Market Operations: ISOs, RTOs, and Deregulation

Frances Cleveland of Xanthus Consulting International has participated in the following ISO, Market Systems, and Deregulation-related projects:

1.      California ISO

2.      Edison Mission Energy (EME), operation under NETA

3.      Electricity Generating Authority of Thailand (EGAT)

4.      Metropolitan Electricity Authority of Thailand (MEA)

5.      Desert Star (now WestConnect) Regional Transmission Organization (RTO)

6.      Transaction Management System

7.   FERC's OASIS Standards & Communications Protocol

These projects are described in the following subsections.

California Independent System Operator (ISO), Operational Testing of Communications Networks and EMS

Project Description

The three major utilities of California (PG&E, SC&E, and SDG&E) agreed to form an Independent System Operator (ISO) to be responsible for operating the transmission power system after deregulation of the California electricity marketplace commenced on January 1, 1998. The ISO required the development and implementation of an Energy Management System, a Scheduling Infrastructure and Scheduling Application System (SI/SA), a Billing Information System, a Metering System, and a Bidding System (PX). These systems were interconnected over a very high speed communications network (620Mbps), linking the high speed LANs at the primary Folsom control center in northern California, with multiple Access Points of Presence (APOP) throughout California to connect up to 1000 bidders (Schedule Coordinators), and with the high speed LAN at the backup control center in Alhambra in southern California.

Services Provided by Xanthus staff

The timetable for implementing the new ISO systems was extremely short, with operational and procedural changes taking place even while the systems were being implemented. The operational testing of these systems was crucial to ensure that the electricity marketplace was fair and that power system operations were not compromised. Xanthus staff assisted in this operational testing of the communications network and the EMS system by helping to determine the key functions requiring testing, to devise the tests, to execute and monitor the tests, and to report on the results.

Edison Mission Energy (EME): New Electricity Trading Arrangements (NETA) Project, England

Edison Mission Energy Limited (EME), an owner of six generation plants in the United Kingdom (UK), needed to procure a computer based system for use in energy trading under the New Electricity Trading Arrangements (NETA). EME’s NETA System provides all the functions needed by GenCos, covering trading in various electricity markets, risk management, contract management, settlement, interface with system operation, interface with the power stations, reporting among others. 

The change in the UK electricity market was a drastic one.  The new market, requiring all parties to enter into bilateral contracts, bears no semblance to the previous single buyer-pool arrangement. Hence, practically all the systems and practices developed for the previous set up had to be changed. New systems and tools were implemented for NETA, since a lack of ability to execute trades would mean no income. Therefore it was imperative that EME and its companies be prepared in time for the change.

Xanthus staff developed the Technical Specification for EME’s NETA System within 2 months, using the available documentation from the NETA rules, even though these rules were still being refined. We evaluated the four vendor tenders, analysing technical quality, risks associated with on-time delivery, and price. Xanthus staff then assisted EME in project implementation.

Electricity Generating Authority of Thailand (EGAT)

The Electricity Generating Authority of Thailand (EGAT) is a government-owned vertically integrated utility having responsibility for electricity generation and transmission throughout Thailand.  The Thai government has proposed that the electricity industry be made competitive and that EGAT will be privatized.  After privatization, EGAT will eventually sell its generation side and will also form an Independent System Operator to ensure security of supply.

In addition to the privatization of EGAT the Thai government also proposes that the new Thailand Electricity Market (Power Pool) be established such that generators would compete to provide electricity and that the generation be dispatched purely on a price basis, rather than on a basis that optimizes the system as a whole. This will require the procurement and commissioning totally new systems to facilitate the Power Pool.  Draft market rules have been formulated by the BDR and these were used as a basis for the system specification of the Market Management System. The System Operator will operate and enhance the transmission assets whilst a new Market Operator company (also derived from current EGAT resources) will facilitate a competitive market.

Prior to privatization EGAT has embarked upon a project to enhance the control of the transmission facilities by implementing a new SCADA / EMS system.  EGAT contracted with Xanthus staff to provide consultancy services to specify the new systems and help in the procurement process. The main provision of the work is to specify a replacement SCADA / EMS system that will be located at the new National Control Center and to specify the Market Management systems to support the competitive market. Separate projects are also underway to improve the communications networks etc.

The Market Management system consists of the information interface with market participants (for submission and acknowledgement of schedules, bids, and quotes), market applications (that evaluate and select energy and ancillary service providers, as well as providing congestion management and prices), meter data management (to collect and validate participant meter data), settlements and billing, and (5) other related tools and applications.

Xanthus staff’s responsibilities included:

• Review Previous Studies and Define Operational Requirements

• Review Relevant Systems Available in the Market

• Recommend Procurement Strategy

• Recommend Communication Protocols

• Develop Implementation Plan

• Discuss Major Technical Requirements

• Review Draft of Market Rules being prepared by another consultant

• Prepare Finalized Specification for the SCADA / EMS and Market Management Systems

Metropolitan Electricity Authority of Thailand (MEA)

The de-regulation of Thailand’s electricity industry that is currently in progress will create new challenges as well as opportunities for all market players. The two major distribution companies in Thailand (MEA and PEA) are required to un-bundle their businesses, possibly be privatized and also allow new competition to enter the market.

After de-regulation, increasing numbers of customers will have the freedom to choose a supplier of electricity. As a consequence, new suppliers will require access to the transmission and distribution networks. In preparation for the new market, the most significant change as far as MEA is concerned, is the possibility that new market players (Retailers) will have access to MEA’s distribution network.

From MEA’s perspective there may be a transition from a distribution and supply company, to a pure distribution company. Although they could also possibly operate a separate energy retailing company in the longer term. However, in the short term, MEA needs to prepare itself for the new regime whilst “conducting business as usual”. As part of the process relating to third part access main requirements are to:

1.      Set scales of distribution network charges in conjunction with the Regulator;

2.      Charge new suppliers for any energy transmitted through their network;

3.      Collect revenue meter data and, if necessary, make this available to the new retailers and other interested parties;

4.      Clearly identify which supplier “moved” energy between all reference points;

5.      Provide information to the ISO/MO (POOLCo) regarding forecast loads and possibly calculate imbalances;

In addition, during the transition stage (from the time of market opening to full contestability) MEA will continue to serve its existing customers, both residential, commercial and industrial, until they become contestable and elect to change supplier, and MEA is therefore also required to:

1.      Calculate settlement values;

2.      Generate invoices;

3.      Perform reconciliation of customer accounts, and;

4.      Provide customer information

Finally in the future MEA may wish to become a competitive supplier of energy to non-franchised customers in Thailand (by spinning off a retail operation), and at that point MEA will need IT systems to

1.      Capture new customers by offering different products and services

2.      Strike contracts with new customers

3.      Manage their risk whilst operating as an energy trader

Xanthus staff worked with MEA in defining (in high level) the restructured company and specify the IT systems that will be required to support the new business needs. The main requirements of the project included:

Phase 1- Process Re-engineering

1.      Identify a list of services that MEA may consider offering in the newly restructured environment.

2.      Identify accurately the costs components of all MEA Business Processes

Phase 2- System Functional Requirements and Specifications

1.      Determination of Metering Requirements

2.      Determination of Settlement Requirements

3.      Determination of Billing Requirements

4.      Determination of Communication Infrastructure Requirements

5.      Develop an Implementation Plan

6.      Develop Functional Requirements for Systems

7.      Produce Technical Specification Documents

Phase 3 – Support Services

1.      Determination of Requirements for Market Participation

2.      Assist MEA in Analyzing the Draft Distribution Codes

3.      Conduct Training Programs For MEA Staff

4.      Determine the Requirements for Real Time Systems

Desert Star (DSTAR) (Now WestConnect) Regional Transmission Organization (RTO)

DSTAR was intended to function as a combined grid operator and market operator in an area across five states, depicted below. Up to 22 utilities, with 25,000 MW generation and about six million customers, were expected to become members of DSTAR. All of these utilities own transmission lines, and the DSTAR member utilities would transfer to DSTAR the operational authority of those facilities. Nine of the utilities operate area control centers, and all of them had planned to transfer area control responsibilities to DSTAR.

Xanthus staff first helped develop the DSTAR Conceptual Design report, which: 

1.      Outlined an overall plan to procure the necessary information systems and services to support the DSTAR grid operations and market operations.

2.      Estimated the facilities requirements for the DSTAR control center operations.

3.      Provided staffing and budgetary estimates for DSTAR start-up and on-going RTO operations.

4.      Provided an overview of the DSTAR RTO functional requirements for the Desert Star System (DSS), comprised of an Energy Management System, a Market Operations System, and a Metering/Settlements/Billing System.

5.      Provided a schedule for DSTAR start-up and the implementation of the DSS.

6.      Outlined the DSS system architecture and communication interfacing requirements.

7.      Served as a foundation for developing the procurement specifications for the DSS. 

Xanthus staff then helped develop the DSS Specifications, which covered:

1.      Data acquisition and control through links with the transmission utilities for collecting data, and with Area and Regional Operations Centers for generation control.

2.      SCADA functions, including the user interface, alarm management, and disturbance analysis.

3.      Operations Management functions, including Maintenance Coordination, Congestion Management, Day-Ahead/Hour-Ahead Scheduling, Expansion Planning, and other functions required to meet the DSTAR Tariff.

4.      Generation Control functions, including Generation Scheduling, Ancillary Services Scheduling, Load Forecast, Automatic Generation Control, Merit Order Dispatch, and other generation functions required to meet the DSTAR Tariff.

5.      Network Analysis functions, including State Estimator, Dispatchers Power Flow, Real-time Sequence, Security Analysis, Optimal Power Flow, Dynamic Stability Analysis, and Operator Training Simulator.

6.      Market Operations functions, including Market Participant Information Interface Requirements, DSTAR Website, Registration function, Auction functions for Transmission Rights, Ancillary Services, and Local Generation, Market Participant Energy Scheduling function, Electronic Tagging requirements, and other market functions required to meet the DSTAR Tariff.

7.      Metering, Settlement, and Billing functions, including metering interfaces, settlement calculations, and billing requirements.

8.      System Performance and Sizing requirements.

9.      Database generation and management requirements.

10.   Hardware and software requirements.

11.   Documentation requirements.

12.   Quality assurance and testing requirements.

13.   Project organization, maintenance, and training support.

In addition, Xanthus staff reviewed the various versions of the market rules to update the requirements of the various market-support systems. 

Recently, in anticipation of the FERC ordering a Standard Market Design (SMD), WestConnect joined with the California ISO and the RTO West group to establish the Common Systems Interface Coordination (CSIC) group. Xanthus staff was contracted to support this group whose mission is:

1.      Coordination of systems for the RTOs in the Western interconnection for seamless interfaces particularly for Market Participants, lower costs / higher efficiency through sharing facilities and training, and other benefits stemming from interoperability among the 3 RTOs.

2.      Enhancement of the operability of the Western interconnection through sharing power system information across the 3 RTOs with their unique system characteristics and environments.

Transaction Management System (TMS)

Xanthus staff teamed with Perot Systems in the developing the conceptual design for the Transaction Management System (TMS) required to support the then newly-developed, continent-wide, deregulated, electricity marketplace. The electricity marketplace is the broad arena for participants (Customers, Generation Owners, Transmission Providers, Security Coordinators, and Control Area Operators) to negotiate transactions for transmission services, ancillary services, and energy, then to execute those transactions in real-time, while maintaining the security of the power system through power system flow analysis and constraint management.

Many of the applications supporting these transactions have already been developed and are being managed by individual utilities and regional entities according to their market interests, their existing tariffs, and the characteristics of their power systems. Some applications, such as the OASIS interface, have been mandated by FERC. However, many of these interactions require additional coordination to facilitate the flow of information and enhance power system security. The Transaction Management System (TMS) was intended to fill this void.

The Transaction Management System is designed as a seamless, continent-wide, integrated, information system that will reliably, securely, and efficiently:

1.      Enable business transactions related to energy interchange, transmission reservation, and ancillary services procurement;

2.      Support security coordination for inter-area transactions;

3.      Support “real-time” curtailment, re-dispatch, and congestion management; and

4.      Facilitate exchange of interchange transaction data among market participants.

Functions covered by the TMS include functions to Schedule Energy, Transmission Services and Ancillary Services and functions to Negotiate Transmission Services and Ancillary Services. Related to these, TMS also includes functions to study the security impact on the transmission system of the associated energy and power exchanges. Finally, TMS provides the ability to view and modify all the information related to the above transactions.

Open Access Same-Time Information System (Oasis), Standards and Communication Protocol Requirements

In early 1995, FERC issued a Notice of Proposed Ruling (NOPR) which required all owners of transmission lines to offer Available Transmission Capacity (ATC) for sale to any customer. This NOPR was termed the "MegaNOPR", since it was a major step toward utility deregulation. FERC assigned NERC to develop utility positions on "What" the requirements should be in the final ruling, and, in parallel, directed EPRI to develop the "How" requirements for the nation-wide information network that would be necessary for true comparable access to ATC information to become a reality.

Xanthus staff was retained by EPRI to act as Editor of the “How” document. Xanthus staff initially developed "strawman" documents which presented the scope of the issues to be resolved as well as to be presented initially to the “How” Working Group and ultimately to the utility community at large for discussion. The initial “How” document (named OASIS - Open Access Same Time Information System) was delivered to FERC in October 1995, with subsequent revisions provided over the next two years until it was approved by FERC in 1997.

The “How” Working Group was made up of utility personnel from every area of North America, as well as vendors who were interested in eventually implementing the OASIS systems. This group was very goal oriented and resolved administrative and organizational issues relatively easily. However, many different needs and issues had to be resolved with mutual agreement, while ensuring that FERC’s requirements were met. Therefore, the effort involved many long meetings discussing issues, updating the draft S&CP documents, reviewing the new comments, and resolving these new issues. This process was undertaken twice: once for OASIS Phase 1 and a second time for OASIS Phase 1A.

The OASIS Standards and Communications Protocol (S&CP) document recommended the use of the public Internet and the World Wide Web protocols (e.g. HTTP and HTML) as the backbone to the information networking requirements and as the best means to assure comparable access to information by all Market Participants. The OASIS S&CP also presented standardized templates for the information to be exchanged between Market Participants and the transmission companies.