The Grid Interconnection Service (GIS) is an independent system operator (ISO) that coordinates the flow of electricity across the New England power grid. The New England Power Pool (NEPOOL) is a regional transmission organization (RTO) that operates the wholesale electricity market in New England.
The GIS NEPOOL banking system allows generators and load-serving entities (LSEs) to store and withdraw energy credits to manage their financial exposure in the wholesale electricity market. Here are key aspects of banking in this system:
What are the benefits of banking in the GIS NEPOOL system?
Who can participate in the banking system?
How are energy credits calculated?
What are the limits on energy account deposits and withdrawals?
What is a CRR?
How are CRRs priced?
What is an FTR?
How are FTRs used?
Type | Description |
---|---|
Generator | Produces electricity |
Load-Serving Entity (LSE) | Serves electricity customers |
Qualified Entity | Meets eligibility requirements set by GIS NEPOOL |
Type | Description |
---|---|
Energy Account | Holds actual energy quantities |
Congestion Revenue Right (CRR) | Represents the right to inject or withdraw energy at a specific location |
Financial Transmission Right (FTR) | Provides financial rights to inject or withdraw energy without physical energy flows |
Step | Description |
---|---|
Deposit | Entities deposit energy or CRRs into their accounts |
Withdrawal | Entities withdraw energy or CRRs to meet obligations or realize market opportunities |
Settlement | Trades and withdrawals are settled daily, exchanging credits or cash |
A generator anticip anticip a period of low electricity demand and decides to store excess energy in its energy account in the GIS NEPOOL banking system. When demand later spikes, the generator can withdraw this energy to meet its obligations, reducing its exposure to high market prices.
Lesson: Banking allows generators to manage risk and take advantage of market fluctuations.
An LSE forecasts that there will be transmission congestion in a specific region of the grid. To protect itself from high congestion charges, the LSE purchases a CRR that gives it the right to inject energy into that region during the congested period.
Lesson: Banking can provide LSEs with flexibility to mitigate transmission constraints and optimize their market positions.
A trader anticipates a long-term opportunity to profit from the price difference between two regions of the grid. They purchase an FTR that allows them to export energy from the lower-priced region to the higher-priced region. This provides a financial return regardless of the physical flow of energy.
Lesson: Banking enables traders to take advantage of interregional price differentials and enhance market liquidity.
Banking in the GIS NEPOOL system is essential for:
By participating in the GIS NEPOOL banking system, entities can experience numerous benefits, including:
If you are a generator, LSE, or qualified entity operating in the New England power grid, we encourage you to explore the benefits of banking in the GIS NEPOOL system. By understanding the different types of accounts, processes, and strategies, you can effectively manage your market risk and optimize your market positions.
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