Navigating the GIS NEPOOL Banking Landscape: A Comprehensive FAQ

Understanding the GIS and NEPOOL

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.

Banking in the GIS NEPOOL Market

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:

Types of Banking Accounts

• Energy Accounts: Hold actual energy quantities that can be traded or withdrawn.
• Congestion Revenue Rights (CRRs): Represent the right to inject or withdraw energy at specific locations in the grid.
• Financial Transmission Rights (FTRs): Similar to CRRs but provide financial rights only, without physical energy flows.

Banking Processes

• Deposits: Generators and LSEs deposit energy or CRRs into their accounts.
• Withdrawals: Entities withdraw energy or CRRs to meet their obligations or realize market opportunities.
• Settlement: Trades and withdrawals are settled daily, exchanging credits or cash.

Frequently Asked Questions (FAQs)

General

• What are the benefits of banking in the GIS NEPOOL system?

  • Manage market risk
  • Enhance market liquidity
  • Optimize dispatch and flexibility

• Who can participate in the banking system?

  

  

  • Generators, LSEs, and other qualified entities

Energy Accounts

• How are energy credits calculated?

  • Based on actual energy flows and market prices

• What are the limits on energy account deposits and withdrawals?

  • Determined by the GIS NEPOOL Tariff and market conditions

Congestion Revenue Rights (CRRs)

• What is a CRR?

  

  • A financial right to inject or withdraw energy at a specific location to alleviate congestion

• How are CRRs priced?

  • Determined by market supply and demand

Financial Transmission Rights (FTRs)

• What is an FTR?

  • A financial right to inject or withdraw energy at a specific location without any physical energy flows

• How are FTRs used?

  • To hedge against transmission constraints and optimize market positions

Tables

Table 1: GIS NEPOOL Banking Participant Types

Table 2: GIS NEPOOL Banking Account Types

Table 3: GIS NEPOOL Banking Process Timeline

Stories and Lessons Learned

Story 1:

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.

Story 2:

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.

Story 3:

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.

Common Mistakes to Avoid

• Not understanding the different types of banking accounts and their uses
• Failing to account for the potential impact of transmission constraints on CRR and FTR positions
• Over- or under-estimating the available banking capacity

Why Banking Matters

Banking in the GIS NEPOOL system is essential for:

• Risk Management: Allows generators and LSEs to manage their market risk and avoid financial losses.
• Market Liquidity: Enhances the liquidity of the wholesale electricity market by providing a platform for trading and storing energy credits.
• Optimization: Enables entities to optimize their dispatch and flexibility, reducing costs and enhancing reliability.

Benefits of Banking

By participating in the GIS NEPOOL banking system, entities can experience numerous benefits, including:

• Reduced market risk
• Increased market liquidity
• Optimization of generation and load schedules
• Enhanced flexibility and reliability
• Opportunities for profit through trading

Call to Action

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.