[Federal Register Volume 79, Number 206 (Friday, October 24, 2014)]
[Notices]
[Pages 63619-63621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-25322]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket. No. AD14-14-000]
Price Formation in Energy and Ancillary Services, Markets
Operated by Regional Transmission, Organizations and Independent System
Operators: Supplemental Notice of Workshop on Price Formation: Scarcity
and Shortage Pricing, Offer Mitigation, and Offer Caps in RTO and ISO
Markets
As announced in a Notice issued on September 5, 2014, the Federal
Energy Regulatory Commission (Commission) will hold a workshop on
Tuesday, October 28, 2014 to commence a discussion with industry on
scarcity and shortage pricing, offer mitigation, and offer caps in
energy and ancillary service markets operated by the Regional
Transmission Organizations and Independent System Operators (RTOs/
ISOs). The workshop will commence at 8:45 a.m. and conclude at 5 p.m.
and will be held at the Federal Energy Regulatory Commission, 888 First
Street NE., Washington, DC 20426. This workshop is free of charge and
open to the public. Commission members may participate in the workshop.
The agenda and a list of participants for this workshop are
attached. Those who plan to attend the workshop are encouraged to
complete the registration form located at https://www.ferc.gov/whats-new/registration/10-28-14-form.aspx. There is no registration deadline.
The workshop will be transcribed. Transcripts of the workshop will
be available for a fee from Ace-Federal Reporters, Inc. (202-347-3700
or 1-800-336-6646). Additionally, there will be a free webcast of the
workshop. The webcast will allow persons to listen to the workshop but
not participate. Anyone with Internet access who wants to listen to the
workshop can do so by navigating to the Calendar of Events at
www.ferc.gov, locating the technical workshop in the Calendar, and
clicking on the webcast link. The Capitol Connection provides technical
support for the webcast and offers the option of listening to the
meeting via phone-bridge for a fee. If you have any questions, visit
www.CapitolConnection.org or call 703-993-3100.
While this workshop is not for the purpose of discussing specific
cases, the workshop may address matters at issue in the following
Commission proceedings that are pending: Astoria Generating Company
L.P. v. New York Independent System Operator, Inc., Docket Nos. EL11-42
and EL11-50; California Independent System Operator Corporation, Docket
No. ER14-1386 and ER14-2484; Hudson Transmission Partners, LLC v. New
York Independent System Operator, Inc., Docket No. EL12-98; Independent
Power Producers of New York, Inc. v. New York Independent System
Operator, Inc., Docket No. EL13-62; ISO New England, Inc. and New
England Power Pool, Docket Nos. EL14-52, ER 14-1050, ER14-2419, and
ER14-2929; Midcontinent Independent System Operator, Inc., Docket Nos.
ER14-2156, and ER11-4081; PJM Interconnection, L.L.C., Docket Nos.
ER14-1144 and ER14-1145; New York Independent System Operator, Inc.,
Docket No. EL07-39; Old Dominion Electric Cooperative, Docket No. ER14-
2242; Seneca Power Partners, L.P. v. New York Independent System
Operator, Inc., Docket No. EL12-6; and Southwest Power Pool, Inc.,
Docket No. ER15-21.
Commission workshops are accessible under section 508 of the
Rehabilitation Act of 1973. For accessibility accommodations please
send an email to [email protected] or call toll free (866) 208-
3372 (voice) or (202) 502-8659 (TTY), or send a fax to (202) 208-2106
with the requested accommodations.
For more information about the workshop, please contact:
Logistical information: Sarah McKinley, Office of External Affairs,
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, (202) 502-8368, [email protected].
Scarcity/shortage pricing: Bob Hellrich-Dawson, Office of Energy
Policy and Innovation, Federal Energy Regulatory Commission, 888 First
Street NE., Washington, DC 20426, (202) 502-6360, [email protected].
[[Page 63620]]
Offer mitigation and offer caps: Emma Nicholson, Office of Energy
Policy and Innovation, Federal Energy Regulatory Commission, 888 First
Street NE., Washington, DC 20426, (202) 502-8846,
[email protected].
Dated: October 10, 2014.
Kimberly D. Bose,
Secretary.
[GRAPHIC] [TIFF OMITTED] TN24OC14.018
Price Formation in Energy and Ancillary Services Markets Operated by
Regional Transmission Organizations and Independent System Operators
Scarcity and Shortage Pricing, Offer Mitigation, and Offer Caps
Workshop
Docket No. AD14-14-000
October 28, 2014
Agenda
On October 28, 2014 a second conference will be held to address
matters of price formation in the energy and ancillary services markets
administered by the Regional Transmission Organizations (RTOs) and
Independent System Operators (ISOs).\1\ It will have three areas of
focus: Scarcity and shortage pricing, offer mitigation and offer caps
in the RTO/ISO markets. The RTO/ISO markets rely on security
constrained economic dispatch and locational marginal pricing to ensure
efficient dispatch of, and compensation to, resources. Ideally, RTO/ISO
market designs would rely on competitive pressure to ensure that
resource offers reflect marginal cost. Because the markets are
imperfect at times (e.g., structural issues, inelastic demand), the
RTO/ISO tariffs include specific rules to ensure prices remain just and
reasonable. These rules take the form of market power mitigation, offer
caps and scarcity pricing. Working together, these rules are intended
to protect against the exercise of market power while allowing prices
in the markets to rise in response to predetermined triggers (e.g., an
operating reserve deficiency) to elicit a market response (e.g.,
generator performance, load response) to support the reliable and
efficient operation of the market. These rules would ideally reflect
the value to load of maintaining reliability and avoiding involuntary
load curtailments.
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\1\ Price Formation in Energy and Ancillary Services Markets
Operated by Regional Transmission Organizations and Independent
System Operators, Notice of Workshop, Docket No. AD14-14-000 (Sept.
4, 2014).
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Through this conference and any papers Commission staff may release
in advance, Commission staff will explore the technical, operational
and market issues related to shortage pricing, offer mitigation, and
offer caps.
8:45 a.m.-9 a.m.--Welcome and Opening Remarks
9 a.m.-10:30 a.m.--Panel 1: Goals of Scarcity and Shortage Pricing and
Performance of Existing Pricing Rules
Generally speaking, shortage pricing is the method RTOs/ISOs employ
to price energy and operating reserves during scarcity and shortage
conditions. Scarcity and shortage prices are intended to achieve two
primary goals. The first goal of scarcity and shortage pricing is to
send a short-term price signal to incentivize operation of existing
resources to help maintain reliability. In the short term, these prices
should be high enough to induce existing resources to be available to
the maximum extent possible and to induce imports to offer from
neighboring areas. The high prices should also signal consumers to
reduce demand.
The second goal of scarcity and shortage pricing is to contribute
to efficient long-term economic entry and exit. When scarcity and
shortage prices accurately reflect consumers' valuation of avoidance of
an involuntary load curtailment, the resulting energy and ancillary
services prices can contribute to efficient long-run market
participation (entry and exit) by addressing part of the ``missing
money'' problem.\2\
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\2\ See, e.g., Johannes P. Pfeifenberger and Kathleen Spees, The
Brattle Group, and Kevin Carden and Nick Wintermantel, Astrape
Consulting, Resource Adequacy Requirements: Reliability and Economic
Implications at 83-84 (Sept. 2013), available at http://www.brattle.com/system/publications/pdfs/000/004/984/original/Resource_Adequacy_Requirements_Pfeifenberger_Spees_FERC_Sept_2013.pdf?1392303166.
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While scarcity and shortage pricing rules are designed to achieve
these two goals, in practice, system operator practices and experiences
may influence how the rules are administered and thus their efficacy.
Panel 1 will explore how the goals of scarcity and shortage pricing
are balanced against the operational realities of employing
administrative pricing rules. The discussion will also focus on the
following:
[ssquf] How the definition of a scarcity or shortage event and the
pricing triggers compare across RTO and ISO markets;
[ssquf] The frequency and duration of scarcity or shortage events;
[ssquf] To what extent the frequency and duration of scarcity or
shortage events support efficient entry and exit;
[ssquf] How the actions system operators take to avert a scarcity
or shortage event are reflected in energy and ancillary service prices;
[ssquf] Whether scarcity and shortage pricing rules and import/
export timing are sufficiently coordinated such that market
participants can schedule exports and imports efficiently to respond to
shortage conditions.
Panelists:
Matthew White, ISO New England Inc.
Todd Ramey, Midcontinent Independent System Operator, Inc.
Robert Pike, New York Independent System Operator, Inc.
Adam Keech, PJM Interconnection, L.L.C.
Richard Dillon, Southwest Power Pool, Inc.
10:30 a.m.-10:45 a.m.--Break
10:45 a.m.-12:30 p.m.--Panel 2: Lessons Learned from Existing Scarcity
and Shortage Pricing Rules
Panel 2 will explore lessons learned from existing scarcity and
shortage pricing rules. Possible discussion items could include the
topics discussed in Panel 1 in addition to any other concerns panelists
may have. The RTOs/ISOs and the RTO/ISO market monitoring units will be
given an opportunity to discuss any issues raised by panelists.
Panelists:
Joseph Cavicchi, Compass Lexecon, speaking on behalf of
Electric Power Supply Association.
Erica Bowman, America's Natural Gas Alliance.
John Citrolo, PSEG Power.
Charlie Bayless, North Carolina Electric Membership
Corporation.
Joseph Bowring, Monitoring Analytics.
12:30 p.m.-1:30 p.m.--Lunch
1:30 p.m.-3:30 p.m.--Panel 3: Goals of Offer Caps and Market Power
Mitigation
Panel 3 will provide the RTO/ISO Market Monitors an opportunity to
discuss the goals of the current incremental energy offer cap and
market power mitigation provisions in their respective markets, and to
provide a performance assessment with respect to those goals. The
market monitors will be asked to discuss the role the $1,000/MWh offer
cap plays in both the
[[Page 63621]]
mitigation rules and the shortage pricing rules. The market monitors
will also be asked to discuss whether: (1) Market power mitigation
provisions have a material impact on the price formation process; (2)
the short-run marginal costs estimates that underlie market power
mitigation provisions sufficiently account for all resource supply
costs, including opportunity costs; (3) RTO/ISO offer rules provide
sufficient flexibility for resources to reflect cost changes that occur
between day-ahead and real-time and across hours in real-time; and (4)
RTO/ISO rules provide sufficient protection against the exercise of
market power.
Panelists:
Eric Hildebrandt, California Independent System Operator
Corporation.
Jeffrey McDonald, ISO New England Inc.
Shaun Johnson, New York Independent System Operator, Inc.
Joseph Bowring, Monitoring Analytics.
Catherine Mooney, Southwest Power Pool, Inc.
David Patton, Potomac Economics.
3:30 p.m.-3:45 p.m.--Break
3:45p.m.-4:45p.m.--Panel 4: Impacts of Offer Caps and Market Power
Mitigation
Panel 4 will focus on the impacts that offer caps and offer
mitigation have on both buyers and sellers in wholesale markets.
Discussion will include comments from resource owners about whether the
current $1,000/MWh offer cap permits them to reflect their costs fully
in supply bids. Resource owners will also be asked to discuss: (1)
Whether the RTOs/ISOs permit all of the relevant costs, including
opportunity costs, to be included in the marginal cost estimates that
underlie market power mitigation provisions; and (2) whether RTO/ISO
offer rules permit resources to reflect changes in resource supply
costs that occur between day-ahead and real-time and across hours in
real-time. Panelists will be asked to comment on the role that offer
caps and market power mitigation procedures play in ensuring just and
reasonable rates. Of particular interest will be the extent to which
offers capped at some value (like the current $1000/MWh cap) play a
meaningful role in consumer protection. The RTOs/ISOs and the RTO/ISO
market monitoring units will be given an opportunity to discuss any
issues raised by panelists.
Panelists:
Joseph Cavicchi, Compass Lexecon, speaking on behalf of
Electric Power Supply Association.
Abraham Silverman, NRG Energy, Inc.
Edward Tatum, Old Dominion Electric Cooperative.
Jeffrey Nelson, Southern California Edison.
Charlie Bayless, North Carolina Electric Membership
Corporation.
Patrick Connors, WPPI Energy, speaking on behalf of
Transmission Access Policy Study Group.
4:45 p.m.-5 p.m.--Closing
[FR Doc. 2014-25322 Filed 10-23-14; 8:45 am]
BILLING CODE 6717-01-P