-----Original Message-----
From: 	owner-nyiso_tech_exchange@lists.thebiz.net@ENRON [mailto:IMCEANOTES-owner-nyiso+5Ftech+5Fexchange+40lists+2Ethebiz+2Enet+40ENRON@ENRON.com]  On Behalf Of "Mark Younger" <mdy@slater-consulting.com>
Sent:	Saturday, August 25, 2001 8:02 AM
To:	Tech Team EMail List,
Subject:	Partial Fix to Inconsistency Between BME and SCD


"Mark Younger" <mdy@slater-consulting.com> writes to the NYISO_TECH_EXCHANGE Discussion List:

During discussions with the NYISO and other market participants in recent
weeks it has become clear that one of the causes of the BME/SCD price
differences is the way the two programs treat 30 minute reserves.

BME will only get 30 minute reserves (and 10 minute reserves) from market
participants that have specifically bid to provide the reserves.

SCD does not specifically secure 30 minute reserves, it dispatches all on
dispatch units to their economic loading point while assuring that the units
that have bid 10 minute spinning reserve are held back from their economic
operating point, if necessary, to assure the 10 minute spinning reserves.
To track the 30 minute reserves the Operators use another program that
identifies how much 30 minute reserves are available from all on dispatch
units on the system plus the 30 minute GTs that provide 30 minute reserves.
The result of the SCD non-treatment of 30 minute reserves and the treatment
in the other program is that the NYISO real-time operation does not
necessarily carry reserves on the units it purchased them from and instead
may get the 30 minute reserves in real-time from units that did not offer
them.

The different treatment of 30 minute reserves from spinning units by BME and
SCD can become a problem and lead to divergence of BME/SCD prices when loads
are relatively high.  In those cases, if only a small amount of on dispatch
units have offered 30 minute reserves, BME will take the reserves from those
units and meet its energy requirements from more expensive options.  When it
gets to the real-time operation, SCD will get the energy from the less
expensive units that were tagged as 30 minute reserve providers and carry
its reserves on more expensive units on dispatch.  To make matters even
worse, BME may have taken one or more marginal purchases in an effort to
procure the 30 minute reserves rather than, erroneously, rely upon more
expensive internal generation.  This will further depress real time prices.

Fortunately, there is an easy fix for this problem that does not require
anything other than a change in generator's bidder behavior.  The problem
stems from there being more on dispatch units considered for reserve by SCD
than were considered for reserve by BME.  This is easily solved if all
operating on dispatch units offer 30 minute reserves into the BME.  Offering
30 minute reserves is most important for on dispatch units with expensive
incremental energy bid costs.  This will enable BME to consider all the
units as providers of reserves that SCD will ultimately consider as
providers of reserves.  This will let BME take its energy from the units
with cheaper marginal energy costs and its reserves from the units with more
expensive marginal energy costs just like SCD.  This will also keep BME from
making uneconomic external purchases because it thinks its only options are
taking energy from expensive internal units (such as units running above
their UOL levels) or purchasing a slightly less expensive import.




Mark Younger
Slater Consulting
69 Werking Road
East Greenbush, NY  12061
Phone: 518-286-1937
Fax: 518-286-1941