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April 8, 2014 | NEPOOL markets committee

April 8, 2014 | NEPOOL markets committee. Jonathan Lowell. Principal analyst | market development. Updates to Market Rule 1 and Appendix F.3 to Address the New NCPC Payments Design. NCPC Cost Allocation –Conforming Changes.

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April 8, 2014 | NEPOOL markets committee

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  1. April 8, 2014 | NEPOOL markets committee Jonathan Lowell Principal analyst | market development Updates to Market Rule 1 and Appendix F.3 to Address the New NCPC Payments Design NCPC Cost Allocation –Conforming Changes

  2. Background – Conforming and Cleanup Changes are Required in Several Areas Related to EMOF and NCPC • ISO is grouping these changes into two projects: • All changes related to Appendix F NCPC cost allocation will be included under the NCPC Cost Allocation: Phase 1 project • Conforming changes that do not modify the NCPC cost allocation are described in this presentation • The Phase 1 Cost Allocation changes are discussed in a separate presentation as part of the same April MC agenda item • All changes related to Market Rule 1, Appendix A and Appendix F (NCPC payments) will be included under the Energy Market Offer Flexibility Conforming Changes project • This topic will be presented in a separate agenda item at the April MC Meeting

  3. Conforming Changes Required for NCPC Cost Allocation – Appendix F • Existing language in III.3.2.3 is being consolidated into Appendix F – NCPC • Some portions were incorporated into F.2 NCPC Credits, but not removed from III.3.2.3 at that time. • One provision with general applicability will be moved into F.1 • Portions related to NCPC cost allocation will be removed from III.3.2.3 and pulled into Appendix F.3 Charges for NCPC • Appendix F becomes “home sweet home” for all things     NCPC-related in Market Rule 1 • The new NCPC Payments design eliminates Minimum Generation Emergency (MGE) Credits as a separate NCPC credit calculation. • This requires conforming changes in Appendix F.3 so as to not impact how MGE costs are allocated

  4. Overview of Min Gen Emergency NCPC – Old Design • The “old” MGE credit compensated generators that were dispatched up out of rate by the ISO during a MGE, when most resources are being dispatched to their Emergency Min, and RTLMP is administratively set to $0/MWH • The cost of MGE credits was allocated to Real-Time Generation Obligations (RTGO), excluding any Exempt RTGO • Exempt RTGO = RTGO – EcoMin energy (i.e. the out-of-merit dispatch requested by the ISO)

  5. Overview of MGE NCPC – New Design • In the “new” NCPC Payments design, out-of-rate dispatch is addressed by the Real-Time Dispatch Credit, which compensates resources when dispatched by the ISO to operate out of rate, including during an MGE • To avoid any change in NCPC cost allocation, RT Dispatch Credits during a MGE must be accumulated separately for allocation to RTGO excluding exempt RTGO • To abuse the famous words of William Shakespeare, “A Min Gen Emergency Credit by any other name would still smell as sweet [and still be allocated like a Min Gen Emergency Credit].”

  6. Overview of MGE NCPC – New Design • To accomplish these changes: • Minimum Generation Emergency Credits are redefined in terms of Real-Time Dispatch Credits during a MGE • Definition of Exempt RTGO is eliminated • Rather than referring to Exempt RTGO, tariff language will instead refer to “RTGO during an MGE that is eligible for a RT Dispatch NCPC Credit”

  7. Conforming Changes to Address MGE Cost Allocation • MGE Credit definition modified to conform to new NCPC Payments terminology • Definition of Exempt RTGO eliminated, but the same concept still applies • Definition of MGE Charge eliminated – not used or referred to anywhere • Appropriate sections of Appendix F.3 rewritten for clarity, but allocation is unchanged.

  8. Appendix F.3 is Rewritten to Provide Consistency with the New Appendix F.2 and to Improve Clarity • The rewrite makes no changes to how NCPC costs are allocated • It does consolidate language from III.3.2.3 into one convenient location • The rewritten App F.3 will no longer require a secret decoder ring to parse sentences like: “The ISO calculates for each Operating Day the non-Postured non-Synchronous Condenser related, Synchronous Condenser related, non-Local Second Contingency Protection Resource related, non-Regulation and non-SCR related economic NCPC Charges for the Real-Time Energy Market for each Market Participant …”

  9. Summary of Changes in Appendix F

  10. Summary of Changes in Appendix F

  11. Summary of Changes in Appendix F

  12. Summary of Changes in Appendix F

  13. Summary of Changes in Appendix F

  14. Summary of Changes to Appendix F.3

  15. Summary of Changes to Appendix F.3

  16. Summary of Changes to Appendix F.3

  17. Next Steps • Tariff review will follow the stakeholder schedule for the NCPC Cost Allocation Phase 1 • These tariff changes will be voted as part of the NCPC Cost Allocation Phase 1 • Request MC vote at May meeting • Targeted for Q4 2014 effective date • Coincident with Energy Market Offer Flexibility and new NCPC Payments implementation • No implementation concerns for the F.3 rewrite, because these changes do not alter the settlement of NCPC Charges.

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