Adjusting the

1
Adjusting the Dispatch Instructions to the
Defined Metering Point (DMP).Functional
Deferral 6 (FD-06)

• Market Operations Standing Committee (MOSC)
• April 23rd, 2003

2
Background

• March 2000, the TP was informed that certain
  functionalities would be deferred beyond the
  November market commencement date.
• FD-06 - Adjusting Dispatch Instructions to the
  DMP
• Requires mapping of the operational meter data to
  the point of sale.
• Impacts CMSC as the dispatch instruction is
  currently treated as occurring at the operational
  meter.
• Technical Panel (March 7, 2000) deemed the
  deferral to be acceptable and staff should assess
  the impact of high loss situations if any. The
  Panel noted that the losses could be
  significantly larger when viewed as a portion of
  CMSC.
• Current thinking shows that both over and under
  payments to dispatchable facilities can occur.

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What will change?
Operational Meter
DMP
RWM

• TODAY
• Dispatch Instructions (DI) and Market Schedules
  (MS) are issued to the Operational Meter.
• Dispatch and dispatch compliance is measured at
  the Operational meter.
• Settlement (CMSC) uses the DI and MS referenced
  to the operational meter.
• Actual output and energy payment is based on the
  AQEI which is the RWM actual converted to the DMP
  using a correlation factor.

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What will change?
Operational Meter
DMP
RWM

• FUTURE
• Dispatch Instructions (DI) and Market Schedules
  (MS) are issued to the Operational Meter for
  realtime dispatch BUT are converted to the DMP
  prior to settlements.
• Dispatch and dispatch compliance is measured at
  the Operational meter.
• Settlement (CMSC) uses the DI and MS referenced
  to the defined metering point.
• Actual output and energy payment is based on the
  AQEI which is the RWM actual converted to the DMP
  using a correlation factor.

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Current Status

• The IMO has filed for, and received an exemption
  for the period of March 1st to August 1, 2003.
• Conditions of the exemption include
• Provide a detailed study to identify and better
  understand the implications on the marketplace
• Identify and understand the impacts associated
  with implementing the functionality (Market
  Participants and the IMO)
• Determine whether or not the implementation of
  this functionality will materially benefit the
  marketplace and
• Stakeholder recommendations with Market
  Participants.

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Options Going Forward

• Option A
• Considering the impacts, remove the functional
  requirement and retain existing settlement
  calculation.
• Option B
• Implement the functionality
• Register operational meter and DMP relationship.
• Translate the dispatch instructions and market
  schedule quantities to the DMP after the dispatch
  day but prior to settlement determinations.

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Areas of Discussion Today

• Market costs to implement loss calculations.
• IMO costs to meet the intent of FD-06.
• Meter Evolution.
• CMSC Evaluation.
• Issue Evaluation.

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Market Costs to Implement

• The actual implementation details are not
  finalized at this time but there are two general
  approaches currently under debate
• Option A - Where the operational meter is
  registered with the IMO similar to the RWM, a
  correlation factor will be determined and used
  by the IMO. This factor would reflect, with some
  accuracy, installations with loads between the
  operational meter and RWM operational meter
  inaccuracy. Cost estimated to be 700K split
  evenly between the IMO and MP.
• Option B - Where the IMO uses simple losses from
  the operational meters. (Installations with loads
  between the the operational meter and RWM would
  need further consideration.) Cost estimated to be
  320K.

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IMO Costs to Implement

• Initial assessment indicates system costs of
  about 350K.
• Includes vendor system changes to Market
  Information Systems (MIS) and Settlements
  systems, testing and documentation.
• Costs associated with Option A (IMOs portion)
  350K 50K/year maintenance.
• Resource costs are not as well defined but based
  on previous experience defining the RWM/DMP
  relationship this activity could take upwards of
  two years.
• Includes the calculation and registration of loss
  factors in cooperation with dispatchable
  participants for 300 meters.

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Total Costs

• Total estimated costs are
• Option A 1 million
• Option B 700 thousand

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Meter Evolution

• Some new meter installations have hybrid meters
  with the RWM and operational meter at the same
  source.
• If this evolution continues then the
  functionality is no longer required.
• Issues such as divergent standards for repair may
  impede this evolution
• Operational metering repairs are required, due to
  real-time impacts, within a relatively short
  period (24/48 hours).
• RWM errors due to the Validate, Edit, Estimate
  (VEE) process have to be resolved within 6 days.
  
• MSP costs to maintain the operational meter may
  overwhelm the savings associated with the single
  meter design.

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Quantifying CMSC Impacts

• Import and Export CMSC is unaffected due to the
  use of schedules for settlement.
• Preliminary review indicates that OR CMSC
  payments are also unaffected due to schedule
  versus actual settlement.
• Due to the limited amount of CMSC associated with
  nuclear facilities these facilities are not
  considered to be large contributors to the market
  impact.

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Assumptions and Examples

• Primary impact of this functionality is on the
  CMSC quantity. The following examples express MW
  differences between CMSC quantity today and a
  post implementation quantity.
• Dispatch instructions are issued to the
  operational meter for real-time operation of the
  facility. The translation, of the dispatch
  instruction and market schedule quantity, to the
  DMP would occur after the dispatch and prior to
  settlements.
• The examples assume 100 compliance with the IMO
  dispatch instructions at the operational meter.
• For illustration purposes, losses in the example
  are 1 from the operational meter to the DMP.

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Assumptions and Examples

• Existing CMSC calculation rules
• Constrained ON calculations for generators use
  the lesser of the actual output at the DMP or the
  dispatch instruction.
• Constrained OFF calculations for generators use
  the greater of the actual output at the DMP or
  the dispatch instruction.
• Definitions
• Market Schedule MS
• Dispatch Instruction DI
• Actual output at the DMP AQEI
• Losses of 1 f

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Current vs. Future - Constrained ON
Operational Meter
DMP

Today Future the RT dispatch is to a DI of
150MW.
TODAY MS 100 MW DI 150 MW AQEI 148.5
MW CMSC Quantity 48.5 MW
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Current vs. Future - Constrained ON
Operational Meter
DMP

Today Future the RT dispatch is to a DI of
150MW.
TODAY MS 100 MW DI 150 MW AQEI 148.5
MW CMSC Quantity 48.5 MW
FUTURE MS 99 MW DI 148.5 MW AQEI 148.5
MW CMSC Quantity 49.5 MW
This illustration shows that during a constrained
on event the constrained participant is
receiving less CMSC than if the functionality
were implemented.
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Current vs. Future - Constrained OFF
Operational Meter
DMP

Today Future the RT dispatch is to a DI of
150MW.
TODAY MS 200 MW DI 150 MW AQEI 148.5
MW CMSC Quantity 50 MW
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Current vs. Future - Constrained OFF
Operational Meter
DMP

Today Future the RT dispatch is to a DI of
150MW.
TODAY MS 200 MW DI 150 MW AQEI 148.5
MW CMSC Quantity 50 MW
FUTURE MS 198 MW DI 148.5 MW AQEI 148.5
MW CMSC Quantity 49.5 MW
This illustration shows that during a constrained
off event the constrained participant is
receiving more CMSC than if the functionality
were implemented.
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Rules of Thumb

• Constrained ON
• With the AQEI defining the CMSC quantity the
  participant, without the functionality, is being
  paid less today by an amount equal to the market
  schedule quantity, prior to adjustment,
  multiplied by the loss factor or.
• CMSC Underpayment f MS pre

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Rules of Thumb

• Constrained ON
• With the AQEI defining the CMSC quantity the
  participant, without the functionality, is being
  paid less today by an amount equal to the market
  schedule quantity, prior to adjustment,
  multiplied by the loss factor or.
• CMSC Underpayment f MS pre
• Constrained OFF
• The participant, without the functionality, is
  being paid more today by an amount equal to the
  difference between the market schedule and
  dispatch instruction quantities, prior to
  adjustment, multiplied by the loss factor or.
• CMSC Overpayment f MS pre - DI pre

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Quantifying the Issue

• Are Market Participants adjusting their offers to
  compensate for differences between operational
  meters and DMP?
• IMO experience shows that the majority of meters
  have little or no losses between operational
  meter and DMP.
• Are the benefits of implementation greater than
  the costs?

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Next Steps

• Finalized detailed assessment of impact to the
  market.
• Ongoing Market Participant stakeholdering (MOSC
  and TP).
• Develop recommendations for next MOSC and future
  TP meetings.
• Develop action plan based on those
  recommendations.
• Prepare to meet the Exemption obligations.