Entergy Texas. Inc · NYSE:ETI/P
Entergy Texas — Entergy — Entergy 2002 Analyst Meeting
10 slides from Entergy Texas's conference presentation, Jun 14, 2002
Slide 1: Transmission: LMP and Participant Funding
Transmission: LMP and Participant Funding Entergy 2002 Analyst Meeting Michael Schnitzer, Director The NorthBridge Group, Inc. June 14, 2002
Slide 2: The Problem: Transmission Congestion
The Problem: Transmission Congestion Congestion occurs when transmission constraints require “out of merit” dispatch GEN A West Price = 3¢ East Price = 4¢ GEN C 1000 MW 1000 MW 300 MW 250 MW 500 MW 500 MW Rated Bid = 3¢ Interface Bid = 4¢ GEN B 800 MW 750 MW 1000 MW Congestion = 1¢ 1,000 MW Load 1 L
Slide 3: Why LMP?
Why LMP? Parallel flow means that electricity will flow over all interconnected lines between source and sink Electricity flows do not follow contract paths 1/3 MW A B 1 MW generation MW 2/3 MW 1/3 C 1 MW Load Note: All lines have equal impedance. Dollar figures are the generator bids at each bus.
Slide 4: Why LMP?
Why LMP? Economic use of the transmission system can vary significantly A B A B 200 MW 800 MW 1800 MW 0 MW $40/MWH $30/MWH $40/MWH $30/MWH 600 MW Limit 600 MW Limit Flow-gate Flow-gate C C 1000 MW 2000 MW $60/MWH 200 MW $60/MWH
Slide 5: Preferred Approach: LMP with Financial Rights
Preferred Approach: LMP with Financial Rights For dispatch, price signals using LMP is the best answer Low Load Case High Load Case A B A B 200 MW 800 MW 1800 MW 0 MW $40/MWH $30/MWH $40/MWH $30/MWH LMP=$40 LMP=$30 LMP=$40 LMP=$20 600 MW Limit 600 MW Limit Flow-gate Flow-gate C C 1000 MW 2000 MW $60
Slide 6: LMP Pricing Example
LMP Pricing Example Two ways to transact: l Schedule bilaterally, pay LMP Example in High Load Case congestion charge for A B transmission u A to C = $20/MWH 1800 MW 0 MW u B to C = $40/MWH $40/MWH $30/MWH LMP=$40 LMP=$20 l Transact in LMP market, with congestion reflected in spot 600 MW Limit price
Slide 7: The Problem: Transmission Expansion
The Problem: Transmission Expansion For new generator siting decisions, pricing of transmission upgrades is key Generation Expansion at Point A, B or C? A l Should a new 800 MW unit B be sited at A, B, or C? 1000 MW 0 MW Generation l Answer depends on u Relative generation costs u Relative siting co
Slide 8: Why Participant Funding?
Why Participant Funding? Alternative Implications Makes transmission “free” Let generation locate to generators; encourages anywhere; roll in costs of siting that creates network upgrades congestion Have RTO decide where to locate generation, what Replaces integrated utility transmission to build an
Slide 9: The Bottom Line
$$ The Bottom Line $$ Market Participant Economic Challenge Merchant Generator Location or transmission hedge Originator How much/how to hedge Trader Predict/manage short term congestion Transco owner Identify/market economic investment
Slide 10: Summary - Transmission
Summary - Transmission •• Transmission Transmission pricing pricing and and funding funding structures structures determine determine system system efficiency efficiency by by establishing establishing participants’ participants’ risks risks and and incentives incentives •• Locational Locational mar