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Wholesale Power Costs - 101. ISO New England Energy Market April 7, 2011 Craig Kieny – Vermont Electric Cooperative. Topics. Wholesale Power Costs Defined Role of ISO New England (ISO-NE or ISO) Energy Market. Wholesale Power Costs - Defined.

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Wholesale Power Costs - 101

ISO New England Energy Market

April 7, 2011

Craig Kieny – Vermont Electric Cooperative


Topics l.jpg
Topics

  • Wholesale Power Costs Defined

  • Role of ISO New England (ISO-NE or ISO)

  • Energy Market


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Wholesale Power Costs - Defined

  • Costs incurred by Load Serving Entities for the construction, operation and delivery of generating and demand response resources required to serve system load and maintain reliability.


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How power gets to your end-users

NY

Resource

A

#$%^ Look at our &*(^ electric bill!

Utility

Distribution

System

Resource

B

Resource

C

Resource

Z

HQ

NB

Wholesale Power Costs – Administered by ISO-NE


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ISO-NE Roles

  • Maintain regional transmission system integrity

    • Monitor loads

    • Dispatch generators and Price Response customers

    • Import/export with neighboring ISOs

    • Maintain proper reserve levels

    • Transmission upgrades

    • Load and generation forecasts

    • Generator interconnection studies

Real-Time

Long-Term


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ISO-NE Roles (continued)

  • Operate trading markets to promote wholesale competition

    • Capacity– Provides generators a minimum payment as incentive to build.

    • Energy– Provides resources payment for providing energy or reducing load.

    • Regulation– Provides payment to generators to respond to instantaneous changes to load.

    • Reserves– compensate generators for providing “stand-by” service.



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Energy Market - Basics

  • Market through which ISO-NE compensates generators for being available.

  • Resources submit bids ($/MWh) for minimum amount willing to be paid to provide energy or reduce load.

  • ISO continuously dispatches resources to meet the load using least cost solution while maintaining reliability of the system.

  • ISO calculates hourly prices at over 1,000 pricing points in New England.

  • ISO credits each resource based on the price at the location it is providing energy.

  • ISO charges load based on the price at the location it is “consumed”.

  • ISO invoices each participant the difference between its resource credits and load charges.



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Energy Market – Where it Comes From

2010 Generation by Fuel.

Source – http://www.iso-ne.com/markets/hstdata/rpts/net_eng_peak_load_sorc/energy_peak_source.xls


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Things to Remember

  • Energy Market costs are one of the major budget items.

  • The location of your load and resources impacts your net costs.

  • Costs are highly correlated to Natural Gas prices.

  • Potentially high degree of volatility.

  • Hedging can provide stability but not necessarily lowest cost.