Restructured Electrical Power Systems: Operation: Trading, and Volatility

by Shahidehpour; Mohammad

• ISBN13: 9780824706203
• ISBN10: 082470620X
• Edition: 1st
• Format: Hardcover
• Copyright: 2001-06-06
• Publisher: CRC Press

Summary

An examination of key issues in electric utilities restructuring. It covers: electric utility markets in and out of the USA; the Open Access Same-time Information System; tagging transactions; trading energy; hedging tools for managing risks in various markets; pricing volatility, risk and forecasting; regional transmission organization; and more. The text contains acronyms, a contract specifications sample, examples, and nearly 500 bibliographic citations, tables, and drawings.

Author Biography

Mohammad Shahidehpour is Professor, Electrical and Computer Engineering Department, Illinois Institute of Technology, Chicago Muwaffaq Alomoush is Assistant Professor, Electrical Power Engineering Department, Yarmouk University, Irbid, Jordan

Table of Contents

Series Introduction	iii
H. Lee Willis
Preface	v
Overview of Key Issues in Electric Utilities Restructuring	1	(74)
Introduction	1	(4)
Restructuring Models	5	(7)
PoolCo Model	7	(3)
Bilateral Contracts (Direct Access) Model	10	(1)
Hybrid Model	11	(1)
Independent System Operator (ISO)	12	(10)
Background	12	(3)
The Role of ISO	15	(7)
Power Exchange (PX)	22	(4)
Market Clearing Price (MCP)	26	(1)
Market Operations	26	(12)
Day-Ahead and Hour-Ahead Markets	26	(2)
Elastic and Inelastic Markets	28	(10)
Market Power	38	(7)
Stranded Costs	45	(1)
Transmission Pricing	45	(8)
Contract Path Method	46	(4)
The MW-Mile Method	50	(3)
Congestion Pricing	53	(4)
Congestion Pricing Methods	56	(1)
Transmission Rights	57	(1)
Management of Inter-Zonal/Intrazonal Congestion	57	(18)
Solution Procedure	58	(3)
Formulation of Inter-Zonal Congestion Subproblem	61	(1)
Formulation of Intra-Zonal Congestion Subproblem	62	(13)
Electric Utility Markets in the United States	75	(54)
California Markets	75	(28)
ISO	77	(1)
Generation	78	(1)
Power Exchange	78	(1)
Scheduling Coordinator	79	(4)
UDCs, Retailers and Customers	83	(1)
Day-Ahead and Hour-Ahead Markets	83	(16)
Block Forwards Market	99	(2)
Transmission Congestion Contracts (TCCs)	101	(2)
Comments	103	(1)
New York Market	103	(6)
Summary	103	(2)
Market Operations	105	(4)
Comments	109	(1)
PJM Interconnection	109	(3)
Ercot ISO	112	(4)
New England ISO	116	(5)
Midwest ISO	121	(5)
MISO's Functions	122	(1)
Transmission Management	123	(1)
Transmission System Security	123	(1)
Congestion Management	124	(1)
Ancillary Services Coordination	125	(1)
Maintenance Schedule Coordination	125	(1)
Summary of Functions of U.S. ISOs	126	(3)
OASIS: Open Access Same-Time Information System	129	(56)
Introduction	129	(4)
What is OASIS?	131	(2)
Ferc Order 889	133	(1)
Structure of OASIS	134	(9)
Historical Background	134	(3)
Functionality and Architecture of OASIS	137	(6)
Implementation of Oasis Phases	143	(3)
Phase 1	144	(1)
Phase 1-A	145	(1)
Phase 2	146	(1)
Posting of Information	146	(12)
Types of Information Available on OASIS	146	(3)
Information Requirements of OASIS	149	(2)
Users of OASIS	151	(7)
Transfer Capability on OASIS	158	(7)
Definitions	158	(1)
Transfer Capability Issues	159	(1)
ATC Calculation	160	(1)
TTC Calculation	161	(2)
TRM Calculation	163	(1)
CBM Calculation	164	(1)
Transmission Services	165	(4)
Methodologies to Calculate ATC	169	(10)
Experiences with OASIS in Some Restructuring Models	179	(6)
PJM OASIS	179	(2)
ERCOT OASIS	181	(4)
Tagging Electricity Transactions Transaction Information System	185	(36)
Introduction	185	(1)
Definition of Tagging	186	(1)
Historical Background on Tagging	187	(2)
How Does a Tagging Process Work?	189	(10)
Electronic Tagging Services	191	(5)
Sequence of Tagging Process	196	(2)
Transaction Scheduling	198	(1)
Identifying Tags	199	(3)
Data Elements of a Tag	202	(9)
Communication During Failure Recovery	211	(1)
Transaction States	212	(3)
Implementation, Curtailment, and Cancellation of Transactions	215	(6)
Implementation of Interchange Transactions	215	(4)
Curtailment and Cancellation of Transactions	219	(2)
Electric Energy Trading	221	(56)
Introduction	222	(1)
Essence of Electric Energy Trading	223	(3)
Energy Trading Framework: The Qualifying Factors	226	(2)
Derivative Instruments of Energy Trading	228	(38)
Forward Contracts	230	(4)
Futures Contracts	234	(3)
Options	237	(12)
Swaps	249	(1)
Applications of Derivatives in Electric Energy Trading	250	(16)
Portfolio Management	266	(5)
Effect of Positions on Risk Management	268	(3)
Energy Trading Hubs	271	(2)
Brokers in Electricity Trading	273	(1)
Green Power Trading	273	(4)
Hedging Tools for Managing Risks in Electricity Markets	277	(60)
Introduction	278	(3)
Risk	281	(1)
Definition of Hedge	282	(2)
Sources of Electricity Market Risks	284	(2)
Supply Shortage	284	(1)
Defaults	284	(1)
Transmission Constraints	285	(1)
Price Information	285	(1)
Lack of Experience	285	(1)
Value-at-Risk (VaR)	286	(2)
Counterparty Risk (The Midwest Case)	288	(9)
What Did Happen in the Midwest?	290	(1)
Factor Contributing to Counterparty Risk	291	(1)
Managing Counterparty Risk	292	(1)
CalPX and Counterparty Risk	293	(2)
Lessons Learned in Risk Management	295	(2)
The Greeks	297	(3)
Risk Evaluation in Electricity Trading	300	(10)
Swap Transaction as a Hedging Instrument	304	(4)
Additional Hedging Tools	308	(2)
Hedging Weather Risks	310	(22)
Background	312	(13)
Weather Hedging Tools	325	(3)
Examples	328	(4)
Conclusions	332	(5)
Electricity Pricing Volatility, Risk, and Forecasting	337	(40)
Introduction	338	(1)
Electricity Price Volatility	339	(10)
Factors in Volatility	342	(3)
Measuring Volatility	345	(4)
Electricity Price Indexes	349	(8)
Case Study: Volatility of Prices in California	352	(2)
Basis Risk	354	(3)
Challenges to Electricity Pricing	357	(2)
Pricing Models	357	(1)
Reliable Forward Curves	358	(1)
Construction of Forward Price Curves	359	(4)
Time Frame for Price Curves	359	(1)
Types of Forward Price Curves	359	(4)
Short-Term Price Forecasting	363	(11)
Factors Impacting Electricity Price	363	(2)
Forecasting Methods	365	(1)
Analyzing Forecasting Errors	366	(1)
Practical Data Study	367	(1)
Impact of Data Pre-Processing	368	(3)
Impact of Training Vectors	371	(2)
Impact of Adaptive Forecasting	373	(1)
Conclusions	374	(3)
RTO: Regional Transmission Organization	377	(20)
Introduction	377	(2)
Historical Perspectives for Establishing RTOS	379	(2)
Ferc NOPR on RTO	381	(2)
Ferc's Final Rule on RTO	383	(2)
Organization of an RTO	384	(1)
Minimum Characteristics of an RTO	385	(5)
Minimum Functions of an RTO	390	(4)
Benefits of RTO	394	(3)
Electric Utility Markets Outside the United States	397	(48)
Nord Pool (The Nordic Power Exchange)	397	(12)
Congestion Management	402	(3)
Bilateral Contracts	405	(2)
Marketplace for Electric Power Options	407	(2)
Australia National Electricity Market	409	(13)
Restructuring in Canada	422	(16)
Power Pool of Alberta	422	(11)
The Independent Electricity Market Operator (IMO)	433	(5)
Electricity Industry in England and Wales	438	(7)
Appendix A. Acronyms	445	(6)
Appendix B. A Sample of Electricity Contract Specifications	451	(12)
Bibliography	463	(26)
Index	489