Asm pilot program preliminary design november 1 2004
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ASM Pilot Program Preliminary Design November 1, 2004. What’s the Problem?. Current ASM design not attractive to many existing Demand Response customers: Why? Nodal Pricing for All Usage 4-Second Metering Requirement 5 MW Minimum (must be an individual end-use metered customer)

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ASM Pilot Program Preliminary Design November 1, 2004

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Asm pilot program preliminary design november 1 2004

ASM Pilot ProgramPreliminary DesignNovember 1, 2004

What s the problem

What’s the Problem?

  • Current ASM design not attractive to many existing Demand Response customers:

  • Why?

    • Nodal Pricing for All Usage

    • 4-Second Metering Requirement

    • 5 MW Minimum (must be an individual end-use metered customer)

    • Must be available to 11 p.m. (Weekdays)

Size requirement

Size Requirement

  • Very few Load Response resources with

    5 MW or greater of interruption

    • 6 in CT (121 MW)

    • 1 in NEMA (15 MW)

  • Over 100 MW of resources in CT & NEMA under 5 MW

    • 74 MW in CT

    • 30 MW in NEMA

Current demand response distribution

Current Demand Response Distribution

Zonal vs nodal settlement

Zonal vs. Nodal Settlement

  • Two types of customers

    • Customer in constrained area on high price node

      • Zonal LMP is less than nodal price

      • Basically must reduce 100% of load to achieve meaningful savings

      • 2 customers in SWCT with interruptions great than 80% of their load

    • Customer in constrained area on low priced node

      • Can obtain benefit through SCNP

      • Doesn’t need to be involved in reserved for savings

      • Why would they trouble themselves?

Positive customer attributes

Positive Customer Attributes

  • The remaining 466 resources are:

    • What the pilot focuses on

  • These customers are where we want them

    • Located in constrained areas

    • Dispersed within load

Why do a pilot

Why do a Pilot?

  • Determine if Demand Response can provide functionally equivalent Reserves:

    • Dispatched on Nodal Pricing, but settlement on Zonal Pricing

    • 5-Minute vs. 4-Second Meter Data to ISO-NE’s Control Room

    • Customers less than 5 MW (or customer aggregations to meet size requirement)

    • Available to 6 p.m. (Weekdays)

Value of demand response

Value of Demand Response

  • Response Time

  • Location

Response time all zones august 20 2004

Response Time – All Zones (August 20, 2004)

Response time connecticut august 20 2004

Response Time – Connecticut (August 20, 2004)



Demand Response Resources available as of 10/1/2004 ready to respond within 30-minutes

Preliminary pilot project design

Preliminary Pilot Project Design



  • Customers

    • 100 kW Minimum Reduction

    • Aggregation allowed at Node

      • With approved M&V plan where necessary (i.e., for aggregations of customers)

    • Pilot limited to XXX MW and/or YY customers

      • Limitations resulting from Manual Settlement for Pilot resources

  • Suppliers (Enrolling Participants)

    • NEPOOL Participants

    • Demand Response Providers (Non-participants)



  • Design Phase

    • Start:10/1/2004End:10/1/2005

    • FERC Filing in February 2004

  • Implementation Phase

    • Start:10/1/2005End:5/31/2007

    • Pilot will continue until Evaluation Completed. If deemed viable, until incorporated in ASM

  • Evaluation Phase

    • Start:10/1/2006End:6/1/2007

Preliminary design continued

Preliminary Design (Continued)

  • Location

    • No restrictions. Market Prices will encourage resources in the higher valued locations

    • OR Limited to Constrained Zones

  • Availability

    • 7 a.m. to 6 p.m. Weekdays, Non Holidays

  • Payment

    • Forward Reserve Auction Clearing Price

    • Zonal LMP if Dispatched (No Floor Price)

Preliminary design continued1

Preliminary Design (Continued)

  • Dispatch

    • Dispatched when Nodal Price > or = Offer Price

    • Group 1 Resources offered at Strike Price

    • Group 2 Resources offered at $ ZZ /MWh

      • Establish Group 2 offered based on expected hours of operation

  • Day-Ahead Energy Bid

    • Equal to or greater than the Strike Price described above

  • Penalty for Non-Performance

    • Forfeit Forward Reserve Revenue, plus

    • Pay Replacement Energy at Zonal LMP

Preliminary design continued2

Preliminary Design (Continued)

  • Metering and Communications

    • Internet Based Communication System (IBCS)

    • Meter data submitted to Open Solution every 5-minutes

    • “Dispatch” notice through IBCS

  • Settlement

    • Reductions settled at Zonal Price

    • Customers can remain on existing Retail Rate

Preliminary design continued3

Preliminary Design (Continued)

  • Capacity

    • Resources eligible for ICAP

  • Source of Funding

    • Funding source identical to proposed ASM or current Forward Reserve Market

  • Real-Time Reserve Payment

    • If a DR Pilot resource does not clear in the Forward Reserve Auction it can qualify for Real-Time Reserve Payments

Market issues

Market Issues

  • Other Demand Response Programs

    • Pilot DR resource can not provide Forward Reserves and be an OP4 Action resource, at the same time

    • Pilot DR resources will be enrolled in a 30-minute notice program

      • Activated on Nodal Price not OP 4 Actions

Market issues continued

Market Issues (Continued)

  • Forward Reserve Purchases

    • Pilot DR resource selection will be run parallel to Forward Reserve Auction

    • Pilot DR resources will not effect the Forward Reserve Clearing Price

      • Presently DR does not meet NPCC requirements

    • Pilot DR resources will not offset other non-DR Forward Reserve resources

Resource selection process

Resource Selection Process

  • DR resources submit bid in $/kW-Month on same timeline as Forward Reserve Auction

  • Bid may be zero.

  • DR bids accepted that are < or = Forward Reserve Clearing Price

  • DR bids accepted up to _____ MW

  • Ties broken through pre-determined preference criteria (to be determined)

    • Location

    • Allocating among different resource types: emergency generation, direct load control, different customer sectors, etc.

Pilot budget

Pilot Budget

  • ____ MW eligible to participate

  • Expected average $____/kW per Month Forward Reserve Payment

  • 20 month duration

    • Winter 05/06, Summer 06, Winter 06/07

  • Total Budget: $__________

Project team

Project Team

  • Demand Response Department

  • National Labs

    • Lawrence Berkeley, Oak Ridge, and Pacific Northwest National Laboratories

  • Demand Response Working Group

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