Special Pricing Rule Updates - PDF Free Download

Special Pricing Rule Updates Michael DeSocio Manager, Energy Market Design New York Independent System Operator MIWG June 28, 2013 NYISO KCC Conference Center 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY

Agenda Background Unified Pricing Examples RT BPCG for Imports Proposed Tariff Updates The Plan Appendix Proxy Generator Bus Prices OASIS Posting Updates Financial Impact Charges Review Next Steps 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 2

Background In 2010 and 2011 with Enhanced Interregional Transaction Coordination Phase 1, HQ 15 minute scheduling, and Phase 4, CTS with ISONE, the NYISO updated its special pricing rules for Proxy Generator Buses and created 50+ pricing rules These rules do not cover all potential scheduling scenarios that will be available to market participants The existing pricing rules do not address CTS-enabled designated Scheduled Lines or CTS-enabled Non-Competitive Proxy Generator Buses During the NYISO s review of these special pricing rules, the NYISO determined the rules can be distilled down to a core set of universally applicable pricing rules These universally applicable pricing rules provide an incremental improvement over today s rules by maintaining a consistent real-time Reference Bus Price across all internal and external buses 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 3

Unified Pricing Examples On the next few slides, the examples are illustrative of varying RTD and RTC LBMPs where the RTC LBMP is not a perfect prediction of the RTD LBMP. These examples were placed together at the request of NYISO stakeholders and are based on the original set of examples that can now be found in the Appendix. The NYISO expects that the proposed unified pricing rules should not substantively change the outcomes of the real-time energy market 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 4

Example Unified Pricing (A) Non-Competitive Bus Import Constrained TODAY'S RULES Max(RTC15 LBMP, Rolling RTC LBMP, Min(RTD LBMP, 0)) A B C D MAX(B,C,MIN(D,0)) DA LBMP RTC15 LBMP Rolling RTC LBMP RTD LBMP RT LBMP $ 40.00 $ (951.00) $ (951.00) $ 47.84 $ - $ 40.00 $ 8.00 $ 8.00 $ 51.23 $ 8.00 $ 40.00 $ 48.00 $ 48.00 $ 46.71 $ 48.00 $ 40.00 $ 1,034.00 $ 1,034.00 $ 2,672.48 $ 1,034.00 $ 40.00 $ (142.00) $ (142.00) $ (16.09) $ (16.09) PROPOSED UNIFIED RULES LBMP=REF+INTERNAL CONGESTION+EXTERNAL INTERFACE CONGESTION+LOSSES BORDER LBMP=REF+INTERNAL CONGESTION+LOSSES A B C D =A+B+C+D (E) =A+B+C (F) G IF E>MIN(F,0) THEN G+D ELSE MIN(G, 0) EXTERNAL REFERENCE INTERNAL INTERFACE BORDER Example BUS PRICE CONGESTION LOSSES CONGESTION RTC LBMP LBMP RTD LBMP RT LBMP 1 $ 30.00 $ 15.00 $ 3.00 $ (999.00) $ (951.00) $ 48.00 $ 47.84 $ - 2 $ 30.00 $ 15.00 $ 3.00 $ (40.00) $ 8.00 $ 48.00 $ 51.23 $ 11.23 3 $ 30.00 $ 15.00 $ 3.00 $ - $ 48.00 $ 48.00 $ 46.71 $ 46.71 4 $ 30.00 $ 2,000.00 $ 3.00 $ (999.00) $ 1,034.00 $ 2,033.00 $ 2,672.48 $ 1,673.48 5 $ (90.00) $ 15.00 $ 3.00 $ (70.00) $ (142.00) $ (72.00) $ (16.09) $ (16.09) 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 5

Example Unified Pricing (B) Non-Competitive Bus Export Constrained TODAY'S RULES Min(RTC15 LBMP, Rolling RTC LBMP, Max(RTD LBMP, SCUC LBMP)) A B C D MIN(B,C,MAX(D,0)) DA LBMP RTC15 LBMP Rolling RTC LBMP RTD LBMP RT LBMP $ 40.00 $ 1,047.00 $ 1,047.00 $ 47.84 $ 47.84 $ 40.00 $ 88.00 $ 88.00 $ 51.23 $ 51.23 $ 40.00 $ 48.00 $ 48.00 $ 46.71 $ 46.71 $ 40.00 $ 3,032.00 $ 3,032.00 $ 2,672.48 $ 2,672.48 $ 40.00 $ (2.00) $ (2.00) $ (82.18) $ (2.00) PROPOSED UNIFIED RULES LBMP=REF+INTERNAL CONGESTION+EXTERNAL INTERFACE CONGESTION+LOSSES BORDER LBMP=REF+INTERNAL CONGESTION+LOSSES A B C D =A+B+C+D (E) =A+B+C (F) G IF E<MAX(F,0) THEN G+D ELSE G EXTERNAL REFERENCE INTERNAL INTERFACE BORDER Example BUS PRICE CONGESTION LOSSES CONGESTION RTC LBMP LBMP RTD LBMP RT LBMP 6 $ 30.00 $ 15.00 $ 3.00 $ 999.00 $ 1,047.00 $ 48.00 $ 47.84 $ 47.84 7 $ 30.00 $ 15.00 $ 3.00 $ 40.00 $ 88.00 $ 48.00 $ 51.23 $ 51.23 8 $ 30.00 $ 15.00 $ 3.00 $ - $ 48.00 $ 48.00 $ 46.71 $ 46.71 9 $ 30.00 $ 2,000.00 $ 3.00 $ 999.00 $ 3,032.00 $ 2,033.00 $ 2,672.48 $ 2,672.48 10 $ (90.00) $ 15.00 $ 3.00 $ 70.00 $ (2.00) $ (72.00) $ (82.18) $ (12.18) 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 6

Background RT BPCG Eligibility of RT BPCG for Imports at Non-Competitive Proxy Generator Buses and Proxy Generator Buses associated with designated Scheduled Lines is limited for an hour when: The Rolling RTC is export constrained due to a NYCA Ramp Constraint; and The Rolling RTC is export constrained due to an Interface ATC or Interface Ramp Constraint for a quarter hour This settlement change was part of the set of changes proposed with the original special pricing rules that were designed to eliminate large settlement windfalls due to significant price distortions as discussed at the May 23 rd MIWG 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 7

Background RT BPCG (2) The RT BPCG non-eligibility was created to protect against the following potential outcome: Consider RTC is export constrained at a Non-Competitive Proxy Generator Bus and the RTC LBMP is $900 due to that export constraint Due to the high RTC LBMP, expensive import transactions were scheduled to counter the export constraint. Those imports were bid at $800. The special pricing rules fire due to the export constraint in RTC and the RT LBMP is set at the RTD LBMP which equals $50. The imports that bid $800 and were scheduled are due a RT BPCG, even though a distorted LBMP was the cause of those imports being scheduled. In this case, the presence of the export constraint renders the import non-eligible for the RT BPCG 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 8

Proposal RT BPCG Remove limitation of RT BPCG ineligibility at Non- Competitive Proxy Generator Buses and Proxy Generator Buses associated with designated Scheduled Lines due to NYCA Ramp Constraints With the introduction of 15 minute scheduling at the PJM Proxy Generator Buses, NYCA Ramp is competed for by all intra-hour transactions and no longer a concern as a source of price distortion Narrow the RT BPCG ineligibility at 15 minute scheduled Non-Competitive Proxy Generator Buses and Proxy Generator Buses associated with designated Scheduled Lines due to a quarter hour Interface ATC or Interface Ramp export constraint to apply only to that quarter hour 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 9

Long Term Plan - RT BPCG Long Term Plan In early 2014, remedy the non-eligibility rules for Non-Competitive Proxy Generator Buses and designated Scheduled Lines to ensure consistent pricing and settlement rules. In late 2014, implement CTS with PJM and eliminate real-time make whole payments for imports from PJM In late 2015, implement CTS with ISO-NE and eliminate real-time make whole payments for imports from ISO-NE In 2016-2017, eliminate real-time make whole payments for imports from HQ In 2017-2018, eliminate real-time make whole payments for imports from IESO This allows for the time to work with our other neighbors on the proposed changes to ensure that there are no unintended consequences 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 10

Proposed Tariff Actual Proposed Tariff Language can be found separately Updated MST Section 4.5 to revise the calculation of the Financial Impact Charge Updated MST Section 17.1.6 adding the new unified pricing rules and eliminating the current pricing rules for Proxy Generator Buses Updated MST Section 18.6.1 to revise the duration of ineligibility of RT BPCG during export constrained periods for Non-Competitive Proxy Generator Buses and Designated Scheduled Lines 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 11

The Plan Goals for 2013 The NYISO has a CTS internal system build out initiative underway where it intends to create a common set of special pricing rules that can be applied to all Proxy Generator Buses, including CTS-enabled designated Scheduled Lines and CTSenabled Non-Competitive Proxy Generator Buses. Goals for 2014 The NYISO intends to implement the revise special pricing rules early in the year. The NYISO, in conjunction with PJM, intends to implement the CTS scheduling capabilities at the NY-PJM interfaces by the end of the year. This is the CTS with PJM initiative. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 12

The Plan (2) The changes included with this early 2014 implementation would include updates to: Special Pricing Rules Financial Impact Charges RT BPCG Eligibility for Imports The NYISO is not seeking approval of the long term plan at this time OASIS Postings Price Verification/Corrections 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 13

Background Current Pricing For 15 minute transaction scheduling, Real-Time Proxy Generator Bus prices are based on comparing DAM, RTC15, Rolling RTC, RTD and Zero For Competitive Buses the RT price is based on either the RTC15 or Rolling RTC price for specific RTC constraints For Non-Competitive Buses the RT price is based on comparison of the DAM, RTC15, Rolling RTC, RTD and Zero for specific RTC constraints For designated Scheduled Lines the RT price is based on comparison of the DAM, RTC15, Rolling RTC, RTD and Zero for specific RTC constraints 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 15

Background Current Pricing For CTS transaction scheduling, fold the RTC external interface congestion* into the RTD prices when appropriate to create the Real-Time Prices for Proxy Generator Buses Competitive Buses For specific Rolling RTC constraints increment/decrement the RTD LBMP by the RTC external interface congestion from the specific constraint(s) to determine the Real-Time LBMP *RTC external interface congestion is the congestion associated with NYCA Ramp, Interface Ramp and/or Interface ATC Constraints that impact the specific Proxy Generator Bus 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 16

Background Non-Competitive Pricing In 2002, the NYISO established rules for External Transaction Settlements at Non-Competitive Proxy Buses http://www.nyiso.com/public/webdocs/markets_operations/committees/bic/meetin g_materials/2002-10-23/agenda9_trans_settle_proxy_buses.pdf The rules were created to address the possibility of significant price distortions at external proxy buses that lack competitive import or export alternative offers 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 17

Background Non-Competitive Pricing Non-competitive external proxy buses can cause inefficient market results in several ways. The external interface is derated in RTC to a point where the day-ahead scheduled flows cannot be maintained; Wheel Transactions are scheduled in RTC at levels that can only be accommodated by scheduling counterflow on the interface. When counterflow that was relied on to develop the interface schedule is not available in real-time, the remaining export transactions can benefit through large payments based on large negative RTC LBMPs which are no longer offset by the charges that would have been collected from the counterflow transaction. At an external proxy bus where there are insufficient competitive alternatives the described scenarios may result in the scheduling of inefficient transactions that do not reflect a competitive market result. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 18

Background Non-Competitive Pricing In 2002, real-time proxy bus prices were set using the endstate ECA B logic (current pricing rules for competitive proxy generator buses). When an external interface or DNI constraint is not binding in RTC, the real-time external proxy bus price is set by RTD. When an external interface or DNI constraint is binding in RTC, the real-time external proxy bus price is set by RTC regardless of whether the interface is import or export constrained. In each of these scenarios there is a binding external interface constraint and the prices generated by RTC would set the real-time price without the additional Non-Competitive rules. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 19

Background Non-Competitive Example TTC in the DAM is 1000 MW. In Real-Time, the limit must be reduced to 499 MW for reliability reasons. Company X offers all of its Day-Ahead scheduled imports at -$500/MWh. There are no competing import or export bids submitted by other market participants so the NYISO scheduling software is forced to reduce the 999 MW day-ahead scheduled import by 500 MW setting a price of -$500/MWh in RTC. Illustration of Real-Time flows and prices: 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 20

Background Non-Competitive Example In the example, the real-time settlement under the competitive pricing rules (ECA-b) would cost New York ISO participants $275,000. $250,000 is paid to Company X to buy out of their day-ahead scheduled imports. 500 MW at -$500/MWh. $25,000 is paid to internal New York generators that are dispatched up to meet New York load. 500 MW at $50/MWh. There are no counter-parties to these transactions so these costs would show up in Schedule One energy, congestion and loss residual accounts. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 21

Proposal Unified Pricing Establish a unified set of special pricing rules for Proxy Generator Buses This unified set of special pricing rules would provide greater certainty for Proxy Generator Bus prices and would create a universally applicable set of Special Pricing Rules for all Proxy Generator Buses 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 22

Proposal Unified Pricing (2) Competitive Buses leverage the current pricing rules for Variably Scheduled Proxy Generator Buses that are economically scheduled once every 15 minutes and extend those rules to handle Proxy Generator Buses that are economically scheduled only once per hour Remove existing special pricing rules that compare the RTC15 and Rolling RTC LBMPs 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 23

Proposal Unified Pricing (3) Non-Competitive Buses and Designated Scheduled Lines establish special pricing rules similar to the rules set forth in the CTS design where the RTD LBMP is incremented/decremented by the RTC external interface congestion when appropriate Remove existing special pricing rules that compare the RTC15 LBMP, Rolling RTC LBMP, RTD LBMP and the DAM LBMP/Zero 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 24

Unified Pricing Rules LBMP Review LBMP = Reference Bus Price + Marginal Cost of Congestion + Marginal Cost of Losses Marginal Cost of Congestion can be broken down into congestion from internal constraints and congestion from external interface constraints Marginal Cost of Congestion = Marginal Cost of Internal Congestion + Marginal Cost of External Interface Congestion 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 25

Unified Pricing Rules (2) Therefore, the Proxy Generator Bus LBMP is LBMP = Reference Bus Price + Marginal Cost of Internal Congestion + Marginal Cost of External Interface Congestion + Marginal Cost of Losses Finally, the LBMP at the NYCA Border for the Proxy Generator Bus (Border LBMP) is LBMP = Reference Bus Price + Marginal Cost of Internal Congestion + Marginal Cost of External Interface Congestion + Marginal Cost of Losses 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 26

Unified Pricing Rules (3) HQ Chateauguay Bus IESO Bruce Bus NE Sandy Pond Bus NYISO Reference Bus Border LBMP for NE Sandy Pond Bus External Interface Congestion for NE Sandy Pond Bus PJM Keystone Bus 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 27

Unified Pricing Rules (4) For Competitive Proxy Buses that are economically scheduled once per hour (Rule 1) RT LBMP = RTD LBMP + RTC15 External Interface Congestion For Competitive Proxy Buses that are economically scheduled once every 15 minutes (Rule 2) RT LBMP = RTD LBMP + Rolling RTC External Interface Congestion 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 28

Unified Pricing Rules (5) For Non-Competitive Proxy Buses that are economically scheduled once per hour When RTC15 has External Interface Congestion due to Interface ATC/Ramp Constraints in the Import Direction (Rule 3) If (RTC15 Border LBMP + RTC15 External Interface Congestion) > Min(RTC15 Border LBMP, 0) Then RT LBMP = RTD LBMP + RTC15 External Interface Congestion Else RT LBMP = Min(RTD LBMP, 0) When RTC15 has External Interface Congestion due to Interface ATC/Ramp Constraints in the Export Direction (Rule 4) If (RTC15 Border LBMP + RTC15 External Interface Congestion) < Max(RTC15 Border LBMP, 0) Then RT LBMP = RTD LBMP + RTC15 External Interface Congestion Else RT LBMP = RTD LBMP 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 29

Unified Pricing Rules (6) For Non-Competitive Proxy Buses that are economically scheduled once every 15 minutes When the Rolling RTC has External Interface Congestion due to Interface ATC/Ramp Constraints in the Import Direction (Rule 5) If (Rolling RTC Border LBMP + Rolling RTC External Interface Congestion) > Min(Rolling RTC Border LBMP, 0) Then RT LBMP = RTD LBMP + Rolling RTC External Interface Congestion Else RT LBMP = Min(RTD LBMP, 0) When the Rolling RTC has External Interface Congestion due to Interface ATC/Ramp Constraints in the Export Direction (Rule 6) If (Rolling RTC Border LBMP + Rolling RTC External Interface Congestion) < Max(Rolling RTC Border LBMP, 0) Then RT LBMP = RTD LBMP + Rolling RTC External Interface Congestion Else RT LBMP = RTD LBMP 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 30

Unified Pricing Rules (7) For designated Scheduled Lines that are economically scheduled once per hour When RTC15 has External Interface Congestion due to Interface ATC Constraints in the Import Direction (Rule 7) If (RTC15 Border LBMP + RTC15 External Interface Congestion) > Min(RTC15 Border LBMP, 0) Then RT LBMP = RTD LBMP + RTC15 External Interface Congestion Else RT LBMP = Min(RTD LBMP, 0) When RTC15 has External Interface Congestion due to Interface ATC Constraints in the Export Direction (Rule 8) If (RTC15 Border LBMP + RTC15 External Interface Congestion) < Max(RTC15 Border LBMP, 0) Then RT LBMP = RTD LBMP + RTC15 External Interface Congestion Else RT LBMP = RTD LBMP 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 31

Unified Pricing Rules (8) For designated Scheduled Lines that are economically scheduled once every 15 minutes When the Rolling RTC has External Interface Congestion due to Interface ATC Constraints in the Import Direction (Rule 9) If (Rolling RTC Border LBMP + Rolling RTC External Interface Congestion) > Min(Rolling RTC Border LBMP, 0) Then RT LBMP = RTD LBMP + Rolling RTC External Interface Congestion Else RT LBMP = Min(RTD LBMP, 0) When the Rolling RTC has External Interface Congestion due to Interface ATC Constraints in the Export Direction (Rule 10) If (Rolling RTC Border LBMP + Rolling RTC External Interface Congestion) < Max(Rolling RTC Border LBMP, 0) Then RT LBMP = RTD LBMP + Rolling RTC External Interface Congestion Else RT LBMP = RTD LBMP 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 32

Example - Unified Pricing On April 29, 2013 from 16:15 to 16:30, the PJM Keystone Interface ATC constraint was binding in the Rolling RTC The external interface congestion associated with this external interface constraint was $8.39 The RTC Keystone LBMP was $45.45 Keystone is a competitive Proxy Generator Bus The RTD Keystone Bus LBMPs for the 16:15 16:30 period were: 16:15 to 16:20 $35.57 16:20 to 16:25 $37.11 16:25 to 16:30 $35.04 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 33

Example - Unified Pricing (2) The Real-Time settlement LBMPs for the Keystone Bus using the current special pricing rules for the 16:15 16:30 period were: 16:15 to 16:20 $45.45 16:20 to 16:25 $45.45 16:25 to 16:30 $45.45 The Real-Time settlement LBMPs for the Keystone Bus using the unified special pricing rules (Rule 2) for the 16:15 16:30 period would have been: 16:15 to 16:20 $35.57 + $8.39 = $43.96 16:20 to 16:25 $37.11 + $8.39 = $45.50 16:25 to 16:30 $35.04 + $8.39 = $43.43 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 34

Example - Unified Pricing (3) On April 29, 2013 from 16:15 to 16:30, the PJM Keystone Interface ATC constraint was binding in the Rolling RTC The external interface congestion associated with this external interface constraint was $8.39 The Rolling RTC Keystone LBMP was $45.45 The DAM Keystone LBMP was $31.87 for HB16 The RTD Keystone Bus LBMPs for the 16:15 16:30 period were: 16:15 to 16:20 $35.57 16:20 to 16:25 $37.11 16:25 to 16:30 $35.04 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 35

Example - Unified Pricing (4) Assume Keystone is a non-competitive, 15 minute scheduled, Proxy Generator Bus for this example Keystone is Export Constrained Rolling RTC LBMP Keystone External Interface Congestion Keystone = RTC Border LBMP Keystone $45.45 - $8.39 = $37.06 Apply Pricing Rule 5 Test Rolling RTC LBMP < Max(RTC Border LBMP, 0) $45.45 < Max($37.06, $0) Does not pass 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 36

Example - Unified Pricing (5) In the example, proposed unified special Pricing Rule 5 sets the Real-Time LBMP equal to the RTD LBMPs for each of the three RTD intervals. The Real-Time settlement LBMPs for the Keystone Bus using the unified special pricing rules for the 16:15 16:30 period would be: 16:15 to 16:20 $35.57 16:20 to 16:25 $37.11 16:25 to 16:30 $35.04 Note: Since the DAM LBMP for Keystone was $31.87 that the current noncompetitive pricing rules would also result in using the RTD LBMPs above If the DAM LBMP was greater than the RTD LBMPs above, the current noncompetitive pricing rules would have set the real-time LBMPs to the DAM LBMP. The proposed unified special pricing rules do not have any conditions that would set the real-time LBMPs to the DAM LBMP. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 37

Example Unified Pricing (6) Non-Competitive Bus Import Constrained TODAY'S RULES Max(RTC15 LBMP, Rolling RTC LBMP, Min(RTD LBMP, 0)) A B C D MAX(B,C,MIN(D,0)) DA LBMP RTC15 LBMP Rolling RTC LBMP RTD LBMP RT LBMP $ 40.00 $ (951.00) $ (951.00) $ 48.00 $ - $ 40.00 $ 8.00 $ 8.00 $ 48.00 $ 8.00 $ 40.00 $ 48.00 $ 48.00 $ 48.00 $ 48.00 $ 40.00 $ 1,034.00 $ 1,034.00 $ 2,033.00 $ 1,034.00 $ 40.00 $ (142.00) $ (142.00) $ (72.00) $ (72.00) PROPOSED UNIFIED RULES LBMP=REF+INTERNAL CONGESTION+EXTERNAL INTERFACE CONGESTION+LOSSES BORDER LBMP=REF+INTERNAL CONGESTION+LOSSES A B C D =A+B+C+D (E) =A+B+C (F) IF E>MIN(F,0) THEN E ELSE MIN(F, 0) EXTERNAL REFERENCE INTERNAL INTERFACE Example BUS PRICE CONGESTION LOSSES CONGESTION RTC LBMP BORDER LBMP RT LBMP 1 $ 30.00 $ 15.00 $ 3.00 $ (999.00) $ (951.00) $ 48.00 $ - 2 $ 30.00 $ 15.00 $ 3.00 $ (40.00) $ 8.00 $ 48.00 $ 8.00 3 $ 30.00 $ 15.00 $ 3.00 $ - $ 48.00 $ 48.00 $ 48.00 4 $ 30.00 $ 2,000.00 $ 3.00 $ (999.00) $ 1,034.00 $ 2,033.00 $ 1,034.00 5 $ (90.00) $ 15.00 $ 3.00 $ (70.00) $ (142.00) $ (72.00) $ (72.00) 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 38

Example Unified Pricing (7) Non-Competitive Bus Export Constrained TODAY'S RULES Min(RTC15 LBMP, Rolling RTC LBMP, Max(RTD LBMP, SCUC LBMP)) A B C D MIN(B,C,MAX(D,0)) DA LBMP RTC15 LBMP Rolling RTC LBMP RTD LBMP RT LBMP $ 40.00 $ 1,047.00 $ 1,047.00 $ 48.00 $ 48.00 $ 40.00 $ 88.00 $ 88.00 $ 48.00 $ 48.00 $ 40.00 $ 48.00 $ 48.00 $ 48.00 $ 48.00 $ 40.00 $ 3,032.00 $ 3,032.00 $ 2,033.00 $ 2,033.00 $ 40.00 $ (2.00) $ (2.00) $ (72.00) $ (2.00) PROPOSED UNIFIED RULES LBMP=REF+INTERNAL CONGESTION+EXTERNAL INTERFACE CONGESTION+LOSSES BORDER LBMP=REF+INTERNAL CONGESTION+LOSSES A B C D =A+B+C+D (E) =A+B+C (F) IF E<MAX(F,0) THEN E ELSE F EXTERNAL REFERENCE INTERNAL INTERFACE Example BUS PRICE CONGESTION LOSSES CONGESTION RTC LBMP BORDER LBMP RT LBMP 6 $ 30.00 $ 15.00 $ 3.00 $ 999.00 $ 1,047.00 $ 48.00 $ 48.00 7 $ 30.00 $ 15.00 $ 3.00 $ 40.00 $ 88.00 $ 48.00 $ 48.00 8 $ 30.00 $ 15.00 $ 3.00 $ - $ 48.00 $ 48.00 $ 48.00 9 $ 30.00 $ 2,000.00 $ 3.00 $ 999.00 $ 3,032.00 $ 2,033.00 $ 2,033.00 10 $ (90.00) $ 15.00 $ 3.00 $ 70.00 $ (2.00) $ (72.00) $ (2.00) 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 39

Background Today, the NYISO produces and posts publically Hour- Ahead Market ( HAM ) prices See the NYISO OASIS http://www.nyiso.com/public/markets_operations/market_data/pricing_data/index.jsp The term Hour-Ahead Market ( HAM ) is not a defined term The NYISO MST discusses RTC postings See the NYISO MST Section 4.4.1.4 RTC will make decisions and post information in a series of fifteen-minute runs which are described below. 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 41

Background (2) With CTS, special pricing rules will be modified to fold RTC Proxy Generator Bus constraints into RTD LBMPs, when appropriate See the NYISO MST, Att B, Section 17.1.6 from Dec 2011 CTS Filing 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 42

Proposal HAM Prices Realign Real-Time postings to provide stakeholders with Authoritative and Intuitive Real-Time Energy Market information Combine the NYISO OASIS RTM and HAM postings into one cohesive set of RTM postings Settlement Postings RTM/HAM LBMPs Zonal and Generator Ancillary Services Combine Real-Time & Hour-Ahead Analysis and Visualization Postings Pricing Data Mart Combine RTM & HAM prices Zone Maps and Graphs 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 43

Proposal Real-Time Prices Update Real-Time Price Postings to include look ahead information from RTC Real-Time Price Postings would include current Real-Time Price from RTD (including application of unified pricing rules) and advisory Real-Time Prices from RTC, which would be subsequently overwritten by the final Real-Time Price These postings include: RTM LBMP Zonal and Generator Custom Reports Public Data Mart 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 44

Proposal Other Postings Prescheduled ATC/TTC Rename to Long Term ATC/TTC ATC/TTC Change DAM and HAM within the report to Day-Ahead and Hour-Ahead Update DAM ATC to show ATC from the final SCUC pass Make use of RT, Real-Time, Day-Ahead, DAM consistent within the Market & Operational Data postings Standardize Terms using Real-Time, Hour-Ahead and Day- Ahead Remove use of the term HAM 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 45

Background - FIC The Financial Impact Charge (FIC) applies to transactions scheduled at all Proxy Generator Buses The FIC only applies to transactions that receive a non-zero schedule from RTC for any part of the hour The FIC is assessed for external transactions on an interval by interval basis as: For Imports: Max((RTC Schedule RT Schedule)*[Max((RTD LBMP RTC LBMP),0),0) For Exports: Max((RTC Schedule RT Schedule)*[Max((RTC LBMP RTD LBMP),0),0) For Wheel-Throughs: Assessed as both a failed import and failed export 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 47

Proposal - FIC To align the proposed unified pricing rules with the FIC, the FIC will be based on the RT marginal cost of congestion at relevant Proxy Generator Bus price as follows: The FIC will be assessed for external transactions on an interval by interval basis as: For Imports: Max((RTC Schedule RT Schedule)*Max(RT Congestion,0),0) For Exports: Max((RTC Schedule RT Schedule)*Min(RT Congestion,0)*-1,0) For Wheel-Throughs: Assessed as both a failed import and failed export RT Congestion for the Proxy Generator Bus = RT Marginal Cost of Congestion = Marginal Cost of Internal Congestion + Marginal Cost of External Interface Congestion 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 48

Next Steps Review Tariff Updates at the June 6, 2013 MIWG If necessary, bring updates to additional MIWG meetings Request Approval of Tariff Language at August 2013 BIC Request Approval of Tariff Language at August 2013 MC File Tariff Language early Q4 2013 2013 New York Independent System Operator, Inc. All Rights Reserved. DRAFT FOR DISCUSSION PURPOSES ONLY 49