Pricing Method used to establish the price for Energy purchases and sales at specific locations throughout the New England wholesale electricity market, to collect transmission congestion charges, to determine compensation for FTR Holders, to pay generators, and to charge Load.
LMPs result from the application of a linear programming process, which minimizes total energy costs for the entire New England region, subject to a set of constraints reflecting physical limitations of the power system. The process yields the three components of LMPs: LMP ($/MW) = Energy component + Loss component + Congestion component The energy component is the same for all locations. The loss component reflects the marginal cost of system losses specific to each location, while the congestion component represents the individual location's marginal transmission congestion cost.
Nodes will be modeled on both the PTF and non-PTF systems, consistent with requirements to model actual generator and/or Dispatchable Load locations on the system.
The Nodes that comprise the Hub are listed below. In addition, the proposed Load Zones are also shown in the graphic. To the extent possible, Load Zones follow political boundaries. The SMD software implementation will allow for changes in Load Zones.
Under SMD, all generators, including under 5 MW generators, will have generation obligations at the Node and settle at the Node. Under 5 MW generators will be price takers and will not be eligible to set LMP.