MISO Day 2:A Transmission User’s (Marketer’s) Perspective

Leon White

August 8, 2007

MISO Footprint

US RTO’s

ERCOT ISOERCOT ISO

Grid FloridaGrid Florida

PJMPJM

PJM WestPJM West

New YorkNew YorkISOISO

RTORTONew EnglandNew England

Grid WestGrid West

WestConnectWestConnect

California ISOCalifornia ISO SPPSPP

MISO138,870 MW capacity111,275 miles transmission 16.5 million customers111,503 MW load

MISO138,870 MW capacity111,275 miles transmission 16.5 million customers111,503 MW load

MISO Control Center - Indianapolis

MISO Market – Types of GenerationMISO Generation Distribution (MWs)Other, 944 - 0.7%

Wind, 792 - 0.6%

Oil, 7318 - 5.3%

Hydro, 8152 - 5.8%

Nuclear, 10013 - 7%

Gas, 37495 - 27.0%

Coal, 74157 - 53.4%

Coal

Gas

Nuclear

Hydro

Oil

Wind

Other

Ameren Corporation Generation Distribution (MWs)

Wind, 0

Other, 0Oil, 617 - 4.5%

Hydro, 780 - 5.6%

Nuclear, 1174 - 8.5%

Gas, 2430 - 17.5%

Coal, 8858 - 64.9%

Coal

Gas

Nuclear

Hydro

Oil

Wind

Other

Summer Load CurveSummer Peak

6000

7000

8000

9000

10000

11000

12000

19:12 0:00 4:48 9:36 14:24 19:12 0:00 4:48

MW

s

Winter Load CurveWinter Peak

7500

8000

8500

9000

9500

10000

19:12 0:00 4:48 9:36 14:24 19:12 0:00 4:48

MW

s

Forward Prices

MISO Market & Bilateral MarketBilateral Market

• Energy Sale Between Two Counterparties

• ex : AEM -> TVA - 200 MWs @ $45.00

• Can Occur External or Internal to MISO

• Long Term, Day Ahead, & Hourly Markets

MISO Energy Market

• Offer Generating Units into MISO Power Pool

• Bid Loads into MISO

• Day Ahead & Hourly (Real-Time) Markets

MISO “Day 2” LMP Market Locational Marginal Pricing Market (April 1, 2005)Locational Marginal Pricing Market (April 1, 2005)

All generators offer generation into the day ahead and the All generators offer generation into the day ahead and the hourly (real-time) markethourly (real-time) market

Load is forecast on a day ahead basisLoad is forecast on a day ahead basis Day Ahead market closes at 11 am EST day aheadDay Ahead market closes at 11 am EST day ahead Day Ahead market settles at 5 pm EST day aheadDay Ahead market settles at 5 pm EST day ahead Day Ahead RAC (Reliability Assessment Commitment) Day Ahead RAC (Reliability Assessment Commitment)

completed at 8 pm EST day aheadcompleted at 8 pm EST day ahead Hourly unit capability declaration 30 min prior to hourHourly unit capability declaration 30 min prior to hour MISO LMP Market runs a security constrained dispatch MISO LMP Market runs a security constrained dispatch

model which determines the lowest cost generation model which determines the lowest cost generation dispatch without exceeding any transmission limitationsdispatch without exceeding any transmission limitations

MISO redispatches generation based on LMP dispatch model MISO redispatches generation based on LMP dispatch model every 5 minutesevery 5 minutes

Unit 1 Unit 2 Unit 3 Unit 4

MISO Market – Day Ahead Awards

LMP = Energy + Congestion + Losses

Congestion

Load

Gen1000MW

On

Gen200MW

OFF

3000MW

Gen2000MW

On(3000MW Capability)

2000MWLimit

$40 Offer

$200 Offer$40

Offer

$

LMP

$

LMP

Financial Transmission Rights (FTRs)DA Congestion

• Financial Transmission Rights (FTRs) from base load generation to load provide a hedge against congestion.

• FTRs are funded if congestion shows up in the DA market– On paper, Generators lose money, but FTRs recover the lost

money• FTRs assure that at the very least, load obligations are served

with low cost units whenever possible– Other Generators may see increased DA LMPs

• No DA congestion means units will be paid more but the FTRs will have no daily value

RT Congestion• FTRs do not apply to RT congestion• If congestion does not show up in DA, but instead shows up in RT,

then the RT LMP will be less than the Generator Offer• Generators are paid in full in the DA market and can make more

money in RT by NOT generating.

MISO Market – 5 Minute LMP Dispatch

Unit Meets Day Ahead Commitment

Unit Trip – RT LMP Settlement

Unit Trip – RSG Charges

Total Cost of Unit TripProfit (Unit Meets DA Commitment) = $684,200

Profit (Unit Trips) = $45,375

Average RSG Charge (Unit Trips) = $95,051Low RSG Charge (Unit Trips) = $2,019High RSG Charge (Unit Trips) = $316,805

Cost of Unit Trip• Ave = ($684,200 - $45,375) + $95,051 =

($733,876)• Low = ($684,200 - $45,375) + $2,019 = ($640,844)• High = ($684,200 - $45,375) + $316,805 =

($955,630)

Typical Generator/Marketer/MISO Communications

Marketer

Balancing Authority (Control Area)

Unit Returns from Outage Late – RT LMP

Unit Returns from Outage Late – RSG

Unit Returns from Outage Early

Actual Ramp vs. MISO Dispatch

MISO Charges Uninstructed Deviation :

Unit is deviating greater than 10% of MISO Basepoint for an integrated hour (25 MWs max cap, 5 MWs min cap)

Regulating Unit is deviating greater than the sum of 10% of MISO Basepoint for an integrated hour plus the amount of Reg Up and Reg Down offered in the generation offer

Revenue Sufficiency Guarantee Revenue to Generators due to:

Make whole payments to DA, RAC, or Reliability committed units

Costs to Generators, Loads, Virtuals & MISO interchange due to:

Charged for every MW difference between actual and MISO Dispatch Variation of RT load from DA load bid Variation of RT imports from DA imports Variation of RT unit output from DA unit schedule All exports from MISO All RT imports into MISO All DA Virtual Offers and Bids

Average RSG Rates: 2005 - $7.72 / MWh; 2006 – $4.04 / MWh

2006 RSG Rates by Quarter

Improvement OpportunitiesRegulation

Units Available to Regulate for ACE Units Available to Regulate to Track 5 Min LMPIncreased Ramp Rate SpeedLarger Ramp RangesRegulate to Top of Unit Capability

Outage SchedulingMore Exact Return to Service TimesOptimal Economic Derate Windows

Capability DeclarationsMore Accurate Day Ahead Capability Estimates

Plant and Marketer CommunicationsMISO Ancillary Service Market - 2008

Questions?