Allocating Costs of Ancillary Services: Contingency Reserves and Regulation

40 Pages·2003·0.17 MB·English

ORNL/TM-2003/152
Allocating Costs of Ancillary Services:
Contingency Reserves and Regulation
June 2003
Eric Hirst
Brendan Kirby

ORNL/TM-2003/152
ALLOCATING COSTS OF ANCILLARY SERVICES:
CONTINGENCY RESERVES AND REGULATION
Eric Hirst
Consulting in Electric-Industry Restructuring
Bellingham, Washington 98229
and
Brendan Kirby
Power Systems Research Program
Oak Ridge National Laboratory
Oak Ridge, Tennessee 37831
June 2003
Prepared by
OAK RIDGE NATIONAL LABORATORY
P.O. Box 2008
Oak Ridge, Tennessee 37831-6285
managed by
UT-Battelle, LLC
for the
U.S. DEPARTMENT OF ENERGY
under contract DE-AC05-00OR22725

CONTENTS
Page
LIST OF FIGURES .......................................................... v
LIST OF TABLES ........................................................... vi
ABBREVIATIONS, ACRONYMS, AND INITIALISMS ............................ vii
SUMMARY ................................................................ ix
1. INTRODUCTION ........................................................ 1
2. CONTINGENCY RESERVES .............................................. 3
PURPOSE OF RESERVES .............................................. 3
DATA RESOURCES .................................................. 5
REQUIRED VERSUS PURCHASED RESERVES ........................... 5
RESERVE PRICES .................................................... 6
NUMBER AND SIZE OF OUTAGES ..................................... 6
MAXIMUM OUTPUT OF LARGEST GENERATOR ONLINE EACH HOUR .... 7
HOURLY OUTPUTS OF ALL LARGE GENERATORS ...................... 8
SHARE OF LOAD .................................................... 10
EFFECTS OF METHODS ON INDIVIDUAL GENERATORS ................. 11
RECOMMENDATIONS ................................................ 13
3. REGULATION .......................................................... 15
PURPOSE OF REGULATION ....................................... .... 15
DATA RESOURCES .................................................. 17
REGULATION PURCHASES AND PRICES ............................... 17
SYSTEM-LEVEL METRIC ............................................. 17
ALLOCATION OF COSTS TO INDIVIDUAL CUSTOMERS .................. 19
RESULTS ........................................................... 21
RECOMMENDATIONS ................................................ 23
4. CONCLUSIONS ......................................................... 25
REFERENCES ............................................................. 27
iii

FIGURES
S-1 Contingency-reserve costs for four generators and the major intertie if charged
solely on the basis of the number and size of forced outages or the size of the
large units online each hour .............................................. ix
S-2 Relationship between the share of regulation costs and energy consumption
for several customers ................................................... x
1 One-minute loads of two large industrial loads, normalized to the same energy
use for the hour shown .................................................. 2
2 Daily pattern of contingency-reserve requirements and purchases ................ 6
3 The time for recovery as a function of outage size for the 27 outages between
July 2001 and June 2002 ................................................ 6
4 Allocation of the 27 outages and the 9100 MW of outages among the 13 units
with outages .......................................................... 7
5 The percentage of the hours of MW-hr reserve required during which eight
generators plus a major intertie were the largest contingencies ................... 8
6 Assignment of responsibility for reserves on the basis of unit output or share
of total load served ..................................................... 9
7 The share of annual costs for contingency reserves based on the largest-single-
contingency criterion ................................................... 10
8 The share of annual costs for contingency reserves based on the
5% plus 7% rule ....................................................... 11
9 Components of a hypothetical load on a weekday morning ..................... 15
10 Average monthly (top) and hourly (bottom) regulation prices and quantities
purchased, July 2001 through June 2002 .................................... 18
11 Minute-by-minute values of system load and the load-following and regulation
components for one hour ................................................ 19
12 Geometric allocation of individual loads A and B to regulation Total ............. 20
v
13 Relationship between the share of regulation costs and energy consumption
for 15 customers ....................................................... 21
14 The annual bills for regulation for 15 transmission customers based on
the method developed here and based on energy use ........................... 23
TABLES
1 Allocation of the costs of contingency reserves to generators .................... 12
2 Ratio of share of regulation cost to share of energy consumption for 15 electricity
customers ............................................................ 22
vi
ABBREVIATIONS, ACRONYMS, AND INITIALISMS
ACE area control error
AGC automatic generation control
CPS Control Performance Standard
DCS Disturbance Control Standard
ERCOT Electric Reliability Council of Texas
MWh MW of electricity provided for an hour
MW-h MW of ancillary service provided for an hour
NERC North American Electric Reliability Council
WECC Western Electricity Coordinating Council
vii