FEBRUARY 10, 2016 | NEPOOL MARKETS COMMITTEE Resource

FEBRUARY 10, 2016 | NEPOOL MARKETS COMMITTEE Resource

FEBRUARY 10, 2016 | NEPOOL MARKETS COMMITTEE Resource Dispatchability Requirements Improving price formation and efficient dispatch Jon Lowell (413) 540-4658 | [email protected] ISO-NE PUBLIC Project Title: Resource Dispatchability Requirements WMPP ID: 84 Proposed Effective Date: #1 TBD; #2 Feb 2018; #3 - deferred To improve price formation, operational flexibility, and

efficient dispatch outcomes: 1. 2. 3. Require all generation (with some limited exceptions) to be electronically dispatchable in real-time in accordance with an economic offer Clarify the Intermittent Power Resource definition to exclude resources that cannot store or manage their input energy supply Require all transactions in the Day-Ahead Market to be priced deferred Todays presentation discusses Day-Ahead Offer/Bid Caps and the recent FERC NOPR Intermittent Power Resource effective date ISO-NE PUBLIC

2 PROBLEM STATEMENT ISO-NE PUBLIC ISO-NE INTERNAL USE 3 Background / Problem Identification Non-dispatchable generation adversely impacts price formation and efficient dispatch Percent of Online Non-dispatchable EcoMax MW 9/1/2014 - 8/31/2015 2500 120.00%

100.00% 2000 20% of the time more than 50% of online capacity is non-dispatchable 80.00% Frequency 1500 60.00% Frequency Cumulativ e % 1000 40.00% 500 20.00%

0 0.00% Current Intermittent Power Resource definition includes resources that are not inherently intermittent Fixed (unpriced) transactions in the Day-Ahead Market can produce unintended outcomes - deferred ISO-NE PUBLIC 4 DAY-AHEAD MARKET CONSIDERATIONS ISO-NE PUBLIC ISO-NE INTERNAL USE 5

Requiring All Day-Ahead Transactions to be Priced: Deferred ISO has proposed requiring all Day-Ahead bids to be priced This would eliminate Day-Ahead Fixed Demand Bids What is a Fixed Demand Bid? A Fixed Demand Bid is a request to clear a fixed amount of load in the Day-Ahead Market, regardless of the clearing price The design change would require establishing a Demand Bid Cap to complement the existing Offer Cap On January 21, 2016 FERC issued an Offer Caps NOPR Docket No. RM16-5-000 NOPR raises a number of issues with respect to caps for supply, demand, imports and virtual transactions ISO is planning to wait until additional direction is provided by FERC before moving forward with these changes ISO-NE PUBLIC 6

EFFECTIVE DATE FOR INTERMITTENT POWER RESOURCE DEFINITION CHANGE ISO-NE PUBLIC ISO-NE INTERNAL USE 7 Intermittent Power Resource Definition Change in Feb 2018 for FCA 13 A change in Intermittent Power Resource (IPR) status is best done at the start of the Forward Capacity Auction (FCA) process timeline Qualification process for FCA 13 starts in February 2018 Mid-February 2018 IPR definition change Aligns with FCM-PFPs treatment of availability penalties associated with FCA 9 (CCP 20182019)2019) Pre FCM-PFP IPRs are exempt from availability penalties

Post FCM-PFP everyone is exposed to availability impacts The FCA process timeline requires a change in a Resources IPR status to be made no later than five business days prior to the start of the Existing Capacity Challenge Window for a particular Forward Capacity Auction (FCA). Once implemented, an IPR status change is effective for all Capacity Commitment Periods (CCP) ISO-NE PUBLIC 8 IPR Definition Timing Required to Seamlessly Support FCA #13 (CCP 2022-2023) Implementation at any time other than mid-February is problematic Requires reconciling potential changes in seasonal CSO values across multiple auctions This is true for any future FCA/CCP The revised status would be effective for:

FCA 13 (CCP 2022-2023) - Existing Capacity Qualification Calculation Monthly Qualified Capacity Calculation for CCP 2018-2019 3rd Annual Reconfig Auction Qualification Calculation for CCP 2018-2019 2nd Annual Reconfig Auction for CCP 2019-2020 1st Annual Reconfig Auction for CCP 2020-2021 If the latest Seasonal Qualified Capacity Values are less than the most recent qualified capacity values, then the Qualified Capacity Values will not change. ISO-NE PUBLIC 9 How Should a Resource Prepare if it Anticipates Longer Meeting the IPR Definition? Resources that lose IPR status should plan to conduct summer and winter Seasonal Claimed Capability (SCC) audits prior to

the start of the FCA qualification process. SCC audits play a role in determining Qualified Capacity For more information on SCC audits see training materials at http://www.iso-ne.com/static-assets/documents/ 2015/11/2015110201_fcm101_08_registration_and_auditing.pdf In most cases, we expect that Qualified Capacity using seasonal SCC values will be equal to or higher than the values produced by the intermittent resource calculation: IPR Summer and Winter Qualified Capacity is based on the average of median output during the respective seasonal reliability hours for the previous 5 years ISO-NE PUBLIC 10 Conclusion To improve price formation, congestion management, and efficient dispatch outcomes: Non-Settlement Only generating resources in the energy market will

be required to receive and respond to electronic dispatch instructions, consistent with their economic offers and physical performance characteristics All Day-Ahead Market offers & bids must be priced (no self-schedules) Intermittent Power Resources restricted to those without the ability to store or manage input energy supply Proposed effective dates Mid-February 2018: IPR definition change TBD: Dispatchability requirement for Non-Settlement Only Resources Deferred: Day-Ahead Offers/Bids required to be priced ISO-NE PUBLIC 11 Proposed/Anticipated Stakeholder Schedule Stakeholder Committee and Date Scheduled Project Milestone

Markets Committee October 8, 2015 Problem Identification Markets Committee December 9, 2015 Presentation/discussion of proposed design changes Markets Committee January 2016 Review/discussion of proposed design changes Markets Committee February 2016 Review/discussion of proposed design changes

Markets Committee March 2016 Presentation of supporting tariff changes Markets Committee April 2016 Vote ISO-NE PUBLIC 12 Jon Lowell (413) 540-4658 | [email protected] ISO-NE PUBLIC 13

Acronyms Used in this Presentation ATRR: Alternative Technology Regulation Resource CCP: Capacity Commitment Period DNE Dispatch: Do Not Exceed Dispatch FCA: Forward Capacity Auction Incs and Decs: Increment and Decrement Offers IPR: Intermittent Power Resource LNG: liquified natural gas SCC: Seasonal Claimed Capability SOR: Settlement Only Resource PRD: Price Responsive Demand RTU: Remote Terminal Unit ISO-NE PUBLIC 14

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