Trading Hubs hub discussion recap 20150917.pdfAgenda 1) Focus Group Meeting Attendees 2) Recap of...
Transcript of Trading Hubs hub discussion recap 20150917.pdfAgenda 1) Focus Group Meeting Attendees 2) Recap of...
Trading Hubs- Follow Up and Next Steps
From Trading Hubs Focus Group Meeting on 9/17/2015
Nick Parker [email protected] Weigel - [email protected]
Agenda
1) Focus Group Meeting Attendees
2) Recap of Face-to-Face Meeting on 9/17/2015
3) Idea Generation*
4) Next Steps
*The ideas included in this presentation were gathered from the Trading Hubs Focus Group meeting attendees, and do not necessarily reflect SPP’s position.
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Company Last Name First Name Email Attending
Cargill Power Markets LLC A Al [email protected] Net Conference
Hoekman Austin [email protected] Net Conference
Municipal Energy Agency of Nebraska Cutsor Billy [email protected] Net Conference
Unrein Chad Unrein‐[email protected] Net Conference
Kansas City Power and Light Standifer Christopher [email protected] Net Conference
Daily‐[email protected] Net Conference
Municipal Energy Agency of Nebraska Beard Dave [email protected] Net Conference
Southern Company Services Olsen Erik [email protected] Net Conference
Southwest Power Pool Guney Esat [email protected] Net Conference
gsec‐[email protected] Net Conference
Hpanchamia Harsh Harsh‐[email protected] Net Conference
American Electric Power Lao Hongmou [email protected] Net Conference
Lewis James Lewis‐[email protected] Net Conference
Genscape Verga Jarret [email protected] Net Conference
Kansas City Power & Light Company Flucke Jim [email protected] Net Conference
Customized Energy Solutions, LTD Krajecki Jim jkrajecki@ces‐ltd.com Net Conference
Southwest Power Pool Hyatt John [email protected] Net Conference
Western Farmers Electric Cooperative Sullivan Kim [email protected] Net Conference
Golden Spread Electric Cooperative, Inc. Nemoede Kristen [email protected] Net Conference
Lincoln Electric System Anderson Lee [email protected] Net Conference
Frisk‐Thompson Lorie [email protected] Net Conference
Southwest Power Pool Choate Marisa [email protected] Net Conference
Golden Spread Electric Cooperative, Inc. Moore Matt [email protected] Net Conference
Servera Max Servera‐[email protected] Net Conference
Southwest Power Pool Bailey Micha [email protected] Net Conference
Western Farmers Electric Cooperative Brown Natasha [email protected] Net Conference
Mehta Neil Mehta‐[email protected] Net Conference
Denver Energy, LLC Nagarsheth Raj [email protected] Net Conference
Powerex Corp Richard Randy [email protected] Net Conference
American Electric Power Garza Rene [email protected] Net Conference
Seide Richard [email protected] Net Conference
Nebraska Public Power District Pick Robert J. [email protected] Net Conference
Sunflower Electric Power Corporation Chartier Ronald [email protected] Net Conference
ACES Power True Roy [email protected] Net Conference
Cochran Seth cochran‐seth.cochran@dc‐energy.com Net Conference
Beach Scott Beach‐[email protected] Net Conference
Boston Energy Trading and Marketing, LLC Maestranzi Stephen [email protected] Net Conference
Enbridge Allen Travis [email protected] Net Conference
Southwest Power Pool Sharp Zachary [email protected] Net Conference
Trading Hubs Focus Group Meeting - 9/17/15
Topics Discussed:1) Integrated System History and Makeup2) Makeup of SPP3) Background and Basin Electric 4) History of Existing Hubs & Protocol Requirements for New
Hubs5) Lack of SPP Trading Hub Liquidity and Brattle Study6) Trading Hub Survey Results7) Influences of Hedging & Dodd-Frank 8) Criteria for Successful Trading Hubs9) Idea Generation
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Trading Hubs Focus Group Meeting – (cont’d)Primary Objectives and Focus Group Response
• Is there a Trading Hub problem in SPP? - YES
• Does SPP need a new Trading Hub that would be more liquid? -MAYBE
• Does SPP need to make any market construct changes to facilitate more activity at existing Trading Hubs?- YES
• Does SPP need to redefine existing Trading Hubs to increase liquidity? - MAYBE
• Does SPP need to facilitate Dodd-Frank in a different manner to increase liquidity at existing Trading Hubs?
• What can market participants do to encourage more liquidity at existing hubs or a new hub? - SEE NEXT SLIDES
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Current North Hub and South Hub
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North Hub (496 pnodes)---LES (58), NPPD (191), OPPD (247)South Hub (537 pnodes)---AEP(102), OKGE (309), WFEC (125), GRDA (1)
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IDEA GENERATION
The Issue ….
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Chicken/Egg Problem … How do you attract new market participants that could provide liquidity, when you need liquidity to attract them in the first
place?
Brainstorm - Causes of Low Liquidity at Trading HubsMarket Make Up Issues:• Over capacity
– Generation is long which leads to lower volatility
• SPP is small in relation to other markets
• Make up of participants
– Some utilities can’t hedge loads
• Need more financial participants in SPP
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Brainstorm - Causes of Low Liquidity at Trading Hubs Market Construct Issues from the Focus Group:• RUC - when units are RUC’d for reliability it doesn’t allow
true price formation to occur in the real time
• SPP holds a 35% reserve margin … but, not all is economic
• Not enough transparency in the market
– Other markets provide far more transparency
• Scarcity Pricing
– SPP relaxes reserve requirement
• Cost of transmission service to drive out of SPP is very high compared to other markets
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Brainstorm - Causes of Low Liquidity at Trading HubsMarket End Results:
• Difficult to get in and out of positions
• Not that market isn’t liquid … just the cost of that liquidity is too high
• No retail choice
• ICE related products are lacking
– No real-time North Hub product
– Minimum transaction blocks are too high
• Ability to hedge basis with entities willing to take that risk
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Brainstorm - Ideas to Create More Liquidity
• Create a joint MISO/SPP Trading Hub
• Create a “Super” Hub
• Put positions out on ICE
• Virtual blocking – On-peak and off-peak virtual block products
• More data transparency
• Use basis products to hedge around illiquid Trading Hubs
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| brattle.com15
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ICE Products
ICE Financial Structure exists for• Financial North Hub DA• Financial South Hub DA• Financial South Hub RT
ICE does not have a real time product for North Hub
ICE does not have a physical market for SPP
ICE only trades in 50MW blocks for SPP
Market Transparency• Other markets provide far more transparency than SPP does
• Provide information more readily to participants
• Need more transparency
– RUC Which units are being RUC’d?
What is cause for each units RUC?
– Wind/load forecasts by zones
– Reserves
• Example of ERCOT transparency:http://mis.ercot.com/misapp/GetReports.do?reportTypeId=11460&reportTitle=ERCOT%20Market%20Information%20List&showHTMLView=&mimicKey
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Next Steps1. SPP to provide list of registered Market Participants
– This information is provided on the SPP Marketplace Portal
2. Create list of Market Transparency desired by Market Participants
3. Schedule discussion with MWG and Financial participants to gain better insight financial perspective and to gain comparison of market constructs
4. Work with ICE to create:– North Hub Real Time product– 25MW transaction blocks– Physical products
5. Support RUC process improvements
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THANK YOU!