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Transcript of PS ERC TLR, Reliability and Efficiency Fernando L. Alvarado Professor Electrical and Computer...
PSERC
TLR, Reliability and EfficiencyTLR, Reliability and Efficiency
Fernando L. AlvaradoFernando L. AlvaradoProfessorProfessor
Electrical and Computer EngineeringElectrical and Computer EngineeringThe University of WisconsinThe University of Wisconsin
(also: Senior Consultant, LRCA)(also: Senior Consultant, LRCA)
Presentation to the Harvard Electricity Policy GroupMilwaukee, WI, November 18, 1998
www.pserc.wisc.edu
PSERC
ObjectiveObjective
Discuss congestion relief alternativesDiscuss congestion relief alternatives
Describe a problem with the present Describe a problem with the present NERC TLR proceduresNERC TLR procedures
Propose market-efficient alternatives Propose market-efficient alternatives that are compatible with present that are compatible with present institutional structuresinstitutional structures
PSERC
ObservationsObservations
Congestion leads to high spatial Congestion leads to high spatial volatilityvolatilityThis is necessary for economic efficiencyThis is necessary for economic efficiency
However, bad rules can increase volatility However, bad rules can increase volatility and reduce efficiencyand reduce efficiency
Internalizing loop flows leading to zonal Internalizing loop flows leading to zonal prices may result in inefficienciesprices may result in inefficiencies
Efficiency requires adjusting to Efficiency requires adjusting to conditionsconditionsStatic average prices are inefficientStatic average prices are inefficient
PSERC
Congestion relief alternativesCongestion relief alternatives
Market-blindMarket-blindOperators deal with security issues onlyOperators deal with security issues only
Market-awareMarket-awareOperators deal with security but facilitate Operators deal with security but facilitate
markets operationmarkets operation
Pure marketPure marketMarket deals with congestionMarket deals with congestion
PSERC
Congestion management Congestion management optionsoptions
Command and control -- no choices Command and control -- no choices (FAA)(FAA)
As internalized ancillary costs (Uplift)As internalized ancillary costs (Uplift)
By curtailment rules (NERC)By curtailment rules (NERC)
By locational spot pricingBy locational spot pricingSpot pricing (Schweppe, Hogan)Spot pricing (Schweppe, Hogan)
Transmission-only pricing (TCCs, Glavitsch)Transmission-only pricing (TCCs, Glavitsch)
PSERC
The NERC TLR ProcedureThe NERC TLR Procedure
A method for determining who to A method for determining who to curtail and by how muchcurtail and by how much
Based on pre-computed flow Based on pre-computed flow sensitivitiessensitivities
Uses “arbitrary” formulasUses “arbitrary” formulas
PSERC
The procedureThe procedure
Determine amount to curtailDetermine amount to curtailSelect curtailment categorySelect curtailment category
• Firm, non-firm
Determine flow sensitivitiesDetermine flow sensitivitiesIgnore those with less than 5% impactIgnore those with less than 5% impact
Determine transaction sizeDetermine transaction size
Apply formula, determine amount to Apply formula, determine amount to curtailcurtail
PSERC
6 transactions and 4 flowgates6 transactions and 4 flowgates
E DC
A X Y
B
Constraining flowgate
Other flowgates
Firm
Hourly non-firm
PSERC
Impact of transactions on flowsImpact of transactions on flows
Transaction AX AE ED XY
A to C 0.85 0.15 0.30 0.15
B to C -0.01 0.01 0.45 0.01
D to C 0.02 0.15 -0.20 0.10
D to X 0.03 0.07 -0.10 0.09
Y to X -0.10 -0.10 0.03 -0.60
E to Y -0.20 -0.10 0.69 0.30
PSERC
The curtailment formulaThe curtailment formula
iii
kkknTransactio Initial * PTDF
curtail amount to Total * nTransactio Initial * PTDFamount Curtailed
2
PSERC
The curtailmentsThe curtailments
1 2 3 4 5 6 7 8
(1)*(2) 2 /(2TOT)
(3)*(4) (5)*overload/(5TOT)
(6)/(2) (1) - (7)
TransactionID
InitialTransaction
PTDF ImpactOn
Interface
WeightedInterfaceImpact
WeightedInterface
Reduction
ActualInterface
Reduction
CurtailedAmount
NewTransaction
Amount
A to C 150 0.30 45.00 0.40 18.00 20.00 66.67 83.33
B to C 100 0.45 45.00 0.60 27.00 30.00 66.67 33.33
TOTALS 250.00 0.75 90.00 1.00 45.00 50.00 133.33 116.67
PSERC
The problemsThe problems
Phantom schedulesPhantom schedules
Inability to create packaged Inability to create packaged multilateral schedulesmultilateral schedules
Ability to play games with contract Ability to play games with contract pathspaths
Possible games with the 5% dropout Possible games with the 5% dropout rulerule
Conflicting curtailment rules for Conflicting curtailment rules for multiple congestionmultiple congestion
PSERC
Phantom schedulesPhantom schedules
1 2 3 4 5 6 7 8
(1)*(2) 2 /(2TOT)
(3)*(4) (5)*overload/(5TOT)
(6)/(2) (1) - (7)
TransactionID
InitialTransaction
PTDF Impact OnInterface
WeightedInterfaceImpact
WeightedInterface
Reduction
ActualInterface
Reduction
CurtailedAmount
NewTransaction
Amount
A to C 200 0.30 60.00 0.40 24.00 30.59 101.96 98.04
B to C 100 0.45 45.00 0.60 27.00 34.41 76.47 23.53
TOTALS 300.00 0.75 105.00 1.00 51.00 65.00 178.43 121.57
PSERC
Consequence of phantom scheduleConsequence of phantom schedule
Transaction A to C benefits at the Transaction A to C benefits at the expense of transaction B to Cexpense of transaction B to CIt can also work the other way aroundIt can also work the other way around
It results in gaming behaviorIt results in gaming behavior
It leads to suboptimal, possibly It leads to suboptimal, possibly unstable, market conditionsunstable, market conditions
PSERC
Packaged multilateral tradesPackaged multilateral trades
B to C bilateral transaction Packaged transaction
B to C: 100 MW A to C: 60 MW
D to C: 90 MW
The packaged trade has no negative impact
PSERC
The curtailed tradeThe curtailed trade
1 2 3 4 5 6 7 8
(1)*(2) 2 /(2TOT)
(3)*(4) (5)*overload/(5TOT)
(6)/(2) (1) - (7)
TransactionID
InitialTransaction
PTDF ImpactOn
Interface
WeightedInterfaceImpact
WeightedInterface
Reduction
Actual InterfaceReduction
CurtailedAmount
NewTransaction
Amount
A to C 60 0.30 18.00 0.40 7.20 1.05 3.51 56.49
B to C 100 0.45 45.00 0.60 27.00 3.95 8.77 91.23
TOTALS 160.00 0.75 63.00 1.00 34.20 5.00 12.28 147.72
This curtails a desirable packaged trade
PSERC
ConsequencesConsequences
With congestion, optimal trades will With congestion, optimal trades will (almost) always be packaged trades(almost) always be packaged tradesNERC rules will discourage optimal behaviorNERC rules will discourage optimal behavior
NERC rules result in much higher NERC rules result in much higher spatial volatilityspatial volatilityWe have a model that demonstrates thisWe have a model that demonstrates this
There are problems with the present There are problems with the present NERC rules for TLRNERC rules for TLRNodal pricing can lead to optimality, but the Nodal pricing can lead to optimality, but the
NERC rules will not get you thereNERC rules will not get you there
PSERC
Another view of curtailmentAnother view of curtailment
250
100(limit: 100)
100 250150
150
250100
price
PSERC
Quantity rationing (NERC)Quantity rationing (NERC)
250
100(limit: 100)100
250100
Limit transaction
150 200100
PSERC
Transmission pricingTransmission pricing
250
150 200
100
100
(limit: 100)100
250100
price
PSERC
Transmission pricing Transmission pricing alternativealternative
It is indeed possible to attain secure It is indeed possible to attain secure operation with price signalsoperation with price signalsThere are practicality/institutional concernsThere are practicality/institutional concerns
• Speed/reliability of response
• Degree of participation
Use ex-ante contractsUse ex-ante contractsCurtailment is, however, compensatedCurtailment is, however, compensated
• The system is voluntary for everyone
PSERC
Recommendations (1)Recommendations (1)
Improve NERC rulesImprove NERC rulesAllow packaged tradesAllow packaged trades
• Phantom trades still possible– System could be efficient if no games are played
or: permit economic signalsor: permit economic signalsFull bid/auction dispatchFull bid/auction dispatch
Use transmission congestion “adders”Use transmission congestion “adders”
• Average charges are inefficient
Explicit Explicit voluntary voluntary trading of TCCstrading of TCCs
Can’t have it both waysin the same time frame
PSERC
Recommendations (2)Recommendations (2)
Enable futures market that permit Enable futures market that permit hedging against spatial volatilityhedging against spatial volatilityCan be done within existing financial market Can be done within existing financial market
structuresstructures
Integrate demand management into Integrate demand management into the picturethe pictureAirlines analogyAirlines analogy