ORNUCON-427 Ancillary-Service Costs for 12 US. Electric Utilities Brendan Kirby Eric Hirst I This report has been reproduced directly from best available copy. the Available to DOE and DOE contractors from the Office of scientific and Techni- cal Information, P.O. Box 62, Oak Ridge, TN 37831; prices available from (423) 576-8401, FTS 626-8401. Available to public from National Technical Information service, U.S. the the Department of Commerce, 5285 Port Royal Rd., Springfield, VA 22161. ~ ~~ This report was prepared as an account of work sponsored by an agency of United States Government. Neither United States Government nor any the the agency thereof, nor any of their employees, makes any warranty, express or implied. or assumes any legal liability or responsibility for accuracy, com the pletene9a, or usefulness of any information, apparatus, product, or process dis- dosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, not necessarily consti- does tute or imply its endorsement, recommendation, favoring by United States or the Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. ORNLKON-427 ENERGY DIVISION ANCILLARY-SERVICE COSTS FOR 12 U.S. ELECTRIC UTILITIES BRENDAN KIRBY and ERIC HIRST March 1996 Sponsored by Competitive Resource Strategies Program Ofice of Energy Efficiency and Renewable Energy U.S. Department of Energy OAK RIDGE NATIONAL LABORATORY Oak Ridge, Tennessee 3783 1 managed by LOCKHEED MARTIN ENERGY RESEARCH CORPORATION for the U.S. DEPARTMENT OF ENERGY under contract No. DE-AC05-960R22464 CONTENTS Page SUMMARY ............................................................... v LIST OF ACRONYMS .................................................... vii 1 . INTRODUCTION ....................................................... 1 2. METHODS AND ASSUMPTIONS .......................................... 3 3 . UTILITY-SPECIFIC RESULTS ............................................ 9 AMERICAN ELECTRIC POWER ....................................... 9 COMMONWEALTH EDISON ......................................... 10 CONSUMERS POWER .............................................. 12 DETROIT EDISON .................................................. 13 DUKEPOWER ..................................................... 13 GENERAL PUBLIC UTILITIES ....................................... 15 ILLINOIS POWER .................................................. 18 NORTHEAST UTILITIES ............................................ 19 NORTHERN STATES POWER ........................................ 21 PACIFICORP ....................................................... 21 PACIFIC GAS & ELECTRIC .......................................... 23 SOUTHERN CALIFORNIA EDISON ................................... 25 4 . OVERALLRESULTS ................................................... 27 5 . CONCLUSIONS ....................................................... 33 ACKNOWLEDGMENTS ................................................... 33 REFERENCES ........................................................... 35 ... 111 SUMMARY Since the Federal Energy Regulatory Commission issued its proposed rule on open- access transmission in March 1995, ancillary services have been an important and controversial topic within the electricity industry. These services, many of which are required to maintain system reliability, support the basic services of providing and delivering electric energy and power to customers. Using data, assumptions, and analyses from 12 utilities throughout the United States, we developed estimates of the costs of ancillary services, both in aggregate and by service. These utilities, although a small and nonrepresentative sample of the industry, account for 28% of U.S. electric-energy production. To facilitate comparison between services and among utilities, we normalized all costs on a $kWh basis even though many services would not be priced this way. In aggregate, ancillary-service costs range from 0.15 to 0.68$kWh7w ith an average of 0.41 $kWh for the 12 utilities in our sample. Ancillary services account for 5 to 25% of total generation and transmission costs, with an average of 10% (Fig. S-1). Based on total U.S. generation of 2900 thousand GWh in 1994, ancillary services cost almost $12 billion per year. The substantial range in ancillary-service costs and the lack of correlation between these costs and the underlying costs of generation and transmission suggest that additional work is needed to sharpen the definitions of each ancillary service, to identie how much of each service is required, and to establish the fixed and variable costs for each service. Not surprisingly, the costs for the various services differ substantially (Table S-1). Scheduling and dispatch is very inexpensive, typically costing about O.O18$kWh and accounting for only 4% of total ancillary-service costs. Operating reserves account for the bulk of ancillary-service costs. Load following averages O.04#/kWh79 % of total cost. Reliability reserve averages 0.07$/kWh7 of total 16% cost. Supplemental-operating reserve averages 0.07$/kWh71 8% of total cost. Altogether, these three generation services cost O.l8$/kWh, 43% of the total. If transmission constraints are present, the costs for operating reserves and perhaps for other ancillary services could be much higher. Energy imbalance, assuming that 1% of customer loads are subject to this penalty, costs O.OS$kWh, 11% of the total. Real-power losses cost 0.12$kWh, 30% of the total. Finally, voltage control costs O.OS$kWh, 12% of the total. V ANCl LLARY-S ERVlC E COSTS (e/kWh) 0.7 1 m 0.6 m 0.2 ' 0.1 ' 0 - I I I I I I 0 1 2 4 5 6 7 3 GENERATION AND TRANSMISSION COSTS (e/kWh) Fig. S-1. Ancillary-service costs a function of generation and transmission costs for as 12 U.S. investor-owned electric utilities. Table S-1. Ancillary-service costs for 12 U.S. investor-owned utilities As a percentage of Average Ancillary- Generation and ($kWh) servjce cost transmission cost Scheduling & dispatch 0.01 8 4.3 0.4 Generation reserves Load following 0.038 9.1 0.9 Re1 iabi lity 0.066 16.0 1.5 Supplemental operating 0.073 17.6 1.6 Energy imbalance 0.047 11.3 1.1 Real -power 1o sses 0.122 29.5 2.9 Voltage control 0.05 1 12.3 1.2 Total cost or percent 0.4 14 100.0 9.8 vi LIST OF ACRONYMS AEP American Electric Power Company AS Ancillary service ComEd Commonwealth Edison Company CPCO Consumers Power Company FERC Federal Energy Regulatory Commission GPU General Public Utilities Corporation G&T Generation and transmission IP Illinois Power Company Nu Northeast Utilities NSP Northern States Power Company PG&E Pacific & Electric Company Gas SCE Southern California Edison Company VAR Volt-ampere-reactive vii