Demand Response in MISO Markets NASUCA Panel on DR November 12, 2012

About MISO MISO is an independent, non-profit organization and is committed to the safe, cost-effective delivery of electric power MISO’s Three Primary Roles: –Reliability - keeping the lights on throughout the Midwest –Wholesale Market Management - allowing the sale and transfer of wholesale electricity to reduce costs and promote reliability –Regional Transmission Planning - working with all transmission stakeholders to develop the region’s transmission grid in a way that promotes public interest; reliability, and enables lowest-cost delivery of electricity and implementation of public policies 2

Market Based Demand Response MISO operates an open wholesale energy market where Market Participants can buy or sell energy in a fair, efficient and non-discriminatory manner Markets work best when there is vigorous and voluntary participation by both buyers (demand response) and sellers Demand response can: –reduce the need for new generating capacity –address real-time reliability issues –mitigate peak prices and price volatility –limit supplier market power 3

Demand Response Participation MISO’s markets provide opportunities for demand to participate on a comparable basis to supply side resources (generation) –Provides price signals for demand resources to make flexible energy use decisions –Provides for full cost recovery of the flexibility offered by demand resources 4

MISO Services for Demand Resources Energy and Ancillary Services Markets –Day ahead Energy –Real time Energy –Ancillary Services Markets Emergency Procedures Resource Adequacy Ancillary Service Markets Resource Planning 5

Day-Ahead Energy Market Participation in Day Ahead Market provides a hedge against real-time congestion Offer types –Fixed Demand Bid – Loads indicate the amount to be purchased, regardless of price (~85% of market demand on a daily basis) –Price Responsive Demand (PRD) – Loads submit PRD bids, either “physical” or “virtual,” to manage price risk (~15% of market demand on a daily basis) –Demand Response Resources (DRRs) – Treated in all respects like generation; DRRs are evaluated and cleared based on offer components, including start, notification, minimum run times and availability 6

Real-Time Energy Market Participation in Real-Time Market provides price signals for supplying real-time energy Offer types –Price Responsive Demand (PRD) – Load Serving Entities manage load by responding to Real-Time clearing prices –Demand Response Resources (DRRs) – DRRs can be dispatched based on economics, in the same manner as a supply-side resource Including ability to participate in 5-minute balancing market 7

Ancillary Services Markets Enables demand resources to provide Ancillary Services –Spin and Regulation services Offer types –Demand Response Resources Type I Capable of supplying a specific quantity of Energy to the market through physical load interruption Committed in the same manner as a Supply Resource –Demand Responsive Resource Type II Capable of supplying dispatchable Energy to the market through behind-the-meter generation or controllable load Can be Committed and Dispatched in the same manner as Generation Resources 8

Emergency Procedures Demand Resources during emergency conditions are used to avoid load interruptions during Real- Time generation emergencies Needed infrequently in MISO to date Demand Resources provided –3,000 MW of relief on August, 2006 –300 to 500 MW in February

Resource Adequacy Provides a mechanism for Demand Resources to be counted as capacity similar to generation resources by MISO Load Approximately 9,000 MW of Demand Response in MISO is eligible to count towards capacity by MISO Load –Today most of this 9,000 MW is registered as Emergency Demand Response 10

Resource Planning Enables MISO to plan the transmission system for use of demand resources –MISO conducts long-term reliability planning to determine the need for and to coordinate new investment in generation and transmission in each region –MISO, through its MISO Transmission Expansion Planning (MTEP) process, has committed more than $5b for new transmission investment –In MTEP planning studies, demand resources compete against generation or transmission to address internal resource deliverability 11

Questions? 12