September 12, 2019

How to Protect DAMAP and RTORSGP Income in MISO ASM [UPDATED 2019]

Since we wrote the initial article about DAMAP and RTORSGP guidelines in 2009, it has been our most popular post. MISO rules have changed since then (e.g, the dispatch bands disappeared, and MISO replaced some eligibility checks with the Performance and Rate factors), and we decided the article was due for an update.

Most generation operators in MISO have probably been in this situation: MISO has kept the unit at the low limit for hours, the LMP finally picks up, but the unit seems to take forever to get to the top! To help, MISO created the Day-Ahead Margin Assurance Payment (DAMAP) and the Real-Time Offer Revenue Sufficiency Guarantee Payment (RTORSGP). To put it simply, they compensate generation owners affected by (a) price volatility and (b) the fact that RT operation, unlike DA, is rate-limited.

DAMAP and RTORSGP can be substantial payments. They are most likely to be large when a unit would be most profitable operating at the DA BP, but the RT dispatch cannot ramp there fast enough.

When you expect to receive DAMAP or RTORSGP, it is critical to ensure that your unit is eligible, and that the PVMWP Performance and Rate factors remain high. However, MISO rules can be tricky and this is not always easy! Keep the guidelines below in mind to help ensure that your units receive DAMAP and RTORSGP and maximize your revenue.

Hourly Guidelines

It is important to remember that failure to meet the eligibility criteria below for DAMAP or RTORSGP in any 5-minute dispatch interval will make the unit ineligible for the entire hour. Although many offer parameters are hourly values, they can be changed on the 5-minute level through RTOE overrides.

• DA and RT Ramp Capability Dispatch Status must be set to Economic to receive DAMAP or RTORSGP.
• Avoid having the DA offer price at the DA BP decrease by more than 10% between hours. Sometimes this will be inevitable if offering a unit with a highly sloping cost curve and the DA BP changes dramatically between hours. However, changing the offer curve dramatically over a single hour could be avoidable.
• Avoid changing the DA Economic limits too much between hours in a Commitment Period. The greater of the DA Economic Minimum and As-Committed Self-Schedule MW (if available) must not increase by more than five times the DA Ramp Rate from the greater of the prior hour’s DA BP, DA Economic Minimum, or As-Committed Self-Schedule MW (if available).
• Keep the following RT offer values equal to the corresponding DA offer values for the unit to be eligible for RTORSGP:
• those defining the Offer Curve (except when manually re-dispatched)
• Economic, Emergency, and Regulation Minimum Limits
• Regulating Capacity and Mileage offers
• Spinning and Supplemental Availability offers
There may be benefits to changing an RT offer from DA, but be aware that loss of RTORSGP revenue could substantially offset them!

Non-Dispatchability Guidelines

In addition to following the Hourly Guidelines above for the offer values, it is important to avoid units being labeled Non-Dispatchable (ND). A unit is ineligible for DAMAP or RTORSGP if it is ND for four consecutive dispatch intervals in an hour. (Note that, when manually re-dispatched, being labeled ND does not make a unit ineligible for DAMAP.) The following actions can help avoid MISO labeling the unit ND:

• When possible, don’t set a unit control status to Off Control for four consecutive intervals if that unit might qualify for DAMAP or RTORSGP. If you send MISO a control status other than Load Following or Regulating for the unit, that interval is marked ND.
• For the set of limits used in MISO’s UDS for the unit (Economic or Regulation, based on control status), make sure the difference between minimum and maximum is always at least 1.1 MW. If the difference is 1 MW or less in four consecutive 5-minute dispatch intervals in an hour, the unit becomes ineligible for DAMAP and RTORSGP. Avoid reducing limits to a single point if a unit might receive a DAMAP or RTORSGP payment. Reducing the dispatchable band down from 1.1 MW is unlikely to have any positive impact on settlement results.
• Don't allow generation to stray far from the limits applied by MISO in UDS (usually the offer limits). MISO will set the Fixed Dispatch flag if the generation is more than ten minutes of down ramp rate above the maximum limit, or more than ten minutes of up ramp rate below the minimum limit (both ramp rates will be replaced by the bi-directional rate if the unit's control status is Regulating). If the Fixed Dispatch flag is set, MISO considers the unit to be ND.
• Avoid situations where changes to the offered or UDS limits leave generation far outside the new limits. MISO will set the Fixed Dispatch flag, and therefore consider the unit ND, if generation is at the maximum limit and the limit is reduced by more than five minutes of down ramp rate, or generation is at the minimum limit and the limit is increased by more than five minutes of up ramp rate (both ramp rates will be replaced by the bi-directional rate if the unit's control status is Regulating). Such a change in the limits of more than twenty minutes of rate is likely to cause four ND intervals, although the count of ND intervals does reset at the top of the hour. Still, too large of an offered limit jump at the top of the hour could result in a unit being labeled ND.
• Keep the applicable offered RT Ramp rate(s) greater than 0.0 MW. MISO will set the Fixed Dispatch flag if a unit has a zero rate.

Other Things to Keep in Mind

A unit doesn’t earn DAMAP if it is dispatch constrained by the UDS maximum limit, and it doesn’t earn RTORSGP if it is dispatch constrained by the UDS minimum limit. In such a case, however, it will be ineligible for only that single 5-minute interval.

Note that the above guidelines apply only to units committed in DA; RTORSGP for units committed in RT follows slightly different rules. Also, note that it’s not only units with high LMPs that could earn DAMAP; sometimes, units that are cleared at the bottom can earn money from this settlement category and would benefit from remaining eligible.

In addition to preserving eligibility, it is important to maximize the PVMWP Performance and Rate Factors to maximize DAMAP and RTORSGP, which are both multiplied by each of these factors.

• The PVMWP Performance Factor is a metric designed to estimate how well a unit follows the MISO target, based on its offered rate.
• The PVMWP Rate Factor is a metric designed to estimate to what extent a unit’s RT ramp rates are lower than its DA ramp rate.

Look for an upcoming newsletter elaborating on these factors.

Information in this post is provided only as an overview, and it should not be construed to provide operational advice or consulting. For more information about DAMAP and RTORSGP eligibility rules and calculations, you can find the Post Operating Processor 5 Minute Calculation Guide (BPM 005 - Market Settlements) and Attachment D (BPM 002 - Energy and Operating Reserve Markets) at MISO's web site. Sections D.8.1.2 and D.8.2.2 of the Post Operating Processor explain RTORSGP and DAMAP eligibility, respectively. Section E.17 of the Post Operating Processor and Section 3.16 of Attachment D explain Dispatchability and Fixed Dispatch, respectively. These rules may have changed since this writing; the BPMs used as a guide for this writing are archived here.

PCE is a consulting and software development company with expertise in market rules and optimizing market operations. If you are exploring how to reduce lost DAMAP/RTORSGP or maximize your company’s profit from market operation, please contact us at +1 (614) 799-0300 or EnergyMarketConsulting@pce-co.com.