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Recent Anomalies in the ISO-NE Hub Congestion Prices

Recent Anomalies in the ISO-NE Hub Congestion Prices. ISO-NE Markets Committee July 22-23, 2003 Ivan Kimball CEEI. Price Separation. Day Ahead Four Occurrences Identified on Three Dates 6/3; 6/13 and 7/8 Same four 115KV busses diverged during 1 st three occurrences HC Barre 115

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Recent Anomalies in the ISO-NE Hub Congestion Prices

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  1. Recent Anomalies in the ISO-NE Hub Congestion Prices ISO-NE Markets Committee July 22-23, 2003 Ivan Kimball CEEI

  2. Price Separation • Day Ahead • Four Occurrences Identified on Three Dates • 6/3; 6/13 and 7/8 • Same four 115KV busses diverged during 1st three occurrences • HC Barre 115 • HC Paxton 115 • HC Webster St 115 • HC Wendle Depot 115 • The divergence of these few busses accounted for virtually all of the congestion at the HUB • Real Time – NO Separation

  3. Hypothesis • Equal Weighting Causes Virtual Congestion • By dividing the DEC bids equally over the 32 busses that make up the Hub without regard to the capability of each of those busses to absorb the ‘load’ results in virtual congestion and price divergence

  4. Results • Hub pricing becomes unpredictable • Loss of confidence as a trading point • Loss of liquidity • Higher Risk • Higher FTR pricing • Higher prices • Higher cost to the load

  5. Proposal • Investigate alternative weighting of busses at the Hub. Options include: • Weight by rating of facility • Weight by throughput of facility • Or some alternate methodology that reflects the different capabilities of the 32 facilities that define the Hub • ISO would calculate and publicly post alternate results (both historically and prospectively) for review and analysis by market participants

  6. Next Steps • Discussion and submittal of Hub weighting methodology • Member agreement on option(s) for Hub weighting? • Determine steps and implement process to achieve “workable” trading Hub

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