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Enron Mail |
Market Participants:
CONTINGENCY ONLY OPERATING RESERVE AND IMBALANCE ENERGY On March 12, 2001, the ISO notified Market Participants that the ISO was proposing to give Market Participants the ability to indicate hourly whether resources selected to provide Operating Reserves should be dispatched in the absence of a Contingency or a System Emergency. The purpose of the proposal is to increase the supply of Operating Reserves bid into the ISO markets and to facilitate the ISO's ability to preserve Operating Reserves for use during Contingencies and System Emergencies. Giving Market Participants the flexibility to designate hourly whether Operating Reserves can be dispatched in the absence of a Contingency or a System Emergency requires changes to ISO software as well as changes to the ISO Tariff. The ISO Board of Governors approved of the proposal and it was included in Amendment No. 38 to the ISO Tariff filed yesterday at the FERC. INTERIM OPTION FOR MARKET PARTICIPANTS Prior to FERC action on Amendment 38, the ISO will continue to use its discretion to dispatch Operating Reserves to supply Imbalance Energy. See ISO Tariff o 2.5.22.3. The ISO strives to achieve the highest level of effectiveness for Operating Reserves dispatched to maintain reliability within the ISO Control Area. To accomplish this goal, the ISO must consider the amount of Energy that can be dispatched from awarded Operating Reserves. In order to assist the ISO in this assessment, the ISO asked Market Participants to indicate, on an interim basis, whether resources selected to provide Operating Reserves should be dispatched in the absence of a Contingency or a System Emergency. If a Market Participant elects to so designate a resource, it will be asked to provide certain operational information (e.g., the number of available hours of operation, minimum run time, minimum down time, etc.). Market Participants will not be able to make this designation hourly as proposed in Amendment 38. Rather, if a Market Participant designates that the dispatch of a resource should be limited to Contingencies or a System Emergencies, the designation will remain in place until the FERC acts on Amendment 38. For the interim period, beginning March 20, participants were requested to submit to the ISO any resource or external import (tie point and interchange id) that was to be used in response to a system contingency or emergency only. To the extent any such designated resource or import is awarded Operating Reserve (OR) (Spin or Non-Spin), the energy associated with the OR will only be called upon during a contingency or emergency. These same resources are not precluded from submitting supplemental or replacement reserve bids. However, only in the event the ISO is utilizing the contingency-only reserves will supplemental and replacement reserve associated with a contingency-only resource be called upon. If a Market Participant wants a resource to be dispatched for Imbalance Energy in the absence of Contingencies and System Emergencies, it should not designate the resource. LONG TERM SOLUTION The long-term solution (as filed in Amendment 38), will allow for participants to make hourly elections for contingency only designation. This election will only be available for Spin and Non-Spin bids. Resources and imports that are not successful in the OR capacity market (contingency only or not) will still be able to submit bids for replacement reserve and supplemental energy. Furthermore, to the extent that a resource has been awarded OR, is designated as contingency only, and has additional capacity available, that capacity can be bid into the replacement reserve market or be submitted as a supplemental energy bid. However, any replacement reserve or supplemental energy made available to the ISO will be used for Imbalance Energy and not be reserved for contingency only. The reporting of specific operational data will also be required for the long-term solution for any resource awarded contingency only OR. ADDITIONAL CLARIFICATIONS Some resources are interested in providing contingency only OR because they have very limited, not less than 2 hours, energy available behind the resource. If such a resource is bid in for multiple hours, is dispatched, and if all of its energy is exhausted, that resource is still responsible for any OR awarded for future hours.. The ISO expects that resources providing contingency-only OR may schedule Ancillary Service capacity in the Day Ahead Market for which available Energy is insufficient to support Dispatch in all hours at the full scheduled capacity. As required by ASRP 5.3.1 and 5.4.2, at least two hours of Energy must support any scheduled OR. Therefore, the sum of scheduled OR should not exceed the available Energy in any two consecutive hours. In the event that the ISO has dispatched all available Energy, and OR is scheduled in subsequent hours for which insufficient Energy is available, then the Scheduling Coordinator should buy back in the Hour Ahead market any capacity for which there is no available Energy. If a Scheduling Coordinator fails to buyback scheduled OR capacity for which no Energy is available, then "No Pay" will apply, and the capacity payment will be eliminated to the extent that a resource is incapable of delivering all Energy associated with OR capacity that is dispatched. The ISO will also monitor performance and consider whether the ISO should use its existing authority to impose additional penalties to encourage suppliers to bid and schedule consistent with the availability of Energy. As with any OR, bid or self provided, the ISO may conduct unannounced tests of contingency-only OR when no contingency exists. Naturally such tests will be conducted in a non-discriminatory manner. The ISO may also require each contingency-only resource to specify the total Energy that is available in relation to whatever capacity is scheduled in the DA market. This information could be used in determining buy-back obligations. If you have questions regarding this interim solution, please contact Brian Rahman, Manager of Markets at 608-5883. Byron Woertz Director, Client Relations
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