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Reliable Power
Reliable Markets
Reliable People
Status of Canadian Markets
APEX Conference – Sydney, Australia
October 13, 2008
Warren Frost,
Vice President
Operations & Reliability
Reliable Power
Reliable Markets
Reliable People
Alberta's Electricity Market
3
AESO - Our Core Business
• Markets: develop and operate Alberta’s real-time wholesale energy market to facilitate fair, efficient and open competition
• Transmission System Development: plan and develop the transmission system to ensure continued reliability and facilitate the competitive market and investment in new supply
• Transmission System Access: provide system access for both generation and load customers
• System Operations: direct the reliable operation of Alberta’s power grid
• Settlement: accountable for administration of the provincial load settlement
4
Quick Facts - Alberta’s Electric Industry
• 9,710 MW peak & 80% LF
• 12,085 MW total generation
• Over 280 generating units
• Wholesale market with ~ 200 market participants
• > 21,000 km of transmission
• Interties BC (up to 780 MW) & Sask. (up to 150 MW)
BC
AltaSask
5,893 MW
4,635 MW(Other renewables)
178 MW
(Wind)
510 MW
869 MW
5
Electric Utilities Act
Minister of Energy Appoints Board members & MSA
MarketSurveillance Administrator
BalancingPool
Wholesale Energy Market
Transmission Planning
Alberta Electric System Operator
Real-timeOperation of
Electric System
AUC
Load Settlement
Industry Structure
Alberta Utilities Commission Act
Cabinet Appoints Commission
Members and Chair of AUC
ComplianceSurveillance
Consumer Financial accts
PPA Obligations
6
AESOSystem
ControllerNeighbouringBA and TOP
TFO/GFO
ReliabilityCoordinator
Generators
AncillaryService
Providers
Marketers
Operate the Grid Operate the Market
Grid & Market Operations
SC Support 24/7OperationsEngineering
EMS/IT
7
• Real-time energy only market
• Clearing market – one price for all
• No capacity payments
• Price cap @ $1,000
• Day-ahead operating reserve market
• Supply shortfall procedures
• Postage stamp transmission rates paid by load
• Siting signals for generators Loss factors
System contributions for interconnections
Wholesale Markets
8
Market Operations
• Participants submit bids/offers by noon day ahead – can restate price up to two hours before delivery (T- 2 hours)
• Each asset can use 7 price-quantity pairs for each hour
• AESO creates an Energy Merit Order (EMO) for each hour from the bids and offers
• SC Dispatches up and Down the EMO
• Schedules inter-provincial energy schedules hourly
• Imports offered at $0
• Exports bid at $999.99
• Highest dispatched asset sets SMP
• Ex-post pool price is the arithmetic average of the 60 one minute system marginal prices
9
Setting System Marginal Price (SMP)
MW
SMP
Generation units dispatched
$ per MW Demand
10
Ancillary Services
• AESO is the buyer of reserves - procured 5 days to 1 day ahead of delivery
• Contingency reserves Replaces unexpected lost supply
500 MW of spinning and non-spinning reserves
Must be able to provide in 10 minutes
• Regulating Reserves Normally use 130 to 225 MW
Responds to instantaneous fluctuations in supply/demand balance
11
Adequacy
• No centrally planned generation - market signals to encourage generation investment
• Established a threshold where stop-gap action will be taken by AESO to ensure adequacy until investors can build
• Threshold looks at supply two years out• If 2 year supply picture appears to breach threshold AESO will
procure: Demand products and/or emergency generation• Out of market actions invoked when energy market merit order is
exhausted using Supply Shortfall Procedures: Curtail exports, loads Cut reserves Acquire emergency energy from neighboring jurisdictions Curtail firm load
12
Transmission and Interties
• Market Policy Transmission is required for reliability and to facilitate a competitive
market ISO must create long term plans – 10 and 20 year
• Transmission Must Run Generally expected to be short-term solutions Using dispatch down service to remove pool price impact
• Congestion management rules
• Interties – essential to a well functioning market Reliability – reserves, frequency, stability Market – imports during scarcity and export during surplus Merchant Interties - TransCanada NorthernLights (NL) and MATL
13
Major Initiatives in the Alberta Market
• Wind integration
• Congestion Management Rules and Procedures
• Market Power Mitigation Market share and a pivotal supplier test
• Dispatchable Interties
• Operating Reserve Market Redesign
• Demand Response
• New Intertie Capacity
Reliable Power
Reliable Markets
Reliable People
Ontario’s Electricity Market
15
Ontario at a Glance(year-end 2007)
Installed Capacity 31,000 MW
Record Summer Peak
27,005 MW (August 1, 2006)
Record Winter Peak
24,979 MW (December 20, 2004)
Total Annual Energy Consumed
152 TWh
Customers 4.5 million
Ontario Import Capability
4,000 MW
Transmission Lines 30,000 km (18,600 miles)
Average Price
(2008 to date)
5.23¢/kWh
The IESO is the reliability coordinator for Ontario and works closely with other jurisdictions to ensure energy adequacy across North America.
16
Ontario’s Electricity Market
$ $
BillingPayments
Dispatch Dispatch
Offers/Schedules Bids
Suppliers
Generators45
(e.g. Shell, Constellation)
Wholesale Sellers
68(e.g. Shell,
Constellation)
Consumers
Local Distribution Companies
78(e.g. Toronto Hydro, Hydro Ottawa, Hydro
One)
WholesaleConsumers
98(e.g. Dofasco,
Norampac, De Beers)
Transmitters(Hydro One, Great Lakes Power, Canadian
Niagara Power, Five Nations Energy)
Tariffs $
Contracted/Regulated Prices$
Ontario Energy Board
Electricity
Direction
17
Fixed or Capped Prices in Ontario
• More than 75 percent of the generation in Ontario has a contract or fixed price for example:
Non utility generator (NUG) contracts
Contracts for new (selected under RFP) and existing plants based on market price
Fixed rates for ‘heritage’ generation owned by the monopoly generator (nuclear and 85% of baseload hydro)
85% of coal and peaking hydro output from monopoly generator pays a rebate if market price exceeds a set rate
Fixed rates for renewable generation – Standard Offer Program for small-scale renewable
• In addition, Ontario is initiating a large volume of conservation and demand response contracts
• All Ontario consumers pay an adjustment to the Hourly Ontario Energy Price to cover these contracts
Adjustment fluctuates between a credit and debit depending on the market price
18
Major Initiatives in the Ontario Market
• Government RFP for new nuclear
• Smart Meters for all Ontarians by 2010 (4 million customers) 1.3 million installed to date
27,000 customers now billed on time-of-use rates
• Day-ahead mechanisms planned for 2010 Assessing an energy forward market
• Day-ahead price forecast implemented this summer
• Ontario’s target for renewables is over 10,400 MW by 2010
• Coal replacement strategy being implemented, with shutdown complete in 2014
• Significant conservation and demand response programs launched and under development
Target 6,300 MW reduction through CDM by 2025
Reliable Power
Reliable Markets
Reliable People
New Brunswick’s Electricity Market
20
New Brunswick System Operator(Independent Not-for-Profit System Operator)
NBSO is 1 of 17 Reliability Coordinators
21
Reliability
22
Interconnections
23
Market Design
• Market activity through physical bilateral contracts Competitive supply must match load obligation
• Open access transmission by FERC 888 and compatible tariff operated through FERC 889 compatible OASIS
• NBP Genco responsible to backstop delivery of Standard offer services for supply and backup
All ancillary transmission and market services
• Central system operator to be responsible for market
• PUB to have regulatory authority
• Remove embedded generation barriers
24
HQ/NS MarketersNBPGenco
SJ/Ed/PA PEI/NMNBPDisco
Large Industry
IPPs
NBPTransco
Suppliers
Market Delivery
Loads
NBSO
NBPNuclear
Market Structure
25
Market Implementation
• Contracts between two parties (supplier and load) terms, conditions and price negotiated privately scheduled every day through system operator OASIS imbalance & transmission settled after the fact by system operator
• Eligible loads are Large Industry at transmission voltage (about 50) Wholesale municipals (SJ, Ed, P-A) NB Power Disco
• Eligible suppliers are NB generators (NBP Genco, NBP Nuclear, WPS, Bayside, others?) Industrial self generation (existing, new?) External utilities (HQ, NS, MPS/EA) Others (Marketers, Aggregators, brokers)
26
Transmission Tariff
• FERC 888 compatible open access tariff Point to point service
Network service
Unbundled ancillary services
• System Dispatch and Voltage Support (mandatory)
• AGC and Operating Reserves (optional)
• Energy Imbalance (mandatory settlement)
• Billing determinants Net non coincident demand by delivery point
27
Ongoing Work
• Continue to pursue efficiencies in dispatch, market administration, and operations.
• Seek details on the standard service rates, terms, and conditions that would apply in the case of a customer serving all or a part of its load from an alternative supply (e.g. exit fees, partial service policies).
• Enhance automated market assessment and monitoring tools.
• Increase system flexibility and competitiveness of balancing energy supply by increasing levels of participation in the balancing energy market.
• Pursue additional supplies of capacity-based ancillary services and competitive pricing of those services.
• Simplify and fine tune the market rules where appropriate (especially with respect to wind power integration).
28
Ongoing Work (cont.d)
• Actively monitor transmission planning studies in adjacent jurisdictions and their potential impacts on the New Brunswick market.
• Pursue regional cooperation on issues such as transmission planning, reducing inter-market barriers, and easing wind power integration.
• In keeping with the intent of some aspects of FERC 890 the NBSO will consider the expansion of the regional transmission planning function beyond reliability and ten year time frames to include overall system needs inclusive of economics.
• Review of the overall approach to transmission investment, usage and tariffs given the magnitude of the potential generation, the non-dispatchable nature of proposed generation, and the requirements for significant transmission investments.
29
Questions