Economic Dispatch: Concepts, Practices and Issues 

 Presentation to the Joint Board 

 for the Study of Economic Dispatch 

 FERC Staff 

 Palm Springs, California 

 November 13, 2005 
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Overview

• What is economic dispatch? 

• Planning for tomorrow’s dispatch 

• Dispatching the power system today 

• Factors limiting the effectiveness of dispatch in minimizing customer 

costs 

• Issues for consideration in the joint board report 

What is economic dispatch? 

• The definition of economic dispatch provided in EPAct section 1234 is: 

“The operation of generation facilities to produce energy at the lowest 

cost to reliably serve consumers, recognizing any operational limits of 

generation and transmission facilities.” 

• Most electric power systems dispatch their own generating units and their 

own purchased power in a way that may be said to meet this definition. 

• There are two fundamental components to economic dispatch: 

o Planning for tomorrow’s dispatch 

o Dispatching the power system today 
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Planning for Tomorrow’s Dispatch 

• Scheduling generating units for each hour of the next day’s dispatch 

o Based on forecast load for the next day 

o Select generating units to be running and available for dispatch 

the next day (operating day) 

o Recognize each generating unit’s operating limit, including its: 

 Ramp rate (how quickly the generator’s output can be 

changed) 

 Maximum and minimum generation levels 

 Minimum amount of time the generator must run 

 Minimum amount of time the generator must stay off 

once turned off 

o Recognize generating unit characteristics, including: 

 Cost of generating, which depends on: 

• its efficiency (heat rate) 

• its variable operating costs (fuel and non-fuel) 

 Variable cost of environmental compliance 

 Start-up costs 

o Next day scheduling is typically performed by a generation 

group or an independent market operator 

• Reliability Assessment 

o Analyze forecasted load and transmission conditions in the area 

to ensure that scheduled generation dispatch can meet load 

reliably. 

o If the scheduled dispatch is not feasible within the limits of the 

transmission system, revise it. 

o This reliability assessment is typically performed by a 

transmission operations group 
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Dispatching the Power System Today 

• Monitor load, generation and interchange (imports/exports) to ensure 

balance of supply and load 

o Monitor and maintain system frequency at 60 Hz during dispatch 

according to NERC standards, using Automatic Generation 

Control (AGC) to change generation dispatch as needed 

o Monitor hourly dispatch schedules to ensure that dispatch for the 

next hour will be in balance 

• Monitor flows on transmission system 

o Keep transmission flows within reliability limits 

o Keep voltage levels within reliability ranges 

o Take corrective action, when needed, by: 

 Limiting new power flow schedules 

 Curtailing existing power flow schedules 

 Changing the dispatch 

 Shedding load 

• This monitoring is typically performed by the transmission operator 
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Area Factors Limiting the Effectiveness of Dispatch in Minimizing 

Customer Costs

• Geographic area included 

The size of the geographic region over which the dispatch occurs affects 

the level of costs: that is, which generation resources and which 

transmission facilities are considered in planning and economic dispatch. 

• Generation resources included 

Which generation resources in the area are included in the planning and 

economic dispatch, and whether they are included in the same manner, 

affects the level of costs. 

• Transmission facilities included 

What transmission facilities are included in the planning and economic 

dispatch, and how the reliability security limits of the transmission 

facilities are incorporated into the economic dispatch. 
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Implementation Factors Limiting Effectiveness of Dispatch in 

Minimizing Customer Costs

• Frequency of the dispatch 

Performing an economic dispatch more frequently (e.g., 5 or 15 minutes 

rather than each hour) affects the level of costs. 

• Communication of information 

Generation operators, transmission owners, and load serving entities must 

provide accurate and current information to those performing the 

planning and dispatch functions. 

Those performing planning and dispatch must provide accurate and 

current dispatch instructions to generation operators, transmission 

operators and load serving entities. 

Inadequate or incomplete communications affects the level of costs of the 

economic dispatch. 

• Software tools for dispatch and information 

Reliable and secure computer software is essential for rapidly responding 

to system changes to maintain power system reliability, while selecting 

the lowest cost generators to dispatch. 

Obsolete software affects the level of costs achieved by the economic 

dispatch. 

• Coordination of dispatch across regions 

Where there are multiple, independently performed, dispatches in a 

region, the effectiveness of coordination agreements and their 

implementation affect the level of costs of the economic dispatch. 
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Issues for Consideration in the Joint Board Report 

• What is the current practice of economic dispatch in each region, and 

what is the scope of this dispatch? 

• What improvements could be considered? 

• What are the potential benefits and costs of those improvements? 

• How would those improvements affect reliability? 

• Are there institutional, regulatory, or statutory impediments to the 

identified improvements?