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Market products and services help meet demand

The products traded in our market allow us to meet reliability needs and serve load by providing balancing energy and sufficient capacity and allow participants to meet their own business objectives. The ISO also offers services including mechanisms for entities to obtain and trade congestion revenue rights and engage in convergence bidding activities. All products and services are developed and implemented in full collaboration with stakeholders.

Energy

Scheduling coordinators can offer energy into the market from generating units, system units associated with metered subsystems, physical scheduling plants (group of tightly coupled units), participating loads and system resources located outside the ISO balancing area.

 

Ancillary services

There are four types of ancillary services products: regulation up, regulation down, spinning reserve and non-spinning reserve.

Regulation energy is used to control system frequency that can vary as generators access the system and must be maintained very narrowly around 60 hertz. Units and system resources providing regulation are certified by the ISO and must respond to “automatic generation control” signals to increase or decrease their operating levels depending upon the service being provided, regulation up or regulation down.

Spinning reserve is the portion of unloaded capacity from units already connected or synchronized to the grid and that can deliver their energy in 10 minutes. Non-spinning reserve is capacity that can be synchronized and ramping to a specified load within 10 minutes.

Scheduling coordinators certified by the ISO as meeting the requirements of sections 4.5.1 and 8 of the ISO Tariff may participate in the ancillary services market.

Residual unit commitment

This capacity is the positive difference between the schedules generated by the processes and the greater of the day-ahead schedule and the minimum load level of resources. The price and capacity are based on bids. The schedule is the total megawatts per hour amount of committed capacity, including the commitments produced by the day-ahead scheduling process.
 

Congestion revenue rights

These are financial instruments that can be used to manage exposure to congestion charges in the day-ahead market process. These rights can be allocated and auctioned, and are settled based on the marginal cost of congestion, a component of the integrated forward market locational marginal prices.  

A revenue rights obligation entitles its holder to receive payment if congestion in a given trading hour is in the same direction as the obligation, and requires the holder to pay a charge if congestion in a given trading hour is in the opposite direction of the revenue right.

A revenue rights option entitles its holder to a payment if congestion is in the same direction as the option, but requires no charge if congestion is in the opposite direction. Monthly revenue rights are valid for one month and are made on a time-of-use basis, while seasonal rights have a term of one season, either on- or off-peak. Long-term rights have a term of 10 years and are allocated on a seasonal and time-of-use basis. Merchant transmission revenue rights have a term of 30 years or the intended life of the facility, whichever is less. Rights can be traded bilaterally. 

Congestion revenue rights

 

Convergence bidding

This is a service in which market participants can buy or sell energy in the day-ahead market with the explicit requirement to buy or sell it back in the real-time market. This type of bidding, also called virtual bidding, pressures prices in the day ahead and real-time markets to move closer together, or converge, reducing the incentives for buyers and sellers to forego bidding physical schedules in the day-ahead market to receive better prices in the real time.
Bids must start at 0 megawatts and have an increment of at least 1 megawatt per segment. If cleared in the day-ahead market, they are settled at day-ahead prices and then automatically liquidated with the opposite position at real-time prices. For example, a virtual supply bid would be an offer to sell energy at the day-ahead price and buy the same amount back at the real-time price. A virtual demand bid would be just the opposite. Generators and utilities that are also bidding to buy and sell physical energy can use these strategies to reduce the risk of being caught on the wrong side of price fluctuations between the day ahead and real time.