ONTARIO: Straddling the Northeast and Midwest RTOs Presentation to Ontario Power Summit Update on...
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Transcript of ONTARIO: Straddling the Northeast and Midwest RTOs Presentation to Ontario Power Summit Update on...
ONTARIO: Straddling the Northeast and ONTARIO: Straddling the Northeast and Midwest RTOsMidwest RTOs
Presentation to Ontario Power Summit Presentation to Ontario Power Summit
Update on Regional market DevelopmentsUpdate on Regional market Developments
June 11, 2002June 11, 2002
Toronto, OntarioToronto, Ontario
Amir Shalaby
Manager of Regulatory and Government Affairs
The Independent Electricity Market Operator
Toronto, Ontario, Canada
2
Scope of PresentationScope of Presentation
• Overview of Ontario electricity markets
• Ontario’s participation in current policy choices at FERC
• RTO developments in the Midwest & Northeast
• Next frontiers for markets and regional scope for Ontario
3
Ontario: Quick BackgroundOntario: Quick Background• 11 million people. 3 Million Customers .Sales
of 150 TWh; valued at Over $10 billion /year..
• Trade with US: ± 5 TWh/yr (± 3% of production)
• 6,000 MW interconnection with the U.S. (Northeast and Midwest) and Canadian Provinces
• Totally unbundled industry structure
• Four Transmitters, 90 distributors, many generators, an Independent Operator
• Divestiture and privatization of the former Ontario Hydro is underway
• Wholesale and retail electricity markets were open on May 1, 2002
4
Ontario Straddles the Northeast and Ontario Straddles the Northeast and the Midwest the Midwest
New York (Niagara)(2100 MW Limit)
New York (East)(400 MW Limit)
OntarioManitoba(369 MW Limit)
Quebec (North)(80 MW Limit)
Michigan(2450 MW Limit)
Minnesota(150 MW Limit)
Quebec (South)(1130 MW Limit)(* 200 MW Limit)
5
The Neighbourhood:The Neighbourhood:Midwest ISO/TRANSLink/SPP/Alliance/PJM/NERTOMidwest ISO/TRANSLink/SPP/Alliance/PJM/NERTO
Midwest ISO Service Territory
TRANSLink (Non-MISO Members)
SPP Service Territory
Alliance Service Territory
PJM West Service Territory
PJM Service Territory
NERTO
Ontario
6
Northeast: • Evolves from operating ISOs
• High density, frequent congestion, geographically small
• Current focus is on market design / role ofITCs/ cost benefits
• Ontario’s IMO active in discussions
Midwest: • Numerous control areas and transmission Owners • Largest geographic RTO
• Early stages of market development
• Focus is on consolidation of control areas, role of ITCs, Transmission agreements and coordination with other RTOs.
• Ontario’s IMO starting discussions
Northeast & Midwest: Different Origins, Northeast & Midwest: Different Origins, Different Evolution PlansDifferent Evolution Plans
CONNECTICUT
DISTRICT OF COLUMBIA
DELAWARE
MASSACHUSETTS
MAINE
NEW HAMPSHIRE
NEW JERSEY
NEW YORK
PENNSYLVANIA
VIRGINIA
WEST VIRGINIA
proposedproposedproposedproposedproposedproposedproposedproposedproposed
operatingoperatingoperatingoperatingoperatingoperatingoperatingoperatingoperating NY/NE ISOs and
PJM
7
Active Two-way Trade with New Active Two-way Trade with New York and US MidwestYork and US Midwest
Trade Between Ontario and Michigan Trade Between Ontario and New York
in MWh
0500000
100000015000002000000250000030000003500000
1999 2000 2001
Tra
de
(MW
h)
Exports to Michigan (MWh) Imports from Michigan (MWh)
in MWh
0500000
100000015000002000000250000030000003500000
1999 2000 2001
Tra
de
(M
Wh
)
Exports to New York (MWh) Imports from New York (MWh)
in dollars
$-
$50
$100
$150
$200
1999 2000 2001
Tra
de
(m
illio
n C
AN
$)
Exports to Michigan ($) Imports from Michigan ($)
in dollars
$-
$50
$100
$150
$200
1999 2000 2001
Tra
de
(mill
ion
CA
N$)
Exports to New York ($) Imports from New York ($)
8
Day Ahead Prices
Source: London Economics
9
Illustrative Wholesale Electricity Price Illustrative Wholesale Electricity Price in Ontario ($65/MWh)in Ontario ($65/MWh)
TransmissionCharges
9.0
Debt Retirement Charge
7.0
Wholesale Market Services Charges
6.2
Rural RateSettlement Charge
1.0
IMOAdministration
Charge1.0
Line Losses1.3
CongestionManagement andAncillary Services
2.9
Network ServiceCharge
Line ConnectionService Charge
TransformationConnection
Service Charge
CommodityCharge
43
10
Regulatory Developments and IMO Regulatory Developments and IMO Views on Policy Choices at FERC Views on Policy Choices at FERC
11
A Flurry of Regulatory A Flurry of Regulatory DevelopmentsDevelopments
Ontario:Ontario: Market based permits, Merchant transmission proposals, Market evolution
Canada:NEB Canada:NEB Permits. Lobbying and influence in U.S., Provincial policy developments
U.S.:U.S.: Comprehensive Legislation, , DOE Infrastructure Study, Busy FERC Agenda, evolving organizations: Northeast RTO, Midwest ISO, NAESB/NERC
12
Developments at FERC:Developments at FERC: • Standard Market Design and Tariff• Generation Interconnection Standards• Various RTO rules/orders/announcements• Standards Developments (reliability, business
practices)• Office of Market Oversight
13
IMO Perspective on Standard Market IMO Perspective on Standard Market DesignDesign
• Ontario’s market design is compatible in principles, concepts and in certain aspects in detail design
• Two incomplete components in Ontario are LMP and day ahead markets
• Comfortable with Financial Transmission reservations and rights , not physical
14
IMO Perspective on Allocation of IMO Perspective on Allocation of RTO FunctionsRTO Functions
• Straightforward if SMD is adopted
• Most RTO functions belong with the independent entity of the RTO due to the integrated nature of functions of a SMD
• Transmission owners are asset operators and managers, proponents for transmission rates, and partners in planning and congestion relief.
• April decisions on Translink and Alliance provide guidance
15
IMO Perspective on Standards IMO Perspective on Standards DevelopmentsDevelopments
• Process should enable various jurisdictions to adopt compatible standards
• Best facilitated with an international, self-governing , industry based organization
• Reliability standards have a public interest nature to them
• Reliability standards do interact with business practices. Coordination is therefore in the best interest of the entire industry
16
RTO Developments in the Midwest RTO Developments in the Midwest and Northeastand Northeast
17
NYISO and ISO-NE committed to:NYISO and ISO-NE committed to:• Developing a common NY and NE energy market
• Evaluating the economic benefits and system reliability implications while maintaining integrity of current markets
• Preparing a comprehensive integration plan with orderly transmission
• Ensuring stakeholder input
• Maximizing reuse of existing assets
• Submitting a filing to FERC by June 30th
18
• Submissions to FERC on: design/allocation of functions/standards development
• Participation in Northeast evolution: MOU agreement, mediation at FERC, NERTO design, seams mending at FERC(June 12)
• Discussions with MISO
• Review of emerging standards
Ontario’s Involvement in RTO Ontario’s Involvement in RTO DevelopmentsDevelopments
19
Val
ue
Cre
atio
n
NY
PJM
NEPOOL
Stage 0 - Current State Markets
NYISO ISO-NE
PJM
Stage 1 - NE Implements SMD 1.0
NY
PJM
SMD 1.0
NYISO ISO-NE
PJM
MACC
NPCC
IMO
IMO
SMD 1.0
ISO-NENYISO
SMD2.0
PJM
PJM
NPCC
Stage 3 – Consolidated Market
NYISOISO-NESMD2.0
IMO
NPCCIMO
PJM
PJM
MACC
CONSOLIDATE MARKETS
STANDARDIZE MARKET DESIGN
Timing
IMO
IMO
Stage 2 - NY Implements SMD 2.0
Now Month 12 Month 24 Month 36
Possible Northeast Market Evolution Possible Northeast Market Evolution (including Ontario)(including Ontario)
IMO
IMO
20
Next Frontiers for Markets and Next Frontiers for Markets and Regional Scope for Ontario Regional Scope for Ontario
21
Opportunities with Neighbouring Opportunities with Neighbouring RTOsRTOs
• Shared reserves and other synergies
• Coordinated scheduling of transactions
• Eliminating export transmission tariffs
• Coordinated planning
• Dealing with circulating power
• Joint assessment of interconnection projects near borders
• Closer coordination of outage plans
• Common energy day ahead market and other features
22
Relevance of Regulatory Relevance of Regulatory Developments to OntarioDevelopments to Ontario
• Increased emphasis on independence
• Challenge to integrate markets and reliability
• Move to converge to “standard market Design” • Further context for evaluation of ‘unfinished business’ in Ontario:
– LMP and day ahead markets are central to SMD
– PBR for transmission has been deferred
– Interregional coordination with U.S. RTOs (day ahead, license plates, Open System Scheduling, Transmission Planning)
– Merchant transmission framework
23
Additional Resource MaterialsAdditional Resource Materials
• IMO Web site: www.theimo.com–Great source of information–On-Line Web Courses (capability training courses)
–Training Guides
–Market Rules and Manuals
• IMO Help Centre: –1-888-448-7777
–905-403-6900
24
Appendix: Ontario’s IMO FunctionsAppendix: Ontario’s IMO Functions
25
Bill 35 - 1998
Enabling Legislation Bill 35 - 1998
Enabling Legislation
GovernmentRegulations
Companies Institutions Rules Agreements
• Hydro One• OPG• Distributors• Retailers
• IMO• OEB• ESA• OFC
• Wholesale Market Rules• Retail• Licenses • Codes
• Operating
• Market Power
• Many established in past 2 years
Ontario RestructuringOntario Restructuring Policy Development: Committees, White
paper, Design Committee 1995-1999
Policy Development: Committees, White paper, Design Committee 1995-1999
26
Day 1 Market StatisticsDay 1 Market Statistics
• Ontario’s new market has 239 participants– 93 Local Distribution Companies – 89 Industrial Consumers– 19 Generators– 34 Wholesale Buyers/Sellers– 4 Transmitters
• 1st 5-min price for electricity was $25.43 MW/hr or 2.54 cents kW/hr
• At opening market demand was 14,500 MW
27
Market Prices on Day 1Market Prices on Day 1
28
Market Demand on Day 1Market Demand on Day 1
29
IMO - Operational AuthorityIMO - Operational Authority– Serves as reliability authority for Ontario– Directs the operations of the IMO-controlled
grid - does not physically operate the system – Maintains short-term reliability:
• implements interchange scheduling
• establishes operating procedures
• redispatches generation for Emergencies
• approves transmission maintenance schedules
• coordinates and approves transmission and generation outages
• establishes Emergency Plan
30
IMO - Tariff Administration and DesignIMO - Tariff Administration and DesignTransmission Rates– Transmission Owners develop and propose
revenue requirements, rate design, and the rate levels necessary to recover the costs of service.
– The OEB requires and approves.– Approved rates are billed and settled by the IMO
and transferred to the TOs.
Market Rules– Market rules (often called RTO tariffs in the U.S.)
are developed in a consultative ‘Technical Panel’ of the IMO and approved by IMO Board of Directors. Appeals can be made to the OEB.
31
IMO - Interconnection RequestsIMO - Interconnection Requests– IMO conducts system impact studies in
coordination with affected TOs. – Evaluation is based on impact on reliability of
IMO-controlled grid.– IMO submits approval or disapproval of each
connection proposal to the OEB.– System impact study evaluation results are used by
the OEB to assess compliance with the Transmission System Code and to assess whether to grant a “leave to construct”.
32
IMO - Real-Time Energy MarketIMO - Real-Time Energy Market• bid-based• security-constrained 5-minute dispatch• single settlement• generators submit single-part bids and perform their
own unit commitment• open to dispatchable loads and generators• allows for submission of bilateral contract data for
settlement purposes
33
IMO - Real-Time Market for IMO - Real-Time Market for Operating ReservesOperating Reserves
• 10 minute and 30 minute reserve markets• bid-based• joint co-optimization with energy market
• Three other ancillary services (voltage support, black start, AGC) are procured through competitively tendered contracts
34
• auction FTRs across the interconnections
• ability to hedge against changes in locational differences in energy prices between
the uniform Ontario price and the prices for each intertie zone
IMO - Financial Transmission IMO - Financial Transmission Rights MarketRights Market
35
IMO - Congestion ManagementIMO - Congestion Management• uniform price for energy across Ontario for each 5 minute
interval• Different locational prices across interconnections if congested
• generators will be paid if constrained on or off
• the IMO will publish 5-minute and hourly prices at each relevant node within Ontario to provide information on congestion within Ontario
• Ontario will assess implementation of LMP within Ontario at a later time (18 months)
36
IMO - Market MonitoringIMO - Market Monitoring• Accountability is with the independent Board members and
the Market Surveillance Panel (MSP)• market power mitigation is the shared responsibility of the
MSP , the Ontario Energy Board, and the competition Bureau. Joint Statement in place.
• unit created at the IMO to support the analysis and investigations