powergem power grid engineering & markets 1 new york congestion costs experience and plans...

PowerGEMPower Grid Engineering & Markets

1

New York Congestion CostsExperience and Plans

[email protected]

FERC OfficesApril 14, 2005

James Mitsche


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Meeting Topics• Congestion

– It’s Nature– Analysis Tools– NYISO Activities

• NYISO Congestion Analysis– Congestion Measures– Congestion Analysis Approach– Historic Congestion Results– Sensitivity Studies

• Congestion Planning• PowerGEM Observations


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Remember

• Numbers– Average 4 Simultaneous Constraints Every Hour in NY– NY Congestion Impact: 2003 = $85 Million; 2004 = $72 Million

• Observations from a Planning Perspective– Congestion Occurs at All Load Levels– Most Congestion Impact is Due To Chronic Events, Not Price Spikes– Bottleneck Relief Is Not as Cost Effective as Generally Believed– Analysis of Large Persistent Transmission Constraints is Reasonable


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Congestion

• The Cost of Committing or Running Generating Units Out of Merit Order

• Caused By Combination of– Insufficient Transmission, Requiring Local More

Expensive Supply to Maintain Load/Generation Balance– Generator Characteristics (e.g. min run time, ramp rate,

unit MW minimum) • Unit Commitment Process Commits/Decommits Units to

Minimize BPC, but Increases Congestion


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Nature of Congestion Cost

New York 2004

Congestion Impact $ / MW Range % Hours

% Congestion Impact

= $0.00 0.0% 0.0% $0.00 to $1.00 84.2% 79.4% $1.00 to $2.00 9.7% 14.2% $2.00 to $3.00 2.2% 2.2% $3.00 to $4.00 1.4% 1.1% $4.00 to $5.00 1.0% 0.9% $5.00 to $6.00 0.7% 1.1% $6.00 to $7.00 0.4% 0.6% $7.00 to $8.00 0.2% 0.1%

> $8.00 0.1% 0.4%

Congestion is:

Persistent

Usually Not Dramatic

At All Load Levels

New York 2004

Load Level Range % Hours% Congestion

Impact12,000 to 13,000 6.9% 1.4%13,000 to 14,000 9.1% 2.2%14,000 to 15,000 9.4% 3.3%15,000 to 16,000 10.1% 5.1%16,000 to 17,000 8.8% 5.0%17,000 to 18,000 11.8% 8.8%18,000 to 19,000 12.6% 11.7%19,000 to 20,000 11.1% 15.4%20,000 to 21,000 7.8% 14.9%21,000 to 22,000 4.8% 10.1%22,000 to 23,000 3.8% 10.0%23,000 to 24,000 2.2% 6.6%24,000 to 25,000 1.2% 3.4%25,000 to 26,000 0.3% 1.4%26,000 to 27,000 0.1% 0.5%27,000 to 28,000 0.0% 0.2%28,000 to 29,000 0.0% 0.0%

Average $0.59 / MW

New York 2004 Statewide $ Congestion Impact / MW at Hourly Load Level

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How Often are There Simultaneous Transmission Constraints?

New York 2004 Average Simultaneous Constraints by Day-of-the-Week

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New York 2004

Number of Simultaneous Constraints

% of Hours% of Annual Congestion Impact

0 5.8% 0.7%1 9.5% 2.2%2 10.6% 3.8%3 11.2% 9.7%4 17.4% 22.3%5 18.2% 25.8%6 10.9% 12.0%7 6.6% 7.8%8 4.4% 5.9%9 3.0% 5.1%10 1.4% 2.4%11 0.8% 1.6%12 0.3% 0.6%13 0.0% 0.1%14 0.0% 0.0%

Answer:

Almost Always

Average for NY 4.25, Max 13 in 2004


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Congestion Is an Everyday ThingBid Production Cost Impact

New York 2004 Congestion Impact by Day-of-the-Week

Sun, 7%

Mon, 15%

Tue, 14%

Wed, 16%Thu, 20%

Fri, 18%

Sat, 9%


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Congestion Is an Every Hour ThingBid Production Cost Impact

New York 2004 Congestion Impact by Hour-of-the-Day

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What Causes Congestion At Shoulder Load ?

• Unit Commitment Decisions and Restrictions– Unit Minimums

– Ramp Rates

– Minimum Run Times

• Generation Outages• Transmission Outages• Bidding Patterns


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Congestion Terms

• Bid Production Cost– The Total Cost to Serve Demand at the Bid Price (Not Clearing Price)

• Shadow Price – The Incremental Change in Bid Production Cost for an Incremental

Change in Constrained Facility Rating• LMP = Shadow Price x Distribution Factor• LMP Congestion Component

– Difference Between Local and Reference Point LMP (excepting Losses)

• Distribution Factor – Change in Constraint Flow for a Change at a Location, Relative to a

Reference Point• Reference Point

– Assumed Uncongested Location


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Congestion Calculation Tools

• Shadow Prices Result From Optimization Simulations– Security Constrained Unit Commitment– Security Constrained Economic Dispatch

• These Tools Minimize Total Bid Production Cost Subject to Energy Balance, Flow Limits, and Other Constraints

• Payments are Made at the LMP Clearing Price, Not the Bid Price


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NYISO Congestion Analysis

• NYISO has reported historic congestion costs since 2001 • Included in NYISO Market Advisor's annual "State of the

Market" report • Electric System Planning Working Group ("ESPWG") was

formed in 2003 to assist in the development of a Comprehensive Planning Process for the NYISO

• ESPWG efforts have led to a detailed methodology for the analysis of historic congestion costs

• This process is now included in the NYISO Tariff (Attachment Y)


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ESPWG Objectives

To Better Understand Congestion Costs & Causes – Define congestion – Analyze causes of congestion – Provide better information for the market

– Consider implications for NYISO Comprehensive Planning Process

Characterize Historic Congestion – Measures & Metrics

– Magnitude

– Location• Zones• Constraints


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Congestion Measures

• Market Impact Measures– Change in BPC– Incremental BPC Impact (Patton Method)

• Payment Impact Measures– Congestion Payments– Demand and Supply Payments


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New York Congestion Impact Metrics Summary Metric 2003 Result

$ Millions Description

Bid Production Cost $85 Primary Metric Actual Constrained – Unconstrained Measures Economic Inefficiency Societal Impact

Congestion Payments $821 Sum of (Congestion LMP Change) *

(Demand Affected) w/o Transmission Constraints

Ignores Energy Change w/o Constraints Accounting Impact Measure Power Alert Number

TCC Hedging $528 TCC MW owned times the LMP difference between the TCC contract point of withdrawal (POW) minus point of injection (POI)

Unhedged Congestion Payments

$293 Congestion Payments – TCC Hedging Accounting Impact Measure

Demand Payments $392 Sum of (Total LMP Change) * (Demand

Affected) w/o Transmission Constraints Includes Energy Response w/o

Constraints Bills Impact Measure

TCC Hedging $528 TCC MW owned times the LMP difference between the TCC contract point of withdrawal (POW) minus point of injection (POI)

Unhedged Demand Payments -$136 Actual Bills Impact After Hedging Supply Payments -$136 Sum of (Total LMP Change) * (Supply

Affected) w/o Transmission Constraints Includes Energy Response w/o

Constraints

Amount Paid to Suppliers Due to Congestion

Patton Figure $688 Incremental Bid Production Cost Change


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David Patton’s 2003 NYISO Markets Report

• Defines Congestion as:– The difference between total congestion payments from loads and

payments to generators and imports; plus– Congestion costs collected from physical bilaterals

• Utilizes a “marginal cost” definition: – “Shadow price” x Power flowing across congested interface

• Includes both Day-Ahead and Real-Time congestion components• Relative, Not Absolute Measure

• Total for 2003: $688 Million


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BPC Congestion Impact and Patton Number

• Both Numbers are Extreme Cases– BPC Impact Removes All Transmission Constraints (Big Change)– BPC Represents the Maximum Savings Possible– Patton Number is for a Small Incremental Change Only

• Better Approach– BPC Change for Discrete Grid Improvements or Other “What If”

Tests– It is Believed That Both Methods Should Converge When Looking

at Discrete Situations


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Comparison of 2004 Totals By Different Metrics,

Metric 2004 Total

$ Millions

Positive Means Negative Means Interpretation of Actual 2004 Result

BPC Change $ 71.3 Market Inefficiency Not Possible Maximum that Can be Saved (Not Shifted) from Eliminating Congestion

Demand Payments After TCC Hedging

- $ 181.2 Congestion Increased Energy Bills

Congestion Decreased Energy Bills

NY State as a Whole Benefited from Congestion

(Viewed Differently at Zonal Level)

Supply Payments After TCC Hedging

- $ 181.2 Suppliers Benefited from Congestion

Suppliers Were Paid Less Because of Congestion

NY Generators as a Whole Were Hurt by Congestion

(Viewed Differently at Zonal Level)

Unhedged Congestion Payments

$ 316.0 Congestion Increased this Component of Total Energy Payments

Congestion Decreased this Component of Total Energy Payments

Congestion Was about 3% of Total NY State Energy Payments


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Congestion Reporting Posting(www.NYISO.com)

Total and Zonal Congestion Metrics

Congestion Payments By ConstraintAnnual Totals Monthly Totals Daily Totals

A Monitored Element Totals x xB Monitored Element /Contingency Pair x

Annual Totals Monthly Totals Daily Totals4 Metrics Mitigated Bids NYCA x x x4 Metrics Mitigated Bids Zonal x x xConstrained Quantities xUnconstrained Quantities x

Annual Totals Monthly Totals Daily TotalsMonitored Element Totals x xMonitored Element /Contingency Pair x


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Metrics Calculated Using PROBE Software

• PROBE (PoRtfolio Ownership Bid Evaluation) Software– A “Study Mode” for the NYISO SCUC– Day Ahead Market Only– Driven by Same Data as the SCUC

• Bids (real and virtual, load and generation), Hourly Network Models, Business Rules, TCC

– Market Optimization• All Markets (Generation, Price Capped Load, Virtual Load & Generation, Imports, Exports,

Wheels, Ancillary Service)• Full Security Constrained Unit Commitment and Dispatch• Includes Mitigation • Produces Same Hourly Results as SCUC (LMP’s, dispatch, flows, etc.) + Insights

– 2 Modes• SCUC Viewer• Simulation

• Used Since January 2002• NYISO Market Monitoring & Performance Unit Uses Routinely• Used for Daily PJM Market Advice and Economic Planning


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Simulation Tool

PROBE

Hourly Network Models (24)

Generator Bids

Virtual Load & Gen Bids

Fixed Load & Price Capped Load Bids

PAR Settings

Imports & Export Bids

Unit Characteristics (Status, Min Up & Down Time, Ramp Rates)

Monitored Branches, Interfaces Limits,

Contingencies

Zonal Factors

TCC Contracts

Daily Security Constrained Unit Commitment

Daily Security Constrained Dispatch

Energy & Congestion $ for All Bid Types

•Generators

•Fixed Load

•Price Capped Load

•Virtuals

•Imports & Exports

Shadow Prices & LMP’s

Branch Flows

Marginal Bids

Congestion Impact on Bidders

Excel Spreadsheets

NYISO Supplied Daily

Relatively Static or Derived Data

User Controls

•Ramp Rate Handling

•Bids to Optimize

•PAR Handling


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Important Assumptions

• The Congestion Impact Calculation is the Difference of the “As Given” Network and a Totally Unconstrained System. Removing All Constraints is Not Truly Practical, but Quantifies the Maximum Possible Savings

• Bids are Assumed to Be Mitigated and Unchanged for All Calculations

• Bilateral Market Hedging is Not Included

• TCC Hedging Attributed Totally to Load. No Inclusion of TCC Auction Cost

• Virtual Load, Virtual Generation, and Price Capped Load Assumed to be Fixed MWHr in the Unconstrained Case ($ Payments Change)

• No Adjustment for “Unusual Events”

• PAR’s Fixed at SCUC Supplied Setting


23

SCUC – PROBE Results Comparison

Conclusion: Overall Revenue and Bid Production Cost is Being Reproduced by PROBE With Acceptable Precision

Revenue SCUC - PROBE Difference

15-Jul 22-Sep 3-Dec 12-Dec 15-Dec 18-Dec 19-DecNew York Generation -1.1% -0.7% 0.5% 0.1% -1.6% 0.2% 0.4%Price Capped Load -1.7% -2.9% 0.6% 0.6% 0.4% 2.8% 1.8%Imports -0.6% 11.8% -1.4% -0.8% -3.9% -0.1% -2.4%Exports -0.5% -0.1% 0.9% 0.6% -2.5% 0.7% 2.9%

Mitigated Bid Production Cost SCUC - PROBE Difference

Generation & Imports -1.5% -0.3% -1.7% -0.5% 2.6% -1.2% -1.0%

Grayed Areas are Differences >2%

Note: Sept. 22 Imports were very small (5% of Gen+import Revenue); a small SCUC/PROBE difference results in a larger than normal % difference. All dates in 2003


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2003 & 2004 Summary

New York Congestion Impact(Bid Production Cost Impact)

$71.7

$84.6

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2003 & 2004 SummaryComparative Cumulative Congestion -- BPC impact

$0

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$ M

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2003 2004

Not all Constraints Shown. 95% of 2003, 90% 0f 2004

2003 vs 2004 Unhedged Congestion Payments by Constraint

0% 5% 10% 15% 20% 25% 30%

DUNWODIE 345SHORE_ RD1 345

CENTRAL EAST -VC

RAINEY __ 138VERNON __1 138

LEEDS ___ 345N. SCTLND1 345

RAINEY __ 345 DUNWODIE 1 345 or2

UPNY CONED

E179 THST 138HELLGT_ E1 138

W49TH_ ST 345SPRNBRK _ 1 345 or2

VALLYSTR 138 EGRDNCTY1 138

PLSNTVLY 345LEEDS ___1 345

% of Annual Total Positive Congestion Impact

2004

2003


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2003 Totals

2003 Total Congestion Impact Mitigated Bids ($ Millions)

Zone BPC mitig Unhedged Cong Gener pay Unhedged load payCAPITL -$6.10 $5.66 -$20.64 -$20.64CENTRL -$39.70 -$2.88 -$124.88 -$124.88DUNWOD $0.00 $6.39 -$0.42 -$0.42GENESE -$2.51 $1.24 -$18.02 -$18.02HQ -$43.97 $2.17 -$51.17 -$51.17HUDVL -$25.57 -$13.32 -$59.62 -$59.62LONGIL $95.70 $135.98 $177.42 $177.42MHKVL -$7.82 -$2.30 -$16.97 -$16.97MILLWD -$0.14 -$10.22 -$45.26 -$45.26N.Y.C. $230.19 $163.48 $319.96 $319.96NORTH $0.39 $2.60 -$29.93 -$29.93NPX -$5.52 $1.85 -$10.19 -$10.19OH -$13.21 $0.17 -$37.23 -$37.23PJM -$79.46 $6.75 -$123.67 -$123.67WEST -$17.74 -$4.13 -$95.52 -$95.52NYCA Total $84.55 $293.43 -$136.12 -$136.12

+ Number Means Congestion Increases Supplier Production Cost

+ Number Means Congestion Increases Load Cost

- Number Means Congestion Decreases Load Payments

Negative Number Means Gen Payments Congestion Hurt Gens


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2003 TotalsUnhedged Congestion Impact by Constraint

(Price Increasing Impact only) Monitored Facility % of Total Cum % of TotalDUNWODIE 345 SHORE_RD 345 1 26.5% 26.5%CENTRAL EAST - VC 19.5% 46.0%RAINEY__ 138 VERNON__ 138 1 16.1% 62.1%LEEDS___ 345 N.SCTLND 345 1 11.2% 73.3%RAINEY__ 345 DUNWODIE 345 1 8.0% 81.3%RAINEY__ 345 DUNWODIE 345 2 3.7% 85.0%UPNY CONED 3.6% 88.6%E179THST 138 HELLGT_E 138 1 3.1% 91.7%W49TH_ST 345 SPRNBRK_ 345 1 1.7% 93.4%VALLYSTR 138 EGRDNCTY 138 1 1.4% 94.8%W49TH_ST 345 SPRNBRK_ 345 2 1.4% 96.1%PLSNTVLY 345 LEEDS___ 345 1 0.8% 96.9%JAMAICA_ 138 VALLYSTR 138 1 0.5% 97.5%FRESHKLS 138 WILLWBRK 138 1 0.5% 98.0%VERNON__ 138 KENTAVE_ 138 1 0.3% 98.3%ROSLYN__ 138 EGRDNCTY 138 1 0.2% 98.5%HELLGATE 138 E179THST 138 1 0.2% 98.7%BUCHAN_N 345 EASTVIEW 345 1 0.2% 98.9%NEWBRDGE 138 EGRDNCTY 138 1 0.2% 99.0%


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2004 Totals

2004 Total Congestion Impact Mitigated Bids ($ Millions)

Zone BPC mitig Unhedged Cong Gener pay Unhedged load payCAPITL -$23.12 $3.37 -$46.87 -$46.87CENTRL -$50.75 -$3.11 -$132.52 -$132.52DUNWOD $0.00 $9.91 -$1.08 -$1.08GENESE -$1.93 $0.02 -$18.62 -$18.62HQ -$30.40 -$0.10 -$31.85 -$31.85HUDVL -$19.58 -$5.12 -$71.47 -$71.47LONGIL $118.69 $137.81 $168.82 $168.82MHKVL -$4.75 -$0.95 -$13.16 -$13.16MILLWD -$0.03 -$10.68 -$40.54 -$40.54N.Y.C. $187.86 $187.09 $250.48 $250.48NORTH $0.06 $0.04 -$29.02 -$29.02NPX -$13.28 $1.08 -$14.05 -$14.05OH -$11.48 -$0.11 -$25.95 -$25.95PJM -$66.01 -$0.51 -$79.14 -$79.14WEST -$13.56 -$2.71 -$96.21 -$96.21NYCA Total $71.73 $316.04 -$181.18 -$181.18

+ Number Means Congestion Increases Supplier Production Cost

+ Number Means Congestion Increases Load Cost

- Number Means Congestion Decreases Load Payments

Negative Number Means Gen Payments Congestion Hurt Gens


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2004 TotalsUnhedged Congestion Impact by Constraint

Monitored Facility % Cum %DUNWODIE 345 SHORE_RD 345 1 26.4% 26.4%

RAINEY__ 345 DUNWODIE 345 1 or 2 21.2% 47.7%RAINEY__ 138 VERNON__ 138 1 15.2% 62.9%

CENTRAL EAST - VC 9.5% 72.4%PLSNTVLY 345 LEEDS___ 345 1 4.9% 77.3%

W49TH_ST 345 SPRNBRK_ 345 1 or 2 4.8% 82.0%UPNY CONED 4.8% 86.8%

VALLYSTR 138 EGRDNCTY 138 1 2.7% 89.5%SHORE_RD 345 SHORE_RD 138 1 2.0% 91.5%

E13THSTA 345 W49TH_ST 345 1 1.3% 92.8%VERNON__ 138 KENTAVE_ 138 1 1.1% 93.9%SPRNBR49 345 EGRDNCTY 345 1 0.9% 94.9%FRESHKLS 138 WILLWBRK 138 1 0.7% 95.5%

E179THST 138 HELLGT_E 138 1 0.6% 96.1%HUDS_AVE 138 JAMAICA_ 138 2 0.6% 96.7%

QUENBRDG 138 VERNON__ 138 1 0.5% 97.2%LEEDS___ 345 ATHENS__ 345 1 0.5% 97.8%PLSNTVLY 345 ATHENS__ 345 1 0.5% 98.2%

SPR/DUN-SOUTH 0.4% 98.6%NE - NY 0.3% 98.9%

MILLWOOD 345 EASTVIEW 345 1 0.2% 99.1%LEEDS___ 345 N.SCTLND 345 1 0.0% 99.1%JAMAICA_ 138 VALLYSTR 138 1 0.0% 99.1%


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Congestion Impact By Day2003 NY Daily Congestion

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Observations• 2004 Congestion Impact Not Dramatically Different than 2003, but is Lower• After a Congested January, Summer 2004 Congestion was Lower then 2003• The Upstate/Imports to Zone J and K Congestion Impact Divide Continues• Individual Constraints 2003 vs 2004

– Consistent• Dunwoodie – Shore Rd 345• Rainey – Vernon 138 kV

– Up• Dunwoodie – Rainey 345 • Pleasant Valley – Leeds 345 kV • Sprainbrook – 49th Street

– Down• Central East Interface


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“Release Constraints in Sequence” Test

Assumes No Network Impedance or Connection Change

Scenario (Constraints Ignored for

Next Scenario) Monitored Element Contingency

Base DUNWODIE 345 SHORE_RD 345 1 Base Case RAINEY__ 345 DUNWODIE 345 1 SCB: SPBK (RS-4): M52 99941

1 DUNWODIE 345 SHORE_RD 345 1 BUS: NORTHPORT 681 UNIT 3 DUNWODIE 345 SHORE_RD 345 1 BUS: NORTHPORT 677 UNIT 2 RAINEY__ 345 DUNWODIE 345 1 Base Case W49TH_ST 345 SPRNBRK_ 345 2 SCB: SPBK (RS-4): M52 99941 E179THST 138 HELLGT_E 138 1 Base Case

2 RAINEY__ 345 DUNWODIE 345 1 DUNWODIE345_SHORE_RD345_Y50___ ROSLYN__ 138 EGRDNCTY 138 1 SHORE_RD138_GLENWD__138B365___ W49TH_ST 345 SPRNBRK_ 345 1 Base Case VALLYSTR 138 EGRDNCTY 138 1 BUS: LAKSUCSS 368 903

3 CARLPLCE 138 EGRDNCTY 138 1 SHORE_RD138_GLENWD__138A366-1_ W49TH_ST 345 SPRNBRK_ 345 1 SPRNBRK_345_W49TH_ST345_M51___ VALLYSTR 138 EGRDNCTY 138 1 Base Case

4 GLENWDGT 138 ROSLYN__ 138 1 SHORE_RD138_GLENWD__138B365___ VALLYSTR 138 EGRDNCTY 138 1 BUS: E F BARRET 292 459 BA SPR/DUN-SOUTH Base Case

5 JAMAICA_ 138 LAKSUCSS 138 1 DUNWODIE345_SHORE_RD345_Y50___ W49TH_ST 345 SPRNBRK_ 345 1 SCB: DUNW(7): W75 72 GLENWD__ 138 SHORE_RD 138 1 SHORE_RD138_GLENWD__138B365___

Single Day Effect of Sequentially Ignoring Constraints

-$800,000

-$600,000

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Economic Planning Example Using PROBE

May 2004• Dunwoodie – Shore Rd. 345 kV was 25% of Congestion

Payments• 2 Tests

– 10% Increase in Dunwoodie – Shore Road Rating

– 600 MW added in Zone K @ $50/MW

Bid Production Cost Savings May 2004

Total Congestion Impact All Congestion Removed $5,258,463

Monthly Decrease in Bid Production Cost ForDunwoodie - Shore Rd. 345 kV Rating Increased 10% $599,442600 MW added to Zone K at $50/MW $14,617,085


34

Handling “Unusual Days” Approach

1. Use a Statistical Approach to Identify Days with an Unusual Amount of Congestion Impact

2. Define Congestion Impact Using the Primary Congestion

Measure (Constrained – Unconstrained) Mitigated Bid Production Cost

3. Analyze and Characterize Why the Days Were Unusual

4. Report Congestion Metrics Separately for “Unusual Days”


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Unusual Days Part of the Preliminary 2003 Congestion Metrics

New York 2003Unusual Day Portion of Congestion Metrics

Bid Production Cost Change Impact % of all 200399 % Confident Unusual $9,703,053 13%99% to 95 % Confident Unusual $9,342,245 12%Not Unusual days $58,206,184 75%

Load Payments Impact % of all 200399 % Confident Unusual $45,490,007 11%99% to 95 % Confident Unusual $28,056,635 7%Not Unusual days $342,263,081 82%

Congestion Payments Impact % of all 200399 % Confident Unusual $97,206,520 10%99% to 95 % Confident Unusual $71,247,322 7%Not Unusual days $783,277,256 82%

Generation Payments Impact % of all 200399 % Confident Unusual $3,060,104 -4%99% to 95 % Confident Unusual -$8,817,920 10%Not Unusual days -$81,522,957 93%


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Economic Planning Thoughts Using PROBE

Everyone Agrees “What if” Studies are Worthwhile

Study Approach Questions• Analyze All Hours or a Sample?• Take Out “Unusual Events” in the Base Calculation?• Solution to Each Problem or Multiple Problems ?• What about the “Just Submerged” Constraints ?


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Economic Planning Thoughts Using PROBE

“Cost Effectiveness”• Measured by the Change in Bid Production Cost with the

Upgrade (Economic Efficiency Improvement)• Whole State Net Benefit Viewpoint• 10 Year Planning Horizon• “Benefit” is Present Worth of Production Cost Improvement

Net of– Cost of the Transmission Upgrade– Cost of the Upgrade Outage


38

Chronic Congestion May Be Viewed As:– All Monitored Elements that contributed to the

top X% of unhedged congestion payments in 2004

99% of Total 2004 Congestion 95% of Total 2004 Congestion 80% of Total 2004 Congestion %DUNWODIE 345 SHORE_RD 345 1 DUNWODIE 345 SHORE_RD 345 1 DUNWODIE 345 SHORE_RD 345 1 26.4%

RAINEY__ 345 DUNWODIE 345 1 or 2 RAINEY__ 345 DUNWODIE 345 1 or 2 RAINEY__ 345 DUNWODIE 345 1 or 2 21.2%RAINEY__ 138 VERNON__ 138 1 RAINEY__ 138 VERNON__ 138 1 RAINEY__ 138 VERNON__ 138 1 15.2%

CENTRAL EAST - VC CENTRAL EAST - VC CENTRAL EAST - VC 9.5%PLSNTVLY 345 LEEDS___ 345 1 PLSNTVLY 345 LEEDS___ 345 1 PLSNTVLY 345 LEEDS___ 345 1 4.9%

W49TH_ST 345 SPRNBRK_ 345 1 or 2 W49TH_ST 345 SPRNBRK_ 345 1 or 2 4.8%UPNY CONED UPNY CONED 4.8%

VALLYSTR 138 EGRDNCTY 138 1 VALLYSTR 138 EGRDNCTY 138 1 2.7%SHORE_RD 345 SHORE_RD 138 1 SHORE_RD 345 SHORE_RD 138 1 2.0%

E13THSTA 345 W49TH_ST 345 1 E13THSTA 345 W49TH_ST 345 1 1.3%VERNON__ 138 KENTAVE_ 138 1 VERNON__ 138 KENTAVE_ 138 1 1.1%SPRNBR49 345 EGRDNCTY 345 1 SPRNBR49 345 EGRDNCTY 345 1 0.9%FRESHKLS 138 WILLWBRK 138 1 0.7%

E179THST 138 HELLGT_E 138 1 0.6%HUDS_AVE 138 JAMAICA_ 138 2 0.6%

QUENBRDG 138 VERNON__ 138 1 0.5%LEEDS___ 345 ATHENS__ 345 1 0.5%PLSNTVLY 345 ATHENS__ 345 1 0.5%

SPR/DUN-SOUTH 0.4%NE - NY 0.3%


39

PowerGEM Observations

• More Comprehensive Calculation Significantly Lowers Congestion Impacts– Cost Shifting Rather than Savings – Effect on Energy Markets– Another Constraint is Usually in Hiding

• Studies to Date Have Not Shown Instances Where Transmission Development Lowers Cost Enough to Justify the Investment on a Purely Economic Basis

• Reliability Upgrades Affect Congestion• Diligence is Justified

– Persistent High Impact Constraints– Low Cost Transmission Investments


40

PowerGEM Observations

• LMP Based Rewards for Transmission Investment are Weak– LMP’s are Volatile– Congestion is Shifty and Difficult to Predict – Small Changes Can Make a Large Local Difference– Upgrades Remove the Source of Reward– Free Rider Issues

• LMP’s Are Strong Indicators for Generation• Affect on Bid Production Cost is a More Dependable Reward

for Transmission Investment


41

PowerGEM Lessons Learned

• Congestion is Persistent• LMP’s are Volatile• Shadow Prices are Even Yet More Volatile• Unit Commitment Has a Major Impact on Congestion Location and

Price• Congestion Cost Measurement Depends on Application• Transmission Upgrades Shift Rather than Reduce Cost to

Customers• Bid Production Cost Change is a More Stable Measure of Upgrade

Merits


42

Remember

• Numbers– Average 4 Simultaneous Constraints Every Hour in NY– NY Congestion Impact: 2003 = $85 Million; 2004 = $72 Million

• Observations from a Planning Perspective– Congestion Occurs at All Load Levels– Most Congestion Impact is Due To Chronic Events, Not Price Spikes– Bottleneck Relief Is Not as Cost Effective as Generally Believed– Analysis of Large Persistent Transmission Constraints is Prudent

powergem power grid engineering & markets 1 new york congestion costs experience and plans...

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