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Market Surveillance Panel Consultation on CMSC Issues Related to Constrained off Payments to Generators and Imports. Market Operations Standing Committee March 5, 2003. Contents. Purpose & Context of Consultation CMSC Payments - Background Constrained off Payments

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Market operations standing committee march 5 2003

Market Surveillance Panel Consultation on CMSCIssues Related to Constrained off Payments to Generators and Imports

Market Operations Standing Committee

March 5, 2003


Contents
Contents

  • Purpose & Context of Consultation

  • CMSC Payments - Background

  • Constrained off Payments

    • Various Rationale Noted

  • Implications of Retaining Constrained off Payments

  • Issues for Discussion

  • Request for Additional Comments


Purpose context of consultation
Purpose & Context of Consultation

  • Ongoing issue for MSP signaled earlier

    • constrained off payments do not seem necessary or appropriate and have the potential for abuse

      • MSP Report: May-August 2002

      • MSP Backgrounder paper April, 2002

    • experience from the operation of the market

  • MSP invites input

    • to focus discussion, reconsider constrained off payments for energy to generators and imports

    • if not eliminated, may need additional safeguards against abuse


Purpose context of consultation cont
Purpose & Context of Consultation (cont.)

  • Timetable

    • Feb 21: Posting of discussion paper

    • Mar 31: Final date for submission of comments

    • early May: MSP conclusions and recommendations

      to IMO Board

  • MOSC Consultation

    • to introduce issues

    • to promote some initial discussion of issues

    • to encourage subsequent written comments


Cmsc payments background
CMSC Payments - Background

  • Design alternative to locational pricing

    • CMSC payments based on difference between offers (bids) and MCP

    • intended for transmission / reliability limits

    • but also induced by non-transmission causes

  • Mitigation framework limited to transmission

  • Weight of the recent evidence in other markets

    • constrained-off payments are not regarded as necessary in spot markets


Cmsc payments for energy may to dec 2002
CMSC Payments for Energy- May to Dec 2002


Constrained off payments various rationale noted
Constrained off Payments- Various Rationale Noted

  • Keep wholesale prices lower than otherwise

  • Enhance reliability

    • by maintaining critical plant in the marketplace

  • Information about transmission bottlenecks

    • helpful in identifying areas for investment

  • Operational benefits to the marketplace

    • encourages compliance; selection rule

  • Compensates for departures from optimality

    • existing generation and transmission endowment


Implications of retaining constrained off payments
Implications of Retaining Constrained off Payments

  • Constrained off payments may interfere with appropriate signaling in the market

    • no incentive for generators to seek enhancements

    • siting of new generation is indifferent to transmission conditions

  • Potential to affect CMSC with offer price

    • treatment of negative offer prices

    • some aspects of the local market power mitigation framework need to be reviewed


Issues for discussion
Issues for Discussion

  • Primary Discussion Issues

    • Implications for efficiency

    • Implications for reliability

    • Implications for coordinating transmission & generation

  • Additional or Optional issues (selected subset)

    • Implications for local market power mitigation

    • Implications for investment decisions

    • Audience identified issues

    • Discussion of one or two issues as time permits


Implications for efficiency
Implications for Efficiency

  • What are the implications of keeping or removing constrained off payments?

    • Impact on market price

    • Total payments

    • Signals for suppliers or consumers

    • Etc.


Implications for reliability
Implications for Reliability

  • What are the implications of keeping or removing constrained off payments?

    • Is it necessary or desirable to compensate a market participant to comply with a dispatch instruction?

    • Do payments help maintain critical plant in the market place?

      • Are constrained off payments the right vehicle?

    • etc.


Implications for coordinating transmission generation
Implications for Coordinating Transmission & Generation

  • What are the implications of keeping or removing constrained off payments?

    • Are CMSC payments providing good transmission investment signals?

      • Are there other more effective drivers or signals?

      • What else is needed for transmission investment?

    • Are generator siting signals being blunted?

    • Is there a basis for treating new generation differently from earlier existing generation?

    • etc.


Additional issues for discussion
Additional Issues for Discussion

  • To be determined

    • local market power mitigation framework?

    • investment decisions?

    • other identified issues?


Request for additional comments
Request for Additional Comments

  • See Consultation page and Discussion Paper

    http://www.theimo.com/imoweb/consult/consult_cmsc.asp

  • Provide written comments for posting on web site

    • send to MACD@theIMO.com

  • For background information on CMSC

    • see links from Consultation page