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2009 State of the Market Report

Market Performance

Figure 31: Regulation Offers and Commitments 2009

2,500

Regulation Capability (MW)

2,000

1,500

1,000

500

0

Unavailable

Ltd. by Dispatch

to the

Level

5-Minute

Greater than $20

Not Offered

Not Reg-Committed

Dispatch

Between $10 and $20

Between $5 and $10

Requirement / Amount Cleared

Between $2 and $5

Available to the 5-Minute Dispatch

Between $1 and $2

Less than $1/MWh

J

F

M

A

M

J

J

A

S

  • O

    N

D

Three quarters of the unavailable regulation is due to the resources not “committed” for regulation. Figure 31 shows that lower-cost offers (the green bars) became marginal later in the year because the requirement (black line) decreased gradually over the year and the regulation resources committed increased after the first quarter of 2009. These changes have contributed to price reductions throughout the year. Regulation prices averaged nearly $15 per MWh, which is substantially higher than the typical marginal offer price because the clearing price includes the opportunity costs of not producing energy when resources must be dispatched up or down from their economic level to provide bi-directional regulation capability.

Figure 32 shows offer prices and quantities of qualified spinning and offline supplemental reserves available in the real-time market. The figure shows that the share of each ancillary service product that cleared the market averaged between 15 and 25 percent of the qualified capability in each month. This finding suggests competitive performance of the markets because individual suppliers are unlikely to be pivotal when there is substantial excess capability in the market.

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