Competitive Power Procurement

Transcription

1 Competitive Power Procurement Energy Regulatory Partnership Program Abuja, Nigeria September 20-24, 2010 Kirk Megginson Financial Specialist - Regulated Energy Division Michigan Public Service Commission

2 Power Procurement in the US The Federal Energy Regulatory Commission (FERC) is the nation s primary regulatory agency for the regulation of interstate electricity, natural gas and oil transmission FERC assures reliable, efficient and sustainable energy services at reasonable costs to consumers through proper regulatory and market-based means on a national level Rules and regulations for obtaining energy are just, reasonable and not unduly discriminatory or preferential Promote the development of safe, reliable and efficient energy infrastructure that serves the public interest

3 Power Procurement continued In the 1990s, the concept of market competition and market based pricing in the energy industry was very popular To increase the concept of market based competition, FERC was instrumental in developing and establishing: Regional Transmission Organizations (RTOs) Independent System Operators (ISOs)

4 RTOs and ISOs RTOs are responsible for wholesale electricity over large interstate areas, including the control and monitoring i of the region s electric transmission grid (FERC Order 2000) ISOs operate in a similar manner to RTOs but usually over a smaller footprint (usually within one US state) (FERC Order 888 & 889) FERC Orders 888 and 889 authorized how Independent Power Producers and power marketers were to be allowed fair access to transmission systems and to energy market transactions

5 RTOs and ISOs 4 RTOs currently operating in North America 1. Midwest Independent Transmission System Operator (MISO), an RTO despite ISO in name (Michigan is part of MISO) 2. ISO New England Inc. (ISO-NE), an RTO despite ISO in name 3. PJM Interconnection LLC (Pennsylvania, Jersey, Maryland) 4. Southwest t Power Pool (SPP) 6 primary ISOs currently operating in North America 1. Alberta Electric System Operator (AESO) 2. California ISO (CAISO) 3. Electric Reliability Council of Texas (ERCOT) 4. Independent d Electricity it System Operator of Ontario (IESO) 5. New England ISO (ISO-NE) 6. New York Independent System Operator (NYISO)

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7 Benefit of RTOs & ISOs in Power Procurement 1. Coordinate and ensure equal access to the power grid from non-utility firms 2. Enhanced reliability of electric transmission system 3. Facilitate wholesale electricity markets 4. Develop rules to enhance competition in the energy markets and ensure fairness and neutrality of all market participants i t 5. Develop reasonable pricing methods during times of scarcity

8 Benefits of the Midwest Independent System Operator (MISO) MISO- an RTO for 13 Midwestern states and one Canadian province (Manitoba) with over a 1 million square mile footprint Controls an open competitive wholesale power market for generators to enter the grid Institutes a day-ahead and a real-time market where electric generators (both utility and independent power producers) can offer a volume of electricity and a price for that electricity available the next day Provides for an Independent Market Monitor that makes sure competition stays fair and bidding/auction rules are adhered to and transparency is promoted

9 The Midwest Independent System Operator (Midwest ISO or MISO) is an independent, nonprofit organization that supports the reliable delivery of electricity in 13 U.S. states and the Canadian province of Manitoba. This responsibility is carried out by ensuring the reliable operations of the region's interconnected high voltage power lines that support the transmission of more than 100,000 MW of energy in the Midwest, by administering one of the world's largest energy markets, and by looking ahead to identify improvements to the wholesale bulk electric infrastructure that will best meet the growing demand for power in an efficient and effective manner. The Midwest ISO was approved as the nation's first regional transmission organization (RTO) in The organization is headquartered in Carmel, Indiana with operations centers in Carmel and St. Paul, Minnesota. Our Regional Reliability Area:

10 Price and Non-Price Factors in Pi Price Factors Power Procurement Cheapest power in general Most economical power serving a particular area Non-Price Factors Most reliable producer during critical periods Whatever is available Cleaner, higher quality or more environmentally friendly feedstock to produce the power Promoting new technology

11 Considerations to Enhance Competitive Supply in Nigeriai Coordinate country into power regions NERC officials/divisions can oversee a region/grid Regions can be based on customer mix or other Better control and manageability Identify all power producers/potential power producers in a region/grid Primary power producers Supplemental or secondary power producers Offer a website or other forum for producers to submit bids to sell power to the market

12 Considerations to Enhance Competitive i Supply in Nigeriai Coordinate the power supply offers and dispatch power based on the cheapest power cost bids Monitor power rates offered in different regions Create incentives for producers to offer power in underserved areas (reduced license fees, tax credits, etc.) Work towards full integration of power regions to avert potential problems Black outs, brown outs, weather related issues, etc.

13 Thank You