Transmission constraint relaxation parameter change (completed)

Outcome: The ISO reduced the real-time market transmission constraint relaxation parameter used in the scheduling run from $5000 to $1500 in the market application software. Lowering this parameter reduces the shadow prices of a transmission constraint when the constraint cannot be met at a reasonable cost. The reduction is expected to reduce or control the uplift cost of real-time congestion offset at a reasonable level. — Implemented: May 10, 2013; FERC approval: May 9, 2013; Tariff amendment filing: March 8, 2013 (ER13-1060-000); Board of Governors approval: Dec. 14, 2012

Currently the ISO market software relaxes transmission constraints whenever the constraint’s shadow price hits a threshold of $5,000. When this occurs, high shadow prices and corresponding locational marginal prices, coupled with the reduced constraint limits, cause high real-time congestion offset costs. The ISO proposes reducing the threshold to $2,500 in the real-time market only, which will still allow for effective flow mitigation through market optimization.