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2009 State of the Market Report

Executive Summary

retail rate when load is curtailed. This is an efficient approach because it provides the same incentives to the retail customer that they would have under a dynamic retail pricing regime. However, this approach is not consistent with the current settlements for other DR resources, which the Midwest ISO should consider revisiting. The Commission has been considering these issues more broadly in its recent Notice of Proposed Rulemaking on compensation for DR resources.

In addition, the Midwest ISO is also considering pricing changes that would be necessary to allow load interruptions and other emergency actions to set prices in energy and reserve markets. We strongly support this work because it should improve pricing during peak conditions when demand response resources are called.

H.

Capacity Market

Beginning in June 2009, the Midwest ISO began running a monthly VCA to allow load-serving entities to procure capacity to meet their Module E capacity requirements. Figure E-8 shows the VCA market results for the each month in 2009.

Figure E-8: Voluntary Capacity Auction Results June 2009 – December 2009

140,000

14,000

120,000

12,000

Undesignated Capacity

Designated Capacity (MW)

100,000

80,000

60,000

40,000

10,000

8,000

6,000

4,000

Price ($/MW-month)

Purchased in MISO Auction

Import Capacity

Bilateral Purchases

Owned Capacity

Requirement

20,000

2,000

Clearing Price

0

0

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Note: Total column height represents the total designated capacity, including imports.

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