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$/MWh

DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT DA RT

Minnesota Hub

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WUMS Area

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Page 29

2009 State of the Market Report

Market Performance

One of the contributors to the large day-ahead premiums in the West was the fact that wind output was substantially under-scheduled in the day-ahead market. The large supply increase in the real-time market results in lower real-time prices (sometimes negative prices). Normally, this price separation would be arbitraged by virtual supply; however, the decline in virtual

negative. This measure shows how consistent day-ahead and real-time prices were on an hourly basis.

There was only a slight day-ahead energy price premium at the Cinergy hub in 2009, which was roughly equal to the real-time RSG allocation borne by real-time load purchases. Overall, convergence was comparable to prior years at this location. However, the Minnesota Hub and WUMS experienced larger and more volatile price differences. This is especially evident in the average absolute price differences at these locations. Price convergence in historically congested locations is more difficult to achieve because of congestion-driven price volatility in these areas. Some of this volatility is associated with negative price spikes in off-peak hours.

$80 $70 $60 $50 $40 $30 $20 $10 $0

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    $10

Figure 17: Day-Ahead and Real-Time Prices 2007 – 2009: Cinergy Hub

Cinergy Hub Michigan Hub

31 32 27 36 33 29 31 33 40 32 30 35 28 25 26 22 19 28 28 34 33 25 32 32 24 27 27 32 33 31 36 32 29 33 34 42 34 33 38 29 26 27 22 19 29 33 34 34 27 37 44 39 34 27

3

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2

61

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-3

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Average DA Price DA RSG Rate Average Price Difference

Average RT Price RT RSG Rate Abs Difference

Average Absolute Price Difference (% of Real-Time Price)

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Cinergy Hub

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3

Michigan Hub

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Minnesota Hub

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3

WUMS Area

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07 08 09

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A

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JJ

Avg Average Price Difference (% of Real-Time Price)

2008

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JJ

2009

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