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What Are Ancillary Services?
Ancillary services help ensure the secure and efficient operation of the bulk electric power system. Operating reserves serve as a real-time insurance policy to make certain that system operators will be able to maintain uninterrupted service in the face of an unexpected generation or transmission outage. Regulation helps system operators maintain Interconnection frequency and keep net actual tie line flows reasonably close to their schedules on the bulk power system.
Operating Reserves
Operating reserves represent the bulk power system’s insurance policy. They provide a margin of additional supply above and beyond what is otherwise needed to meet real-time system demand. Operating reserves allow ISO New England to respond to contingencies without interrupting load.
The ISO must ensure that the system can recover—with no interruption of service—from the loss of its two largest sources of power, or contingencies, at any given time. Having operating reserves in place ensures the reliability of the bulk power system in the face of unexpected transmission or generation outages, or differences between demand forecasts and actual system demand.
The ISO compensates generators who provide operating reserves based on their submitted costs for providing energy, including start-up and no-load costs. This operating reserve compensation ensures that generators providing reserves are made whole for any expenses not recovered through the sum of daily energy payments. Special provisions provide lost opportunity compensation to generators whose output is constrained for the purposes of providing operating reserve.
Operating reserves charges in the day-ahead market are levied upon participants proportionate to their day-ahead market load obligations. In the real-time market, charges are levied upon participants whose real-time load deviates from the day-ahead schedule and/or whose generators deviate from day-ahead schedules and do not follow real-time dispatch instructions. Potential revenues and costs from operating reserve credits and charges should be taken into consideration when participating in both the day-ahead and real-time markets.
To schedule operating reserves, ISO New England schedules adequate resources in the day ahead market to meet the cleared demand and forecasted regional reserve requirements. After the day-ahead market closes, the ISO conducts a reserve adequacy analysis to ensure that operating reserve requirements are met based on the forecast demand for the following operating day, and if necessary, schedule additional resources to meet the reliability requirements.
