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Electric Distribution Sector

Electric Distribution Sector. RPM Explained. Constantly changing rules. Six years after RPM was implemented, we seem to have a major market reform every year.

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Electric Distribution Sector

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  1. Electric Distribution Sector

  2. RPM Explained

  3. Constantly changing rules • Six years after RPM was implemented, we seem to have a major market reform every year. • These reforms seem to be driven not by the search for an optimum market but by the urging of one party or the other to obtain an advantage. • If the markets are not optimum then, by definition, someone must pay more and that is our customers.

  4. Minimum Offer Price Rule • There have been several challenges to the Self-Supply exemption both at FERC and the Circuit Courts in the past two years. AEP Mountaineer- Sporn

  5. Cost of New Entry • Gross CONE vs. Net CONE • Shape of the Variable Resource Requirement Curve • Offer Mitigation Rock Springs Essential Power

  6. Imports INTO PJM • Import Limit – Currently before the PJM Planning Committee • Requirement that external resources must continue to offer once they clear

  7. FERC Issues • SEAMs • FTR • ATC • Order 1000 Black Pump Vatenfall Germany

  8. Other Issues • Incremental Auctions • Price Floors • Buying Out • Multi-Year Commitment • Allowing resources to get commitments for multiple years in the BRA NCEMC Hamlet Power Plant

  9. Other Issues Continued • Demand Response • Comparability • CSP Issues • Day Ahead Markets • Renewables • Capacity Values • Storage Ontario Hourly Wind Output Hourly by day August 2009

  10. Reaction to Market Changes • Market participants often overreact to changes which may • Cause uncertainty • Constrain Competition • Impose Additional Costs on Customers • Time is needed to assess the effects of a change • Don’t assume than any aberration is due to the last change and continually tinker with the market

  11. RPM was intended to place a portion of the risk on generators and transmission owners leading to wiser decisions and better capital allocation due to normal market mechanisms. • Proposed changes to PJMs rules constantly seek to eliminate these risks risk

  12. Undoing Compromise • Many aspects of RPM where developed through hard-fought give-and-take negotiations which required sectors to give on certain issues to protect their critical issues • Some changes now seek to undo that compromise by eliminating negotiated provisions harmful to one group while maintaining the benefits to that group

  13. The Stakeholder Process Lends Dignity to What Would Otherwise be a Vulgar Brawl

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