NYISO Demand Response Programs Design and Performance 2002

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NYISO Demand Response Programs Design and
Performance 2002

• David J. Lawrence
• Manager, Product Development
• Center for Market Excellence
• New York Independent System Operator
• Prepared for
• PLMA Fall 2002 Conference
• October 7, 2002

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NYISO Wholesale Electricity Markets
Customer-Supplied Resource Programs

• Generation Assurance - ICAP
• Energy - in two sequential markets
• Day-Ahead Market (DAM)
• Real-Time (RTM)
• Direct-bid Ancillary Services
• Operating Reserve
• Regulation
• Emergency
• Cost Based Ancillary Services
• Congestion Protection - the TCC

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PRL Program Features
Market Function
Eligible
Event Notice
Duration
Installed Capacity
As needed
gt 100 kW
Day-ahead warning, 2 hour notice
ICAP
Emergency Capacity
Min. of 4 hours
2 hour notice
gt 100 kW can aggregate
EDRP
Economic Energy
As bid, can require a strip
Bid by 5am, day-ahead, notice by noon
1 MW increments, can aggregate
DADRP
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PRL Program Benefits
Non-compliance Penalty
Up-front Payment
Performance Payment
/kW Market value of ICAP
None
UCAP impact, possible deficiency payments
ICAP
none
None
Greater of .50/kWh or RTM LBMP
EDRP
none
Greater of DAM or RTM LBMP, plus 10
Greater of Bid /kWh or DAM LBMP
DADRP
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EDRP Event Performance

• Comments
• 4/17/02, 4/18/02 no advanced notice
• 4/17/02 Zones G-K
• 4/18/02 Zones G-K, B
• 8/10/01 Zones F-K
• 7/30/02, 8/14/02 - estimated

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2002 EDRP Registration

• As of Sept. 10, 1706 end-use customers have
  registered with CSPs
• A total of 27 CSPs have registered end-use
  customers
• 10 LSEs
• 9 Aggregators
• 8 Direct EDRP participants

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Changes to EDRP/SCR

• Extend EDRP until Oct. 31, 2005.
• Call SCR resources before EDRP (currently called
  simultaneously).
• Allow SCR resources to submit minimum strike
  price offers, giving the NYISO a mechanism to
  selectively choose how much demand response is
  needed.
• SCR strike prices would be allowed to set RT LBMP
  under the hybrid pricing rules.
• If needed, EDRP resources would be called after
  SCR EDRP would also set LBMP at 500.

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Market Benefits

• Will help restore scarcity pricing for the 10
  hours/year when SCR/EDRP will set price.
• Minimal (5M) additional payment impact to LSEs.
• Demand resource participation should stay close
  to current level.
• One caveat mechanics of price-setting need to
  be worked out for 2003

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2002 Performance - DADRP
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2002 Performance DADRP (contd)
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2002 Performance DADRP (contd)
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Demand Response Market Design Issues

• What types of programs to offer?
• Participation requirements
• Diesel unit participation
• Payments/penalties
• Metering requirements
• Market integration (scheduling/pricing)
• Performance measurement
• Program free riders

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What Types of Programs?

• Day-ahead bidding
• NYISO Day-Ahead Demand Response program
• Reliability-driven programs
• NYISO Emergency Demand Response program, ICAP
  Special Case Resources
• Real-time market participation
• Intended for deployment in Real-Time Scheduling
  (RTS) module (Q1-2004)
• Ancillary services (day-ahead and real-time)
• Reserves and regulation in RTS development

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Participation Requirements

• Limitations on end-use customer size
  (minimum/maximum)?
• Is there a role for third-party aggregators?
• Small customer aggregation allowed in EDRP in
  2002 (covers residential programs, e.g. direct
  load control)
• Bidding programs can end-use customers bid
  directly?
• Creditworthiness requirements?

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Diesel Unit Participation

• Treat differently in reliability vs. economic
  programs?
• EDRP allows diesel participation
• DADRP does not
• Coordination with environmental regulators
• Need to give unambiguous signals for participation

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Payments/Penalties

• Reliability-based programs how much to pay?
• EDRP uses 500/Mwhr in 2001/2002
• Bidding programs who gets paid what?
• Need to consider LSE, end-use customer,
  third-party aggregator
• Retail tariffs that do not allow customers to see
  real-time price are a problem
• Do you pay LSE and end-use customer
  (double-payment)?
• Penalties for non-performance
• Or is real-time balancing process acceptable?

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Metering Requirements

• Hourly interval meters required
• Interruptible load must use metering with 2
  accuracy or better (revenue meters only expanded
  in 2002)
• Future reserves/regulation market participants
  must have metering equivalent to generators
• How much is needed in real time?

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Market Integration (Scheduling/Pricing)

• User interface for LSEs or curtailment
  customers?
• System modeling zonal vs. individual bus
• Integration of billing and cost allocation rules
  into settlement process big issue
• Reliability-based programs should they set
  marginal price?
• EDRP 1st 2 years no extension will allow EDRP
  and SCR to set LBMP

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Performance Measurement

• Customer Baseline Load approach
• Out of last 10 days, average of 5 highest energy
  consumption blocks corresponding to load
  reduction period
• Is 5 too many? Too few?
• Optional weather-sensitive CBL approved for 2002
• Shifts CBL upwards or downwards 20 so as to
  line up CBL and actual load in hours just prior
  to event
• Proxy for weather variables
• Consider gaming of CBL

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Program Free Riders

• How to treat end-use customer scheduled outages?
• EDRP allow, since ISO determines need
• DADRP disallowed criterion should be altered
  behavior
• DADRP 50/Mwhr bid floor imposed in 2002
• Defines when load resources can bid in day-ahead
  market
• Other approaches require surveillance

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• Questions?
• dlawrence_at_nyiso.com
• 518-356-6084
• www.nyiso.com