July 27, 2009

How to Protect DAMAP and RTORSGP Income in MISO ASM

Most generation operators in MISO have probably been in this situation: MISO has kept the unit at the low limit for hours, the LMP finally picks up, but the unit seems to take forever to get to the top! To help, MISO created the Day-Ahead Margin Assurance Payment (DAMAP) and the Real-Time Offer Revenue Sufficiency Guarantee Payment (RTORSGP). To put it simply, they compensate generation owners affected by (a) price volatility and (b) the fact that RT operation, unlike DA, is rate-limited.

DAMAP and RTORSGP can be substantial payments. They are most likely to be large when a unit would be most profitable operating at the DA basepoint, but the RT dispatch cannot ramp there fast enough.

When DAMAP and RTORSGP are expected to be sizeable, it is critical to ensure that your unit is eligible. However, MISO doesnít make this easy! Keep the Guidelines below in mind to help ensure that your units receive DAMAP/RTORSGP and maximize their revenue.

Guidelines

It is important to consider that failure to meet the eligibility criteria below for DAMAP in any 5-minute dispatch interval will make the unit ineligible for the entire hour. However, ineligibility for RTORSGP in any 5-minute dispatch interval will make the unit ineligible not just for one hour, but for every remaining hour in the Commitment Period!

  • For each set of limits used in MISOís UDS for the unit (Economic, Emergency, or Regulation), make sure the difference between minimum and maximum is always at least 2 MW. If the difference is 1 MW or less in any 5-minute dispatch interval, the unit becomes ineligible for DAMAP and RTORSGP. Avoid offering point Dispatch Band Limits or point Schedule Offer Limits if a unit might receive a DAMAP or RTORSGP payment. Since MISOís tolerance bands are at least 6 MW, any unit generation trend that satisfies MISO rules with a point band can very likely get the same settlement with a 2-MW band.


    • Note that if dispatch bands are in effect, then the effective Economic and Regulation limits should also have a width of more than 1 MW. Effective Economic and Regulation limits are defined by the overlapping area between the corresponding schedule offer and the selected dispatch band limits; see section 4.2.2.4.2 of the Energy and Operating Reserve Markets BPM.

  • Keep all offered RT Ramp Rates for a unit greater than or equal to the DA Ramp Rate for the hour, as well as greater than 0.5 MW/min. There are exceptions to that rule, but itís best for most units to follow those two rules. Because you also need to ensure that your RT Ramp Rate is achievable, being conservative with the DA ramp rate is usually a good idea. The potential loss of 100% of DAMAP/RTORSGP will probably outweigh the relatively small costs of shifting some DA ancillary service revenue to RT. See section C.1 of the Post Operating Processor Calculation Guide for definition of RT Ramp Rate.

  • Many RT offer values must be equal to the corresponding DA offer values for the unit to be eligible for RTORSGP. They include those defining the Offer Curve (except when manually re-dispatched); Economic, Emergency, and Regulation Minimum Limits; and Regulating, Spinning, and Supplemental Availability Offers. There may be benefits to changing an RT offer from DA, but be aware that loss of RTORSGP revenue for the rest of the Commitment Period could substantially offset them!

  • When possible, donít set a unit control status to Non-Dispatchable if that unit might qualify for DAMAP or RTORSGP. If you send MISO a control status other than Load Following or Regulating for the unit, in even one 5-minute dispatch interval, it will become ineligible. See section E.17 of the Post Operating Processor Calculation Guide.

  • Don't allow generation to stray far from the limits applied by MISO in UDS. MISO will set the Fixed Dispatch flag if the generation is more than five minutes of down ramp rate above the maximum limit, or more than five minutes of up ramp rate below the minimum limit (both ramp rates will be replaced by the bi-directional rate if the unit's control status is Regulating). If the unit is set to Fixed Dispatch, it is considered non-dispatchable, and is no longer eligible for DAMAP or RTORSGP. See section E.17 of the Post Operating Processor Calculation Guide.

  • Avoid the Failure to Follow Dispatch Flag (FFDF). FFDF will prevent the unit from receiving both DAMAP and RTORSGP. Of course, you donít have to worry about this if the unit is exempt from FFDF. Avoiding FFDF is a complicated subject, but there are several steps that can reduce the likelihood of incurring this status:


    • Ensure that units are physically capable of following their dispatch instructions and reserve deployments. The RT ramp rate should be reasonably close to the physical capability of the unit.

    • Keep Schedule Offer Limits not much wider than the range that a unit can reliably achieve. If you have to change equipment to be able to traverse the entire range of the Schedule Offer Limits, use dispatch bands and make sure your dispatch band selection software keeps the dispatch band selections in line with your generation. If Schedule Offer Limits change between hours, start any necessary equipment changes in the last 10 minutes of the first hour to minimize the risk of FFDF.

    • Improper control can make obtaining maximum profit impossible, both through inefficient operation and unnecessary penalties. For regulating units, use an AGC that is designed specifically for operation under MISO ASM rules and is able to alert the operator if manual intervention is necessary. Simply turning on the AGC controller at the plant, passing MISO setpoints to units, and hoping for the best does not guarantee success in following dispatch!

In addition to the reasons outlined above, a unit can also become ineligible for DAMAP or RTORSGP if it is dispatch constrained by the maximum or minimum limit, respectively, provided to the MISO UDS for a 5-minute interval. In that case, however, it will be ineligible only for that single 5-minute interval.

Note that the above Guidelines apply only to units committed in DA; RTORSGP for units committed in RT follows slightly different rules. For more information about DAMAP and RTORSGP eligibility rules and calculations, you can find the Post Operating Processor Calculation Guide (section E.9 explains DAMAP and RTORSGP eligibility) and the Energy and Operating Reserve Markets BPM at MISO's web site.


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