DRR Pilot Phase II

Robert B. BurkePresented To: NEPOOL Markets Committee - April 8-9, 2008

Outline of Presentation

• Background of the Demand Response Reserves (DRR) Pilot Program

• Summarize DRR Pilot Phase I Results• Summarize and Discuss Proposal for DRR Pilot Phase II• Timeline

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DRR PILOT:BACKGROUND

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Background on the DRR Pilot Program

• Objectives– Demonstrate whether customer loads can reliably

provide 30-minute operating reserve and 10-minute non-synchronized reserve

– Determine the requirements for communications, dispatch, metering, and telemetry sufficient for DR resources to provide reserve services

– Identify and evaluate lower cost communications and telemetry solutions that meet the requirements and are more suitable for DR reserve resources

DRR Pilot Details

Duration 2 years from commencement date

Program Size 50 MW

Load Zone All zonesOnly CT and NEMA registered

Availability 7 a.m. to 6 p.m. non-holiday weekdays

Dispatch Random based on experimental design (between 18 and 20 times)

Communication IBCS-OS

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DRR Pilot Details(continued)

Availability Payment FRM minus ICAP based on actual performance during each activation

Performance Payment Higher of Threshold Price or LMP

Performance Penalty Buy back portion not provided RT LMP

Baseline Calculation Same as RT Demand Response

Registration 30-Minute RT DR Action 9ICAP value (Max Interruptible)No DALRP participation

Substitution No resource substitution allowed

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DRR PILOT:PHASE I RESULTS

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DRR Pilot – Phase I

• Phase 1 began October 1, 2006– Completed 1st full year

• Resources dispatched by Operations based on random schedule

• Approximately 18 times per season

• Performance indicates 30 minute response is practical

• Some resources may be 10 minute responsive

• October 1, 2007– Commenced 2nd full year of testing

• Collect additional performance data

– Investigate alternative dispatch methodologies• Concepts developed before February 12, 2008 announcement

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DRRP Event Statistical Significance

Winter SessionOctober 2006 to May 2007

Summer SessionJune to September 2007

19 events, total 18 events, total (17 + 1 audit)

48 Asset 92 Assets

19.9 MW 39.3 MW

All 19 events yielded statistically significant load relief

13 events yielded statistically significant load relief

32 out of 37 events yielded significant load relief over the course of year one

Statistical Significance of Observed Load Reductions indicates that demand reductions are outside of the natural variation of the load.

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Statistical Significance - Winter 2006/2007 Period

Natural Variation of Load

Statistical Significance of Observed Load Reductions indicates that demand reductions are outside of the natural variation of the load in all but 5 of 18 summer activations.

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Statistical Significance – Summer 2007 Period

Natural Variation of Load

Lessons Learned

• ICAP value not a good measure of ability to provide reserve– DR needs a separate value to measure DRR Pilot response– In graphs that follow, performance measured against ICAP

values

• Need to learn more– Develop measurement of how much DR can provide daily

• Not ready to fully integrate into Ancillary Service Market

• Goal is to integrate into Forward Reserve Market– June 2010

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Winter 2006 – 2007 Performance

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Summer 2007 Performance

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Conclusion

• Program is worth continuing

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PROPOSAL:DRR PILOT PHASE II

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Purpose of DRR Pilot Phase II

• Finalize requirements for:– Communication, dispatch, metering, and telemetry sufficient for

DR resources to provide Ancillary Services

• Implement identified lower-cost communications and telemetry solutions– Verify compliance with operational requirements

• Integrate communications infrastructure with operations and market systems

• Once the above objectives are accomplished, the ISO will be in a position to fully integrate demand response resources into Ancillary Service Market

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What Remains The Same

• Program Size– Continue to limit to 50 MW

• Availability Payment– FRM minus Transition ICAP– Based on actual performance during each event (prospective)

• Performance Payment– Higher of Threshold Price or LMP

• Communication– IBCS-OS– Possibly beta test RIG replacement

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What Remains the Same(continued)

• Performance Penalty– Buy back portion not provided at RT LMP

• Registration– Assets registered in 30-minute RT Demand Response Program

Action 9– Assets cannot participate in DALRP

• Substitution– No substitution of assets allowed

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What Changes

• Duration– October 2008 through May 2010

• Goal to integrate into FRM for June 2010

– Separate registration for each FRM period

• Load Zone– Connecticut

• Availability Requirement– 7 a.m. to 11 p.m. non-holiday weekdays

• Baseline Calculation– Symmetric baseline adjustment

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What Changes(continued)

• Dispatch– Dispatch after 1st contingency event in Connecticut only– Periodic random activations– Dispatch all resources at once

• Include in Forecast– Operations will include as available for CT 1st contingency– 50% of average performance

• Response Time– 20 minutes from start of event

• On 1st contingency response Operations will take additional actions based on observed response

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Timeline

• Initial Present to MC– Mid April

• Market Rule to MC– Mid May– Vote Mid June

• NPC Approval– June Summer meeting

• FERC Filing– Early July

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