Energy Choice
                            

Matters

FERC Seeks To Allocate Uplift To Market Participants Who Are "Reasonably Expected" To Have Caused Uplift

Costs To Be Allocated To Entities Which Deviate From Their Day-Ahead Market Schedules

January 19, 2017

Email This Story
Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Federal Energy Regulatory Commission in a NOPR is proposing to revise its regulations to require that each regional transmission organization (RTO) and independent system operator (ISO) that currently allocates the costs of real-time uplift due to deviations shall allocate such real-time uplift costs, "only to those market participants whose transactions are reasonably expected to have caused the real-time uplift costs."

As part of the proposed changes, FERC would require that uplift costs allocated to deviations be separated into at least two categories based on the reason uplift costs were incurred, a system-wide capacity category and a congestion management category

Furthermore, FERC proposes to require each RTO/ISO to distinguish between deviations that are "helping" to address system needs and those that are "harming" efforts to address system needs. Further, within each uplift category, uplift costs must be allocated to a market participant’s net "harming" deviations, i.e., relevant "harming" deviations net of relevant "helping" deviations.

"Under the proposed system-wide capacity category, a market participant would be allocated a portion of the total real-time uplift costs incurred to maintain energy and operating reserve requirements in the real-time market based on the net contributions of its deviations to those costs. This method would require an RTO/ISO to determine if each market participant’s deviations are, on net, 'helping', by converging the day-ahead scheduled unit commitment and dispatch to the unit commitment and dispatch needed to meet real-time energy and operating reserve requirements, or if they are 'harming', by exacerbating the difference between the day-ahead scheduled unit commitment and dispatch and the unit commitment and dispatch needed to meet real-time energy and operating reserve requirements. For example, if the system operator committed an additional resource to maintain energy and operating reserve requirements in the real-time market, a market participant with net deviations that increased demand (or decreased supply) would be allocated a portion of real-time uplift costs in the system-wide category, while a market participant with net deviations that increased supply (or decreased demand) would not," FERC said

FERC proposes to clarify that a resource responding to an RTO/ISO-initiated real-time dispatch instruction should not be allocated deviations-related real-time uplift costs.

FERC proposes that real-time uplift costs allocated to deviations must be settled using hourly uplift rate calculations

"This proposal would apply only to real-time uplift costs allocated to deviations. The NOPR does not propose to require that RTOs/ISOs allocate uplift costs to deviations, and we recognize that there are other methods for allocating uplift costs that are not based on deviations, such as allocations based on load obligation. Further, we recognize that there are many causes of uplift and this NOPR does not propose to address the allocation of all uplift costs. Rather, to improve upon existing RTO/ISO cost allocation practices, this NOPR addresses the allocation of uplift costs caused by market participants that deviate from their day-ahead market schedules," FERC said

FERC would set forth a definition of deviations to delineate what type of real-time uplift cost allocation is the subject of this NOPR. FERC proposes that deviations are megawatt hour differences between a market participant’s scheduled deliveries or receipts at particular points cleared in the day-ahead market and those amounts actually delivered or received at those points in real-time that are not related to real-time economic or reliability-related operator dispatch instructions. FERC proposes that, to the extent an RTO/ISO allocates real-time uplift costs to deviations, it must do so consistent with this proposed definition.

"We propose that if an RTO/ISO allocates real-time uplift costs to deviations, it must allocate such costs only to deviations that can reasonably be expected to have caused those costs. Real-time uplift costs are most likely to be incurred when, for various reasons, the day-ahead market clearing process does not schedule sufficient resources to satisfy the system’s real-time needs, and instead, RTOs/ISOs must procure additional resources after the day-ahead market has cleared. Market participants that deviate from their day-ahead schedules will either more closely align the day-ahead market solution with actual real-time system needs or contribute to a divergence from the day-ahead solution. Scheduling practices that contribute to these divergences may require operator actions, such as operator-initiated commitments, in real-time," FERC said

The Commission also proposes to revise its regulations by requiring that each RTO/ISO post uplift costs paid (dollars) and operator-initiated commitments (megawatts) on its website; and define in its tariff its transmission constraint penalty factors, as well as the circumstances under which those penalty factors can set locational marginal prices, and any procedure for changing those factors.

Docket No. RM17-2

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Analysts, Sales and Marketing - Retail Electric Supplier -- Houston
• NEW! -- Market Director -- Retail Energy
• NEW! -- Energy Business Development Professional
• NEW! -- Managers, Sales and Marketing - Retail Electric Supplier -- Houston
• NEW! -- Directors: Telemarketing or Broker Channel Management - Retail Electric Supplier -- Houston
• NEW! -- Director, Wholesale & Retail Electricity Operations
• NEW! -- Director, Finance & Operations
• NEW! -- Sales Support Specialist -- -- Retail Supplier
• NEW! -- Sales Associate -- Retail Energy
• NEW! -- Energy Sales Rep
• NEW! -- Channel Sales Manager -- Retail Supplier
• NEW! -- Sales/Pricing Support Coordinator
• NEW! -- Marketing Coordinator
• NEW! -- Channel Partner Manager -- Retail Supplier
• NEW! -- Retail Energy Sales