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Misty Blue · 02-02-2014, 11:23 PM

Ok folks, lets look at the money.

Remember the six states that make up ISO NE? Think of New England as a boat. There are around 400 producers supplying the boat. There are also around six wires connecting our boat to the dock (the other ISOs). There is a balance between what we produce locally, import and export to and from the dock.

Selling electricity is like selling at an auction. Except it is sort of a reverse auction.

Every morning all of the suppliers in NE bid in on how much they will charge, on an hourly basis, for their power for the next day. We are guessing on how much power will cost tomorrow. The cost depends on the system load and what the other plants have bid in at. It varies as the day goes on and with other factors. Want some fun? The Super Bowl is on right now and the load will vary by the minute according to time outs, half time, etc. During a time out a million people in NE get out of their chair and grab a beer, put popcorn in the microwave and flush the toilet. The ISO can actually see this and will prepare for the load swing.

So now it is time to bid. We have three plants bidding: Misty power, Professors scientific, and the Rusty turbine. (Sorry Rusty, had to say it)

Misty bids in at $0.00 per MW.
Prof. bids in at $25 per MW.
Rusty bids inat $50 per MW.

Remember, the ISO must run the cheapest plant first.

Misty bid $0 as did several other plants like Nucs that can't change load easily. But we are betting that the load required will be greater than total of all of the plants that bid zero.

So the load is a bit above this load supplied by the zeros. The ISO must add more generation to meet demand so Prof. gets a call to run at $25. Here is the "reverse auction" kick. We ALL get that $25! Even us zeros.

Now the load increases above what we and the Prof. and the rest of us zeros can supply. The ISO calls on Rusty to start up at $35. And, yup, we ALL get the $35!

If load goes above what we can supply the ISO will call on the next cheapest plants which are usually Gas. But it is -10 degrees outside and there is a shortage of gas. If the gas plants can't run then ISO will call on the next cheapest unit, maybe Harry's oil burner at $85 per MW and we ALL get $85! That is how the prices ended up at around $200 during the last cold spell.

Another funny thing....

It is 2000 on groundhog day and the ISO just called me and said that they have too much generation running and the price just went to $0.00 per MW and the expensive plants will be called off and the rest of us will ALL be getting zero. We will continue to run at this price (I expect it to go up around 0600) because we are power plant operators and have a duty to provide a vital service to our community.

Sorry, didn't mean to preach...

Misty Blue.

02-02-2014, 11:23 PM	#10
Misty Blue Senior Member Join Date: Jul 2004 Posts: 658 Thanks: 121 Thanked 283 Times in 98 Posts	Electric rates 102. Ok folks, lets look at the money. Remember the six states that make up ISO NE? Think of New England as a boat. There are around 400 producers supplying the boat. There are also around six wires connecting our boat to the dock (the other ISOs). There is a balance between what we produce locally, import and export to and from the dock. Selling electricity is like selling at an auction. Except it is sort of a reverse auction. Every morning all of the suppliers in NE bid in on how much they will charge, on an hourly basis, for their power for the next day. We are guessing on how much power will cost tomorrow. The cost depends on the system load and what the other plants have bid in at. It varies as the day goes on and with other factors. Want some fun? The Super Bowl is on right now and the load will vary by the minute according to time outs, half time, etc. During a time out a million people in NE get out of their chair and grab a beer, put popcorn in the microwave and flush the toilet. The ISO can actually see this and will prepare for the load swing. So now it is time to bid. We have three plants bidding: Misty power, Professors scientific, and the Rusty turbine. (Sorry Rusty, had to say it) Misty bids in at $0.00 per MW. Prof. bids in at $25 per MW. Rusty bids inat $50 per MW. Remember, the ISO must run the cheapest plant first. Misty bid $0 as did several other plants like Nucs that can't change load easily. But we are betting that the load required will be greater than total of all of the plants that bid zero. So the load is a bit above this load supplied by the zeros. The ISO must add more generation to meet demand so Prof. gets a call to run at $25. Here is the "reverse auction" kick. We ALL get that $25! Even us zeros. Now the load increases above what we and the Prof. and the rest of us zeros can supply. The ISO calls on Rusty to start up at $35. And, yup, we ALL get the $35! If load goes above what we can supply the ISO will call on the next cheapest plants which are usually Gas. But it is -10 degrees outside and there is a shortage of gas. If the gas plants can't run then ISO will call on the next cheapest unit, maybe Harry's oil burner at $85 per MW and we ALL get $85! That is how the prices ended up at around $200 during the last cold spell. Another funny thing.... It is 2000 on groundhog day and the ISO just called me and said that they have too much generation running and the price just went to $0.00 per MW and the expensive plants will be called off and the rest of us will ALL be getting zero. We will continue to run at this price (I expect it to go up around 0600) because we are power plant operators and have a duty to provide a vital service to our community. Sorry, didn't mean to preach... Misty Blue.