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Subject: Re: [emix] Baselines and Relative and Absolute Deltas


Phil,
I agree what you mention (mostly) and is precisely my point -- use what we have and if there are different wholesale requirements, then look into them and incorporate. We have done studies to review examples of wholesale market pricing examples (CAISO, PJM, etc.) that have locational marginal pricing with PRICE_ABSOLUTE and supported by OpenADR (simplest form of RTP). That's the work I was referring to in Enegy Interop TC and was donated to eMIX TC sometime back.

However, while the DR programs (mostly reliability-based) in retail markets can get complicated from end-user perspective, the dynamic pricing programs are intended to alleviate that complication. Their current dynamic pricing programs are applicable to commercial implementations and should be least considered. We should make both forms of market work for interoperability (at least for standards) -- both wholesale and retail.

The regulations that govern these should be out of scope of our work -- my perspective.

Thanks,
-Rish

On Sun, Jun 27, 2010 at 11:30 AM, Phil Davis <pddcoo@gmail.com> wrote:
Rish,

I agree with you within the retail context, but am not aware of any examples in the wholesale context (but would like to know of them outside of VAT's). The retail context is almost entirely governed by state regulatory commissions while wholesale largely is the province of a single agency, FERC.  My recommendation is that we work from the simple (wholesale) to the complex (retail).  Otherwise, I fear we will have what mathematicians refer to as an imponderable. 

A multiplies is an expression of social policy that operated independently of price.  Otherwise, you have to know the current price (set by orders to sell=orders to buy), as well as an arbitrary "base price" (who decides and under what authority?), and then do the calculation to arrive at the multiple.  This strikes me as requiring two additional calculitic steps that aren't necessary (since you already have access to the current price.

I can see where derivatives of a ratio of current price to base price could be useful for analysis and strategy, but these would occur in systems other than energy management.

I think...

Phil

Phil Davis | Senior Manager - Solutions | Schneider Electric Demand Response Resource Center | 3103 Medlock Bridge Road, Suite 100 | Norcross, GA  30071 | 404..567.6090 | phil.davis@us.schneider-electric.com | www.schneider-electric.com


On Sun, Jun 27, 2010 at 11:57 AM, Girish Ghatikar <gghatikar@lbl.gov> wrote:
Phil and Toby,

All three types -- PRICE_MULTIPLE, PRICE_RELATIVE, and PRICE_ABSOLUTE are already incorporated and offered in commercial DR programs. If it's related to DR, I sincerely urge the TC to look at the existing activity that's working, do a gap analysis, then if needed, do exercises like this. Otherwise, we will be spending too much time discussing various financial schema options and reinventing the wheel.

Toby -- So that I understand this better -- how is it different from what we've already done/doing in Energy Interop?

Thanks,
-Rish


On Sun, Jun 27, 2010 at 7:23 AM, Phil Davis <pddcoo@gmail.com> wrote:

Toby,

 

Lest we develop a whole new financial schema, perhaps we can benefit from existing practice in other commodities trades.  Does anyone know if multiples are used elsewhere and for what purpose?  The only instance of multiples as a signal for energy (that I am aware of) is in California.  Since California hasn’t allowed meaningful wholesale market access, those transaction come through regulated IOU’s.  The terms are formal tariffs approved by the CPUC.

 

Any discussions we have for that type of environment are purely academic.  PUC decisions on the matter will result from the normal process of interveners and politics.  I am familiar with at least one IBM plant that is charged for electricity as a function of the amount of water consumed by its chillers.  The tariffs written for local economic development purposes truly can be bizarre.  This is why utility billing systems are so costly and why each is unique.

 

At least for this phase, it might be more productive either to restrict our activities to wholesale market constructs, or to distinguish between wholesale and retail transactions.  In the latter case, we should invite heavy input from NARUC and EEI (and similar).

 

Also, since “baseline” has such a specific meaning and wide adoption with regard to a demand profile, might it be preferable to use another term for pricing, such as “reference price”? 

 

Since FERC’s current NOPR deals with Locational Marginal Price, my belief is that we will have much difficulty with any construct based on another pricing concept.  Since LMP itself can be volatile intraday, using a multiples approach would add complexity to complexity and you’d still have to track the value of LMP anyway.

 

Multiples can make sense at the retail level since either tariffs or contracts (from REPs) tend to talk in specific dollar values.  However, billing systems in those environments can have a unique rate for each customer.  The ability to do this is at the heart of a competitive retailer’s “differential advantage”. The best approach for the retail side might be to define “fields to be used later” in their layouts.

 

Reactions?

 

Thanks!

Phil

________________________________________________________________________________________________
Phil Davis | Senior Manager Schneider Electric Demand Response Resource Center | 3103 Medlock Bridge Road, Ste 100 | Norcross, GA  30071 | (404.567.6090 | 7678.672.2433 | Skype: pddcoo *phil.davis@us.schneider-electric.com | : Website:  http://www.schneider-electric.com

 

 

 

From: Toby Considine [mailto:tobyconsidine@gmail.com] On Behalf Of Toby Considine
Sent: Sunday, June 27, 2010 9:37 AM
To: emix@lists.oasis-open.org
Subject: [emix] Baselines and Relative and Absolute Deltas

 

A continuing point of contention is unspecified prices that are changes from current prices. I want to start a conversation on baselines and relative and absolute change.

 

As I understand the argument, there are times when it would be simple to send out a signal to everyone announcing that something is going to change. Whether you currently buy power at 0.02, o.08, 0.20, or 0.45 $ per kW h, you will experience a price change. Such a change could be one of two forms.

 

(1)    Relative: All prices double at 3:00 this afternoon

(2)    Absolute: App prices go up by 0.25 this at 3:00 this afternoon.

 

Do we need both (assuming we need either)? I think it is essential here that we are discussing functionality and information required, and not discussing whether it is possible to communicate some price signal that was created to make sense at a PUC meeting as a way to juke the existing systems which only had one register free and that worked as a plausible hack on existing software and hardware—which is alas how many tariffs get written.

 

Discussion:

 

1)      Relative can be handled with no changes to the existing data structures, but with the creation of a special currency case, the “baseline”. Prices at 2:00 AM are .3 baselines. Price this afternoon is 1.4 baselines. This can make a clean set of rules for systems to optimize energy use over a 24 hour period.

2)      Delta’s require more facts. It is unclear whether a rise of /50/kW H is interesting without special knowledge. Each system would need to hold occult knowledge, i.e. what was the price before. Is this change insignificant or is it a several-fold change in price? Delta’s also require a larger change in the base communication—it needs additional fields (and complexity and a new source of ono-interoperation).

 

I would prefer no baseline pricing. I know others fell that we need relative pricing. I am stepping back from that argument for a moment.

 

The question here is what does relative pricing look like, and what is the simplest kind of relative pricing we can use.

 

 


“It is difficult to get a man to understand something, when his salary depends upon his not understanding it” -- Upton Sinclair.


Toby Considine
TC9, Inc

OASIS Technical Advisory Board
TC Chair: oBIX & WS-Calendar

TC Editor: EMIX, EnergyInterop

U.S. National Inst. of Standards and Tech. Smart Grid Architecture Committee

  

Email: Toby.Considine@gmail.com
Phone: (919)619-2104

http://www.tcnine.com/
blog: www.NewDaedalus.com

 

 


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--
Rish Ghatikar
Lawrence Berkeley National Laboratory
1 Cyclotron Road, MS: 90-3111, Berkeley, CA 94720
GGhatikar@lbl.gov | +1 510.486.6768 | +1 510.486.4089 [fax]

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--
Rish Ghatikar
Lawrence Berkeley National Laboratory
1 Cyclotron Road, MS: 90-3111, Berkeley, CA 94720
GGhatikar@lbl.gov | +1 510.486.6768 | +1 510.486.4089 [fax]

This email is intended for the addressee only and may contain confidential information and should not be copied without permission. If you are not the intended recipient, please contact the sender as soon as possible and delete the email from computer[s].


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