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2009 State of the Market Report

Competitive Assessment

Next we summarize the offers for ancillary services. Figure 81 shows the monthly average quantities of regulation and operating reserves offered at varying price levels (ranging from $10 to $50/MWh) above each unit’s reference level.25 A reference level is an estimate of the competitive offer level for the service (i.e., the unit’s marginal cost of supplying the service). This is information that we had previously published in quarterly reports reviewing the conduct in the ancillary services markets.

Figure 81: Ancillary Services Offers 2009

200

10%

>= $50/MWh

180

9%

>= $40 and < $50

Quantity Offered above Reference

160

140

120

100

80

60

40

>= $30 and < $40

>= $20 and < $30

>= $10 and < $20

Share of Capability Offered $10/MWh Above Reference

8%

7%

6%

5%

4%

3%

2%

Share of Total Capability (%)

20

1%

0

0%

J F MA M J J A S O N D Regulation

J F MA M J J A S O N D Spinning Reserve

J F MA M J J A S O N D Offline Supplemental

Offers for ancillary services were generally competitive in 2009. On average, 88 MW of regulation capability (or 4.8 percent of the online regulation capability) was offered at more than $10 per MW above its reference level, while only 19 MW was offered at more than $20 per MW above its reference level. Similarly, 105 MW of spinning reserve capability (or 2.1 percent of the total capability) exceeded reference levels by at least $10 per MW. Very few offers for

25

These thresholds are below the BCA mitigation threshold, which is the lesser of 300 percent or $50 per MWh (for offer prices greater than $5 per MWh).

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