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WMS Meeting, October 10, 2012

WMS Meeting, October 10, 2012. RCWG Continuing Efforts NPRR 747 Price Correction No consensus on this issue RCWG needs additional guidance on the

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NPRR385, Negative Price Floor  METF is working on the Impact test. Currently there are emergency Basepoints given to keep units on line when negative prices  RCWG had general consensus that NPRR385 should continue forward

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Page 1: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

WMS Meeting, October 10, 2012

Page 2: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

RCWG Continuing Efforts

NPRR 747 Price Correction No consensus on this issue RCWG needs additional guidance on the

issue Continuing Issues

Bio mass plant generic and standard cost

Load Providing Capacity

Page 3: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

NPRR385, Negative Price Floor METF is working on the Impact test.

Currently there are emergency Basepoints given to keep units on line when negative prices

RCWG had general consensus that NPRR385 should continue forward

Page 4: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

QSGR MITIGATED OFFER CAP PROPOSAL Purpose of WMS-approved changes to VCM

on September 12 were meant to amortize start-up costs for QSGRs across a more accurate calculation of run-times.

The calculation (75% of all online time) does not recognize the significant amount of time when a QSGR’s LSL is greater than the amount of energy needed by SCED, and the unit is not receiving a positive Base Point above LSL. In those situations, it is probable that the unit is receiving an LMP lower than its MOC (i.e., below short-run marginal costs).

Page 5: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

PROPOSED SOLUTION Modify Protocols to allow QSGRs to

telemeter a zero LSL while online (NPRR 487) This will allow SCED to dispatch the unit

between zero and its physical LSL such that the LMP at the generator bus will continue to be set by the unit’s MOC.

The possible increased use of Reg-Down can be addressed and minimized through implementing NPRR 486 on calculation of Generation To Be Dispatched, which changes the calculation of GTBD from “actual generation” to “Base Points + deployed regulation.”

Page 6: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

OTHER ISSUES WITH QSGR COST RECOVERY Minimum Energy Costs

The verifiable cost calculation for QSGRs uses an incremental heat rate, which would be correct for dispatch if minimum run costs were separately paid, but that is not the case for QSGRs.

The proposed changes in the VCM manual to include the “Minimum Energy Component” are to account for these uncompensated minimum run costs.

Gas Shaping and Transportation The VCM recognizes the appropriateness of compensating resources

for their “actual cost of transporting and purchasing spot fuel.” However, the VCM does not include gas shaping and transportation

costs for calculating the QSGR MOC. And, fuel adjustment it is not included in the cost calculation for the

dispatch of any resource. The proposed changes in the VCM manual add start-up fuel to the

Variable O&M calculation and add the ability for resource owners to submit a verifiable Value of X (VOX) for QSGRs, and grey-box the ability for other resources to verify a fuel adder once application of VOX is automated.

Page 7: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

MINIMUM ENERGY COMPONENT MEC is used to adjust the incremental heat

rate by the difference between the average heat rate and incremental heat rate at the midpoint of the dispatch range.

The MEC adjustment is needed because QSGRs are not separately compensated for the cost to run at LSL. Using an unadjusted incremental heat rate in the MOC calculation for QSGRs does not appropriately compensate those resources for all the fuel required to operate at or above LSL.

Page 8: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

EXAMPLE MEC CALCULATION• First find midpoint of dispatch range (HSL – LSL) .• MEC = Difference between Average Heat Rate and Incremental Heat Rate at that midpoint.• Add MEC to each of the heat rate points on the Incremental Heat Rate curve to create the new adjusted curve.

Page 9: WMS Meeting, October 10, 2012. RCWG Continuing Efforts  NPRR 747 Price Correction No consensus on this issue  RCWG needs additional guidance on the

QUICK START VOX QSVOX is a fuel adder that compensates

resources for the verified costs of transporting and purchasing spot fuel over and above an average fuel index price.

For calculating QSGRs, QSVOX is applied for both Startup Fuel and minimum energy costs.

As soon as the process can be automated, all resources should be permitted to verify a fuel adder.