ISO-New England Strives to Increase Uplift Payment Transparency

Monica Jha
Director of Product, Northeast Markets

FERC Order 844 was issued to improve transparency practices for Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).  Per the order, each RTO/ISO was instructed to add requirements for monthly reporting.  Specific additions include:

  • Total uplift payments for each transmission zone, broken out by day and uplift category;
  • Total uplift payments for each resource;
  • The size of the commitment, transmission zone, commitment reason, and commitment start time for each operator-initiated commitment;
  • The transmission constraint penalty factors used in market software, as well as the circumstances under which those factors can set locational marginal prices (and any process by which they can be changed).

FERC’s goal is to ensure system needs are transparent to market participants, as it ultimately helps in finding cost effective solutions to the operational challenges that RTOs/ISOs face to support reliable operations and resilience.  As indicated in FERC Order 844, RTO/ISO market software is limited in its ability to incorporate all reliability considerations, which  results in clearing prices that fail to capture all challenges and (under some condition) uneconomical dispatch instructions. At times, an ISO/RTO needs to take out-of-market actions to ensure system needs are met which results in uplift costs. These costs, and the reasons for incurring them, are inherently less transparent. There are times when out-of-market actions can mask system conditions, which limit the ability of competitive electricity markets to send appropriate price signals that compensate and financially encourage investment in resource attributes that respond to system needs.

Improving transparency with such practices enhances market participants’ understanding of how energy prices are formed and thus, augments their ability to hedge transactions and respond to market signals. Finally, increased transparency into uplift payments, operator-initiated commitments, and transmission constraint penalty factors, allow market participants to assess and advocate for improvements to RTO/ISO practices in these areas.

 

ISO-New England’s Response

On August 15 of this year, the ISO-NE Markets Committee approved the proposal to address compliance requirements contained in the Order 844.  The ISO proposed Tariff revisions reflecting the three new monthly reports that will be publicly available on its website in January 2019.  The reports are:

  1. Zonal Uplift Report
    Indicates the aggregate dollar amount of NCPC Credits (by category) paid to the resources located in each Load Zone for each day during the month.
    Due Date: 20-days after EOM

  2. Resource-Specific Uplift Report
    Indicates the name of each resource that received NCPC Credits for the month, as well as the total dollar amount of NCPC Credits that each of those resources received for that month.
    Due Date: 90-days after EOM

  3. Operator Initiated Commitment Report
    Indicates each resource commitment made during the month after the Day-Ahead Energy Market for a reason other than minimizing the total production costs of serving load.  For each such commitment, the report shall include the start time, the Economic Maximum Limit or Maximum Reduction of the committed resource, the Load Zone in which the committed resource is located, and the reason for the commitment.
    Due Date: 30-days after EOM

 

PCI’s GenManager bid-to-bill platform includes robust back office functionality that is continually updated to meet all market rules in every ISO-controlled market.  It contains a Settlement Module that provides end-to-end workflow support for both ISO and non-ISO environments.  It enables calculation of settlements position or market instrument level (generator, load zone, virtual bids, internal/external transactions, FTRs, etc.) and performs independent shadow settlements for side-by-side comparison with ISO settlement statements – for all charge types.  GenManager’s functionality also includes complex charge types like Uplift Payment (NCPC in ISO-NE Market).  In addition, companies that use GenManager can employ the new Uplift Reports provided by the ISO, along with PCI’s powerful analytical tools, to optimize their portfolio and decrease operational costs while increasing profitability.