24 Hour Bids in the CRR Monthly and Annual Markets

Presented to NATF January 5th, 2010

The behavior of 24 Hour bids in the CRR Monthly Auctions

• 24 hour bids can be entered into CRR Monthly auctions

• The auction engine treats a 24 hour bid as a single bid across the three time of use network models (Peak WD, Peak WE, Off-peak)

– Single MW amount

– Single $/MW-hr bid price (not to exceed)

• If the Bid Price is higher than the weighted (by number of hours) average of the three times of use clearing prices(Peak WD, Peak WE, Off-peak) then the CRR bid will be awarded fully (assuming there is no active budget constraint).

• If the Bid Price is lower than the weighted average of the three times of use clearing prices then the CRR bid will not be awarded.

• If the Bid Price is equal to the weighted average of the three times of use clearing prices then the CRR bid will be awarded at some level between 0 and 100%, but the same in each time of use..

24 Hour Example in Monthly Market

• 24 hour CRR bid for February 2013 Monthly Auction– 28 x 8 = 224 Off-peak hours– 8 x 16 = 128 PeakWE hours– 20 x 16 = 320 PeakWD hours– 28 x 24 = 672 total hours

• For a certain path prices are as follows– Off-peak 2$/MW-hr (arbitrary number for this example)– PeakWE 3$/MW-hr (arbitrary number for this example)– PeakWD 8$/MW-hr (arbitrary number for this example)– 24 hour = (224x2 + 128x3 + 320x8)/672 = $5.048/MW-hr

– Note that a 24 hr bid of $6/MW-hr would be fully awarded in each time of use even though it was less than the clearing price in the PeakWD time of use.

– Also note that a 24 hr bid of $4/MW-hr would not be awarded at all, even though it was more than the clearing price in the Off-peak and PeakWE times of use.

The behavior of 24 Hour bids in the CRR Annual Auctions

• 24 hour bids can be entered into CRR Annual auctions• The auction engine treats a 24 hour bid as a short cut for

entering three separate bids in the three time of use network models (Peak WD, Peak WE, Off-peak)

• If the Bid Price is higher than the clearing price in a given time of use (Peak WD, Peak WE, Off-peak) then the CRR bid will be awarded fully in that time of use (assuming there is no active budget constraint).

• If the Bid Price is lower than the clearing price in a given time of use then the CRR bid will be not be awarded in that time of use.

• If the Bid Price is equal to the clearing price in a given time of use then the CRR bid will be awarded at some level between 0 and 100% in that time of use.

24 Hour Example in Annual Market

• 24 hour CRR bid for February 2013 in 2012/2013 Annual Auction

• For a certain path prices are as follows– Off-peak 2$/MW-hr (arbitrary number for this example)– PeakWE 3$/MW-hr (arbitrary number for this example)– PeakWD 8$/MW-hr (arbitrary number for this example)

– Note that a 24 hr bid of $6/MW-hr would be fully awarded in PeakWE and Off-peak, but not awarded in PeakWD

– Also note that a 24 hr bid of $4/MW-hr would also be fully awarded in PeakWE and Off-peak, but not awarded in PeakWD

Options for Resolving the Difference

• Don’t change anything, make sure the behavior is well explained in the CRR documentation

• Change 24 hour bid behavior in monthly auction to match annual behavior (This may have schedule and/or cost impacts)

• Disable 24 hour bid in annual auction (This may have schedule and/or cost impacts)

• Disable 24 hour bid in monthly auction (This may have schedule and/or cost impacts)

• Disable 24 hour bid in both auctions (This may have schedule and/or cost impacts)

• (We can’t make the annual 24 hour bid behave like the monthly 24 hour bid, as that would require linking the three times of use in the annual auction making it computationally intractable)