Locational Capacity Demand Curves in ISO-NE

Copyright © 2014 The Brattle Group, Inc.

PREPARED FOR

PREPARED BY

Locational Capacity Demand Curves in ISO-NE

Samuel A. NewellKathleen SpeesBen Housman

June 11 , 2014

ISO New England Markets Committee

2| brattle.com

Contents

▀ Introduction▀ Framework for Local Curves▀ Import-Constrained Zones▀ Export-Constrained Zone▀ Next Steps▀ Appendix

3| brattle.com

IntroductionReminder: FERC Status and Proposed System CurveFERC Status

▀ On April 1, ISO-NE and NEPOOL submitted a proposed system curve before FERC, to be in effect by FCA 9 (2018/19)

▀ FERC approved the proposed curve on May 30, 2014

▀ Our task now is to develop demand curves for each capacity zone, to be in effect by FCA 10 (2019/20)

System Curve▀ The approved system curve is a

simple straight-line curve (see right)▀ We use this curve as the starting

point for the local curve discussion Sources and Notes:See ISO-NE and NEPOOL filing and attached Newell/Spees Testimony, before FERC April 1, 2014, Docket No. ER14-1639-000.Quantity and reliability parameters consistent with FCA7.

Parameter Cap NICR Foot

Price ($/kW-m) $17.73 $13.16 $0.00

Corresponding RM in FCA 7 9.0% 12.1% 21.1%

Reliabil ity Index (1-in-x) 1-in-5 1-in-10 1-in-87

% of NICR 97.2% 100.0% 108.0%

Approved System Curve

4| brattle.com

IntroductionProcess for Developing Zonal Curves  Our approach is similar to that for developing a system demand curve

  At this initial meeting today, we present and evaluate initial options▀ Starting point is the system curve adapted to zones (simplest option)▀ Also show flatter (and steeper) curves to address price sensitivity▀ Present sensitivity scenarios to facilitate discussion of options

  Over the summer, we will work with you to develop a proposal▀ Invite stakeholder questions, comments, and alternative curves for

analysis (see schedule on slide 23)▀ Refine results into proposed local curves by September

5| brattle.com

IntroductionLocal Demand Curve Objectives  Reliability

▀ Maintain reliability near or above 0.105 LOLE (1-in-9.5) LOLE local reliability target▀ Rarely drop below a “minimum acceptable” reserve margin below which ISO-NE is more

likely to intervene, which we are defining as max of TSA or 1-in-5 at the local level  Efficient Prices

▀ Long-run average price at Net CONE, consistent with a market capable of attracting sufficient merchant entry to attain reliability objectives at least cost

▀ Short-run prices consistent with current fundamentals, going above Net CONE during shortage and below Net CONE during surplus

▀ Rationalize prices according to the incremental value of capacity (if possible)  Mitigate Price Volatility

▀ Reduce price volatility impact from lumpiness and small movements and uncertainties in supply, demand, and transmission (no bimodal price distribution)

▀ Few outcomes at the administrative cap  Other

▀ Reduce susceptibility to market power▀ Minimize contentiousness, complexity, and uncertainty from administrative parameters

6| brattle.com

IntroductionStarting Point for Zonal Candidate CurvesImporting Zones (see right)

▀ Simplest option is to adapt system curve to zones (details on slides 14-15)

▀ Preliminary recommendation is to adopt this zonal curve as-is, or a flatter curve that will further mitigate price volatility (but not below the volatility experienced system wide)

Exporting Zone▀ Maintain vertical constraint at MCL

Local Net CONE▀ Same as system (see detail on slide 13)▀ Periodic CONE studies to review need for

higher local net CONE in importing zones, to be estimated separately if local Net CONE is likely to be >15% above system

NEMA Initial Candidate Curve

Preliminary Recommended Range

Zonal StartingPoint Curve

7| brattle.com

Contents


8| brattle.com

Framework for Local CurvesZonal Auction Clearing Structure

▀ Zonal capacity market structure will remain essentially unchanged with local demand curves:

− Simultaneous clearing in system and sub-zones

− Export zones may have a lower clearing price if export constraint binds

− Importing zones may have a higher price if import constraints bind

▀ Difference is that minimum quantity procured in zones will vary with price (rather than a vertical minimum constraint at LSR)

ISO-NE Zonal Capacity Structure

System Demand CurveReflects total ISO-NE demand near NICR including four zones plus Rest-of-System

Exporting Zone “Maximum demand curve” near MCL prevents excess supply from being procured in export-constrained zone.

Maine

NEMA/B

CT

SEMA/RI

Importing Zones “Minimum demand curve” near LSR+TTC ensures a sufficient quantity is sourced locally in import-constrained zones.

9| brattle.com

Framework for Local CurvesReflecting Zonal Imports in the Demand Curve▀ It is a matter of convention whether to

include TTC in x-axis (i.e. capacity supply imported into the zone from Rest-of-System)

▀ Including TTC in the x-axis is functionally equivalent to excluding TTC

▀ We recommend applying PJM’s convention of including TTC in the x-axis because it intuitively reflects capacity as the “reserve margin” above local peak load (i.e. demand curve width scales in proportion to local peak load)

▀ An alternative approach would be to draw the curve through LSR (as in NYISO), but the approaches are functionally equivalent in a simultaneously-solved optimal auction clearing mechanism

Demand Curve at LSR + TTC• Supply curve defined as imports

(at system-wide price) plus local supply

• Intuitive demand curve shows “reserve margin” over local peak load

• X-axis would be approximately 133% and 135% of local peak load in both NEMA and CT respectively

Demand Curve with TTC (PJM Approach - Recommended)

LSRTTC

Notes:Imports are paid the system clearing price. LSEs receive CTRs that are calculated as the difference between charges to LSEs with capacity load obligations and payments to capacity resources.TTC = Total Transfer Capability (i.e. transmission import/export limit)LSR = Local Sourcing Requirement

LSE = Load Serving Entity CTR = Capacity Transfer Right

10| brattle.com

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 0.5 1 1.5 2 2.5 3 3.5

VRR Curve

Constrained Supply CurveUnconstrained Supply Curve

$/MW-d

UCAP GW

Imports at Parent Price

Framework for Local CurvesImpact of System on Importing Zone Prices

▀ Prices in import-constrained zones are equal or greater than prices in the Rest-of-Pool (or any parent-level LDA)

▀ If the zone is import constrained (top chart) then the zone will price separate and a local resource will be marginal

▀ If the zone has abundant local supply (bottom chart) then the price will clear with system and import capability will be only partly used

Import Constraints BindingPJM DPL-South 2012/13

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 5 10 15 20 25

VRR Curve

Constrained Supply CurveUnconstrained Supply Curve

$/MW-dUCAP

UCAP GW

Imports at Parent Price

Abundant Local SupplyPJM SWMAAC 2012/13

Sources: PJM auction clearing data and parametershttp://www.pjm.com/markets-and-operations/rpm/rpm-auction-user-info.aspx

http://www.pjm.com/markets-and-operations/rpm/rpm-auction-user-info.aspx

http://www.pjm.com/markets-and-operations/rpm/rpm-auction-user-info.aspx

11| brattle.com

Framework for Local CurvesMonte Carlo Modeling Approach in ZonesModel Structure

▀ We use the same Monte Carlo simulation model at the system and locally, with 1,000 random draws on local supply and demand

▀ Run a local auction clearing mechanism to calculate resulting price, quantity, and reliability results in each draw

▀ Supply adjusts so long-run average price equals true Net CONE by location

Differences in Zones (vs. System)▀ Offer “blockiness” is a bigger factor in zones

(each unit is a bigger fraction of the zone)▀ Evaluate curve performance assuming that

true Net CONE is 10% higher in import-constrained zones (10% lower in export-constrained zones), but administrative Net CONE is equal to the system value

Standard Deviation in Supply Shocks

Standard Deviation in Demand Shocks

(MW) (MW)

Rest of System 327 n/aCT 486 387NEMA/Boston 387 567ME 148 287Total System 721 567

Shocks to Supply and Demand

Sources and Notes:Supply shocks calculated as the standard deviation in offers below the cap over FCAs 1-7, based on ISO-NE FCA offer data.Demand shocks calculated as the standard deviation in NICR, LSR, and MCL over FCAs 1-7, from ISO-NE, Summary of Historical ICR Values, posted at: http://iso-ne.com/markets/othrmkts_data/fcm/doc/summary_of_icr_values%20expanded.xls

$0$2$4$6$8

$10$12$14$16$18$20

30,000 32,000 34,000 36,000

Offe

r Pric

e ($

/kW

-m)

Supply Quantity (MW)

Offer Curve with Individual Offer Blocks Supply Curve

Core Shape

Supply Curve Blocks

Individual BlocksHave size and location from

FCA 7 offer stack, but with randomly shuffled merit order.

http://iso-ne.com/markets/othrmkts_data/fcm/doc/summary_of_icr_values%20expanded.xls


12| brattle.com

Contents


13| brattle.com

Import-Constrained ZonesAdditional Challenges in Importing Zones

▀ Smaller size relative to realistic fluctuations in supply and demand, means:− One large plant can make the difference between the price cap and floor if the curve is too

steep− Greater susceptibility to low reliability events− Greater price volatility (mostly upside price volatility, with downside price volatility

mitigated by system-wide price)

▀ Two types of reliability must be considered, with the current Local Sourcing Requirement (LSR) set at the max of:

− Local Resource Adequacy (LRA) Requirement, set at the local supply quantity that would result in local loss of load event (LOLE) of 0.105 events/year in an import-constrained zone

− Transmission Security Analysis (TSA) Requirement, which ensures that local supply will be sufficient to protect transmission security in the event of deterministic contingency scenarios

▀ Net CONE estimation error is more likely in smaller zones:− Same factors as in the system, plus− Idiosyncratic siting, gas availability, or environmental factors, which may affect some

individual zones but not the system (or they may be difficult to discover or estimate in CONE studies if there are few or no comparable projects built)

14| brattle.com

Import-Constrained ZonesCurrently No Indication of Need for Local Net CONE  Location-specific Net CONE values for NEMA/Boston likely to be <5% higher

than Rest-of-System Net CONE▀ No change in technical specifications▀ Assume NEMA/Boston plant located in Lowell, MA with labor rates estimated at

20% higher than Rest-of-System (Worcester, MA)▀ Slightly higher land costs ▀ Differences in E&AS revenue offset not considered due to limited data available for

NEMA/Boston capacity zone (but would likely reduce the Net CONE differential)▀ Connecticut and SEMA/RI Net CONE expected to be similar due to labor rates less

than NEMA/Boston

Capacity Installed Total Plant Overnight After-Tax Capital Fixed Gross E&AS NetZone Capacity Capital Cost Cost WACC Costs O&M CONE Offsets CONECC MW $m $/kW % $/kW-mo $/kW-mo $/kW-mo $/kW-mo $/kW-mo $/kW-mo

ROP 715 $900 $1,178 8.0% $11.59 $2.44 $14.04 $3.33 -$0.37 $11.08NEMA/Boston 715 $910 $1,192 8.0% $11.73 $2.50 $14.23 $3.33 -$0.37 $11.27

PER/PFPOffsets

Indicative Estimate of Local Net CONE in NEMA/Boston

15| brattle.com

0.0x

0.5x

1.0x

1.5x

2.0x

6,75

0

7,00

0

7,25

0

7,50

0

7,75

0

8,00

0

8,25

0

8,50

0

8,75

0

9,00

0

9,25

0

9,50

0

Pric

e (%

of N

et C

ON

E)

Local ICAP MW + TTC MW

1-in-5 1-in-10 LRA TSA (LSR)

Cap Price: 1.6x Net CONE Minimum at Gross CONELocal Net CONE only if >115% of System

Cap Quantity: Minimum Acceptable atMax of 1-in-5 or TSA

Foot Price: $0Foot Quantity: Same % of Minimum

Acceptable as System Curve

Import-Constrained ZonesStarting Point: System Curve Applied LocallyStarting point is to adapt the proposed system curve to importing zones

▀ Cap is at MAX [1-in-5 LOLE (same as system) or TSA], and 1.6x Net CONE− Cap quantity corresponds to minimum

acceptable reliability level below which ISO-NE would be more likely to intervene

▀ Foot quantity is the same ratio above minimum acceptable in the system curve

▀ Local Net CONE is assumed to be equal or greater than system Net CONE:

− Estimate local Net CONE as a separate value only if likely to be 15% higher than system

− Currently estimating <5% higher for CT, NEMA/Boston, and SEMA/RI

NEMA Starting Point Curve

Acronyms:TTC = Total Transfer Capability (i.e. transmission import/export limit)LSR = Local Sourcing Requirement TSA = Transmission Security AnalysisLRA = Local Resource Adequacy

16| brattle.com

Import-Constrained ZonesStarting Point: Parameter Values by Importing Zone

ConnecticutNEMA

Notes: MW quantities based on FCA7; prices based on a Net CONE of $11.1/kW-m. Foot quantity based on the system demand curve foot-to-cap ratio of 1.1.TTC values were 2,600 MW CT, 4,850 MW NEMA in FCA& from http://iso-ne.com/markets/othrmkts_data/fcm/doc/summary_of_icr_values%20expanded.xls

Cap Foot

Curve DefinitionPrice 1.6 Net CONE $0

Quantity Max of 1-in-5 LOLE or TSA

1.1x Cap Quantity

Corresponding Quantities in FCA7

Local + Import MW 8,059 8,952

Cap to Foot

Change in Price ($/kW-m) $17.7Change in Quantity (MW) 893Slope ($/kW-m per 100 MW) $1.98

Cap to Foot

Change in Price ($/kW-m) $17.7Change in Quantity (MW) 1,118Slope ($/kW-m per 100 MW) $1.59

Cap Foot

Curve DefinitionPrice 1.6 Net CONE $0

Quantity Max of 1-in-5 LOLE or TSA

1.1x Cap Quantity

Corresponding Quantities in FCA7

Local + Import MW 10,089 11,207



17| brattle.com

Import-Constrained ZonesComparison of Vertical to Sloped Curves

▀ A vertical curve at the reliability requirement produces high price volatility and a high frequency of low reliability events, and makes the zones more susceptible to exercise of market power

▀ Applying a sloped curve to the system only (leaving local zones vertical) partly mitigates the concerns, but local reliability concerns remain (CT not meeting LOLE target, CT and NEMA with relatively high frequency below TSA)

▀ Applying the system sloped curve at the local level shows reasonably good performance− Price volatility is reduced to a standard deviation of $4.0 and $3.9/kW-m in NEMA and CT respectively (compare

to $3.7/kW-m at the system level), and 15-17% frequency at the price cap− LOLE equal to 0.105 target in CT, and better than target in NEMA − Frequency below TSA is 11-12%

Notes: Base case assumes true Net CONE in NEMA/Boston and Connecticut is 10% higher than system.Zonal load costs reflect capacity procurement costs paid by customers in each zone, assuming all zonal CTRs are awarded to local customers.

Quantity Zonal Load Cost

Average Standard Deviation

Frequency at Cap

Frequency of Price

Separation

Average Excess

(Deficit) Above LSR

Standard Deviation

Frequency Below

LSR

Frequency Below

TSA

Frequency Below 1-in-5

Average LOLE

Average Customer

Costs

Average of Bottom

20%

Average of Top 20%

($/kW-m) ($/kW-m) (% of draws) (% of draws) (MW) (MW) (% of draws) (% of draws) (% of draws) (events/yr) ($mil/year) ($mil/year) ($mil/year)

NEMA/BostonVertical in Zones and System $12.2 $6.3 54.2% 10.7% 502 398 21.7% 21.7% 15.0% 0.143 $941 $275 $1,646Vertical in Zones (System Sloped) $12.2 $4.3 23.9% 18.3% 558 404 20.0% 20.0% 6.9% 0.094 $959 $495 $1,482Sloped in Zones and System $12.2 $4.0 16.6% 25.6% 785 404 12.2% 12.2% 6.2% 0.091 $962 $499 $1,474

ConnecticutVertical in Zones and System $12.2 $6.2 53.0% 12.6% 345 443 22.9% 18.2% 17.5% 0.150 $1,208 $385 $1,853Vertical in Zones (System Sloped) $12.2 $4.3 24.7% 20.0% 409 469 22.2% 17.6% 10.2% 0.114 $1,232 $666 $1,815Sloped in Zones and System $12.2 $3.9 15.2% 30.1% 594 469 14.9% 11.3% 7.4% 0.105 $1,237 $701 $1,775

Price

18| brattle.com

Import-Constrained ZonesSteeper and Flatter Local Curves

▀ We compare performance relative to steeper and flatter local curves (no change to system curve)

▀ Steeper Curve: − Higher price cap at 1.75x Net CONE provides better protection against low

reliability events but increases price volatility▀ Flatter Curves:

− Improve protection against exercise of local market power− Provide reduced price volatility (including better than system for CT in the

2x width case), and better reliability performance− Local load cost increase is small despite higher local quantity, with cost

increase only 10% of Net CONE on MW sourced locally instead of outside− Making curves flatter may over-mitigate price signals relative to changes in

fundamentals, one guideline may be that price volatility need not be mitigated below the $3.7/kW-m standard deviation realized at system level


Steeper and Flatter Curves in NEMA



Frequency at Cap

Frequency of Price

Separation

Average Excess

(Deficit) Above LSR

Standard Deviation

Frequency Below

LSR

Frequency Below

TSA


Average LOLE

Average Customer

Costs

Average of Bottom

20%

Average of Top 20%


NEMA/BostonSteeper, Cap at 1.75x in Zones $12.2 $4.3 9.5% 23.2% 911 404 9.5% 9.5% 6.0% 0.091 $962 $497 $1,504Starting Point Curve $12.2 $4.0 16.6% 25.6% 785 404 12.2% 12.2% 6.2% 0.091 $962 $499 $1,474Flatter, Curves at 1,500 Width $12.2 $3.8 13.0% 27.4% 976 403 8.2% 8.2% 6.1% 0.091 $965 $507 $1,467Flatter, Curves at 2x Base Width $12.2 $3.8 11.7% 30.1% 1,050 403 6.8% 6.8% 5.9% 0.091 $966 $508 $1,463

ConnecticutSteeper, Cap at 1.75x in Zones $12.2 $4.1 7.9% 26.7% 721 469 11.1% 7.9% 6.6% 0.100 $1,236 $690 $1,842Starting Point Curve $12.2 $3.9 15.2% 30.1% 594 469 14.9% 11.3% 7.4% 0.105 $1,237 $701 $1,775Flatter, Curves at 1,500 Width $12.2 $3.7 12.3% 30.6% 728 470 11.0% 7.9% 6.7% 0.101 $1,238 $715 $1,756Flatter, Curves at 2x Base Width $12.2 $3.5 8.3% 35.1% 957 470 5.8% 3.5% 6.2% 0.096 $1,242 $744 $1,723

Price

19| brattle.com

Import-Constrained ZonesPerformance at Different Local Net CONE Levels


▀ Zones may have higher Net CONE (otherwise should not price-separate or remain import-constrained in the long term)

▀ If Net CONE in an import constrained zone is substantially higher than the system Net CONE, defining the local demand curve based on system Net CONE will result in under-procurement and lower reliability

▀ This issue is small if the difference in Net CONE is small, but is substantial for large differences ▀ We recommend that if Net CONE in an import constrained zone is more than approximately 15%

higher than system Net CONE, then the demand curve in that zone be based on the local net CONETrue Net CONE as Varying % Above System Net CONE

(Administrative Zonal Net CONE = System Net CONE in All Cases)



Frequency at Cap

Frequency of Price

Separation

Average Excess

(Deficit) Above LSR

Standard Deviation

Frequency Below

LSR

Frequency Below

TSA


Average LOLE

Average Customer

Costs

Average of Bottom

20%

Average of Top 20%


NEMA/BostonNet CONE 5% Higher than System $11.7 $3.9 11.4% 13.7% 1,068 404 6.6% 6.6% 5.6% 0.090 $939 $495 $1,451Net CONE 10% Higher (Base) $12.2 $4.0 16.6% 25.6% 785 404 12.2% 12.2% 6.2% 0.091 $962 $499 $1,474Net CONE 15% Higher than System $12.8 $4.1 23.1% 33.2% 600 403 18.8% 18.8% 7.2% 0.094 $985 $506 $1,488Net CONE 25% Higher than System $13.9 $4.2 38.8% 50.4% 282 400 36.0% 36.0% 8.5% 0.106 $1,023 $518 $1,494

ConnecticutNet CONE 5% Higher than System $11.6 $3.8 9.9% 16.9% 843 470 7.9% 5.6% 6.0% 0.097 $1,184 $679 $1,721Net CONE 10% Higher (Base) $12.2 $3.9 15.2% 30.1% 594 469 14.9% 11.3% 7.4% 0.105 $1,237 $701 $1,775Net CONE 15% Higher than System $12.7 $3.9 19.6% 38.0% 442 470 20.7% 16.6% 10.0% 0.113 $1,286 $720 $1,799Net CONE 25% Higher than System $13.9 $3.9 32.3% 55.9% 168 470 36.8% 30.4% 15.6% 0.135 $1,384 $776 $1,822

Price

20| brattle.com

Contents


21| brattle.com

Export-Constrained ZoneDefinition of a “Maximum” Demand CurveNew Problem

▀ No other capacity market has used a demand curve in an export-constrained zone

▀ MISO and ISO-NE have defined fixed maximum capacity limits in export constrained zones (i.e., vertical curve for export zones)

Different Type of Constraint▀ Defines “maximum” demand curve

constraint▀ Unlike “minimum” demand curves

applicable for total system and import-constrained zones

“Minimum” Demand Curve(System and Import-Constrained Zones)

“Maximum” Demand Curve(Export-Constrained Zones)

Possible Prices &

Quantities

Impossible Prices &

Quantities

ImpossiblePrices &

Quantities

PossiblePrices &

Quantities

22| brattle.com

Export-Constrained ZoneComparison of Vertical and Sloped Curves in Maine

Notes: System LOLE exceeds 0.100 in base case for 3 reasons: (1) slight difference in approach to translating system curve to zones (impact of 0.002), (2) applying a vertical curve in Maine in the base Case (impact of 0.002), and (3) change from 15% to 10% higher/lower Net CONE in zones (impact of 0.002).Base case assumes true Net CONE in NEMA/Boston and Connecticut is 10% higher than system.Zonal load costs reflect capacity procurement costs paid by customers in each zone, assuming all zonal CTRs are awarded to local customers.

▀ As in import-constrained zones, the export-constrained zone of Maine is also susceptible to price volatility, but the price volatility is mostly downward “spikes” during excess-supply conditions as compared with upward spikes in the zones and system

▀ A sloped curve in Maine improves price volatility (from standard deviation of $4.4/kW-m to $4.1/kW-m) and reduces susceptibility to buy-side market power exercise (sell-side already mitigated by system-wide curve)

▀ However, a sloped curve also slightly degrades system reliability by 0.002 LOLE because Maine MW in excess of MCL have reduced reliability value, and displace system resources that would have cleared. An even flatter local curve would begin to introduce more substantial reliability concerns due to the greater displaced system MW

▀ On balance, the additional complexity of a sloped “maximum demand curve” in Maine may not be warranted

Quantity Zonal Load CostAverage Standard

DeviationFrequency

at CapFrequency

of Price Separation

Average Quantity

Above (Below) MCL

Standard Deviation

System LOLE

Final Customer

Costs

Averageof Bottom

20%

Averageof Top 20%

($/kW-m) ($/kW-m) (% of draws) (% of draws) (MW) (MW) (events/yr) ($mil/year) ($mil/year) ($mil/year)

MaineVertical at MCL (System is Sloped) $10.0 $4.4 4.3% 13.1% (385) 151 0.094 $289 $105 $457Maine with Sloped Curve $10.0 $4.1 3.7% 18.6% (265) 161 0.096 $288 $122 $455Maine with Sloped Curve (2x Wider) $10.0 $3.7 3.1% 25.2% (176) 163 0.099 $288 $140 $448

Price

23| brattle.com

Contents


24| brattle.com

Next Steps

Date Meeting or Deadline

June 10-11, 2014 MC Capacity zone demand curve concepts and candidate curves

June 20, 2014 Participants submit additional questions which Brattle will endeavor to answer at the July 8-10 MC

July 8-10, 2014 MC Answers to stakeholder questions

July 18, 2014 Participants submit additional questions which Brattle will endeavor to answer at the August 5-6 MC

Aug. 5-6, 2014 MC Answers to stakeholder questions

Aug. 8, 2014 Participants submit additional alternative zonal demand curve proposals for quantitative & qualitative analysis

Sep. 3-4, 2014 MC Results of quantitative analysis for stakeholder proposals (and ISO proposed demand curves)

▀ Please submit questions, comments, or alternative proposed curves to ISO-NE by June 20, for Brattle response in the July MC meeting

25| brattle.com

Contents


26| brattle.com

Appendix B: Detailed Local ResultsSystem-Level Detailed Results


27| brattle.com

Appendix B: Detailed Local ResultsImporting Zones Detailed Results




Frequency at Cap

Frequency of Price

Separation

Average Excess

(Deficit) Above LSR

Standard Deviation

Frequency Below

LSR

Frequency Below

TSA


Average LOLE

Average Customer

Costs

Average of Bottom

20%

Average of Top 20%


NEMA/BostonStarting Point Curve $12.2 $4.0 16.6% 25.6% 785 404 12.2% 12.2% 6.2% 0.091 $962 $499 $1,474Maine with Sloped Curve $12.2 $4.0 16.7% 25.1% 788 404 12.0% 12.0% 6.5% 0.092 $962 $499 $1,475Maine with Sloped Curve (2x Wider) $12.2 $4.0 16.9% 25.3% 787 404 12.1% 12.1% 6.6% 0.092 $961 $498 $1,474Net CONE 5% Higher than System $11.7 $3.9 11.4% 13.7% 1,068 404 6.6% 6.6% 5.6% 0.090 $939 $495 $1,451Net CONE 15% Higher than System $12.8 $4.1 23.1% 33.2% 600 403 18.8% 18.8% 7.2% 0.094 $985 $506 $1,488Net CONE 25% Higher than System $13.9 $4.2 38.8% 50.4% 282 400 36.0% 36.0% 8.5% 0.106 $1,023 $518 $1,494Vertical in Zones and System $12.2 $6.3 54.2% 10.7% 502 398 21.7% 21.7% 15.0% 0.143 $941 $275 $1,646Vertical in Zones (System Sloped) $12.2 $4.3 23.9% 18.3% 558 404 20.0% 20.0% 6.9% 0.094 $959 $495 $1,482Flatter, Curves at 1,500 Width $12.2 $3.8 13.0% 27.4% 976 403 8.2% 8.2% 6.1% 0.091 $965 $507 $1,467Flatter, Curves at 2x Base Width $12.2 $3.8 11.7% 30.1% 1,050 403 6.8% 6.8% 5.9% 0.091 $966 $508 $1,463Steeper, Cap at 1.75x in Zones $12.2 $4.3 9.5% 23.2% 911 404 9.5% 9.5% 6.0% 0.091 $962 $497 $1,504

ConnecticutStarting Point Curve $12.2 $3.9 15.2% 30.1% 594 469 14.9% 11.3% 7.4% 0.105 $1,237 $701 $1,775Maine with Sloped Curve $12.2 $3.9 15.2% 29.7% 599 469 14.8% 11.3% 7.6% 0.105 $1,236 $701 $1,774Maine with Sloped Curve (2x Wider) $12.2 $3.9 15.3% 30.1% 596 469 14.9% 11.3% 7.8% 0.105 $1,236 $701 $1,774Net CONE 5% Higher than System $11.6 $3.8 9.9% 16.9% 843 470 7.9% 5.6% 6.0% 0.097 $1,184 $679 $1,721Net CONE 15% Higher than System $12.7 $3.9 19.6% 38.0% 442 470 20.7% 16.6% 10.0% 0.113 $1,286 $720 $1,799Net CONE 25% Higher than System $13.9 $3.9 32.3% 55.9% 168 470 36.8% 30.4% 15.6% 0.135 $1,384 $776 $1,822Vertical in Zones and System $12.2 $6.2 53.0% 12.6% 345 443 22.9% 18.2% 17.5% 0.150 $1,208 $385 $1,853Vertical in Zones (System Sloped) $12.2 $4.3 24.7% 20.0% 409 469 22.2% 17.6% 10.2% 0.114 $1,232 $666 $1,815Flatter, Curves at 1,500 Width $12.2 $3.7 12.3% 30.6% 728 470 11.0% 7.9% 6.7% 0.101 $1,238 $715 $1,756Flatter, Curves at 2x Base Width $12.2 $3.5 8.3% 35.1% 957 470 5.8% 3.5% 6.2% 0.096 $1,242 $744 $1,723Steeper, Cap at 1.75x in Zones $12.2 $4.1 7.9% 26.7% 721 469 11.1% 7.9% 6.6% 0.100 $1,236 $690 $1,842

Price

28| brattle.com

Appendix B: Detailed Local ResultsNEMA Results

▀ Avg Price: $12.2/kW-m (SD = 4.3 W-m)

▀ Avg cleared quantity +TTC as % of LSR + TTC: 107.4% (SD = 9.2%)

▀ % of draws below TSA: 20.0%▀ Avg Cost: $959 mil

▀ Avg Price: $12.2/kW-m (SD = $4.0kW-m)


▀ % of draws below TSA: 12.2%▀ Avg Cost: $962 mil

System Curve Adapted to Zones

Vertical Curve for Zones (System Sloped)

29| brattle.com

Appendix B: Detailed Local ResultsConnecticut ResultsLocal Curve Vertical at LSR



▀ % of draws below TSA: 17.6%▀ Avg Cost: $1,232 mil



▀ % of draws below TSA: 11.3%▀ Avg Cost: $1,237 mil

Local Curve Same Shape as System Curve

30| brattle.com

Appendix B: Detailed Local ResultsExporting Zone Detailed Results


Quantity Zonal Load CostAverage Standard

DeviationFrequency

at CapFrequency

of Price Separation

Average Quantity

Above (Below) MCL

Standard Deviation

System LOLE

Final Customer

Costs

Averageof Bottom

20%

Averageof Top 20%

($/kW-m) ($/kW-m) (% of draws) (% of draws) (MW) (MW) (events/yr) ($mil/year) ($mil/year) ($mil/year)

MaineStarting Point Curve $10.0 $4.4 4.3% 13.1% (385) 151 0.094 $289 $105 $457Maine with Sloped Curve $10.0 $4.1 3.7% 18.6% (265) 161 0.096 $288 $122 $455Maine with Sloped Curve (2x Wider) $10.0 $3.7 3.1% 25.2% (176) 163 0.099 $288 $140 $448Net CONE 5% Higher than System $10.5 $4.1 5.2% 6.2% (469) 122 0.093 $303 $138 $459Net CONE 15% Higher than System $9.4 $4.7 4.3% 19.3% (325) 162 0.095 $274 $71 $456Net CONE 25% Higher than System $8.3 $5.1 3.5% 30.9% (236) 176 0.096 $243 $32 $450Vertical in Zones and System $10.0 $6.6 38.7% 11.6% (410) 187 0.145 $283 $66 $529Vertical in Zones (System Sloped) $10.0 $4.4 4.3% 13.5% (378) 153 0.094 $288 $102 $457Flatter, Curves at 1,500 Width $10.0 $4.4 4.3% 13.5% (377) 153 0.094 $288 $101 $458Flatter, Curves at 2x Base Width $10.0 $4.4 4.3% 13.5% (378) 153 0.094 $288 $101 $457Steeper, Cap at 1.75x in Zones $10.0 $4.4 4.3% 13.1% (386) 151 0.093 $289 $106 $457

Price

31| brattle.com

Appendix B: Detailed Local ResultsMaine ResultsLocal Curve Vertical at MCL

▀ Avg Price: $10.0/kW-m (SD = $4.4 kW-m)

▀ Avg cleared quantity as % MCL: 90.1%

▀ % of draws above MCL: 0.0%▀ Avg Cost: $289 mil

▀ Avg Price: $10.0/kW-m (SD = $4.1 kW-m)

▀ Avg cleared quantity as % MCL: 93.4%

▀ % of draws above MCL: 22.9%▀ Avg Cost: $288 mil

Local Curve Same Shape as System Curve

Documents

Locational Capacity Demand Curves in ISO-NE