competitive retail electricity markets in areas outside of regional transmission organizations vanus...
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Competitive Retail Electricity Markets in Areas Outside of
Regional Transmission Organizations
Vanus J. Priestley
Philip R. O’Connor. Ph.D.
Constellation NewEnergy, Inc.
April 2, 2004
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Constellation NewEnergy Competes in Virtually Every Competitive Retail Market
• California
• Connecticut
• Delaware
• Washington D.C.
• Illinois
• Maine
• Massachusetts
• Michigan
• New Hampshire
• New Jersey
• New York
• Ohio
• Ontario
• Oregon
• Pennsylvania
• Rhode Island
• Texas
• Virginia
CNE Provides over 8000 MW of Electricity and 250 BCF of Natural Gas to Over 8000 Commercial and
Industrial Customers in the following States/Regions
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Competitive Retail Markets and Regional Transmission Organizations
• PJM– Pennsylvania– New Jersey– Maryland– Rhode Island– Virginia– Delaware– D.C.
• NYISO– New York
• NE RTO/NEPOOL– Massachusetts– Maine– Vermont– New Hampshire– Rhode Island
• CAL-ISO– California
• RTO West– Oregon
• OIMO– Ontario
• ERCOT– Texas
• No RTO/ISO
(Moving toward MISO/PJM West)
– Illinois– Ohio– Michigan
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Regional Transmission Organizations are Beneficial, But Not Compulsory
• RTO’s Eliminate Many Problems That Occur in Competitive Retail Markets– RTO’s are Independent, without a financial stake in
market outcomes
– RTO’s improve the competitive wholesale environment
• Competitive Retail Markets Can Work Without an RTO– No need to wait for the RTO
– When RTOs are implemented, the transition can be Seamless
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Retail Competition in El Paso
• Market Size is Sufficient– Over 200,000 Residential Customers– Over 20,000 Commercial and Industrial Customers
• Level of Wholesale Market Competition– El Paso Area can attract more Wholesale
Competitors – Capacity Auctions will create liquidity
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Open Access Transmission Tariffs Need Improved Flexibility
• Conventional OATTs are fine for Bulk, Long-term Wholesale Transactions
• Competitive Retail Markets require allowances for Smaller Loads, and Shorter Terms and Rapid Transaction Response Time
• REPs need the ability to procure the discreet components necessary to serve retail load in small increments and for short time periods
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OATT Problems
• Transmission Procurement Process– Must be more flexible in terms and procurement with a
quicker close time for transactions
– Facilities Impact Studies can normally be waived
• Ancillary Services– Market Based Pricing is optimal but not required
– Balancing Energy Bands need more flexibility
• Contracts Must be able to Substitute for Units– Energy Contracts must qualify as Network Resources
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NON-RTO OPEN ACCESS IN NORTHERN ILLINOIS
• ComEd, the utility serving Chicago and Northern Illinois will soon enter PJM.
• Since October 1999 retail open access has operated without problems on the basis of ComEd’s FERC OATT.
• Important OATT terms were agreed in1999 to accommodate retail access
• The ComEd approach is replicable.
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ANCILLARY SERVICES MEET RETAIL ACCESS NEEDS
• Ancillary Service Prices set on basis of cost as a regulated monopoly service.
• Energy Imbalance service charges are set to cover costs as well as adders to encourage good faith scheduling.
• Ancillary services revenue part of “wires” utility revenue requirement.
• Retail providers billed monthly.
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ENERGY IMBALANCE CHARGES:FAIR, NOT PUNITIVE
• Energy Imbalance Charge is the price paid by ComEd in that hour. 100% assessed for MWh imbalances less/equal to +/- 2% (2MW min).
• Non-utility power providers pooled to set net hourly imbalance >100 MW subject to 10% adder to EIC for provider on “wrong” side.
• 25% adder to EIC for excess MWh if 25% out of balance for 10% or more hours.
• Providers can trade imbalances if they wish.
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POWER CONTRACTS: CAPACITY AND FIRM LD CONTRACTS
• With FERC concurrence ComEd has accepted Firm Liquidated Damages contracts as satisfying the need for capacity backed provider power supplies.
• Since Oct. 1999 start of retail access there have been no reliability problems.
• Now making the transition to RTO capacity requirements.
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IN COMED NETWORK TRANSMISSION IS EASY TO GET
• Speical “Retail” category on ComEd OASIS site for service queue.
• ComEd NITS allows both designated and undesignated resources.
• Firm LD counts as designating a system network resource
• No transmission studies are required.
• FTRs and capacity will be new features with PJM integration of ComEd.