The committee sought and received in September 2005 substantial then-current draft information from NYISO. The committee also contracted with General Electric International (GE) to run the Multi-Area Reliability Simulation (MARS) program. This model simulates, using a transportation model and Monte Carlo simulation, the electrical generation and transmission system of the New York Control Area (NYCA), interconnected with the four contiguous electrical power systems in the northeastern United States and eastern Canada.
The MARS software is the same system reliability screening tool approved by the New York State Reliability Council and used by NYISO in its Comprehensive Reliability Planning Process (CRPP) and Reliability Needs Assessment (RNA) studies (NYISO, 2005). The databases used by GE and NYISO for the MARS analysis differed, however, in that the NYISO database contains commercially proprietary data. Other differences are discussed in Chapter 5.
In addition to the MARS analyses for system reliability, GE used its Multi-Area Production Simulation (MAPS) program to examine the impacts of the several scenarios on NYCA systemwide operations and economics, as well as the impacts on a portion of the interconnected regional power systems (specifically, part of the PJM system and the Independent System Operator-New England [ISO-NE] system). Below are main points of how the MAPS simulation works with MARS, and the results produced by this simulation.
MAPS operates in conjunction with MARS to assess, for systems where MARS projects that reliability criteria are met, the operational and economic characteristics of the entire interconnected system. MARS is a “transportation” model, commonly referred to as a “bubble and stick” model, connecting generation and loads in the grid—that is, connecting with direct-current (DC)-like flows the sources and sinks of power. The MAPS software, however, models the electrical system in greater detail, examining the flow on each transmission line for every hour of the simulation, recognizing both normal and security-related transmission constraints.
MAPS adjusts the operation of each generating unit in the system to meet the electrical generation requirements of the specific scenario being modeled, also considering the transmission constraints noted. MAPS calculates the annual variable operating cost (VOC) of producing electricity systemwide, and iterates, adjusting the operation of each unit in the system, to determine the minimum annual VOC systemwide. The variable cost of producing electricity is dominated by fuel costs, but it also includes variable operation and maintenance (O&M) costs, unit start-up costs (say, going from a cold start and ramping up to full electrical output), and the variable cost of emission credits consumed, where required.1
Having established the minimum systemwide annual VOC, MAPS then provides for the Northeast Region, the NYCA, and each pricing (load) zone in New York (see Figure 1-3 in Chapter 1), the corresponding wholesale price of electricity, airborne emissions, and the mix of fuels used in generating electricity. Iterative use of the MARS reliability simulations in conjunction with MAPS for the different scenarios thus provides a preliminary basis for comparing both reliability and trends of economic impacts among the illustrative scenarios posed by the committee.
Note that the scenario analyses reported here are an early stage of analysis for hypothetical options. Additional analysis, using more sophisticated analytical tools, would be required to develop an optimized, defensible plan for Indian Point replacement options. Such an analysis was beyond the scope of the committee’s charge.
NOTE: In this Appendix F-2 only, the “NYISO Initial Base Case” corresponds to “Base Case” in the draft NYISO Reliability Needs Assessment dated October 10, 2005. It assumes thermal transmission constraints control, and it employed the “Alternate New England Transmission Constraints” on the assumption that substantial loop flow of power into New England, then back into New York south of the Upstate New York/Southeast New York (UPNY/SENY) interface would be limited. The issue of what transmission constraints are appropriate has been appealed to the Federal Energy Regulatory Commission and the New York State Reliability Council by upstate power generators. The committee’s studies assumed the use of the “Alt. NE Transmission Constraints,” but the committee obviously takes no position on the merit of the appeals before the regulatory commissions. The NYISO “Base Case” assumed in its Final Report dated December 21, 2005, corresponds to voltage constraints controlling, and leads to the requirement to correct reactive power in the Lower Hudson Valley.
Some perspective on how the variable cost of operation relates to the total cost of production of electricity is provided by comparing the contribution of variable and fixed costs of operation. These vary for different kinds of units. A modern, high-efficiency, gas-fired combined-cycle unit having a heat rate as low as 6,700 Btu/kWh has a Battery Limits Capital Cost as low as $525/kW installed. The corresponding Non-Fuel Operating Cost is typically $3.30/MWh (Hinkle et al., 2005). Numbers reported later for the variable costs of operation—due mainly to the cost of fuel—are of the order of $20/MWh. Therefore, in this instance, variable costs represent roughly 85 percent of total operating cost. In New York City, both fuel and capital costs of construction can be markedly higher than in other markets. Project-by-project analysis is required, in any event, which is obviously very closely-held competitive information.Finally, note with respect to the recovery of the capital cost of new additions to capacity, that NYISO also runs the installed capacity market (ICAP) in New York that is designed to allow generators of electricity to recover part of their capital costs. Consideration is also being given currently to establishing a capacity market in New York, as a further evolution of deregulating electricity markets.