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2009 State of the Market Report

Market Performance

moving generation to accommodate those needs. We recommend a similar approach for the Midwest ISO.

40%

Figure 29: Five-Minute Real-Time Price Volatility Comparison with Other RTO Markets, 2009

Average Interval Price Change (% of Average Price)

35%

30%

25%

20%

15%

10%

5%

PJM Hubs NYISO Zones ISO-NE Hubs MISO Hubs 2008 Price Change

0%

Cinergy Hub

Michigan Hub

Minnesota Hub

WUMS Area

New Eng. Hub

Maine

Connecticut

West

Hudson Valley

New York City

AEP Gen Hub

Chicago Hub

New Jersey Hub

Western Hub

MISO

NEISO

NYISO

PJM

PJM and ISO-NE generally produce a real-time dispatch every 10 to 15 minutes, although they produce five-minute prices using ex-post pricing models. As a result, these systems are less likely to be ramp-constrained because they have 15 minutes of ramp capability to serve system demands. Because the systems are redispatched less frequently, these markets likely rely more heavily on regulation to satisfy shorter-term changes in load and supply, which is likely less efficient than the Midwest ISO’s real-time dispatch.

Finally, the real-time load served by the real-time market can fluctuate substantially from interval-to-interval, which can demand a significant portion of the system’s ramp capability. In some cases, these fluctuations are real and often caused by changes in “non-conforming” load. In other cases, the fluctuations are due to errors in the STLF. To reduce this source of price volatility, we recommend that the Midwest ISO consider means to improve its STLF to reduce the ramp demand on the system.

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