use of inc offers and dec bids in smd n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Use of INC Offers and DEC Bids in SMD PowerPoint Presentation
Download Presentation
Use of INC Offers and DEC Bids in SMD

Loading in 2 Seconds...

play fullscreen
1 / 9

Use of INC Offers and DEC Bids in SMD - PowerPoint PPT Presentation


  • 148 Views
  • Uploaded on

Use of INC Offers and DEC Bids in SMD. 1/14/03 Presentation to New England Markets Committee Stephen Wemple Director, Retail and Regulatory Affairs Con Edison Energy. Use of INC Offers and DEC Bids in SMD.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

Use of INC Offers and DEC Bids in SMD


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
use of inc offers and dec bids in smd

Use of INC Offers and DEC Bids in SMD

1/14/03 Presentation to

New England Markets Committee

Stephen Wemple

Director, Retail and Regulatory Affairs

Con Edison Energy

use of inc offers and dec bids in smd1
Use of INC Offers and DEC Bids in SMD
  • INC Offers can be viewed as an energy sale into the DAM and a purchase from RT market
    • Used to convert RT energy into DAM energy
      • Allows RT energy to be used to hedge a DAM obligation
    • Called Virtual Generation in NY
  • DEC Bids can be viewed as a purchase from the DAM and a sale into RT market
    • Used to convert DAM energy into RT energy
      • Allows LSEs to buy DAM energy to cover RT loads
    • Called Virtual Load in NY
use of inc offers and dec bids in smd2
Use of INC Offers and DEC Bids in SMD
  • Generators / Marketers need DEC Bids to sell RT products at the HUB
    • Can use FTRs to hedge DAM congestion to the HUB but need DEC Bids at the HUB to hedge DAM to RT risk.
  • LSEs needing to hedge congestion from HUB to load zone will submit offsetting INC Offers @ HUB
    • Need to convert RT energy into DAM to use FTRs as a hedge
  • Only LSEs with load distributed around the HUB will buy RT energy at the HUB without an offsetting INC Offer
    • Otherwise the LSE will be at risk for RT congestion from Hub to Zone
  • Without DECs at the HUB, RT products will trade at zones
    • Will fragment the market and likely make the HUB obsolete
      • Generators / Marketers will buy FTRs to zones to hedge RT zonal energy
      • May not invest in a second set of FTRs to support DAM products at the HUB
supplier perspective use of generation with ftrs and dec bids to hedge a rt energy sale @ mass hub
Supplier PerspectiveUse of generation with FTRs and Dec Bids to hedge a RT energy sale @ Mass Hub

Step 1 -Use of FTR

to move DAM energy

DAM Energy @ Generator A

FTR from

Generator A to

Mass Hub

+

DAM Energy Mass Hub

=

Step 2 -Use of DEC

to convert DAM to RT

+

DAM Energy @ Mass Hub

DEC BID (DAM Purchase & RT Sale) @ Mass Hub

RT Energy @ Mass Hub

=

lse perspective use of inc dec bids w ftrs to hedge rt load with rt energy purchase @ mass hub
LSE Perspective Use of Inc/Dec Bids w/ FTRs to hedge RT load with RT energy purchase @ Mass Hub

Step 1 -Use of INC to

convert RT to DAM

RT Energy @ Mass Hub

INC Offer (DAM sale + RT Purchase) @ Mass Hub

+

DAM Energy @ Mass Hub

=

Step 2 -Use of FTR to

move DAM energy

FTR from Mass Hub to Load Zone

DAM Energy @ Load Zone

DAM Energy @ Mass Hub

+

=

Step 3 -Use of DEC

to convert DAM to RT.

NOTE – LSEs can avoid Step 3

by bidding load directly into DAM

+

DAM Energy @ Load Zone

DEC BID (DAM Purchase & RT Sale) @ Load Zone

RT Energy @ Load Zone

=

balanced hub
Balanced Hub
  • Assumptions:
  • Gen A has sold
  • 100 MW RT @ Hub
  • 60 MW to LSE A
  • 30 MW to LSE B
  • 10 MW to LSE C

Generator A sells 100 MW in DAM

DAM = $25

Gen A – Hedging Strategy

Schedule 100 MW in DAM

FTR hedges congestion to HUB

Submit 100 MW DEC @ HUB

Gen A owns 100 MW FTR Gen to Hub

Mass Hub

DAM = $28

RT = $27

LSE B has 30 MW load in Zone B w/

DAM = $45

LSE A has 60 MW load in Zone A w/

DAM = $35

LSE B owns 30 MW FTR from Hub to Zone B

LSE A owns 60 MW FTR from Hub to Zone A

LSE C has 10 MW load near HUB w/

DAM = $30

& RT = $29

LSE B – Hedging Strategy

Submits 30 MW INC @ HUB

FTR hedges congestion to Zone B

Bids 30 MW DAM load @ Zone A

LSE A – Hedging Strategy

Submits 60 MW INC @ HUB

FTR hedges congestion to Zone A

Bids 60 MW DAM load @ Zone A

LSE C – Hedging Strategy

Requires no action from LSE

At risk for RT congestion from HUB to load – assumed to be small

balanced hub settlement
Balanced Hub – Settlement

Gen A – Settlement

DAM payment of $2500 = 100 MW x $25

FTR pays $300 = 100 MW x ($28 - $25)

HUB DEC costs $100 = 100 MW x ($27 - $28)

Net ISO Settlement = $2700 = value of RT @ HUB

Hedges 100 MW sale @ HUB

Relevant Prices

Gen A = $25 DAM

HUB = $28 DAM, $27 RT

Zone A = $35 DAM

Zone B = $45 DAM

Zone C = $30 DAM, $29 RT

LSE A – Settlement

INC @ HUB pays $60 = 60 MW x ($28 - $27)

FTR pays $420 = 60 MW x ($35-$28)

Net ISO Settlement = $480 = difference between cost of DAM energy at Zone A and RT energy @ HUB

LSE C – Settlement

Pays ISO $20 = 10 MW x ($29-$27)

Cost of RT congestion between @ Hub and Zone C

LSE B – Settlement

INC @ HUB pays $30 = 30 MW x ($28 - $27)

FTR pays $510 = 30 MW x ($45-$28)

Net ISO Settlement = $540 = difference between cost of DAM energy at Zone A and RT energy @ HUB

lse b omits inc @ hub
LSE B Omits INC @ Hub

Generator A sells 100 MW in DAM DAM = $25

Assumption:

LSE B fails to submit INC @ HUB, increasing HUB DAM price

Gen A – Hedging Strategy

Schedules 100 MW in DAM

FTR hedges congestion to HUB

Submits 100 MW DEC @ HUB

Gen A owns 100 MW FTR Gen to Hub

Mass Hub

DAM = $40

RT = $27

LSE B has 30 MW load in Zone B w/

DAM = $45

LSE A has 60 MW load in Zone A w/

DAM = $35

LSE B owns 30 MW FTR from Hub to Zone B

LSE A owns 60 MW FTR from Hub to Zone A

LSE C has 10 MW load near HUB w/

DAM = $30

& RT = $29

LSE B – Omits INC @ Hub

Pays difference between DAM and RT @ HUB

FTR hedges congestion to Zone B

Bids 30 MW DAM load @ Zone B

LSE A – Hedging Strategy

Submits 60 MW INC @ HUB

FTR hedges congestion to Zone A

Bids 60 MW DAM load @ Zone A

LSE C – Hedging Strategy

Requires no action from LSE

At risk for RT congestion from HUB to load – assumed to be small

lse b omits inc @ hub settlement
LSE B Omits INC @ Hub – Settlement

Gen A – Settlement

DAM payment of $2500 = 100 MW x $25

FTR pays $1500 = 100 MW x ($40 - $25)

HUB DEC costs $1300 = 100 MW x ($27 - $40)

Net ISO Settlement = $2700 = value of RT @ HUB

Hedges 100 MW sale @ HUB

Relevant Prices

Gen A = $25 DAM

HUB = $40 DAM, $27 RT

Zone A = $35 DAM

Zone B = $45 DAM

Zone C = $30 DAM, $29 RT

LSE A – Settlement

INC @ HUB pays $780 = 60 MW x ($40 - $27)

FTR costs $300 = 60 MW x ($35-$40)

Net ISO Settlement = $480 = difference between cost of DAM energy at Zone A and RT energy @ HUB

LSE C – Settlement

Pays ISO $20 = 10 MW x ($29-$27)

Cost of RT congestion between @ Hub and Zone C

LSE B – Settlement

FTR pays $150 = 30 MW x ($45-$40)

Net ISO Settlement = $150

LSE B has $390 loss = 30 MW x ($27 - $40) = difference between RT and DAM energy @ HUB