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1 July 15, 2007Alcoa Energy Regulatory Affairs NARUC / FERC Demand Response Collaborative Perspectives of a Large End Use Participant of NYISO Programs.

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Presentation on theme: "1 July 15, 2007Alcoa Energy Regulatory Affairs NARUC / FERC Demand Response Collaborative Perspectives of a Large End Use Participant of NYISO Programs."— Presentation transcript:

1 1 July 15, 2007Alcoa Energy Regulatory Affairs NARUC / FERC Demand Response Collaborative Perspectives of a Large End Use Participant of NYISO Programs July 15, 2007 Presented by: Michael Caufield Alcoa Inc.

2 2 July 15, 2007Alcoa Energy Regulatory Affairs NYISO Foot Print / Operational Characteristics  Two aluminum smelting facilities in Massena, NY  Combined 495 MW of full capacity  Typical load factor 95 to 99%  Bilateral contracts with New York Power Authority who serves as Alcoa LSE  20% of contract energy is interruptible.  When curtailed we buy in NYISO markets to sustain full operations.  Participant in NYISO DR Programs  Emergency Demand Response Program (EDRP)  Installed Capacity / Special Case Resource Program  Evaluating participation in Day Ahead Demand Response Program (DADRP)

3 3 July 15, 2007Alcoa Energy Regulatory Affairs Benefits of Demand Response (DR) Programs The effect of these programs is to provide incentives or direct payments to customers to induce curtailments when needed, usually for system reliability. The specific benefits of demand response programs include:  Lower wholesale prices for all consumers due to load shaving on peaks and the impact on locational marginal pricing (LMP) peaks.  Less required investment in high cost peaking generation facilities and enhanced grid reliability.  Reduced carbon emissions.  Enhanced energy cost management capability of end users.

4 4 July 15, 2007Alcoa Energy Regulatory Affairs Alcoa Perspectives on NYISO DR Programs  Programs are working!  NYISO DR Programs provide critical resources that benefit all New York consumers  SCR and EDRP provide compensation to DR providers that can reduce or eliminate usage on short notice  DADRP allows DR providers to compete with generators in the day-ahead energy market; DADRP participation is lagging. Alcoa ability to participate is hampered by bilateral contract restriction.  Ancillary Services markets will be open to DRs very soon.  Another important milestone and opportunity for DR providers like Alcoa to offer capability to the market.

5 5 July 15, 2007Alcoa Energy Regulatory Affairs Why Does Alcoa Participate In DR Programs?  Electricity can be 30% of our production cost.  Grid reliability is important to our operations.  Payments from DR programs help to offset the increased cost of electricity to our Massena plants.  Deregulated markets have resulted in higher bills  Payments to participating end users are intended to provide fair compensation to incent customers to curtail  By increasing competition, participation in DR programs helps to reduce the cost of electricity to all consumers.

6 6 July 15, 2007Alcoa Energy Regulatory Affairs Alcoa Support During 2003 Northeast Blackout Source: NPCC Report “Restoration of NPCC Areas Following The Power Collapse of August 14, 2003” (page 31 of 69)

7 7 July 15, 2007Alcoa Energy Regulatory Affairs DR Program Participation Retention and Growth  Establish clearly defined limits an end user’s ability to define frequency, magnitude, and duration capability and decide between consuming or curtailing electric consumption.  Load aggregation must be allowed to encompass all potential DR providers.  Power supplied via bilateral contracts must be eligible for demand response programs.  Regulators an ISO/RTO’s must continue to be advocates of DR Programs:  Continue to listen to new ideas and opportunities.  Help us minimize the barriers to participation.  Look for cost effective ways to “Market” DR program opportunities.


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