From: owner-nyiso_tech_exchange@lists.thebiz.net
To: market_relations@nyiso.com, nyiso_tech_exchange@global2000.net
Date: 2001-05-22 14:04:00+00:00
Subject: RE: $20,000 DAM adder

Brian_Grant@cargill.com writes to the NYISO_TECH_EXCHANGE Discussion List:

I have not had any response to questions about whether Don is right
about NYISO simply going back to the way things were, but making that
assumption, I offer the following solution:

In my mind the way the market should work is that there should be "bid
guarantees" in real time.  I do not agree with the fact that there are
production cost guarantees and not sink price cost guarantees.  If there
were guarantees to all HAM bids, that would in turn lead to a more
efficient northeastern marketplace.

An example of an export:

I bid in the DAM to export power from NYISO to PJM. I bid 50, DAM clears
40, so get accepted to export 100 mw's.  Before the HAM commitments take
place, prices in NYISO are 200 while prices in PJM are 20, so I decide
it would be economical to leave the power in NYISO.  I have the ability
to change the HAM bid created from my accepted DAM bid, so I change the
bid to 100...saying that if NYISO is willing to pay 100, then I am
willing to cut my schedule to PJM...NYISO is forecasting 200, so they
cut my schedule.  One of two things happens now, if realtime clears
above my 100 HAM bid, then I buy at 40(DAM) and sell at realtime...If
realtime clears at under my 100 HAM bid, then NYISO needs to provide the
difference between my HAM bid and the realtime px.  The logic here is
that in effect, I already owned power at 40(just like a 40 generator)
and was willing to sell back my "generator" at 100, so if someone
commits my generator at 100, then they should be responsible for
compensating me.

An example of an import:

I bid into the DAM to import power to NYISO from PJM.  I bid 50, DAM
clears 60, so I get accepted to import 100 mw's.  Before the HAM
evaluation, prices in PJM are 200 while prices in NYISO are 30.  So I go
into my HAM bid and change the price from 50 to 150...HAM predicts 30,
cuts my import...thereby I am selling the power at 60, and buying it
back real time...once again two things can occur here...realtime clears
under my 150 bid, so I sell 60(DAM) and buy realtime....or realtime
clears at over my bid...in which case I sell 60(DAM) and buy back at my
150 HAM bid....the logic here is that my power at PJM(my generator)
which had committed itself at 60 in the DAM, was willing to stay flowing
to NYISO at up to 150(my HAM bid)...ie I am willing to take the
financial risk between 60 and 150....NYISO did not commit me in HAM, so
my financial risk should be capped at what I am willing to risk, not
what NYISO says I should be willing to risk

Brian Grant
Cargill-Alliant LLC
952-984-3915

-----Original Message-----
From: barkerde@nmenergy.com [mailto:barkerde@nmenergy.com]
Sent: Tuesday, May 22, 2001 10:02 AM
To: nyiso_tech_exchange@global2000.net
Subject: $20,000 DAM adder



barkerde@nmenergy.com writes to the NYISO_TECH_EXCHANGE Discussion List:



Some feed back so far...... There appears to be a problem brewing with
the
planned implementation of the May 29 adjustment that removes the $20K
bias from
the DAM external transactions.I am awaiting a call back on my concerns
from the
NYISO. By occasionally settling hourly prices through BME or
occasionally
settling after SCD sets RT prices, depending on the extistence or non
existence
of congestion, a problem that we thought we fixed many months ago will
reappear
with the removal of the $20K bias.Here is an example of my musings....

DAM bid gets accepted at  $50 ( Import from PJM)  .....  BME  then runs
(No
constraints)  evaluating the import HAM bids and other items that have
BMEprovide a $40 price.... DAM gets cut  , looks like  a $10 profit  (
providing
your loss in PJM doesn't exceed $10) . Due to in hour operations the RT
price
clears at $60. You loooooooose!!  Sound familiar? After getting beat up
like
this the MP's went through the committee structure and had the $20,000
adder
used for DAM (except IS+) to protect against this. The clearing at BME
for all
external  proxy busses removed the problem so the $20,000 adder was
removed. Now
the external interfaces only clear at BME if they are constrained. Are
we taking
a huge step back on purpose or was there a mistake in implementation?