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2009 State of the Market Report

Market Performance

cost resource and receive minimal LMP margin to cover their startup costs. Additionally, peaking resources frequently do not set the energy price (i.e., the price is set by a lower-cost unit), which increases the likelihood that an RSG payment will be required. Figure 40 and Figure 41 show monthly RSG payments in the real-time and day-ahead markets, respectively.

The results are divided between RSG payments to peaking and non-peaking units. We also distinguish between payments made to commit resources for overall capacity needs versus to manage congestion or satisfy a local reliability requirement. To exclude the effects of fuel price changes, these figures adjust the RSG costs for changes in fuel prices (based on 2009 year-end fuel prices).

RSG Costs ($ Millions)

Peaker

68

59

64

68

59

45

65

60

60

53

50

73

46

57

75

58

65

50

46

66

68

49

61

74

80

70

71

Congestion

19

22

19

35

24

12

15

30

31

8

11

21

10

6

42

9

12

9

5

20

18

10

15

53

34

47

12

Capacity

48

37

45

33

35

34

50

30

29

45

38

52

36

51

34

48

53

41

41

47

51

38

46

21

46

23

59

Non-Peaker

32

41

36

32

41

55

35

40

40

47

50

27

54

43

25

42

35

50

54

34

32

51

39

26

20

30

29

Congestion

4

12

10

10

15

16

11

13

14

6

10

5

26

7

8

11

5

25

18

4

3

11

6

12

8

10

2

Capacity

28

29

26

22

26

39

24

27

26

41

41

22

28

36

17

32

29

25

36

30

29

40

33

14

12

20

27

Fuel Price Adj. RSG: Congestion

59.95 M

48.63 M

44.55 M

Fuel Price Adj. RSG: Capacity

190.00 M

95.61 M

99.58 M

Total Nominal RSG

329.44 M

208.65 M

111.38 M

J

OND

$40 $35 $30 $25 $20 $15 $10 $5 $0

Avg

2008

Share of Real-Time

RSG Costs by Unit Type (%)

S

2009

07 08

09 J

F MAM

J

J

A

S

OND

A

2008

F MAM

JJ 2009

Figure 40: Total Real-Time RSG Payment Distribution 2007 – 2009

RSG Distribution

2007

Over 90 percent of RSG costs are generated in the real-time market, most of which was paid to peaking resources even though they produced less than one percent of total energy generated in 2009. This is expected because the commitments needed for reliability occur after the day-ahead market when peaking resources are the primary available resources. Over 70 percent of RSG payments in the real-time market were paid to units committed for capacity reasons in 2009.

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