During times of tight supply, reserve prices have spiked even though it appears that enough reserves were available?
These price spikes are the result of the different mechanisms used by SCUC, BME and SCD to schedule reserves and to calculate prices. For example, real time operations counts export transactions as recallable to provide 30 minute operating reserve, however, the DAM and HAM are constrained to only use internal suppliers for 30 minute reserve. As a result, BME selects units and calculates the reserve price with different assumptions of reserve availability. Another factor that results in higher reserve prices is the fact that BME does not ‘see’ all the units with reserve availability. These ‘latent’ reserves cannot be scheduled by BME, but SCD will dispatch reserves based upon ramp rate independent of reserve bids. This mismatch results in incorrect price signals. At the December 13, 2001 BIC meeting, a proposal was presented by the NYISO and passed by the Market Participants for the NYISO to implement changes to SCUC, BME, and SCD that will provide as consistent treatment as possible fo
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