Product-Pricing Strawman David Sun Ali Ipakchi 26 October 2009 OASIS eMIX TC

Context: Smart Grid Covers Retail and Wholesale Sectors Retail Electric Energy –Regulated business with few exceptions (e.g. Texas/ERCOT) –eMIX TC focuses on product- pricing definition relevant to customers and aggregators/service providers. –eMIX TC will not consider retail tariff designs that affect price-determination. Aggregators/Service-providers are links between Retail and Wholesale –Serve retail customers by buying/selling wholesale market products –Serve wholesale participants by buying/selling aggregated retail products –Absolutely critical to have rational transformation between retail and wholesale products Wholesale Electricity Markets: –Relatively mature markets with established product and pricing definitions –Participants: Generators, Load Serving Entities, Aggregators, Traders –Delivers products at a price at a substation location (interface between transmission and distribution)

Product-Pricing Definition: Usage Intended users –Product producers, consumers. –Product aggregators, traders. –Market operators (centralized, decentralized) –Others (e.g. regulators, market monitors) Intended Usage –Commercial: prepare offers/bids, receive awards, financial settlement –Physical: produce and/or consume products – eMIX TC will not consider the consequences and impacts of deviation between physical and commercial schedule. These are Retail Regulatory & Wholesale Market Design issues. Sample bid/offer transaction –Sell for delivery at time T1 in location L1. Cherry-tomato for $3/lb in 10/30/2009 in Pike Market in Seattle

Product-Pricing Definition: Product Product: –Energy (wholesale, retail): quantity of energy over time interval –Ancillary Services: (wholesale, retail aggregation) Reserves (MW): quantity of power available with x-minutes of being called-on, e.g. synchronized (10 min), operating (30 min), others? Frequency Regulation (MW): range of MW (up/down) available to regulate when the resource is on regulation. Others (voltage support??) –Capacity-resource MW-capacity (wholesale, retail aggregation): quantity of MW-capacity that are qualified as “Capacity-Resource” –Additional Retail-specific Products (to be discussed) –Green content percentage Note: Demand Response can qualify for Ancillary Service products

Product-Pricing Definition: Location Location (wholesale, retail?) –specifies where the Product is delivered/received. Typically this is also where the Product is financially settled. –Location characteristics Electrical connectivity: e.g. meter location, Commercial settlement: e.g. area, substation, meters explicit mapping between electrical & commercial locations –electrical-nodes (e-node), price-nodes (p-node) are in common use at wholesale markets; An e-nodes can be connected to multiple electrical devices, including meters. Meters can be mapped to Customers/GIS. Each p-node has a price; it can be the weighted aggregation of multiple p-nodes. –Need to assess appropriate extensions for distribution/retail use.

Product-Pricing Definition: Time Interval Time-Interval (wholesale, retail) –Is the time that the price of the product is applicable, –Is the target interval for physical energy generation & consumption –Time-interval needs to have resolution at minute level –Possible additional/alternative of time-interval implications Market clearing/pricing intervals: real-time market clearing price every 5 minutes (base on hourly bid/offer prices) Settlement intervals: 15/30/60 minutes settlement based on average 5-min prices; Retail time-of-use granularity

Product-Pricing Definition: Price Price –Describes the unit price of a Product –Price denomination –When used in offer/bid, the price is floor/ceiling limit price –Price of a Product may vary over time intervals (see previous page) –A party may change its bid/offer, including prices, based on specific market rules. (Change-rules not in eMIX scope) Changes in offers/bids may need to be tracked/archived. –Market operator typically produce market clearing prices (e.g. LMP for wholesale energy). The prices may be used as a form of implicit dispatch instructions, and should affect retail activities –Need to consider similar economic signals for retail use