2019 ANNUAL VRL ANALYSIS - Southwest Power … vrl...Southwest Power Pool, Inc. 2018 SPP Annual VRL Analysis REVISION HISTORY DATE OR VERSION NUMBER AUTHOR CHANGE DESCRIPTION COMMENTS

2019 ANNUAL VRL

ANALYSIS Subtitle

Published on 8/1/2019

By Ops Market Support/Forensics

Ricky Finkbeiner

Abram Harder

Southwest Power Pool, Inc.

2018 SPP Annual VRL Analysis

REVISION HISTORY

DATE OR

VERSION NUMBER AUTHOR

CHANGE

DESCRIPTION COMMENTS

7/25/2019 Abram Harder First Draft

7/29/2019 Abram Harder Incorporated Market

Design Feedback

7/31/2019 Abram Harder Final Revisions

Southwest Power Pool, Inc.

2018 SPP Annual VRL Analysis

CONTENTS

Revision History ......................................................................................................................................................................... i

Executive Summary ................................................................................................................................................................ 1

Recommendations .................................................................................................................................... 2

Background ................................................................................................................................................................................ 3

Data Analysis of Current VRLs ........................................................................................................................................... 5

Binding in the Integrated Marketplace ................................................................................................. 5

Breaching in the Real-Time Balancing Market ...................................................................................... 8

Breaching in the Day-Ahead Market ................................................................................................... 10

Spinning Reserve Shortages in the RTBM ........................................................................................... 11

Sensitivity Analysis for Operating Constraint VRL .................................................................................................. 13

Methodology ........................................................................................................................................... 13

Sensitivities Analyzed .............................................................................................................................. 13

Sensitivity Analysis Results ..................................................................................................................... 15

Sensitivity Analysis for Spinning VRL ........................................................................................................................... 21

Methodology ........................................................................................................................................... 21

Results ..................................................................................................................................................... 22

Reliability Indicators ............................................................................................................................ 22

Economic Indicators ............................................................................................................................ 23

Conclusion ........................................................................................................................................... 27

Southwest Power Pool, Inc. Executive Summary

2019 SPP Annual VRL Analysis 1

EXECUTIVE SUMMARY

This report provides the annual analysis of the Integrated Marketplace violation relaxation limits (VRLs).

The effectiveness of the VRLs and their values on reliability and pricing was evaluated. While the

historical analysis focused primarily on the previous three years (July 2016 – June 2019), the sensitivity

analysis used Real-Time Balancing Market (RTBM) studies from September 2018 and June of 2019.

Table 1 below summarizes the VRL instances in the RTBM and the Day-Ahead Market (DAMKT) for the

SPP Integrated Marketplace during the last two reporting years. Note that the RTBM instances account

for a 5-minute interval while the DAMKT instances account for a 1-hour interval. Multiple VRL instances

can occur per interval if there is more than one constraint with a VRL application in that interval.

Analysis will primarily focus on the operating constraint VRLs due to the large number of instances in

that category.

Table 1: Summary of VRL instances in the RTBM and DAMKT.

DAY-AHEAD REAL-TIME

July 2017 – June 2018

July 2018 – June 2019

July 2017 – June 2018

July 2018 – June 2019

Spinning Reserve 0 0 835 1056

Operating Constraint 36 171 33,758 27,423

Operating Constraint – Lower external M2M Shadow Price

0 0 8,443 22,643

*Day-Ahead Market constraint breaches are primarily due to phase shifter constraints that breach when the

equipment is out of service. These instances have a $0 Shadow Price and no pricing impact. They account for

0 of the 36 instances of breached DAMKT constraints in 2017-2018 reporting year and 142 of the 171

instances of breached DAMKT constraints in the 2018-2019 reporting year.

Southwest Power Pool, Inc. Executive Summary


RECOMMENDATIONS Based on the analysis presented in this report, SPP is not recommending a change to the Operating

Constraint (OC) VRL blocks. However, SPP requests that MWG and ORWG review the results in the report

and consider the costs and benefits for moving toward increasing the first two OC VRL blocks to $900

(Sensitivity 2). Sensitivity 2 showed an increase in reliability, but this came at an increase in operating

costs. For Sensitivity 2, the average MEC increased from $21.88 to $22.02, scarcity events increased from

27 to 29, while reducing breaches from 2226 to 2112.

SPP recommends that the Spinning Reserve constraint VRLs remain at $200. The analysis presented

shows the Spinning Reserve VRL level is near the optimal value based on the current methodology, where

any studied level other than $200 came with an increase in shortage events or significantly increased

prices, while not significantly reducing shortage events.

Additionally, SPP recommends no changes to the VRLs related to Resource Capacity, Power Balance, and

Ramp since these VRLs are rarely employed (if at all).

Southwest Power Pool, Inc. Background


BACKGROUND

Attempting to enforce all constraints when generating a Market Clearing Engine (MCE) solution may

result in a solution that is not feasible. In those situations, SPP will apply the VRLs in the MCE solution.

VRLs and their associated values attempt to achieve a reasonable balance between honoring operating

requirements and constraints while mitigating large price excursions or other extreme prices.

Table 2 contains the current VRL constraints and values currently in place, as listed in the SPP Open

Access Transmission Tariff (Tariff).

Table 2: Current VRL constraints and values

CONSTRAINT TYPE DESCRIPTION VRL

Resource Capacity The minimum and maximum MW dispatchable output of a Resource as indicated in a Resource Offer.

$100,000

Global Power Balance Energy needed to balance Resources and load.

$50,000

Resource Ramp The ramp capability of a Resource as indicated in the Resource plan.

$5,000

Operating Constraint not subject to Market-to-Market coordination

A MW limit that can be imposed on SPP related to MW flow across a market node, a manually-identified transmission constraint, a Watch List transmission constraint, a flowgate constraint, or a transmission constraint identified by SPP’s real-time contingency analysis.

$750 when the loading is greater

than 100% and less than or equal to

102% at each network constraint at

each Operating Constraint.

$1,000 when the loading is greater


103% at each network constraint



104% at each network constraint


than 104% at each network

constraint

Operating Constraint

subject to Market-to-

Market coordination

MISO’s Shadow Price as further

defined in Section 3.1 of

Attachment 2 of the SPP-MISO

JOA

Regulation-up plus

Spinning Reserve

Constraint

A MW value representing the sum of

the Regulation-Up requirement and

Spinning Reserve requirement

$200

Southwest Power Pool, Inc. Background


In the course of running the Security Constrained Economic Dispatch (SCED) for a DAMKT or a RTBM,

constraints are optimized to determine the most efficient and reliable solution. At times, system

limitations may cause the Shadow Price needed to meet a constraint to exceed a defined VRL. In this

situation, the constraint’s limit is relaxed and the Shadow Price replaced with the VRL penalty allowing

the SCED to solve more economically.

The five VRL constraint/categories are

1. Spinning Reserve Requirement

2. Operating Constraint – including:

a. Manual

b. PNode

c. Watch List

d. Flowgate

e. Real-Time Contingency Analysis (RTCA) constraints

3. Resource Ramp Constraint

4. Global Power Balance Constraint

5. Resource Capacity Constraint

In the Marketplace there also exists unavoidable trade-offs in applying VRLs of the constraint type

categories where a higher VRL value is an indication of the relative priority for enforcing the constraint

type. The SCED solution for the Day-Ahead and Real-Time interprets:

Spinning Reserve Requirement is relaxed before a Transmission Constraint

A Transmission Constraint is relaxed before a Resource Ramp Constraint

A Resource Ramp Constraint is relaxed before the Global Power Balance Constraint

The Global Power Balance Constraint is relaxed before a Resource Capacity Constraint

In practice, lower shift factors/sensitivities on a Transmission Constraint could lead to a resource

meeting the Spinning Reserve Requirement at the expense of resolving a Transmission Constraint.

SPP has requirements to provide (by November 1st each year) analysis as well as a set of proposed VRLs

for review by the applicable working groups and committees as described in the Market Protocols and

SPP Tariff. The report, analysis, sensitivities, and recommendations are due to the appropriate working

groups by August 1st. Sources for these requirements are currently found in:

Integrated Marketplace Protocols 4.1.4

SPP Tariff Attachment AE section 3.4 and Addendum 1

Southwest Power Pool, Inc. Data Analysis of Current VRLs


DATA ANALYSIS OF CURRENT VRLS

The following section provides an overview and analysis of the VRL usage in the SPP Integrated

Marketplace. The analysis primarily focused on Operating Constraint VRLs, with some analysis on the

Spinning Reserve VRL. In the past few years, with the analysis and reporting due on August 1st, the data

has been focused on the previous year of data (July of previous year through June of current year) to

provide the latest data available. For this reason, unless otherwise noted, data referred to by reporting

year follows the convention defined below:

Reporting Year 2017: July 2016 – June 2017



BINDING IN THE INTEGRATED MARKETPLACE

The charts below illustrate the relative distribution of the binding1 constraints in the RTBM and DAMKT,

grouped by Shadow Price. Day-Ahead Market has a majority of binding occurrences in the [$0-

$100]/MW Shadow Price range, while RTBM has a wider distribution. This is the expected result, as the

RTBM has additional price volatility with changing real-time conditions and shorter ramping intervals

(five minutes in the RTBM versus one hour in the DAMKT).

Figure 1: Binding instances in the Real Time Balancing Market

1 A constraint is binding when the market clearing engine requires redispatching resources in order to maintain flows at the constraint’s limit.

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

$0 - $100 $100 - $200 $200 - $300 $300 - $400 $400 - $500 $500 - $600 $600 +

Binding Instances in RTBM (Constraint-Intervals)

2016-2017 2017-2018 2018-2019



Figure 2: Binding instances in the Day-Ahead Market

Historical trends still hold true when comparing Real-Time to Day-Ahead Market binding. When

inspecting the binding instances by Shadow Price as a percent of all binding instances, notice there is a

higher concentration of Day-Ahead Market binding instances in the $0 - $100 Shadow Price range. This is

somewhat typical, and the causes for smaller Shadow Prices in DA are primarily due to:

Less volatility than RTBM real-time data

More options to solve constraints (virtual bids/offers, NDVERs participating as dispatchable, etc.)

so the DA constraints can be solved more easily

Figure 3: RTBM OC Binding Instances by Shadow Price July 2018 - June 2019

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

$0 - $100 $100 - $200 $200 - $300 $300 - $400 $400 - $500 $500 - $600 $600 +

Binding Instances in DAMKT (Constraint-Intervals)

2016-2017 2017-2018 2018-2019

63.8%

16.6%6.9% 4.9% 3.0% 2.3% 2.5%

0%

20%

40%

60%

80%

100%

0

40,000

80,000

120,000

160,000

$0 -

$100

$100 -

$200

$200 -

$300

$300 -

$400

$400 -

$500

$500 -

$600

$600 +

% O

C T

ota

l B

ind

ing

In

sta

nc

es

To

tal

Bin

din

g I

nst

an

ce

s

RTBM OC Binding Instances by Shadow Price

July 2018 - June 2019

Binding Instances Percentage



Figure 4: DAMKT OC Binding Instances by Shadow Price July 2018 - June 2019

Taking the percentage of total binding instances (red line in the previous charts) and comparing for each

reporting year shows if the distribution of binding percentages is changing over time. As can be seen in

the two figures below, both RTBM and DAMKT binding instances have followed very similar distributions

for the past three years.

Figure 5: RTBM OC Binding Instances by Shadow Price and Reporting Year

91.9%

5.9% 1.4% 0.4% 0.2% 0.1% 0.1%0%

20%

40%

60%

80%

100%

0

20,000

40,000

60,000

80,000

100,000

$0 -

$100

$100 -

$200

$200 -

$300

$300 -

$400

$400 -

$500

$500 -

$600

$600 +

% O

C T

ota

l B

ind

ing

In

sta

nc

es

To

tal

Bin

din

g I

nsta

nc

es

DAMKT OC Binding Instances by Shadow Price

July 2018 - June 2019

Binding Instances Percentage

63.8%

16.6%6.9% 4.9% 3.0% 2.3% 2.5%

0%

10%

20%

30%

40%

50%

60%

70%

$0 - $100 $100 -

$200

$200 -

$300

$300 -

$400

$400 -

$500

$500 -

$600

$600 +

% O

C T

ota

l B

ind

ing

In

sta

nc

es

RTBM OC Binding Instances by Shadow Price and

Reporting Year

2016-2017 2017-2018 2018-2019



Figure 6: DAMKT OC Binding Instances by Shadow Price and Reporting Year

BREACHING IN THE REAL-TIME BALANCING MARKET

During the previous year (2018-2019), SPP observed a reduction in breach events. It is worth noting in

this section that breach instances are excluded from Figure 7 where SPP was controlling the constraint in

Market Flow Control (such as external M2M or congestion from TLR to meet market relief assignment).

Figure 7: Total RTBM Breach Instances and Severity by Reporting Year Excluding Market Flow Control & External M2M

91.9%

5.9%1.4%

0.4% 0.2% 0.1% 0.1%0%

20%

40%

60%

80%

100%

$0 - $100 $100 -

$200

$200 -

$300

$300 -

$400

$400 -

$500

$500 -

$600

$600 +

% O

C T

ota

l B

ind

ing

In

sta

nc

es

DAMKT OC Binding Instances by Shadow Price and

Reporting Year

2016-2017 2017-2018 2018-2019

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1% or

less

1-2% 2-3% 3-4% 4-5% 5-6% 6-7% 7-8% 8-9% 9-10% 10+%

Total RTBM Breach Instances and Severity by Reporting Year

Excluding Market Flow Control & External M2M

2016-2017 2017-2018 2018-2019



Most levels saw a decrease in the number of breaches, with an exception in the 1-2% level which saw an

increase in the number of breaches. This follows the trend of lower congestion overall when compared to

previous years, with a small shift where constraints are relaxing with the first two VRL blocks having the

same value ($750). The small increase in the percent of 10+% level as portion of the total breaches, as

shown in Figure 8, is not an indication of a reduction in reliability, but due to the large decrease in the

total number of breach events.

Figure 8: Percent of RTBM Breach Instances and Severity by Reporting Year Excluding Market Flow Control & External M2M

Noticing the drop in breaches from the 2018 reporting year to 2019 reporting year, it is useful to

compare the top 10 breached constraints in RTBM from 2018 to their number of breaches in 2019 to see

some major differences. Many of the largest reductions in breaches on particular flowgates were due to

rating increases and high impact outage restorations. This comparison is shown in Table 3.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1% or

less

1-2% 2-3% 3-4% 4-5% 5-6% 6-7% 7-8% 8-9% 9-10% 10+%

Percent of RTBM Breach Instances and Severity by Reporting Year


2016-2017 2017-2018 2018-2019



Table 3: Comparison of the top ten breached constraints in RTBM

CONSTRAINT 2016-2017 2017-2018 2018-2019 COMMENT

NEORIVNEOBLC 1201 2020 296 Rating increase reduced congestion; some reduction in external flow as well as reduction in competing constraints

TMP151_23193

1282 177 Rating increase reduced congestion; some reduction in external flow as well as reduction in competing constraints

TAHH59MUSFTS 968 944 340 Rating increase reduced congestion; some reduction in external flow as well as reduction in competing constraints

TEMP29_23044

846 151 This constraint is very similar to TEP109_22593. The loading changes with slight topology differences and can cause one to load up vs the other.

TMP228_22196 978 818 11* Replaced by permanent HALTUCSWITUC (*11 breached intervals 2018-2019); rating increase in 2018-2019

BONHACAESTAR 5 627

Heavy impact transmission outage in 2017-2018

TMP109_22593 89 627 820 This constraint is very similar to TEMP29_23044. The loading changes with slight topology differences and can cause one to load up vs the other.

TMP213_23918

613 66 Heavy impact transmission outage in 2017-2018

TMP127_23359

578 1063 Higher impact from seasonal loading patterns; limited redispatch available

TEMP86_22813 758 489

Heavier local outage impacts in prior years

BREACHING IN THE DAY-AHEAD MARKET

The DAMKT sees far fewer breaches than RTBM, primarily due to

Less volatility and unexpected system changes

A longer dispatch period (1 hour vs 5 minutes) to solve the constraint

Virtual bids and offers provide more options to resolve the constraint at lower Shadow Prices

Different resource offer/dispatch behavior between Real-Time and Day-Ahead.



Figure 9: DAMKT Breach Instances and Severity by Reporting Year Excluding Market Flow Control & External M2M

As noted in the opening of the report, many of the “Breached” intervals in Day-Ahead Market from the

2018-2019 reporting year are due to phase-shifter control constraints that are unable to solve when the

phase-shifting transformer becomes temporarily radial due to transmission outages. These instances all

resulted in $0 Shadow Price and did not affect the solution but are still reported as breached.

Table 4: Day-Ahead Market Breach Events

DAY-AHEAD MARKET BREACH EVENTS

Reporting year Standard Constraint Phase Shifter Outages

Total

2017-2018 36 0 36

2018-2019 29 142 171

SPINNING RESERVE SHORTAGES IN THE RTBM

In the past few years, the prevalence of Spinning Reserve shortages has increased in the RTBM, while

Day-Ahead Market has seen no Spinning reserve shortages in that same period. The occurrences in RTBM

are primarily due to unplanned changes in obligation, larger than forecasted ramping events, and limited

rampable capacity during those periods. This continued increase in the Spinning Reserve scarcity

contributed to the decision to do additional sensitivity analysis on that VRL setting as well this year.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1% or less 1-2% 2-3% 3-4% 4-5% 5% +

% o

f T

ota

l B

rea

ch

es

DAMKT Breach Instances and Severity by Reporting Year


2016-2017 2017-2018 2018-2019



Figure 10: Occurrences and magnitude of Spinning Reserve Shortages in the RTBM

Historically, Spinning Reserve shortages have been concentrated in the off-peak months. The off-peak

months tend to have large amounts of renewable energy penetration increasing the likelihood that the

error associated with forecastable generation will contribute to a lack of available ramping capability on

the system. In 2019, SPP experienced a shift in months that had larger than expected Spinning Reserve

shortages. While a portion of these shortages can be attributed to a continued increase in forecastable

generation error within SPP, analysis has shown that the primary driver was unprecedented levels of

generator outages reducing commitment flexibility within the SPP footprint.

Figure 11: Spinning Reserve Shortages in RTBM, by Month

0

50

100

150

200

250

300

350#

of

Inte

rva

ls

MW Shortage Amount

Occurrences and magnitude of Spinning Reserve

Shortages in the RTBM

2016-2017 2017-2018 2018-2019

0

50

100

150

200

1 2 3 4 5 6 7 8 9 10 11 12

# o

f In

terv

als

Month

Spinning Reserve Shortages in RTBM, by Month

2016 2017 2018 2019

Southwest Power Pool, Inc. Sensitivity Analysis for OC VRL


SENSITIVITY ANALYSIS FOR OPERATING

CONSTRAINT VRL

METHODOLOGY SPP received and incorporated feedback from the presentation of 2017-2018 VRL sensitivity analysis

that this year’s analysis should focus on the effects that differing levels of the VRL blocks have on

operating costs and reliable system operation. The VRL changes and their impacts were assessed by re-

executing RTBM studies for 18 operating days. The weeks picked are both recent and represent samples

of typical congestion patterns on the SPP system. The selection was intended to cover a wide range of

operational conditions so that while the data analysis did not cover a large time period, it could be

considered robust enough to apply to most operational issues. Intervals included:

5,182 intervals covering 18 days between 9/09/2018 and 6/22/2019

System load ranging from 22.5 to 45.1 GW

System wind forecasts from 0.6 to 14.9 GW

Net scheduled interchange ranging from -1.6 GW to +3.0 GW

There were six sensitivities covered, described in more detail below. Four are uniform VRL block sizes,

and two with increasing block size. Combined with the base reruns, 36,267 RTBM intervals were re-

executed for this study.

The VRL blocks were the only initial input changes to the cases, but a feed-forward dispatch simulation2

was used to reflect resource dispatch following and constraint impacts. This simulation style is the same

as was used on the 2017-2018 annual VRL analysis. Results are assessed based on performance of

constraint control (how many breached instances are observed) as well as system cost and pricing

indicators.

SENSITIVITIES ANALYZED 1. Base – This was simply the existing VRL curve as posted in the SPP Tariff and Protocols, effective

since 3/6/2017. This sensitivity was very important to run due to the usage of the feed-forward

dispatch simulation (which has been added/improved over prior years) to more effectively

represent resource and constraint movement. The base sensitivity acted as the control for the

study, so that changes in the VRL blocks could be assessed against this. The VRL blocks used are

a. $750 when the loading is greater than 100% and less than or equal to 101% at each

network constraint at each Operating Constraint.

b. $750 when >101% and <= 102%

c. $1,000 when >102% and <= 103%

d. $1,250 when >103% and <= 104%

e. $1,500 when >104%

2 SPP's process for performing retroactive dispatch analysis involves feeding forward the calculated dispatch values from a forward time point as the actual values used for generation when the simulation reaches the aforementioned forward time point. I.e., the dispatch calculated from Interval Ending 00:10 will be used as the actual generation when the simulation reaches Interval Ending 00:10.



2. Uniform Blocks – These VRL blocks are set up similarly to the current VRL blocks but are all

increases from the Base constraint VRL blocks used today. These blocks will analyze the

sensitivities of the market from higher VRLs, and Sensitivities 2 and 3 will also include the effects

from increasing the first VRL block amount. The last Sensitivity in this group will explore the

effects of reducing the VRL blocks. The uniform VRL blocks are listed in Table 5 below and are

also shown in Figure 12.

Table 5: Penalty blocks for the Uniform Block Size

Base Sensitivity

1 Sensitivity

2 Sensitivity

3 Sensitivity

4 If VRL passed, relax limit to

First Block 750 750 900 1,050 500 101% 750 900 900 1,050 600 102% 1,000 1,150 1,150 1,300 850 103% 1,250 1,400 1,400 1,550 1,100 104%

Last Block 1,500 1,650 1,650 1,650 1,350 >104%

3. Increasing Blocks – These sensitivities were intended to explore the affects in the market from

putting an increase in the size of the price jump as the market relaxes the constraints limit during

the solution. These blocks are shown in Table 6 below and in Figure 12.

Table 6: Penalty blocks for the Increasing Block Size

Base Sensitivity

5 Sensitivity

6

If VRL passed,

relax limit to

First Block 750 750 750 101% 750 950 1,050 102%

1,000 1,250 1,500 103% 1,250 1,650 2,100 104%

Last Block 1,500 2150 2,850 >104%



Figure 12: 2018-2019 Constraint Sensitivity VRL Blocks

SENSITIVITY ANALYSIS RESULTS Performance of the various VRL block sensitivities and methods was primarily analyzed in terms of total

number of breaching flowgate instances, and system-level pricing and cost indicators. These primary

indicators are

Total number of breach instances in the RTBM solutions

Average Marginal Energy Cost (MEC)

Total Intervals with OR Scarcity

Average Operating Cost (Total fuel/offer cost per interval of energy and operating reserves)

Average Settlement Cost (Total cost to be payed to resources based on DispatchMW * LMP +

ReservesClearedMW * MCP)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

98% 99% 100% 101% 102% 103% 104% 105% 106% 107%

Shad

ow

Pri

ce

% of Effective Constraint Limit

VRL Blocks used for Sensitivity Analysis

Base Sensitivity 1 Sensitivity 2 Sensitivity 3

Sensitivity 4 Sensitivity 5 Sensitivity 6



Table 7: Sensitivity Key Indicators- Averages

Sensitivity Average

MEC

Average Operating

Cost

Average Settlement

Cost

Total Breach

Instances

Total OR Scarce

Intervals

Base $21.88 $18,532.18 $55,422.97 2226 27

Sensitivity 1 $22.03 $18,539.82 $55,724.57 2237 28

Sensitivity 2 $22.02 $18,541.92 $55,570.29 2112 29

Sensitivity 3 $22.26 $18,551.74 $56,005.30 2043 28

Sensitivity 4 $21.56 $18,519.51 $54,821.82 2619 25

Sensitivity 5 $22.25 $18,547.23 $56,034.73 2232 26

Sensitivity 6 $22.79 $18,558.20 $57,273.56 2258 30

Some trends are relatively clear, especially when shown on a scatter plot (Figure 13). There is typically a

tradeoff between increased reliability (reduced breach events) and cost (system MEC and Settlement

Cost). An optimum VRL setting would most likely move to the left and down on this scatter chart, where

breach instances would be reduced with no increase (potentially even a decrease) to system costs.

This simulation shows that Sensitivity 2 provides the largest increase in reliability with the smallest

increase in costs compared to the Base, when looking at averages in Figure 13. Comparing the impacts to

the total Operating and Settlement costs is shown in Figure 14, there is a larger difference in Operating

costs between Sensitivity 2 and the Base.

Figure 13: Key Performance Indicators of VRL Sensitivities (Averages)

$54,500.00

$55,000.00

$55,500.00

$56,000.00

$56,500.00

$57,000.00

$57,500.00

$21.40

$21.60

$21.80

$22.00

$22.20

$22.40

$22.60

$22.80

$23.00

2000 2200 2400 2600

Ave

rage

Set

tlem

ent

Co

st

Ave

rage

MEC

Total Breached Instances

VRL Sensitivity Key Performance Indicators- AveragesAverage MEC Average Settlement Cost

Sensitivity

Sensitivity 2

Sensitivity

Sensitivity 1

Sensitivity 5

Base Sensitivity



Table 8- Sensitivity Key Indicators- Totals

Sensitivity Average

MEC

Total Operating

Cost

Total Settlement

Cost

Total Breach Instances

Total OR Scarce

Intervals

Base $21.88 $96,015,234 $287,146,412 2226 27 Sensitivity 1 $22.03 $96,054,832 $288,708,996 2237 28 Sensitivity 2 $22.02 $96,065,685 $287,909,688 2112 29 Sensitivity 3 $22.26 $96,116,578 $290,163,473 2043 28 Sensitivity 4 $21.56 $95,949,583 $284,031,844 2619 25 Sensitivity 5 $22.25 $96,093,221 $290,315,939 2232 26 Sensitivity 6 $22.79 $96,150,051 $296,734,293 2258 30

Figure 14- Key Performance Indicators of VRL Sensitivities (Totals)

Notice that in both Figure 13 and Figure 14 all of the Sensitivities with the same $750 value for the first

VRL block have almost the same number of breaches as the Base, and the larger the increase in the higher

blocks the larger the increase in costs. Sensitivity 4 shows there are significant economic benefits

available by lowering the VRL block values, but that this comes at the expense of reliability.

The figures below are looking at the total Settlement cost on a more granular level. For each day where

RTBMs were re-executed, each Sensitivity is shown with respect to the Sensitivity with the highest total

Settlement cost for that day. For many of the days in this study there is very little differences in the total

Settlement Cost. For the days where there are larger differences in total Settlement costs, the trends from

the scatter plots are generally echoed here, with Sensitivity 4 costing the least and Sensitivity 6 the most.

$282.00

$284.00

$286.00

$288.00

$290.00

$292.00

$294.00

$296.00

$298.00

$95.90

$95.95

$96.00

$96.05

$96.10

$96.15

$96.20

2000 2200 2400 2600

Tota

l Set

tlem

ent

Co

st (

Mill

ion

s)

Tota

l Op

erat

ing

Co

st (

Mill

ion

s)

Total Breached Instances

VRL Sensitivity Key Performance Indicators - TotalsTotal OPERATING COST Total Settlement Cost

Sensitivity 3

Sensitivity 2

Sensitivity 6

Sensitivity 1

Sensitivity 5

Base Sensitivity 4



The congestion on these days was situated where the differences in both the first and the later VRL

blocks had impacts, causing the larger separation in the total settlement costs for that day.

Figure 15: Daily Settlement Cost comparison of VRL Sensitivities. 2018 Range

Figure 16: Daily Settlement Cost comparison of VRL Sensitivities. 2019 Range

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

9-Sep 10-Sep 11-Sep 12-Sep 13-Sep 14-Sep 15-Sep 16-Sep 17-Sep 18-Sep 19-Sep

Daily Total Settlement Cost by Sensitivityas % of Peak Daily Settlement Cost (2018 Range)

Base Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Sensitivity 5 Sensitivity 6

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

16-Jun 17-Jun 18-Jun 19-Jun 20-Jun 21-Jun 22-Jun

Daily Total Settlement Cost by Sensitivityas % of Peak Daily Settlement Cost (2019 Range)

Base Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Sensitivity 5 Sensitivity 6



By looking at the individual VRL blocks, it is possible to see where the changes in relaxation occurred for

the different Sensitivities. This is shown in two figures. Figure 17 looks at all VRL instances, while Figure

18 removes Market Flow control and external M2M in the same fashion as earlier in the report. Looking

at this data, it is clear that breaches above the first VRL block are only slightly affected by the changes in

the values, and that the vast majority of difference occurs based on the value of the first VRL block. The

large shift between these two Figures also shows that the majority of large (>104%) breaches occur

when the constraint is in Market Flow Control or external M2M.

Figure 17- Breaches per VRL Block

Table 9- VRL Instance Breakdown by Sensitivity

VRL BLOCK

BASE SENSITIVITY

1 SENSITIVITY

2 SENSITIVITY

3 SENSITIVITY

4 SENSITIVITY

5 SENSITIVITY

6

≤101% 315 400 276 290 580 398 464

102% 310 311 313 263 379 320 312

103% 196 145 149 133 226 170 162

104% 114 113 107 96 130 95 89

>104% 252 231 235 225 265 217 198

0

200

400

600

800

1000

BASE Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Sensitivity 5 Sensitivity 6

Bre

ach

es

Breaches per VRL Block

≤101% 102% 103% 104% >104%



Figure 18- Breaches per VRL Block Excluding Market Flow Control and External M2M

Table 10- VRL Instance Breakdown by Sensitivity- Excluding Market Flow Control and External M2M

VRL BLOCK

BASE SENSITIVITY

1 SENSITIVITY

2 SENSITIVITY

3 SENSITIVITY

4 SENSITIVITY

5 SENSITIVITY

6

≤101% 315 400 276 290 580 398 464

102% 310 311 313 263 379 320 312

103% 196 145 149 133 226 170 162

104% 114 113 107 96 130 95 89

>104% 252 231 235 225 265 217 198

Overall, relative to our Base VRL Blocks:

Sensitivity 3 is the most reliable with the largest reduction in Breaches, while Sensitivity 4 had

the largest increase in Breaches. These were also the sensitivities with the largest and smallest

values, respectively, for the first VRL block.

Higher values for the upper VRL blocks, while leaving the first block at $750 had little effect on

the number of breaches, but did increase costs, this is shown by Sensitivities 1, 5, and 6.

Sensitivity 2 gave the best increase in reliability with the smallest increase in costs. With

Sensitivity 2 the average MEC increased from $21.88 to $22.02(+0.6%), scarcity events increased

from 27 to 29 (+7%), while reducing breaches from 2226 to 2112 (-5%).

0

100

200

300

400

500

600

700

BASE Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Sensitivity 5 Sensitivity 6

Bre

ach

es

Breaches per VRL BlockExcluding Market Flow Control & External M2M

≤101% 102% 103% 104% >104%

Southwest Power Pool, Inc. Sensitivity Analysis for Spin VRL


SENSITIVITY ANALYSIS FOR SPINNING VRL

Sensitivities were also run this year on adjusting the VRL value (from $200) of the Spinning + Regulation

Up requirement. Regulation Up is included in the requirement because of potential product substitution

of regulating capacity to meeting Spinning Reserve requirements. This sensitivity analysis focused on the

same 18 day period from the Transmission/OC Constraint VRL sensitivity analysis (9/9/2018 –

9/19/2018 and 6/16/2019 – 6/22/2019).

METHODOLOGY Not all intervals in the time window were rerun, since the Spin VRL really only has substantial impact on

the RTBM SCED solution when there is a scarcity event, and/or high MECs. The sample size was reduced

from the original 5,184 RTBM intervals of the two-week span to only 194 intervals in that period, based

on a selection criteria that the original interval had to have either

Scarcity of an operating reserve product

And/Or system Marginal Energy Cost (MEC) at or above $50

The studies were rerun without performing the full feed-forward simulation, since a continuous dispatch through these rare events was not expected to have a substantial impact between the base case and the

rerun sensitivities. The studies were rerun with new Spin VRL price settings of

$100

$150

$200 (original)

$250

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200



RESULTS Results of the sensitivity analysis are below and are broken into categories of economic indicators (MECs,

MCPs) and reliability indicators (scarcity and constraint breaches).

RELIABILITY INDICATORS

The primary reliability indicators (scarcity of reserves and constraint breach events) did move in the

directions expected

There was no impact to Regulation Down (RegDown) shortages ( as expected due to the

generation needs being in the opposite direction of Spinning Reserve (Spin)) and only a small

impact to Supplemental Reserve (Supp) shortages

Spin Shortages decreased as the value placed on meeting the requirement (the Spin VRL) was

increased

The reduction in number of intervals with scarcity with VRLs above $200 was fairly limited,

primarily because Regulation and OR Demand curves also apply in that dollar range as well.

RegUp saw slightly increasing shortages as product substitution allowed it to compete with Spin

and with higher Spin VRLs, Spin was cleared more; also 5-minute vs 10-minute capacity gave Spin

priority when SPP was limited on capacity

Flowgate breach instances increased with higher Spin VRL levels, as Spin was given increasing

value relative to transmission constraints. In previous years there has been a relatively sharp

jump in breach events from the $700 to the $800 Spin VRL setting, as at this point the Spin VRL

exceeds the first block of the OC VRL ($750). In those cases this had caused a 100% resource

outlet constraint to begin breaching, which did not occur during this year’s analysis.

Table 11: Reliability Indicators

SPIN VRL

# OF SCARCE

INTERVALS

REGDOWN SHORTAGE

MW TOTAL

REGUP SHORTAGE

MW TOTAL

SPIN SHORTAGE

MW TOTAL

SUPP SHORTAGE

MW TOTAL

BREACHED FG

INSTANCES

$100 49 54.1 737.1 2023.1 1146.1 497

$150 47 54.1 729.3 1877.2 1139.7 498

$200 45 54.1 729.3 1750.8 1139.6 500

$250 44 54.1 729.3 1685.6 1139.4 500

$300 44 54.1 731.3 1639.2 1140.8 502

$400 43 54.1 729.5 1598.5 1148.1 502

$500 43 54.1 729.4 1589.1 1149.0 503

$600 43 54.1 731.3 1586.7 1149.0 503

$700 43 54.1 745.6 1584.0 1148.6 503

$800 42 54.1 745.9 1581.0 1148.6 503

$900 41 54.1 756.0 1572.2 1159.0 505

$1000 41 54.1 756.0 1570.3 1158.7 505

$1100 41 54.1 756.1 1569.9 1158.7 505

$1200 41 54.1 756.1 1569.4 1158.5 505



The results may be more enlightening when viewed as a percent change from the base $200 VRL level.

Table 12 shows where the percentage changes are positive if that value increased relative to the amount

in the $200 VRL base and the percentage changes are negative if the value decreased relative to the $200

VRL base.

Table 12: Percentage change relative to the $200 VRL level

SPIN VRL

# OF SCARCE

INTERVALS

REGDOWN SHORTAGE

MW TOTAL

REGUP SHORTAGE

MW TOTAL

SPIN SHORTAGE

MW TOTAL

SUPP SHORTAGE

MW TOTAL

BREACHED FG

INSTANCES

$100 8.89% 0.00% 1.07% 15.55% 0.57% -0.60%

$150 4.44% 0.00% 0.00% 7.22% 0.01% -0.40%

$200 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

$250 -2.22% 0.00% 0.00% -3.72% -0.02% 0.00%

$300 -2.22% 0.00% 0.27% -6.37% 0.11% 0.40%

$400 -4.44% 0.00% 0.02% -8.70% 0.75% 0.40%

$500 -4.44% 0.00% 0.01% -9.24% 0.83% 0.60%

$600 -4.44% 0.00% 0.28% -9.37% 0.83% 0.60%

$700 -4.44% 0.00% 2.23% -9.52% 0.80% 0.60%

$800 -6.67% 0.00% 2.27% -9.70% 0.79% 0.60%

$900 -8.89% 0.00% 3.66% -10.20% 1.70% 1.00%

$1000 -8.89% 0.00% 3.67% -10.31% 1.68% 1.00%

$1100 -8.89% 0.00% 3.67% -10.33% 1.68% 1.00%

$1200 -8.89% 0.00% 3.67% -10.36% 1.66% 1.00%

Percentages shown are calculated as (𝐶ℎ𝑎𝑛𝑔𝑒 𝑉𝑎𝑙𝑢𝑒−𝐵𝑎𝑠𝑒 𝑉𝑎𝑙𝑢𝑒)

𝐵𝑎𝑠𝑒 𝑉𝑎𝑙𝑢𝑒, where the Base Value is the value of that

indicator at that $200 Spin VRL sensitivity.

The results in Table 12 show the relative trade-off between the constraints (transmission/OC constraints

and operating reserve requirements) in the SCED.

ECONOMIC INDICATORS

The economic indicators (LMP, MEC, MCP, Shadow Prices) are consistent with the reliability indicators

results.

There was little impact to RegDown MCPs (not in the same direction as Spin) and little impact to

Supp MCPs

Spin MCPs increased as the Spin VRL was increased; system MECs followed a similar path, since

most shortages of Spin involve competition with energy



RegUp saw heavily increasing MCPs as product substitution allowed it to compete with Spin and

with higher Spin VRLs, Spin was cleared more; there are also impacts when the system is

capacity-limited and capacity can be used for 5 minutes of RegUp versus 10 minutes of Spin

The LMP spread (Maximum LMP minus Minimum LMP in the SCED) initially increased with an

increasing Spin VRL, but then leveled off after about $400-$500 Spin VRL. The congested Shadow

Prices on constraints followed a similar pattern, but actually showed magnitude reductions at

higher Spin VRL levels, in part due to increasing instances of breach events with $0 constraint

Shadow Prices

Table 13: Spin VRL Economic Indicators

SPIN VRL

AVG MEC

AVG LMP

SPREAD

AVG REGDOWN

MCP

AVG REGUP

MCP

AVG SPIN MCP

AVG SUPP MCP

AVG CONGESTED

SHADOW PRICE

$100 $109.60 $863.06 $2.05 $16.77 $9.45 $4.9441 -$521.80

$150 $114.69 $863.66 $2.05 $18.00 $10.71 $4.8316 -$522.50

$200 $119.08 $864.48 $2.05 $19.12 $11.83 $4.8301 -$524.72

$250 $123.72 $867.02 $2.06 $20.23 $13.05 $4.8288 -$526.19

$300 $127.59 $866.36 $2.06 $21.19 $14.03 $4.8288 -$525.92

$400 $131.94 $863.00 $2.07 $22.28 $15.11 $4.4782 -$524.93

$500 $138.33 $862.84 $2.07 $23.81 $16.62 $4.4782 -$524.49

$600 $143.81 $865.41 $2.07 $25.15 $17.93 $4.4782 -$524.43

$700 $150.07 $860.21 $2.08 $26.65 $19.40 $4.4782 -$521.88

$800 $155.49 $865.77 $2.08 $27.97 $20.69 $4.4782 -$524.23

$900 $161.10 $864.96 $2.09 $29.36 $22.09 $4.4781 -$522.36

$1000 $166.24 $866.49 $2.09 $30.59 $23.32 $4.4781 -$522.47

$1100 $171.94 $868.47 $2.09 $31.95 $24.64 $4.4781 -$523.54

$1200 $176.85 $868.03 $2.10 $33.13 $25.80 $4.4781 -$522.67

Some visuals are presented below to illustrate the changes in system pricing. Figure 19 shows the LMP

spreads bottom out near the current setting in the $200-$250 Spin VRL range, while Marginal Energy

Cost increases over the entire range with a small dip for the $1,000 Spin VRL.



Figure 19: MEC and LMP Impacts of Spin VRL Change

MCPs for Regulation Up and Spinning Reserves increase proportionally with the MEC shown in Figure 20.

This has been consistent with existing scarcity events where Regulation Up, Spinning Reserve, and

Energy are all competing (usually coinciding with low remaining online capacity, but there are some

ramping limitations as well).

Figure 20: Average Product MCPs

Figure 21 helps further demonstrate some of the changes occurring around transmission constraint Shadow Prices with the increasing Spin VRL levels. Shadow prices on forward transmission constraints

$800

$810

$820

$830

$840

$850

$860

$870

$880

$0

$50

$100

$150

$200

Av

era

ge

LM

P S

pre

ad

Av

era

ge

ME

C

Spin VRL Setting

MEC and LMP Impacts of Spin VRL Change

Avg MEC Avg LMP Spread

$0

$5

$10

$15

$20

$25

$30

$35

Ma

rke

t C

lea

rin

g P

ric

e

Spin VRL Setting

Average Product MCPs

Avg RegDown MCP Avg RegUp MCP

Avg Spin MCP Avg Supp MCP



have negative values, so the reversal in polarity on the secondary (red) axis should be noted – that an

increase (more positive) in constraint Shadow Price typically signals lower congestion on the system. So

transmission constraint Shadow Prices that are more negative here are the more extreme congestion

pricing events.

There are some instances where transmission constraints can breach in the SCED with a $0 Shadow Price

(when all dispatchable relief is being used to honor other obligations), which causes the average

congested Shadow Price to appear less extreme. This is in part what explains the trend to less extreme transmission constraint Shadow Pricing at higher Spin VRL levels, because there are more breach

occurrences with $0 Shadow Price.

Figure 21: Average Congested Shadow Price and $0 Breach Instances

Finally, the initial economic indicators in terms of percentage change from the base ($200) Spin VRL

sensitivity are shown in Table 14. The percentage changes shown appear to be more extreme than those

shown in the reliability indicators, but these should be considered relative to the base values from which

they are calculated.

-$528

-$526

-$524

-$522

-$520

-$518

0

10

20

30

40

50

Sh

ad

ow

Pri

ce

Bre

ac

h I

nst

an

ce

s

Spin VRL Setting

Average Congested Shadow Price and $0 Breach

Instances

Instances with $0 Shadow Price Breach

Avg Congested Shadow Price



Table 14: Economic indicators in terms of percentage change from the base

SPIN VRL

AVG MEC

AVG LMP

SPREAD

AVG REGDOWN

MCP

AVG REGUP

MCP

AVG SPIN MCP

AVG SUPP MCP

AVG CONGESTED

SHADOW PRICE

$100 -7.96% -0.16% -0.10% -12.30% -20.13% 2.36% -0.56%

$150 -3.69% -0.09% -0.07% -5.86% -9.50% 0.03% -0.42%

$200 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

$250 3.90% 0.29% 0.16% 5.80% 10.27% -0.03% 0.28%

$300 7.14% 0.22% 0.23% 10.80% 18.56% -0.03% 0.23%

$400 10.80% -0.17% 0.76% 16.52% 27.72% -7.29% 0.04%

$500 16.17% -0.19% 0.95% 24.51% 40.47% -7.29% -0.04%

$600 20.77% 0.11% 1.05% 31.52% 51.54% -7.29% -0.05%

$700 26.02% -0.49% 1.34% 39.36% 63.98% -7.29% -0.54%

$800 30.57% 0.15% 1.41% 46.27% 74.87% -7.29% -0.09%

$900 35.29% 0.06% 1.92% 53.54% 86.68% -7.29% -0.45%

$1000 39.60% 0.23% 1.68% 59.97% 97.06% -7.29% -0.43%

$1100 44.39% 0.46% 1.65% 67.06% 108.24% -7.29% -0.22%

$1200 48.51% 0.41% 2.44% 73.27% 118.04% -7.29% -0.39%

Again, the percentages shown are calculated as (𝐶ℎ𝑎𝑛𝑔𝑒 𝑉𝑎𝑙𝑢𝑒−𝐵𝑎𝑠𝑒 𝑉𝑎𝑙𝑢𝑒)

𝐵𝑎𝑠𝑒 𝑉𝑎𝑙𝑢𝑒, where the Base Value is the

$200 Spin VRL sensitivity.

CONCLUSION

The sensitivity analysis shows for any studied Spin VRL level other than $200 came with an increase in

shortage events or significantly increased Energy and Product prices, while not significantly reducing

shortage events.

Documents

2019 ANNUAL VRL ANALYSIS - Southwest Power … vrl...Southwest Power Pool, Inc. 2018 SPP Annual VRL Analysis REVISION HISTORY DATE OR VERSION NUMBER AUTHOR CHANGE DESCRIPTION COMMENTS