AUGUST 9, 2013 | MARKETS COMMITTEE

Matt BrewsterMARKET DEVELOPMENT

Materials prepared in response to Markets Committee requests

NCPC Payments: requested exhibits and examples

SIDE-BY-SIDE COMPARISON OF “PENALTIES”Actions that reduce the Offer cost considered for NCPC under existing and Offer Flexibility designs

Actions that reduce Offer cost for NCPC

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Action Existing Design Offer Flexibility Design

Infeasible Self-Schedule

Ineligible for NCPC for entire day if self-schedule request is infeasible given resource minimum run or down time

Additional hours required to honor minimum run and down time considered self-scheduled

Not Following DDP Excursion outside +/- 10% tolerance in any 5-minute interval makes unit ineligible for total hourly cost Cost up to DDP Revenue at RQM

No +/-10% tolerance or change to hourly cost eligibility

Cost is same Revenue is same

Actions that reduce Offer cost (continued)

Action Existing Design Offer Flexibility Design

Early Start Unacceptable then Start-Up, No Load, and Energy excluded

Acceptable then Start-Up, No Load, and Energy included

Unacceptable then same (considered self-scheduled)

Acceptable then same (costs limited to commitment offer)

Late Start No discount of Start-Up Start-Up cost discounted by number of minutes later than 30 minute grace period (comparable to early shutdown due to trip)

Actions that reduce Offer cost (continued)

Observations:

• Adjustments are largely the same or eliminate “step-change” in compensation to align severity of adjustment with system impact

• Late Start is the only new adjustment– Generators most often achieve ordered time within 30 minute window– Adjustment is gradual and preserves incentive to continue startup– Comparable to existing adjustment for Early Shutdown

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Action Existing Design Offer Flexibility Design

Early Shutdown Trip then Start-Up cost discounted unless transmission-related Approved then no discount of Start-Up

Trip then same

Approved then same

START-UP AND NO LOAD OFFER VALUESSample statistics for dollar value of these Offers

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Summary Start-Up and No-Load Offer values

Supply Offer values were selected from a single day in January 2013

*Average of Start-Up for hot, intermediate, and cold state resource start

Start-Up fee* ($/start)

Start-Up fee /EcoMin MW

($/MWh)

No Load fee ($/hr)

No Load fee /EcoMin MW

($/MWh)

90th percentile $17,820 $239 $3,585 $95

50th percentile $179 $8 $0 $0

10th percentile $0 $0 $0 $0

Average $8,370 $109 $1,060 $28

EXAMPLES OF NCPC CALCULATION STEPSDemonstration of how certain (previously described) elements of the calculations are performed

Reduction of Start-Up fee when release occurs later than planned time (after 30 minute grace)

Start-Up is not reduced because actual release occurs within 30 minutes after planned time

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Commitment OfferStart-Up fee $6,000

2 hour commitment“planned” and “actual” are release for dispatch time

Start-Up is reduced by 20% = (54 – 30) / 120

NCPC considers Start-up of $4,800 = (1 - .20) * $6000

ramp

ramp

Calculation of Energy offer cost for RT Commitment and RT Dispatch NCPC eligible quantity amounts

• RT Commitment NCPC eligible quantity = EDP (= 90 MW)– Energy offer cost = $1,110 ( = $720 + $390 )

• RT Dispatch NCPC eligible quantity = DDP – EDP (= 110 – 90 MW)– Energy offer cost = $450

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Commitment Cost energy offer*0 --> 50 MW $10/MWh51 --> 150 MW $20/MWh

Dispatch Cost energy offer*0 --> 50 MW $15/MWh51 --> 150 MW $30/MWh

*Offer requested offer slopeUnit is not ramp constrained

EcoMin Limit = 70 MW

EDP = 90 MWMarginal energy offerat EDP = $21/MWh

DDP = 110 MWMarginal energy offerat DDP = $24/MWh

RT LMP = $21/MWhCost to EcoMin at Commitment offer Cost above EcoMin

at Dispatch offer

RT eligible quantity treatment during ramp-constrained resource dispatch

Resource’s total NCPC credits = $408 = ( $400 + $8 )

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Commitment/Dispatch OfferEnergy $50 /MWh

Start-Up $350 /start

EcoMin 10 MWEcoMax 30 MW

Min Run Time 7 HrRamp Rate 6 MW/Hour

Hour 2: Resource is ramp-constrained up which is reflected in the DDP value; DDP is upper-limit for EDP

RT eligible quantity treatment during ramp-constrained resource dispatch (continued)

Resource’s total NCPC credits = $408 = ( $400 + $8 )

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Hour 4: Resource is not ramp-constrained but dispatched to operate above the EDP RT Dispatch NCPC credit

Commitment/Dispatch OfferEnergy $50 /MWh

Start-Up $350 /start

EcoMin 10 MWEcoMax 30 MW

Min Run Time 7 HrRamp Rate 6 MW/Hour

RT eligible quantity treatment during ramp-constrained resource dispatch (continued)

Resource’s total NCPC credits = $408 = ( $400 + $8 )

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Hour 6:Resource is ramp-constrained down EDP set equal to DDP (feasible dispatch) and cost included in RT Commit NCPC

Commitment/Dispatch OfferEnergy $50 /MWh

Start-Up $350 /start

EcoMin 10 MWEcoMax 30 MW

Min Run Time 7 HrRamp Rate 6 MW/Hour

RT Commitment NCPC credit determination for multi-commitment settlement period*

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Min Run Time isnow 2 hours

*Excludes Start-Up to demonstrate Commitment Cost change with No Load

Best Alternative: Resource would choose to shutdown at Hour 5. Continues to run through Hour 7 and loses $810.