Market evolution program day ahead market project
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Market Evolution Program Day Ahead Market Project. Regulatory Affairs Standing Committee Meeting May 14, 2003. Day Ahead Market - History. Stakeholder input to IMO Straw-Plan for Market Evolution (Jan 2002) – implementation of a day ahead market is a high priority

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Market Evolution Program Day Ahead Market Project

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Market evolution program day ahead market project

Market Evolution ProgramDay Ahead Market Project

Regulatory Affairs Standing Committee Meeting

May 14, 2003

1


Day ahead market history

Day Ahead Market - History

  • Stakeholder input to IMO Straw-Plan for Market Evolution (Jan 2002) – implementation of a day ahead market is a high priority

  • IMO 2003-2005 Business Plan – a day-ahead commitment market, with the real-time market evolving to a balancing market, is a critical element in executing the strategy of creating amore effective, reliable and mature market

  • Market Surveillance Panel Report (March 2003) – one potential avenue to improve the ineffective pre-dispatch signals is to develop alternative mechanisms for providing price signals such as a day-ahead market

  • FERC SMD NOPR (July 2002) - proposed requirements to run a voluntary, bid-based, security constrained day-ahead energy market.

  • FERC White Paper (April 2003) - reaffirms the necessity of a DAM and commitment to resolve seams issues and integration of regional efforts

2


Day ahead market options considered

Day Ahead Market - Options Considered

  • A simple, single-node, bid-based day-ahead market for energy only (analogous to the Energy Forward Market currently documented in the Market Rules)

  • A comprehensive day-ahead market that contains most of the characteristics and features of day-ahead markets in neighbouring markets (PJM, NE, NY and proposed for MISO), with the key exception of locational marginal pricing

  • An alternative DAM proposed by Coral, characterized by a bid-ask-trade mechanism to discover price for energy, firm physical obligations to deliver and mandated particpation by all loads and generators

3


Day ahead market conclusions to date

Day Ahead Market -Conclusions to date

  • A simple, single-node, bid-based day-ahead market for energy only for the summer of 2003 was not pursued due to the following:

    • risk that it would be illiquid or would not clear

    • delivery risk due to the short timelines

    • adverse impact on other initiatives

  • IMO Feasibility Study and market participant feedback (via DAM Working Group) regarding DAM options concluded that the preferred path is to pursue a comprehensive DAM consistent with the DAM employed in neighbouring jurisdictions

    • Now performing high-level design with target implementation of Fall 2004

    • Staged approach - high-level design to be completed by July at which time an assessment will be made whether to proceed further

  • 4


    Day ahead market activities

    Day Ahead Market -Activities

    • Assessment of high level design:

      • How well it addresses some of the problems evident in current market design and operation

      • Appropriate linkages to long term resource adequacy initiative

      • Broad stakeholder consensus on the benefits of implementing the proposed design

      • Appropriate cost recovery mechanism

    • Working Group is engaged in identifying design issue areas and examining potential solutions

    • Broader stakeholder education/consultation workshops planned for late May/early June regarding proposed high level design

    • MAC - June 11

    • IMO Board - July 3

    5


    Day ahead market regulatory issues encountered so far

    Day Ahead Market -Regulatory issues encountered so far

    • Load participation in the DAM:

      • effectiveness of DAM enhanced as the amount of load participation increases

      • impact of gap between MW quantity of load participants and generation participants mitigated by allowing virtual load in DAM

        Potential approaches to increase load participation in DAM:

      • SSS Rate to be a blend of the day-ahead and real-time spot prices

      • Provide for a more active LDC role in the procurement of electricity

      • Third-party procurement

    6


    Day ahead market regulatory issues encountered so far1

    Day Ahead Market -Regulatory issues encountered so far

    • MPMA for OPG:

      • Is the MPMA restricted to the Real-Time Market?

      • What settlement components of the Day Ahead and Real Time Markets will be used to determine the rebate?

    7


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