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2009 State of the Market Report

Market Performance

2.

Ancillary Services Markets

Price ($/MWh)

Share of Intervals with Shortage

J FMAM J J A S OND

J FMAM J J A S OND

J FMAM J J A S OND

Regulation

Spinning Reserve

Supplemental Reserve

Regulation prices decreased over the course of 2009, dropping from $22 per MWh in January to less than $11 per MWh in November. Much of this decline is attributable to reductions in reserve requirements during the first half of the year. These reductions occurred because the Midwest ISO determined that it could satisfy the reliability needs of the system with less regulation. In addition, the Midwest ISO increased its commitment of regulating resources, which is its process for designating the units that will be available to be scheduled in the real- time market on a 5-minute basis. Since suppliers must incur some costs to be prepared to be selected to provide regulation, it would not be optimal for the Midwest ISO to commit all of the online resources that were offered into the real-time regulation market.

The introduction of ASM in 2009 was a major accomplishment that substantially improves the completeness and efficiency of the Midwest ISO markets. In their first year of operation, ASM markets performed as expected with no significant issues. Figure 30 shows monthly average real-time clearing prices for the Midwest ISO’s ancillary service products in 2009.

$8

$4

$0

2.0%

1.0%

0.0%

$24

$20

$16

$12

4.0%

3.0%

6.0%

5.0%

Figure 30: Real-Time Ancillary Services Prices and Shortages 2009

Regulation Price Spinning Reserve Price Supplemental Reserve Price Share of Intervals

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