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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

Wholesale Power Costs - 101

ISO New England Energy Market

April 7, 2011

Craig Kieny – Vermont Electric Cooperative

  • Wholesale Power Costs Defined
  • Role of ISO New England (ISO-NE or ISO)
  • Energy Market
wholesale power costs defined
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.
how power gets to your end users
How power gets to your end-users




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












Wholesale Power Costs – Administered by ISO-NE

iso ne roles
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



iso ne roles continued
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.
energy market basics
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.
energy market where it comes from
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

things to remember
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.