction that: – Has a day-ahead constrained schedule PDR_DQSI > 0; – Has real-time schedules (DQSI, MQSI) greater than the day-ahead constrained schedule; and – Is not subject to a real-time constrained-on event; may receive less revenue than they should. 3

No Real-Time Constraints Scenario DA OP 90 DAIOG Prices DAIOG $/MW RT OP 20 RTIOG RTIOG RT EMP 10 RT Energy Payment - NEMSC 30 100 MQSI; PDR_DQSI DQSI Schedule Quantities MW 4

No Real-Time Constraints Scenario Revenue Calculations Inputs Symbol Value Formulation Day-Ahead Constrained Schedule Qty (MW) PDR_DQSI 30 Day-Ahead Offer Price ($/MW) DA_OP 90.00 Real-Time Offer Price ($/MW) RT_OP 20.00 Real-Time Constrained Qty (MW) DQSI 100 Real-Time Market Qty (MW) MQSI 100 Real-Time Energy Market Price ($/MW) RT_EMP 10.00 Settlement Amount Calculations ($) Real-Time Energy Payment NEMSC 1000.00 DQSI x RT_EMP Real-Time CMSC CMSC 0.00 (MQSI-DQSI) x (RT_EMP-RT_OP) Day-Ahead Intertie Offer Guarantee DA_IOG 2400.00 MAX(0,MIN(PDR_DQSI,DQSI) x (DA_OP - RT_EMP) - CMSC) Real-Time Intertie Offer Guarantee RT_IOG 1000.00 MAX(0,MQSI x (RT_OP - RT_EMP)) IOG Reversal 1000.00 MIN(DA_IOG,RT_IOG) Total Settlement Amount 3400.00 RT_EP + CMSC + DA_IOG + RT_IOG - IOG Reversal Settlement Amount the MP Should Receive 4100.00 (PDR_DQSI x DA_OP) + ((DQSI - PDR_DQSI) x RT_OP) Under-Payment 700.00 5

Real-Time Constrained-Off Scenario DA OP 90 DAIOG Prices DAIOG $/MW RT OP 20 RTIOG RTIOG -VE CMSC RT EMP 10 Real-Time Energy Payment – NEMSC 30 55 100 DA C RT C RT U Schedule Quantities MW 6

Real-Time Constrained-Off Scenario Revenue Calculations Inputs Symbol Value Formulation Day-Ahead Constrained Schedule Qty (MW) PDR_DQSI 30 Day-Ahead Offer Price ($/MW) DA_OP 90.00 Real-Time Offer Price ($/MW) RT_OP 20.00 Real-Time Constrained Qty (MW) DQSI 55 Real-Time Market Qty (MW) MQSI 100 Real-Time Energy Market Price ($/MW) RT_EMP 10.00 Settlement Amount Calculations ($) Real-Time Energy Payment NEMSC 550.00 DQSI x RT_EMP Real-Time CMSC CMSC -450.00 (MQSI-DQSI) x (RT_EMP-RT_OP) Day-Ahead Intertie Offer Guarantee DA_IOG 2850.00 MAX(0,MIN(PDR_DQSI,DQSI) x (DA_OP - RT_EMP) - CMSC) Real-Time Intertie Offer Guarantee RT_IOG 1000.00 MAX(0,MQSI x (RT_OP - RT_EMP)) IOG Reversal 1000.00 MIN(DA_IOG,RT_IOG) Total Settlement Amount 2950.00 RT_EP + CMSC + DA_IOG + RT_IOG - IOG Reversal Settlement Amount the MP Should Receive 3200.00 (PDR_DQSI x DA_OP) + ((DQSI - PDR_DQSI) x RT_OP) Under-Payment 250.00 7

Why Under-Payments Occur • The DA_IOG and RT_IOG are calculated on different MW quantity bases: – DA_IOG uses day-ahead constrained schedule quantity – RT_IOG uses real-time unconstrained schedule quantity • The DA_IOG and RT_IOG revenues are compared and the participant receives the greater • Participant may lose RT_IOG $ associated with MW above day-ahead constrained schedule quantity 8

Proposed Solution • New Settlement Amount: DA_IOG adjustment • Import transaction eligibility criteria – DACP schedule ≥ one MW – RT schedules > DACP schedule – Not subject to constrained-on event • DA_IOG adjustment formulation: Maximum of (i) zero and the (ii) difference between the IOG floor value and the other settlement amounts for the import MAX(0, IOG_FV – NEMSC – MAX(RT_IOG, DA_IOG) – CMSC ) 9

Intertie Offer Guarantee Floor Value IOG_FV Price 0 0 Quantity ‘IOG _FV’ is a floor value for the minimum revenue that must be received by the market participant over a particular quantity range. This quantity range is Legend: determined by the amount scheduled in the DACP Real-time offer price quantity pair relative to the actual constrained quantity that is Real-time offer curve 10 Day-ahead offer price quantity pair scheduled in the real-time market ….. Day-ahead offer curve

IOG Floor Value: No Real-Time Constraints Scenario IOG Floor value Price (IOG_FV) IOG Floor value (IOG_FV) 0 0 Quantity PDR_DQSI (day- DQSI (real-time constrained ahead) schedule) = MQSI (real-time unconstrained schedule) Floor value Floor value Legend: equation: TERM 2 equation: TERM 1 Real-time offer price quantity pair Real-time offer curve In this example, TERM 2 is calculated for the portion of Day-ahead offer price quantity pair 11 the import that is scheduled in the real-time market Day-ahead offer curve beyond the day-ahead schedule value (DQSI - PDR_DQSI)

IOG Floor Value: Real-Time Constrained-off Scenario IOG Floor value (IOG_FV) Price IOG Floor value (IOG_FV) 0 0 Quantity DQSI (real-time MQSI (real-time PDR_DQSI (day- constrained unconstrained ahead) schedule) schedule) Floor value Floor value Constrained equation: TERM 2 equation: TERM 1 OFF event Legend: Real-time offer price quantity pair In this example, TERM 2 is calculated for the portion of Real-time offer curve 12 the import that is scheduled in the real-time market Day-ahead offer price quantity pair beyond the day-ahead schedule value (DQSI - PDR_DQSI) Day-ahead offer curve

Next Steps • Continue to review DACP results to determine if necessary conditions for under-payment have occurred • Review other potential scheduling and pricing scenarios for inappropriate payments • PA Consulting review of MR-00323 proposed formulations and other DACP formulations in relation to RT formulations • IESO to revise MR-00323 as required • July 18 th report back to Panel; further Panel review of MR-00323 • July 27 th IESO Board consideration of MR-00323 as urgent amendment 13