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2009 State of the Market Report

Executive Summary

Figure E-4: ASM Prices and Shortage Frequency 2009

$24

6.0%

Price ($/MWh)

$20

$16

$12

$8

$4

Regulation Price Spinning Reserve Price Supplemental Reserve Price Share of Intervals

5.0%

4.0%

3.0%

2.0%

1.0%

Share of Intervals with Shortage

$0

0.0%

J FMAM J J A S OND Regulation

J FMAM J J A S OND Spinning Reserve

J FMAM J J A S OND Supplemental Reserve

Spinning reserve shortages occurred at a moderate frequency in 2009. The report concludes that many of these shortages reflect market requirements that exceed the true reliability requirements. This inconsistency decreased over the year, but it could be improved further. This report also shows that prices do not always accurately reflect the spinning reserve shortages due to the method of relaxing the requirement during the shortage. This report includes a recommendation to improve pricing during shortage periods by discontinuing the relaxation process.

4.

RSG Payments

RSG payments ensure that the total market revenue a generator receives when its offer is accepted is at least equal to its as-offered costs. Resources committed by the Midwest ISO after the day-ahead market receive “real-time” RSG payments when their costs are not recovered through the Locational Marginal Price (“LMP”) in the real-time market, which accounts for more than 90 percent of all RSG. Because the day-ahead market is a financial market, it generates minimal RSG costs.

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