TRADING HUBS TUTORIALTRADING HUBS TUTORIAL

Market Participant WebexAugust 5th, September 3rd & 9th - 2009

Nicole’ K. GrottoliMarket Trainer

New York Independent System Operator

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Introduction:Introduction:This presentation assumes trainees have prior knowledge of transactions in the NYISO energy markets. Only an enhancement feature to transactions is being addressed.

The intention is to provide information on the Trading Hubs concept as it relates to the project itself scheduled for deployment in mid-Sept 2009.

This presentation will be incorporated into the Transaction training module in the Market Overview and NYMOC courses upon deployment.

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ObjectivesObjectivesTrainees will be able to:

Describe the concept behind trading hubs

Identify the bidding options associated with bilateral trading hubs

Explain the settlements associated with the different bidding/scheduling scenarios

Identify the MIS screen changes associated with Trading Hubs

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TermsTermsTrading Hub – a virtual location in a given Load Zone, modeled as a Generator bus or Load bus, for scheduling Bilateral Transactions in which both the POI and POW are located within the NYCA.

These are zonal

Trading Hub Energy Owner (THEO) – NYISO customer who, in a Bilateral Transaction, buys Energy using a POW that is a Trading Hub or who sells Energy using a POI that is a Trading Hub.

Responsible for paying the trading hub LBMP settlementsTHEO may be the Financial Responsible Party (FRP)

Financial Responsible Party (FRP) –First MP to enter the transaction in MIS Responsible for TUC chargesMay be the same as the source organization, sink organization ora third party

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Trading Hubs Trading Hubs

Offer a new way to schedule an internal bilateral transaction.

Bilateral transactions may be sourced from a trading hub or delivered to a trading hub.

A Market Participant (MP) can purchase energy at a trading hub or sell the energy from a trading hub.

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Why Trading Hubs?Why Trading Hubs?

Market AccessibilityProvides additional flexibility for marketers and Load Serving Entities (LSEs) in carrying out physical trades.

Credit Requirements Retailers or small LSEs can make better use of the creditworthiness of larger marketing institutions.Hubs allow a physical load, otherwise being served with LBMP Energy, to reduce the NYISO credit requirements.

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RulesRulesEach trading hub is modeled at a zonal level (as a gen_bus or load_bus) and corresponds to a specific NYISO zonal LBMP

Naming convention: NYISO ZONE_GEN_HUB and NYISO ZONE_LOAD_HUB

• ie. CAPITAL_GEN_HUB and CAPITAL_LOAD_HUB

Available only for internal bilateral transactionsNot available for imports, exports or wheel throughs

Trading Hub Energy Owner must have balanced position Sink the same number of Mws as are sourced

Hub to hub transactions are NOT allowed at this time

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Additional Info.Additional Info.Transaction Evaluation….no changes to existing methodology, internal bilateral transactions are always scheduled

Scheduling of trading hub transactions will not impact dispatch

Trading hub transactions will also not impact LBMPs

MPs must register for access to zonal trading hubs

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Internal GEN_A1

Zonal Trading HUB_A

Zonal Trading HUB_B

Internal Load_B2

Internal GEN_B1

Zone A

Zone B

Internal Load_A2

Internal Load_A1

Internal Load_B1

POSSIBLE TRADING OPTIONS

(Available in any 11 internal zones)

---New options---Existing

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Trading Hub SettlementsTrading Hub SettlementsSettlements calculation on a transaction-level basis

Transaction with a trading hub as a source, THEO purchases Mws from NYISO LBMP marketTransaction with trading hub as a sink, THEO sells Mws to NYISO LBMP market

Settlements at the respective market’s zonal LBMP.

DAM settlement at the hourly levelRT settlement at the time-weighted integrated hourlylevel (not the RTD level)

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Charges (internal bilaterals)Charges (internal bilaterals)Trading Hub LBMP Settlement – THEO pays/receives

TUC – Financial Responsible Party (FRP) pays

TSC – Load pays

NTAC – Load Pays

Ancillary Service Charges – Load Pays

Existing charges

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Trading Scenario #1Trading Scenario #1Trading Hub Energy Owner (THEO) sinks Mws into the trading hub sourced from a generator

• Generator to Trading HubTHEO then sinks those Mws (sourced from the hub) to a load

• Trading Hub to Load

THEO sinks 10 Mws from internal generator (Gen_A1) to Hub_A and then sources 10 Mws from Hub_A to internal load_B1

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Scenario #1

Internal GEN_A1

Zonal Trading HUB_A

THEOxyz sinks 10 mws (bilateral

w/GEN_A1)

Internal Load_B1

THEOxyz sources 10 mws from HUB_A

(bilateral w/ Load_B1)

GEN Bus_A1 LBMP $25.00

Zone BLBMP $35.00

Zone ALBMP $30.00

Note: THEO is the FRP in this scenario

Trans. #1

Trans. #2

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Trading Scenario #1 Trading Scenario #1 -- SettlementsSettlements

$35-$30 = $510Load_B1

Zonal Trading HUB_A

Zonal Trading HUB_A

Sink

$30 X 10 = $300$5 X 10 = $50$30-$25 = $510

Internal GEN_A

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Trading Hub LBMP Settlement

Losses & congestion revenue (TUC) X Mw

TUC = Sink LBMP-Source LBMPMwSource

THEO charged $100 in TUCs

Note: THEO is the FRP in this scenario

THEO receives

THEO pays

$5 X 10 = $50 $30 X 10 = $300

Trans. #1

Trans. #2

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Trading Scenario #2Trading Scenario #2

THEO sinks mws into the trading hub sourced from a generator

• Generator to Trading HubTHEO then sinks those Mws (sourced from the hub) to a load

• Trading Hub to Load

THEO sinks 20 mws from internal generator _A1 to hub_B and then sources 15 mws from hub_B to internal load_B1 and 5 mws to internal load_B2

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Internal GEN_A1

Zonal Trading HUB_B

Zone ALBMP $30.00 Internal

Load_B2

Internal Load_B1

THEOxyz sinks 20 mws (bilateral w/GEN_A1)

THEOxyz sources 15 mws from HUB_B (bilateral w/ Load_B1)

THEOxyz sources 5 mws from HUB_B (bilateral w/ Load_B2)

Scenario #2

Zone BLBMP $35.00

GEN Bus_A1 LBMP $25.00

Note: THEO is the FRP in this scenario

Trans. #1

Trans. #2

Trans. #3

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Trading Scenario #2 Trading Scenario #2 -- SettlementsSettlementsTHEO (the FRP in this example) is charged/credited for the transmission usage charge (TUC) per Mw on each bilateral transaction.

$35 X 15 = $525$0 X 15 = $0$35-$35 = $015Load_B1

Zonal Trading HUB_B

$35 X 5 = $175$0 X 5 = $0$35-$35 = $05Load_B2

Zonal Trading HUB_B

Zonal Trading HUB_B

Sink

$35 X 20 = $700$10 X 20 = $200$35-$25 = $1020Internal GEN_A1

Trading Hub LBMP Settlement

Losses & congestion revenue (TUC) X Mw

TUC = Sink LBMP-Source LBMPMwSource

THEO charged $200 in TUCs.

THEO receives

THEO pays

THEO pays

Trans. #1

Trans. #2

Trans. #3

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Challenge questionChallenge question……Why don’t loads just set up two separate [direct] bilaterals?

1) from Internal Gen A_1 to Load B_1 (15 Mws) and

2) from Internal Gen A_1 to Load B_2 (5 Mws)?

- Small Load B_2 may not be able to obtain a bilateral with Gen A_1 or-May wish to simplify their purchases from a number of sources through a single marketer at the Trading Hub.

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Trading Scenario #3Trading Scenario #3THEO sinks mws into the trading hub sourced from two generators

• Generator to Trading HubTHEO then sinks those Mws (from the hub) to a load

• Trading Hub to Load

THEO sinks 20 mws from internal generator (Gen_A1) to Hub_A and 10 Mws from Gen_B1 to Hub_A. Then THEO sinks 30 mws from Hub_A to internal load_A1

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Scenario #3

Internal GEN_A1

Zonal Trading HUB_A

THEOxyz sinks 20 mws (bilateral

w/GEN_A1)

THEOxyz sources 30 mws from HUB_A (bilateral w/ Load_A1)

Internal Load_A1

Internal GEN_B1

THEOxyz sinks 10 mws (bilateral

w/GEN_B1)

Zone ALBMP $40.00

GEN Bus_A1 LBMP $25.00

Zone BLBMP $35.00

GEN Bus_B1 LBMP $35.00

Note: THEO is NOT the FRP in this scenario; The FRP is the same org. for each transaction

Trans. #1

Trans. #2

Trans. #3

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THEO is not the FRP here

Trading Scenario #3 Trading Scenario #3 -- SettlementsSettlements

$40 X 10 = $400$5 X 10 = $50$40-$35 = $510

Zonal Trading HUB_A

Internal GEN_B1

$40 X 30 = $1200$0 X 30 = $0$40-$40 = $030Load_A1

Zonal Trading HUB_A

Zonal Trading HUB_A

Sink

$40 X 20 = $800$15 X 20 = $300$40-$25 = $1520Internal GEN_A1

Trading Hub LBMP

SettlementLosses & congestion revenue (TUC) X Mw

TUC = Sink LBMP-Source LBMPMwSource

FRP charged $350 in TUCs.

THEO receives

THEO receives

THEO pays

Trans. #2

Trans. #1

Trans. #3

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SummarySummaryTrading hub applicable to internal bilateral transactions only

Must register and be bid qualified for transactions

Must have balanced position at each Trading Hub for each hour, in each market by market close

Hub to Hub transactions not permitted at this time

Transaction charges apply (TUC, TSC, NTAC, Ancillary Services charges as appropriate)

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MIS Screen Changes MIS Screen Changes -- New FieldsNew FieldsCreate a New Hub TransactionCreate a New Hub Transaction

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MIS Screen Changes MIS Screen Changes –– New FieldsNew Fields

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MIS Screen ChangesMIS Screen ChangesMenu option: Menu option: Trading Hub SummaryTrading Hub Summary

The New York Independent System Operator (NYISO) is a notThe New York Independent System Operator (NYISO) is a not--forfor--profit profit corporation that began operations in 1999. The NYISO operates Necorporation that began operations in 1999. The NYISO operates New Yorkw York’’s bulk s bulk electricity grid, administers the stateelectricity grid, administers the state’’s wholesale electricity markets, and provides s wholesale electricity markets, and provides

comprehensive reliability planning for the statecomprehensive reliability planning for the state’’s bulk electricity system.s bulk electricity system.____________________________________________________________________________________________________________________

www.nyiso.comwww.nyiso.com