FERC proposes market changes related to pricing of fast-start resources

The Federal Energy Regulatory Commission on Dec. 15 took another step in its continuing effort to improve price formation to support efficient investments in wholesale power markets with a proposal that regional grid operators adopt market rules that meet certain requirements when pricing fast-start resources.

A fast-start resource is defined in the Dec. 15 Notice of Proposed Rulemaking (NOPR) as one that can start up in 10 minutes or less, has a minimum run time of one hour or less, and has submitted an economic energy offer to a market run by a regional transmission organization (RTO) or independent system operator (ISO).

Fast-start resources typically are committed in real-time, very close to the time period when needed, and can respond quickly to unforeseen system needs. However, without fast-start pricing, some fast-start resources are ineligible to set prices due to inflexible operating limits.

Individual regional markets have developed some elements of fast-start pricing to accommodate the specific characteristics of this class of resources. However, the commission said it believes that existing practices may not result in just and reasonable rates, and could produce prices that do not reflect the value of those resources, fail to provide incentives for market participants to make efficient investments, and create unnecessary uplift payments.

The NOPR proposes that, at a minimum, an RTO/ISO:

  • Must apply fast-start pricing to any resource committed that can start up within 10 minutes or less, has a minimum run time of one hour or less, and submits economic energy offers to the market;
  • Should incorporate commitment costs, such as start-up and no-load costs, of a fast-start resource in energy and operating reserve prices during the resource’s minimum run time;
  • Must modify its fast-start pricing to relax the economic minimum operating limits of fast-start resources and treat them as dispatchable from zero to the economic maximum operating limits for the purpose of calculating prices;
  • May allow an offline fast-start resource to set prices, but only if the resource is feasible and economic for addressing certain system needs; and
  • Must incorporate fast-start pricing in both the day-ahead and real-time markets.

Comments on the NOPR are due 60 days after its imminent publication in the Federal Register.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.