2009 State of the Market Report
be withholding if their failure to offer their resources results in a price spike for supplemental reserves and energy.
Clearing prices for spinning reserves averaged approximately $3.25 per MWh in 2009, although sufficient capability was typically available to meet the requirement with offer prices less than $1 per MWh. As with regulation, spinning reserve prices were higher than the marginal offer prices because they sometimes include opportunity costs or shortage costs. Figure 32 also shows that almost one-half of the spinning reserves that cannot be scheduled are due to units that are being dispatched near their dispatch maximum, which limits available spinning reserves. This is not unusual – our monitoring of the unavailable spinning reserves did not raise any significant concerns.
The Midwest ISO operates with a minimum required amount of spinning reserves that can be deployed immediately in response to a contingency. However, units scheduled for spinning reserves may temporarily not be able to provide the full quantity in 10 minutes if the real-time energy market is instructing them to ramp up. To account for this, the Midwest ISO maintains a market requirement that exceeds its real requirement for “rampable” spinning reserves by 200 MW to 300 MW. As a result, market shortages can occur when the Midwest ISO is not physically short, and vice versa. Therefore, the Midwest ISO should set the market requirement to make the market results as consistent with the real conditions as possible.
To evaluate how well the Midwest ISO has satisfied this general objective, Figure 33 shows all intervals with either a real or market shortage in 2009.