Demand Response in MISO Markets NASUCA Panel on

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 2007 9

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 $5 b for new transmission investment – In MTEP planning studies, demand resources compete against generation or transmission to address internal resource deliverability 11

Questions? 12