Demand Response in Midwest ISO Markets

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Demand Response in Midwest ISO Markets

• 09 February 2007

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Demand Response in ISO Spot Energy Markets Today

• The Midwest ISO strives to have
• an open wholesale energy market where Market
  Participants can buy or sell energy in fair,
  efficient and non-discriminatory markets, while
  providing a reliable grid operation.
• Markets work best when there is vigorous
  participation by both buyers and sellers
• End-use customers do demand response
• State regulators can influence that demand
  response

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Demand Response in ISO Spot Energy Markets Today

• The Midwest ISO currently has market design
  elements regarding demand that enable LSEs to
  enhance revenues or avoid costs
• Day-Ahead Market
• Price Responsive Demand (PRD) LSEs can and do
  submit PRD bids to manage their exposure to high
  LMPs
• Demand Response Resources (DRRs) Midwest ISO
  treats DRRs like generation they can be
  committed and dispatched based on economics
• Currently, DRRs are not guaranteed RSG credits
  and cannot set LMP however, the quid pro quo is
  DRRs are not subject to UIDs and have no offer cap

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Demand Response in ISO Spot Energy Markets Today

• The Midwest ISO currently has market design
  elements regarding demand that enable LSEs to
  enhance revenues or avoid costs
• Real-Time Market
• Price Responsive Demand (PRD) LSEs cannot
  submit PRD bids in this market but can manage
  their exposure to high LMPs by considering the
  current LMPs as broadcast by MISO, projecting
  future LMPs and acting accordingly
• Demand Response Resources (DRRs) DRRs can be
  dispatched based on economics

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Demand Response in ISO Spot Energy Markets Today

• The Midwest ISO currently has market design
  elements regarding demand that enable LSEs to
  enhance revenues or avoid costs
• Across DA/RT Markets
• Definition of load zones unlike most if not all
  of the other ISOs/RTOs, LSEs in the Midwest ISO
  can voluntarily define their load zones based on
  the actual withdrawal points of their customers.
  Load zones establish pricing points upon which
  the LSE will be charged. Most other ISOs/RTOs
  establish broader pricing zones across multiple
  LSEs this serves to mute the price signal these
  MPs face, and therefore, inhibit demand response.
  

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Demand Response in ISO Spot Energy Markets Today

• The Midwest ISO currently has market design
  elements regarding demand that enable LSEs to
  enhance revenues or avoid costs
• Resource Adequacy
• Some existing RROs allow demand response to count
  in fulfillment of capacity requirements. The
  ISOs Module E accommodates this treatment.
• Emergency Procedures
• Emergency demand response provided almost 3000 MW
  of relief on 1 August this year.

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Demand Response in ISO Markets moving forward
Day 3 efforts by product types

• Energy Markets
• Price sensitive demand bids in both DA/RT
  markets, DRRs in both markets, ISO projects LMPs
  for price transparency discovery
• Ancillary Services Markets
• Reliability response demand bids response
  required only under power system contingencies
• Resource Adequacy Construct
• Allow demand response to qualify as capacity
  credits
• Planning Process
• Integrate demand response into resource planning
• Emergency Procedures
• Provide more rigorous Emergency Protocols to
  enhance reliability and promote demand response

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Demand Response in ISO Markets moving forward
Day 3 efforts by product types

• Outstanding Issues
• What are the current barriers for demand
  participation?
• How to price emergency demand response?
• How to accommodate PRD in Real-Time markets?
• Should the ISO create programs to jumpstart
  demand response efforts?
• How can the ISO (with coordination from states)
  link wholesale markets with retail rates, so
  end-use customers can see real time prices?