2003 State of the California ISO Markets Report
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2003 State of the California ISO Markets Report Federal Energy Regulatory Commission May 5, 2004 Anjali Sheffrin, Ph.D. Director, Market Analysis California ISO. Overview of Control Area for 2003. COI. 10.5 million households served in PG&E, SCE, and SDG&E

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2003 State of the California ISO Markets ReportFederal Energy Regulatory CommissionMay 5, 2004Anjali Sheffrin, Ph.D.Director, Market AnalysisCalifornia ISO


Overview of control area for 2003 l.jpg
Overview of Control Area for 2003

COI

  • 10.5 million households served in PG&E, SCE, and SDG&E

  • 25,000 circuit miles of network transmission.CA part of western interconnection (WECC)

  • 42,581 MW peak load in July, 2003*

  • 230,668 GWh annual energy

  • 42,000 MW of available generation capacity at peak after derates for hydro and outages

  • 5,670 MW net imports on peak

Pac DC

NP15

SF

SP15

Path 15

ZP26

Mead

Market

Place

McCullough

LA4

LA2

Eldorado

Path 26

Lugo

Vincent

Mohave

Sylmar

AZ3

Palo

Devers

Verde

N.Gila

*Integrated hourly peak

Imperial Valley

Miguel

AYS

Mexico


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Current Markets Operated by CAISO

  • Real Time Imbalance Energy Market

  • Day Ahead and Hour Ahead Congestion Management (Zonal)

  • Ancillary service markets: regulation, spin, non-spin, replacement

  • Soft price cap at $250/MWh

  • Automated Mitigation Procedures (AMP) in place

    • Conduct test, bid at least 200% or $100/MWh above reference level for system AMP

    • Impact test – bid has at least 200% or $50/MWh impact on market clearing price

  • No day ahead energy market, Investor-owned utilities resumed purchasing energy for their own requirements in Jan 2003

AYS


Market highlights for 2003 l.jpg

Ample supply and moderate loads yielded market outcomes close to competitive levels. No mitigation of prices occurred using system AMP

Average load up 1% in 2003, but second half of year up 3.7% due weather and a recovering economy

Energy prices increased due to higher natural gas prices

Real-time prices averaged $70/MWh (inc dispatches). Utility scheduled load within 1-2 % of actual load resulting in low reliance on real-time imbalance market

Ancillary reserve service prices averaged $9.85/MWh, increase of 38% ; some instances of bid insufficiency

Increases in real-time intrazonal congestion

Long outages at Vincent and Sylmar substations, and insufficient transmission at Miguel due to new generation additions in Northern Mexico and Arizona

Market Highlights for 2003

AYS


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Total wholesale cost of serving load $12.1 Billion in 2003, v. $10.1 Billion in 2002; Increase in costs affected by natural gas pricesWholesale Energy and Ancillary Service Costs, 1998-2003

AYS


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All-in price was $55/MWh in 2003 compared to $45/MWh in 2002; increase due largely to increase in gas pricesAll-In Price Index includes estimated bilateral , real-time,A/S 2002-2003

AYS


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Real-time incremental energy prices increased from 2002, following natural gas prices; higher in Southern Calif.

Monthly Averages, 2002-03

AYS


Peak real time incremental prices higher in 2003 than in 2002 top 5 of prices 2001 2003 l.jpg
Peak real-time incremental prices higher in 2003 than in 2002Top 5%* of prices , 2001-2003

At least

At least

At least

Number of Hours:

$249/MWh

$149/MWh

$91//MWh

2001

8

2353

3194

2002

0

0

69

2003

0

25

309

  • The California ISO’s market posts separate incremental and decremental prices. Highest 325 price hours are shown.

AYS


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Load grew approximately 1% in 2003 vs. 2002 2002

Load Duration Curves, 2001-2003

AYS


Improved forced outage rates of existing generation equivalent forced outage rate 1999 2003 l.jpg
Improved Forced Outage Rates of Existing Generation 2002Equivalent Forced Outage Rate 1999- 2003

AYS


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New Transmission Projects 2002

Generating Capacity Net Additions

AYS


Net imports strong for second year in a row 2001 through 2003 average annual net imports l.jpg
Net imports strong for second year in a row 20022001 through 2003 Average Annual Net Imports

AYS


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Competitive Market Outcomes in 2003 2002

Price-to-cost markups 7% in NP15, 8% in SP15

Short-Term Markup Indices: SP15 (top) and NP15 (bottom)

AYS


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High RSI levels in 2003 indicate a healthy market with 2002

suppliers pivotal in fewer than 22 hours in the year

Residual Supply Index = Total Supply – Largest Supplier

Demand

RSI_Duration Curve 1999 - 2003_

2.4

2.3

2.2

2.1

2

rsi_1999

1.9

1.8

rsi_2000

1.7

RSI Index

1.6

rsi_2001

1.5

rsi_2002

1.4

1.3

rsi_2003

1.2

1.1

1

0.9

0.8

1

619

1237

1855

2473

3091

3709

4327

4945

5563

6181

6799

7417

8035

8653

AYS


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SP15 Combined Cycle Net Revenue and Cost 2002

SP15 Combustion Turbine Net Revenue and Cost

100.00

$90.00

90.00

$80.00

80.00

$70.00

70.00

$60.00

60.00

$50.00

$/kW-year

$/kW-year

50.00

$40.00

40.00

$30.00

30.00

$20.00

20.00

$10.00

10.00

0.00

$0.00

2002

2003

2002

2003

CC Cost

CC Net Revenue

CT Cost

CT Net Revenue

Net Revenue Analysis, 2002 and 2003- Profits from ISO spot markets for a new typical combined cycle generation unit fell 30 percent in 2003, combustion turbine unit profits stable*- A significant portion of fixed cost recovery would be from long-term bilateral contract.

*Net revenue analysis based on units selling solely into ISO imbalance energy and ancillary service markets.

AYS


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Reduced ancillary service capacity resulted in higher prices and increased bid insufficiency in 2003 compared to 2002Monthly Weighted Average Ancillary Service Prices, 2002-2003

AYS


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Interzonal congestion costs dropped 33% in 2003 v. 2002 levels2002 and 2003 Monthly Interzonal Congestion Costs

AYS


Major paths with interzonal congestion costs 2003 interzonal congestion revenues on selected paths l.jpg
Major paths with interzonal congestion costs levels2003 Interzonal Congestion Revenues on Selected Paths

AYS


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Real-time intrazonal congestion surged in August as new generation came online in Northern Mexico and Arizona, and overwhelmed local transmission facilities2003 Monthly Total Intrazonal Congestion Costs

AYS


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Effective Real Time Congestion Management generation came online in Northern Mexico and Arizona, and overwhelmed local transmission facilities

Must-Offer Waiver Process Redesign

Resource Adequacy Requirement

Economic Evaluation of Transmission Expansion

Major Market Issues

AYS


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