Wholesale Power Markets' Price Formation

Balancing a Diverse Resource Mix with System Resiliency & Reliability

May 2, 2019 | Philadelphia, PA ::

0519-price-formation

Today’s wholesale power markets administered by system operators (ISOs and RTOs) are a marvel of complexity.  From their nascent stages in the 1990s as vehicles that facilitated more open access to the grid and stimulated competition with the objective of reducing electricity bills, they have evolved into sophisticated mechanisms that manage the flow of electrons across more than 30 U.S. states and Canadian provinces.   The market designs continue to be refined as the technology enables greater granularity in pricing and scheduling and the system resource mixtures evolve.  Continued refinements and enhancements help to ensure the most efficient possible operation of the system for reliably delivering the electricity to power customers.

Not surprisingly, it has been challenging for these massive wholesale power markets to operate efficiently and reliably yet still satisfy many, often competing, interests.  This is especially true given the interplay of energy and capacity market mechanisms designed to ensure the development of resources to accommodate long-term grid sufficiency.

This conference will explore how the three types of wholesale markets – energy, capacity and reserves (ancillary services) – are achieving their specific missions of ensuring reliable and efficient electricity supply.  It will consider how these different elements of the overall market design must interact and respond to current and ongoing power system changes, such as increases in demand response, multiplying distributed generation, the emergence of storage, environmental constraints, renewable energy proliferation, load stagnation, baseload generation erosion and other factors re-shaping the electricity industry.  And it will examine the tensions markets are confronting as they work to balance traditional efficiency functions with state-sponsored and market participant initiatives that seek to incorporate financial externalities into market processes.

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Learning Outcomes

• Discuss market design relationships between energy, reserve (ancillary services), capacity markets, and transmission planning
• Evaluate specific ISO initiatives to reconcile market anomalies and processes
• Review market measures to address evolution in the generation asset base in all U.S. wholesale electricity markets
• Examine whether capacity markets have succeeded in their efforts to solve the “missing money” problem and are a superior alternative to energy-only market designs
• Assess whether the markets have yet developed mechanisms to recognize that not all generation may be created equal, and what to do about it
• Analyze state vs federal jurisdictional (“around market”) issues
• Discuss state-mandated infrastructure subsidies and their effect on wholesale electricity market efforts to address evolution in the generation asset base

Credits

EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.

EUCI is authorized by IACET to offer 1.1 CEUs for this event and 0.7 CEUs for the workshop.

Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.

Course CPE Credits: 12.0 conference, 8.0 workshop
There is no prerequisite for this Course.
Program field of study: Specialized Knowledge
Program Level: Basic
Delivery Methood: Group-Live
Advanced Preperation: None

EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

Requirements for Successful Completion of Program

Participants must sign in/out each day and be in attendance for the entirety of the conference to be eligible for continuing education credit.

Instructional Methods

PowerPoint presentations and case studies will be used in program.

Thursday, May 2, 2019

8:00 – 8:30 a.m. :: Registration and Continental Breakfast

8:30 – 10:00 a.m. :: Market Initiatives in ISOs/RTOs to Address Price Formation Issues

• California ISO (CAISO)

Guillermo Bautista Alderete, Director – Market Analysis and Forecasting

• ERCOT

David Maggio, Senior Manager – Market Analysis and Validation

• Midcontinent ISO (MISO)

Jeff Bladen, Executive Director – Market Services, MISO (invited)

10:00 – 10:20 a.m. :: Morning Break

10:20 – 11:45 a.m. :: Market Initiatives in ISOs/RTOs to Address Price Formation Issues (continued)

• New England ISO (ISO-NE)

Chris Parent, Director – Market Development (invited)

• New York ISO (NYISO)

Robert Pike, Director – Market Structure and Product Management

• PJM Interconnection

Adam Keech, Executive Director – Market Operations, PJM Interconnection

11:45 a.m. – 1:00 p.m. :: Group Luncheon

1:00 – 2:00 p.m. :: Keynote Speech

William Hogan, Raymond Plank Professor of Global Energy Policy at Harvard University and Research Director, Harvard Electricity Policy Group

2:00 – 3:30 p.m. :: Why Are We Still Asking the Question — Is There a Need for Capacity Markets?

• Complex solution to a simple problem?
• Are these instruments working at counter purposes to achieving a resilient grid?
• What price signals are capacity markets sending and are they the right ones?
• How much price formation improvements and ramping considerations (products or OR, etc) will help relative to more and more hours of zero or negative prices?
• Is the energy-only market working for Texas, why not all the ISOs?
• Does the emergence of renewable and other variable energy resources — which demand of the system more flexibility than baseload resources deliver — call for a different paradigm to ensure the development of sufficient grid resource adequacy in the future?
• Is this a ‘Missing Money’ or a ‘Missing the Problem’ issue or both?
• Will capacity markets be able to compensate new entry over the longer term, or just be a vehicle to “top up” payments to keep existing resources online during a transition period to less and less carbon emissions?

Moderator: Joseph Cavicchi, Executive Vice President, Compass Lexecon

Ron Coutu, Principal, Strategic Market Design

Guillermo Bautista Alderete, Director – Market Analysis and Forecasting

Joseph Bowring, PJM Market Monitor and President, Monitoring Analytics

Steve Lieberman, Director – PJM Regulatory Affairs, American Municipal Power (AMP)

Abram Klein, Managing Partner, Appian Way Energy Partners

3:30 – 3:50 p.m. :: Afternoon Break

3:50 – 5:30 p.m. :: What Are the FERC and Different System Operators Doing to Improve Price Formation Signals Across All Their Market Platforms?

This segment will consider whether the market changes referenced below are the results of, or — in the case of what is proposed but not yet implemented — have yielded empirical analyses or actual market behaviors that have improved market outcomes.

• Multiple FERC Orders
• PJM price formation task force
• ERCOT ORDC refinements
• MISO’s extended LMP
• CAISO ramping products
• ISO – NE multi-day ahead market (MDAM) proposal

Moderator: Mike Borgatti, Vice President – RTO Services & Regulatory Affairs, Gabel Assocs

Devin Hartman, CEO, Electricity Consumers Resource Council (ELCON)

Noha Sidhom, CEO, TPC Energy

Adam Keech, Executive Director – Market Operations, PJM Interconnection

Beth Garza, Director – ERCOT Independent Market Monitoring and Vice President, Potomac Economics invited

5:30 p.m. :: Program Adjournment for Day

Friday, May 3, 2019

7:45 – 8:15 a.m. :: Continental Breakfast

8:15 – 10:00 a.m. :: LMP in the 21st Century:  Does It Need to Be Updated or Reach Deeper Down into the Power System to Handle the Future ? How Can It Function Effectively in an Expanding Renewable Resource Paradigm?

• Are low fuel prices and a changing resource mix driving a need to revisit energy price formation?
• Do traditional LMPs appropriately reflect the cost of resources needed to serve load?
• Approaches to pricing for fast-start and block-loaded resources
• Are broader energy price reforms – such as Extended LMP and Convex Hull pricing approaches – required?
• The emergence of storage as a market-spanning, compensation-worthy resource
• Retirements due to fuel switching
• Static load growth due to DR, adoption of energy conservation measures proliferation of DERs and other phenomena
• Emergency events and how they impact the RT price

Abram Klein, Managing Partner, Appian Way Energy Partners

Jason Barker, Director – Wholesale Market Development, Exelon

David Maggio, Senior Manager – Market Analysis and Validation, ERCOT

John Estes, Partner, Skadden Arps Slate Meagher & Flom LLP

10:00 – 10:20 a.m. :: Morning Break

10:20 a.m. – 12:00 p.m. :: Addressing State Policy Initiatives, Subsidies and Their Impact on Markets… 

• Nuclear subsidies
• Zero emission credits (ZECs)
• Renewable energy portfolio standards (RPS)
• RMR and other marginal resources
• Carbon pricing

…And Considering the Impacts of Market Resource Subsidization Policies, Such As

• Non-market mechanism flattening of the resource supply curves
• Impact on already-depressed generator margins
• Hindering recently-constructed resources when they eventually need to re-finance

Moderator:  Ron Coutu, Principal,  Strategic Market Design

Adam Keech, Executive Director – Market Operations, PJM Interconnection

Joseph Bowring, CEO, Monitoring Analytics

Jeff Bladen, Executive Director – Market Services, MISO (invited)

12:00 p.m. :: Conference Adjourns

Critical Elements of Capacity Market Design

Wednesday, May 1, 2019

Overview

This workshop will provide an in-depth overview of the fundamentals of capacity market design. In particular, it will discuss the underlying benefits associated with capacity markets and the tradeoffs between the use of capacity markets and scarcity pricing, focusing on key market design issues.

Learning Outcomes

• Assess the underlying elements of capacity market design including market power implications, forward capacity procurement, and locational issues
• Identify how capacity markets are designed to achieve resource adequacy and price stability
• Examine the key drivers of the development of capacity markets including the impacts on borrowing and technology choice
• Recognize the role of demand-side resources and renewables in capacity markets

Agenda

8:00 – 8:30 a.m. :: Registration and Continental Breakfast

8:30 a.m. 4:30 p.m. :: Workshop Timing

11:45 a.m. – 1:00 p.m. :: Group Luncheon

1. Role and Design of Capacity Markets
   • Why capacity markets?
   • Basic capacity market design
   • Defining capacity requirements
2. Fundamental Capacity Market Issues
   • Deliverability and locational requirements
   • Transmission expansion
   • Generation outages
   • Resource availability and energy limited resources
   • Demand response
   • Imports and exports
   • Retail access
3. Evolution of Capacity Market Design
   • ICAP demand curves
   • Forward capacity markets and long-term price signals
   • Hybrid energy capacity markets
   • Peak energy adjustments
4. Market Power Checks and Balances
5. Review of How North American System Operators Implement Capacity Concepts
   • California ISO (CAISO)
   • ISO New England (ISO-NE)
   • Midwest ISO (MISO)
   • New York ISO (NYISO)
   • PJM Interconnection (PJM)
   • Southwest Power Pool (SPP)

Workshop Instructor

Joseph Cavicchi, Executive Vice President, Compass Lexecon

Joseph Cavicchi is executive vice president with Compass Lexecon (Boston), an FTI Company. He provides wholesale and retail electricity market regulatory economic analyses in connection with the restructuring of the US electricity industry. In particular, he advises clients in a variety of Federal Energy Regulatory Commission (FERC) and state regulatory proceedings, and files testimony and affidavits supported by economic analyses. His work focuses extensively on analyzing the competitiveness of the U.S. wholesale electricity markets and developing an in-depth understanding of the operations of the wholesale markets. Mr. Cavicchi’s work also involves conducting wholesale market power screens, analyzing the competitive impact of mergers and acquisitions, and overseeing the development of complex analytical modeling to assess electricity system operations.

Jason Barker, Director – Wholesale Market Development, Constellation/Exelon

Jeff Bladen, Executive Director – Market Services, MISO (invited)

Guillermo Bautista Alderete, Director – Market Analysis and Forecasting, California ISO (CAISO)

Mike Borgatti, Vice President – RTO Services & Regulatory Affairs, Gabel Assocs

Joseph Bowring, CEO, Monitoring Analytics

Joseph Cavicchi, Executive Vice President, Compass Lexecon – (NEPGA)

Ron Coutu, Principal,  Strategic Market Design

John Estes, Partner, Skadden Arps Slate Meagher & Flom LLP

Devin Hartman, CEO, Electricity Consumers Resource Council (ELCON)

William Hogan, Raymond Plank Professor of Global Energy Policy at Harvard University and Research Director, Harvard Electricity Policy Group

Adam Keech, Executive Director – Market Operations, PJM Interconnection

Abram Klein, Managing Partner, Appian Way Energy Partners

Steve Lieberman, Director – PJM Regulatory Affairs, American Municipal Power (AMP)

David Maggio, Senior Manager – Market Analysis and Validation, ERCOT

Chris Parent, Director – Market Development (invited)

Robert Pike, Director – Market Structure and Product Management, New York ISO (NYISO)

Noha Sidhom, CEO, TPC Energy

REGISTER NOW FOR THIS EVENT:

Wholesale Power Markets' Price Formation

May 2, 2019 | Philadelphia, PA

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Critical Elements of Capacity Market Design

May 1

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