Impact of Unscheduled Energy Flows

As you may know, we are about to implement the first set of rules resulting from the recommendations included in the Policy Framework( DOE Electricity Market Policy Framework Paper - June 6, 2005).   These recommendations contemplate strict adherence to dispatch instructions from the system controller and essentially create the concept of energy deliveries being scheduled, and the resulting concept of unscheduled energy flows.  (Units are dispatched to a specific level, and are expected to stay at that level until they are dispatched to another level).

We recognize that there are many reasons – ranging from normal course business through willful misconduct - that may cause a market participant to deviate from the dispatched level.   For example:   As a pragmatic reality, we expect that wind generation will deviate from any predetermined schedule.  Another pragmatic example would be that a cogeneration unit with a varying steam host requirement will likely see some deviation from time to time.

We have attached a grid that summarizes our views as to the impact of unscheduled energy flows on the Pool Price and on Market Participants.   It is important that all affected stakeholders understand these impacts, with a view to discussing potential mitigation strategies.

In our opinion, there are many ways to address the impact of unscheduled flows, ranging from after the fact compliance monitoring to real time enforcement and imbalance penalties.  It is also our view that the approach that is ultimately employed will have a direct impact on - and arguably will determine - the degree of “price fidelity” that is ultimately attained.   As such, we feel it is extremely important to work collectively with stakeholders on this key variable.

 

Stakeholder Meeting