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Highlights of the 2004 State of the Market Report New York Electricity Markets. David B. Patton, Ph.D. Potomac Economics Independent Market Advisor May 5, 2005. Energy and Natural Gas Prices 2003 – 2004. Average All-In Price Costs per MWh of Load, 2002 - 2004. - PowerPoint PPT Presentation
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Highlights of the 2004 State of the Market Report
New York Electricity Markets
David B. Patton, Ph.D.
Potomac Economics
Independent Market Advisor
May 5, 2005
-2-
Energy and Natural Gas Prices2003 – 2004
$0
$15
$30
$45
$60
$75
$90
J F M A M J J A S O N D J F M A M J J A S O N D
2003 2004
En
ergy
Pri
ces
$/M
Wh
$0
$2
$4
$6
$8
$10
$12
Nat
ura
l Gas
Pri
ces
$/M
MB
tu
East WestNatural Gas
-3-
Average All-In PriceCosts per MWh of Load, 2002 - 2004Average All-In Price
Costs per MWh of Load
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2002 2003 2004 2002 2003 2004 2002 2003 2004 2002 2003 2004
State* NYC East Up-State West
Region
$/M
Wh
NYISO Operations
NTAC
Uplift
Voltage & Black Start
Regulation
Reserve
Energy
Capacity
*Capacity portion of state price excludes Long Island.
Based on calculations provided by NYISOMarket Monitoring and Performance
-4-
Ratio of Day-Ahead to Real Time Prices 2002-2004Comparison of Day-Ahead and Real-Time Prices
2002 - 2004
80%
90%
100%
110%
120%
West HudsonValley
NYC LongIsland
345 kVSystem
AstoriaEast
Vernon /Greenwd
AstoriaWest
Greenwd/Staten Is.
Zones Within NYC
Rat
io o
f D
A P
rice
/ R
T P
rice
200220032004
-5-
Frequency of Day-ahead Constraints and MitigationNew York City Load Pockets, June to December 2004Frequency of Day-Ahead Constraints and Mitigation
New York City Load Pockets, June to December 2004
0%
10%
20%
30%
40%
50%
60%
70%
80%
StatenIsland
ConEdCable
Into the138 kV system
AstoriaEast
AstWest/Queen
AstWest/Queen/Vernon
Vernon/Greenwd
Greenwd/Staten Is.
Outside the138kV system
Sub-pockets inside the 138kV
Per
cen
tage
of
Inte
rval
s
No RT Mitigation
RT Mitigation Invoked
Intervals possiblywarranting mitigation
-6-
Estimated Net Revenue in the New York Market2002 to 2004
Based on calculations provided by NYISOMarket Monitoring and Performance
Economic Dispatch of Generic Gas-Fired CT and CC Net Revenue Streams
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2002
2003
2004
2002
2003
2004
2002
2003
2004
2002
2003
2004
2002
2003
2004
2002
2003
2004
LI NYC Capital LI NYC Capital
Combined Cycle Combustion Turbine
$ pe
r In
stal
led
MW
- Y
ear
Ancillary
Energy
Capacity
-7-
Monthly Congestion Expenses 2002 – 2004Monthly Congestion Expenses
2002 - 2004
$0
$20
$40
$60
$80
$100
$120
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2002 2003 2004
Con
gest
ion
($
Mil
lion
s)
Balancing Congestion Costs
Day-Ahead Congestion RentsDA RT
2002 $414 $1112003 $534 $1552004 $470 $159
-8-
Value of Real-Time Congestion on Major Interfaces2002 – 2004
$0
$100
$200
$300
$400
$500
2002 2003 2004 2002 2003 2004
Up-State New York Down-State New York
Mil
lion
s of
Dol
lars
NYC Load Pockets
Dunwoodie-South
Into Long Island
UPNY-ConEd
Capital to Hudson Valley
Central-East
-9-
Day-Ahead Shortfalls and Real-Time Congestion 2002 – 2004Day-Ahead and Real-Time Revenue Shortfalls From Congestion
2002 - 2004
$0
$50
$100
$150
$200
$250
$300
2002 2003 2004
Con
gest
ion
($
Mil
lion
s)
Day-Ahead Revenue Shortfall
Balancing Congestion Costs
Revenue Shortfall2002: $188 Million2003: $280 Million2004: $188 Million
-10-
Day-Ahead and Real-Time Uplift Expenses 2002 – 2004
0
20
40
60
80
100
120
140$
in M
illi
ons
2002 2003 2004 2002 2003 2004 2002 2003 2004
RT Local Reliability Other RT Uplift DAM Uplift
Day-Ahead and Real-Time Uplift Expenses2001 - 2004
Yearly Uplift Expenses2002: $213 Million2003: $203 Million2004: $258 Million
-11-
Real-Time Prices and Interface SchedulesEastern NY and New England
Monthly Price Statistics
-$5
-$3
-$1
$1
$3
$5
$7
$9
$11
$13
$15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-$5
-$3
-$1
$1
$3
$5
$7
$9
$11
$13
$15
NY
Pri
ce -
NE
Pri
ce (
$/M
Wh
)
Absolute Average Price Difference
Average Price Difference
-$150
-$100
-$50
$0
$50
$100
$150
-1500 -1000 -500 0 500 1000
Net Exports (MW)
NY
Pri
ce -
NE
Pri
ce (
$/M
Wh
)
Counter-Intuitive Flows
Net ExportsNet Imports
-12-
Expenses for Ancillary Services2002 – 2004Expenses for Various Ancillary Services
2002 - 2004
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Jan
Feb
Mar
Ap
rM
ayJu
ne
July
Au
gSe
ptO
ctN
ovD
ec
Jan
Feb
Mar
Ap
rM
ayJu
nJu
lA
ug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Ap
rM
ayJu
nJu
lA
ug
Sep
Oct
Nov
Dec
2002 2003 2004
(as
a P
erce
ntag
e of
Tot
al M
ark
et E
xpen
ses)
30-Minute Reserves
10-Minute NS Reserves
10-Minute Spinning Reserves
Voltage Support
Regulation
-13-
Areas of Potential Improvement and Recommendations
• In February 2005, the NYISO implemented enhanced real-time commitment and dispatch software (RTS).
The new real-time software runs on a platform used by the day-ahead market, providing opportunities to make the day-ahead and real-time market models more consistent.
It has the capability of scheduling external transactions and committing generation on a 15-minute rather than hourly basis.
The dispatch software (RTD), co-optimizes energy and ancillary services on a 5-minute basis.
We will be evaluating the performance of the markets under RTS following the summer 2005 and recommend in the meantime that NYISO continue to work to implement the full functionality offered by RTS.
• If price convergence within NYC does not improve with the implementation of RTS, we recommend virtual trading be expanded to load pockets or individual nodes.
-14-
Areas of Potential Improvement and Recommendations
• Supplemental commitments through the local reliability pass of SCUC and the SRE process are often required to meet local requirements in New York City, which increases uplift on units in the City.
In the longer-run, the ISO should improve the modeling of local reliability rules and NOx constraints to include them in the initial SCUC commitment.
In the short-run, we continue to recommend that ISO allow operators to pre-commit certain units that are known to be needed prior to the day-ahead market.
• Real-time prices in adjacent regions continued to not be efficiently arbitraged in 2004.
Implementation of the coordination provisions that are under development with New England will address this issue.
Export fees were eliminated between New York and New England in 2005, which should help improve the interchange between markets.