2011 State of the Market Reportfor the

NYISO Markets

David PattonPallas LeeVanSchaick

NYISO Market Monitoring UnitNYISO Market Monitoring UnitPotomac Economics

April 16 2012April 16, 2012

Average All-In Price by Region

$10$100

$8

$9

$80

$90

MB

tu)

)

NYISO Cost of Operations

Uplift

Ancillary Services

Capacity

Energy

$5

$6

$7

$50

$60

$70

Gas

Pri

ce ($

/MM

Cos

t ($/

MW

h) Energy

Natural Gas Price

$3

$4

$30

$40

erag

e Nat

ural

G

Ave

rage

$0

$1

$2

$0

$10

$20

9 0 1 9 0 1 9 0 1 9 0 1 9 0 1

Ave

- 2 -See Section II.A.

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

West NY Capital Zone Zones G,H,I New York City Long Island

Estimated Net Revenue and Cost of New Entry

$300

$200

$250

$300Capacity AuctionAncillary ServicesEnergy RevenueEstimated CONE

CONE Net of Energy and AS Revenues

$150

$200

$/K

W-Y

ear

$50

$100$

$0

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

CapitalZone

HudsonValley

NYC LongIsland

CapitalZone

HudsonValley

NYC LongIsland

Combined Cycle Unit Gas Turbine Unit

- 3 -See Sections II.F, VII.B, & VII.C

Recommendations 1 & 2

Combined-Cycle Unit Gas Turbine Unit

Deratings by Supplier by Load LevelDeratings by Supplier by Load Level East New York

50%

35%

40%

45%

50%ap

acity

Other Deratings

Short-term Deratings

20%

25%

30%

35%

a Pe

rcen

t of C

a

10%

15%

20%

Der

atin

g as

a

0%

5%

Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2

< 9 9 ~ 11 11 ~ 13 13 ~ 15 15 ~ 17 17 ~ 19 19 ~ 21 21 ~ 23 > 23

- 4 -See Section 3.A

Load Level (GW)

Output Gap by Supplier by Load LevelOutput Gap by Supplier by Load LevelEast New York

10%

8%

10%pa

city

Mitigation Threshold

Lower Threshold

6%

Perc

ent o

f Cap

2%

4%

utpu

t Gap

as a

0%Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2 Other Top2

< 9 9 ~ 11 11 ~ 13 13 ~ 15 15 ~ 17 17 ~ 19 19 ~ 21 21 ~ 23 > 23

Ou

- 5 -See Section 3.A

Load Level (GW)

Summary of Day-Ahead Mitigation

- 6 -See Section III.B

Capacity Sales and Prices in New York City

- 7 -See Section III.C

Recommendation 3

Supplemental Commitment for Reliability

- 8 -See Section VIII.E

Efficiency of Inter Market SchedulingEfficiency of Inter-Market Scheduling New England

- 9 -See Section VI.C

Recommendation 4

Efficiency of Scheduling on PAR Controlled LinesEfficiency of Scheduling on PAR Controlled Lines Long Island to NYC Line

- 10 -See Section VIII.B

Recommendation 5

Transmission Congestion

$40$200 B l i C ti Sh tf ll

$0

$20

$40

$160

$180

$200

Mill

ion

$

2010 2011

2010 $462011 $53

Balancing Congestion Shortfalls

$100

$120

$140

DAM Congestion Shortfalls DAM Congestion Revenues

2010 2011DAM Congestion Revenues (1) $419 $407DAM Congestion Shortfalls (2) $89 $95

Payments to TCC Holders (1)+(2) $508 $502

$60

$80

$

Mill

ion

$

DAM Congestion Shortfalls g

$0

$20

$40

- 11 -See Section V.A.

J F M A M J J A S O N D J F M A M J J A S O N D

2010 2011

Real-Time Prices During Transmission Shortages

300 s

75

150

225

er o

f RT

Inte

rval

s

20102011

Frequency of Shortages

# of Intervals Pct of ShortagesA 73 50%B 10 15%C 18 55%

Price Set by Offline GT That Was Not Started in 2011

0

$3,000

$3,500

$4,000

Num

be

MW

h)

Average Shadow PriceDuring Shortages

D 21 78%E 5 24%F 5 56%G 6 75%H 14 47%

$1,500

$2,000

$2,500

Shad

ow P

rice

($/M 2010 2011

Average Shadow Price During All Intervals:A: Dunwoodie-Shore Road $1.49 $1.49B: Leeds-Pleasant Valley $2.98 $1.49C: Central East $1.40 $0.36D: Dunwoodie-Mott Haven $0.33 $0.51E: Dysinger East $0.03 $0.25

$0

$500

$1,000

A B C D E F G H

S y g $ $F: New Scotland-Leeds $0.31 $0.18G: W49th St-Sprainbrook $0.00 $0.11H: Other $0.62 $0.22

Affected Zone:Long Island $3.78 $2.63NYC $2.47 $1.16C it l $1 08 $0 32

- 12 -See Section VIII.D.2

Recommendation 7

A B C D E F G H

Limiting Facility

Capital $1.08 $0.32Hudson Valley $1.91 $0.76West $0.00 $0.00

Prices & Available Supply During pp y gEmergency DR Activations

July 21 & 22, 2011 

- 13 -See Section VIII.D.3

Recommendation 8

Statewide Average Five Minute Prices by Time of DayStatewide Average Five-Minute Prices by Time of DayJune to August 2011

$120h)

$60

$80

$100

$120L

BM

P ($

/MW

h

$0

$20

$40

Avg

Inte

rval

$45

MW

h)

Average Change in Price

Average LMP

$0

$15

$30

e in

LB

MP

($/M

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00

-$45

-$30

-$15

Ave

rage

Cha

nge

- 14 -See Section VIII.C

Recommendation 9

0:0

1:0

2:0

3:0

4:0

5:0

6:0

7:0

8:0

9:0

10:0

11:0

12:0

13:0

14:0

15:0

16:0

17:0

18:0

19:0

20:0

21:0

22:0

23:0 A

List of Recommendations

IN 2012 HIGH

RECOMMENDATION PROJECTPLAN

PRIORITY/ BENEFIT

Capacity Market1. Better align the local capacity requirements with the Class Year Deliverability

Test to allow the market to produce efficient price signals.2. Use the most economic new generating technology to establish the capacity

demand curves.3. Clarify and improve the ICAP qualification requirements and supply-side

mitigation measures.Real-Time Market4. Improve coordination of interface scheduling with neighboring markets.

5. Explore improvements in the operation certain PAR-controlled lines.

6. Evaluate criteria for gas turbines to set LBMPs in the real-time market.

7 Consider using graduated Transmission Shortage Cost (i e demand curve)7. Consider using graduated Transmission Shortage Cost (i.e., demand curve).

8. Modify the real-time market to allow DR to set prices when appropriate.9. Identify and address causes of unnecessary real-time price volatility.

Day-Ahead Market10 M dif iti ti l f 10 i t i d h d k t

- 15 -See Section X

10. Modify mitigation rules for 10-minute reserves in day-ahead market.

11. Enable virtual trading at a disaggregated level.