MSCP - EMC

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Table 3: Regulation Offers in MW,April 2006-January 2007Regulation Offers (MW)Total AverageApr-06 265,419 184.32May-06 285,378 191.79Jun-06 276,701 192.15Jul-06 205,882 138.36Aug-06 273,465 183.78Sep-06 290,786 201.93Oct-06 283,196 190.32Nov-06 267,190 185.55Dec-06 284,181 190.98Jan-07 274,312 184.35Total: 2,706,510 184.3527. Although the review period coincided with low energy demand in some periodsand the commissioning of a new CCGT unit, Table 3 shows that the quantities ofregulation on offer during the review period were not significantly lower. In fact,the lowest supply figure was recorded in July 2006, which was outside of thereview period.c. Regulation Offer Prices28. Our analysis of regulation offer price behaviour showed that supply patterns werequite similar between April 2006 and September 2006, as can be seen fromChart 3. However, this changed dramatically beginning from October 2006, withhigher average regulation offer prices observed. The following changes in offerpatterns during the review period compared to the period between April 2006 andSeptember 2006 were also observed:a. In general, the proportion of offers in the lower price range of $0.01/MWhto $100/MWh and the extremely high price range of more than$2000/MWh had dropped;b. The proportion of offers falling within the $100.01/MWh to $2000/MWhprice range had increased.Page 8 of 14
Percentage of Offer Prices100%90%80%70%60%50%40%30%20%10%0%Chart 3: Offer Price Distributions30.8% 17.3% 1.8%0.7%16.0% 2.6%36.7%23.8% 4.6%37.6%36.6%34.7%34.6%44.3%33.5%35.5%37.3%$0/MWh26.1%27.3%29.6%40.0%31.6%27.8%29.6%$0.01/MWh-$50/MWh5.3%8.0%10.4%2.6%1.1%0.8%1.0%0.5%0.5%1.8%3.9% 0.5%0.5%3.9%4.1%$50.01/MWh-$100/MWh1.6%$100.01/MWh-$500/MWh16.2%16.6%7.8%1.0%0.1% 0.2% 0.3% 0.0% 0.7%0.2%$500.01/MWh-$1000/MWh9.2%4.4%1.5%0.5%0.3%0.3%0.0%1.4%0.5% 0.5%0.4%0.3%0.7%0.3% 0.2% 0.3% 0.1%0.1%0.1%$1000.01/MWh-$1500/MWhApr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07$1500.01/MWh-$2000/MWh20.8%23.9%25.7%29.9%31.1%26.9%2.1%30.0%31.9%26.8%>$2000/MWhd. Summary29. In summary, the analysis of supply conditions shows that the level of plannedoutages and quantities of regulation offered generally did not deviate fromhistorical trends during the review period.30. The only exception was the higher than previously seen level of planned outagesfor CCGTs in January 2007. This contributed to offers in the $0/MWh price rangefalling to their lowest level of 30.8 percent in January 2007 compared to 33.5 to44.3 percent between April 2006 and December 2006.31. However, the pricing of regulation offers had changed during the review period.There was a significant shift in capacity which was historically offered at eitherthe $0.01/MWh to $100/MWh price range or the exceeding $2000/MWh pricerange, to the $100.01/MWh to $2000/MWh price range.REASONS FOR HIGH REGULATION PRICES32. Based on our above analysis, the high regulation prices during the review periodwere the result of the following:a. Regulation offers particularly those at the lower price bands ($0.01/MWhto $100/MWh) and the extremely high price band (more than$2000/MWh) were converging at the $100.1/MWh to $2000/MWh priceband;Page 9 of 14
Page 1 and 2: FINDINGS OF THE MARKET SURVEILLANCE
Page 4 and 5: Regulation Price3000250020001500100
Page 6 and 7: Chart 3a to 3d: Volatility of Regul
Page 10 and 11: . This had led to more regulation p
Page 12 and 13: $/MWh180160140120100806040200USEPCh
Page 14: Table 4: Regulation Price Pattern b

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