Contingency Reserve Contingency Reserve Standard Drafting Team Standard Drafting Team Presentation before the Presentation before the WECC Board Technical WECC Board Technical ConferenceConference

David LemmonsDavid Lemmons

Standard Drafting Team ChairStandard Drafting Team Chair

December 5, 2007December 5, 2007

Drafting TeamDrafting Team

David Lemmons – David Lemmons – ChairChair

Brenda Anderson TCBrenda Anderson TC Jeffrey Ackerman TCJeffrey Ackerman TC Ali Amirali TCAli Amirali TC David Frederick TPDavid Frederick TP Steve Heidt TPSteve Heidt TP Duane Helderlein TCDuane Helderlein TC Robert Johnson TPRobert Johnson TP Steve Johnson TPSteve Johnson TP

Clyde Loutan TPClyde Loutan TP John Marusenko TPJohn Marusenko TP Bart McManus TPBart McManus TP Joe Medina TPJoe Medina TP Phil Tice TCPhil Tice TC John Tolo TPJohn Tolo TP Greg Van Pelt TPGreg Van Pelt TP Ben Williams TPBen Williams TP Ken Wilson – WECC Ken Wilson – WECC

StaffStaff

Existing StandardExisting Standard

ProsPros– Comfortable, tried and trueComfortable, tried and true– Credits reserves held by seller on energy Credits reserves held by seller on energy

transactionstransactions ConsCons

– Reserves held by seller on energy transactions are Reserves held by seller on energy transactions are not available to the load serving entitynot available to the load serving entity

– Outdated due to separation of reliability and Outdated due to separation of reliability and marketing entitiesmarketing entities

– Does not address alternative sources of energyDoes not address alternative sources of energy– 60 minute reserve restoration requirement is too 60 minute reserve restoration requirement is too

stringentstringent– Support is marginal for this standardSupport is marginal for this standard– Assumption that Firm transactions will be delivered Assumption that Firm transactions will be delivered

regardless of any eventregardless of any event

Proposed StandardProposed Standard

ProsPros– Provides a clear reliability standardProvides a clear reliability standard– Addresses the market issues discussed aboveAddresses the market issues discussed above– Addresses all generation typesAddresses all generation types– It addresses issues raised in comments as It addresses issues raised in comments as

ordered by FERCordered by FERC ConsCons

– Marginal support at the standing committee Marginal support at the standing committee levellevel

– It is a change to the existing rulesIt is a change to the existing rules– The level of reserves still varies based on The level of reserves still varies based on

uncontrollable forces uncontrollable forces

Future StepsFuture Steps

Work to increase support for the Work to increase support for the proposalproposal– Including WECC leadership support Including WECC leadership support

for the drafting team effortsfor the drafting team efforts– Discussions with each RSGDiscussions with each RSG– Try to talk to stand-alone BAsTry to talk to stand-alone BAs– Offer Workshop open to all to Offer Workshop open to all to

discuss standardsdiscuss standards– Attempt to get more participation in Attempt to get more participation in

drafting team meetings? drafting team meetings?

Future Steps (cont.)Future Steps (cont.)

Standard currently posted for second Standard currently posted for second round of comments through Jan. 2round of comments through Jan. 2

Respond to comments by Jan. 31Respond to comments by Jan. 31 Post for OC approval by February 4Post for OC approval by February 4 Vote at the March OC MeetingVote at the March OC Meeting If approved by the OC, it will be at If approved by the OC, it will be at

the April Board meeting for approvalthe April Board meeting for approval This schedule meets the one year This schedule meets the one year

deadline. deadline.

Issues Raised in Issues Raised in CommentsComments Penalty Allocation (13)Penalty Allocation (13) Change in Reserve Recovery Period (4 Change in Reserve Recovery Period (4

positive, 2 negative) positive, 2 negative) Keep Load Responsibility (7 for, most Keep Load Responsibility (7 for, most

wanting FRR implemented instead of a wanting FRR implemented instead of a change, 3 against)change, 3 against)

Clarification QuestionsClarification Questions Drafting team has posted a response Drafting team has posted a response

to all commentsto all comments

New Issue Identified New Issue Identified by the CRSDTby the CRSDT Not all entities are reporting Not all entities are reporting

compliance based on real time compliance based on real time data.data.– Came about due to clean-up of Came about due to clean-up of

language in the measurement sectionlanguage in the measurement section– Not sure how this might impact Not sure how this might impact

support of either existing or proposed support of either existing or proposed standardstandard

Questions for Questions for DiscussionDiscussion Is every generator inside a BA? Is every generator inside a BA?

(BAL-005 R1)(BAL-005 R1) Is every BA required to have Is every BA required to have

reserves? (BAL-002)reserves? (BAL-002) If so, is it possible to make a sale If so, is it possible to make a sale

without reserves being carried by without reserves being carried by the source BA? Sink BA?the source BA? Sink BA?

Salt River Project TariffSalt River Project Tariff

Salt River Project Open Access Transmission Tariff Revised Sheet No. 85 Effective November 1,

2005

SCHEDULE 5 Page 1 of 1 Operating Reserve - Spinning Reserve Service Spinning Reserve Service is needed to serve load

immediately in the event of a system contingency. Spinning Reserve Service may be provided by generating units that are on-line and loaded at less than maximum output. SRP must offer this service when the transmission service is used to serve load within its Control Area. The Transmission Customer must either purchase this service from SRP or make alternative comparable arrangements to satisfy its Spinning Reserve Service obligation. The amount of and charges for Spinning Reserve Service are set forth below. To the extent the Control Area operator performs this service for SRP, charges to the Transmission Customer are to reflect only a pass-through of the costs charged to SRP by that Control Area operator.

Questions for Salt Questions for Salt RiverRiver Does SRP BA provide reserves (i.e. Does SRP BA provide reserves (i.e.

take load responsibility) for sales its take load responsibility) for sales its merchant makes to parties outside of merchant makes to parties outside of the SRP BA Area?the SRP BA Area?

Does SRP provide reserves to other Does SRP provide reserves to other generators that do not serve load generators that do not serve load inside the SRP BA Area?inside the SRP BA Area?

If so, what quantity and price? If not, If so, what quantity and price? If not, why not?why not?

Scenario 1Scenario 1

David Lemmons wins a really big David Lemmons wins a really big Powerball Lottery and decides to Powerball Lottery and decides to build Generatorsbuild Generators

A new technology for generation, A new technology for generation, IOD is used for these generators.IOD is used for these generators.

Typical Size of IOD Generator is Typical Size of IOD Generator is 1,500 MWs.1,500 MWs.

WIREDWIREDWEIRD WEIRD

INCINCOpening Soon at a location near you!Opening Soon at a location near you!

Scenario DetailScenario Detail

Wired Weird Inc builds a 1,500 Wired Weird Inc builds a 1,500 MW unit in the SRP Balancing MW unit in the SRP Balancing Authority AreaAuthority Area

WWI Does Not Join the SRSGWWI Does Not Join the SRSG WWI sells to BPA 1,500 MWs Firm WWI sells to BPA 1,500 MWs Firm

Energy under WSPP Schedule CEnergy under WSPP Schedule C WWI agrees with BPA to take Load WWI agrees with BPA to take Load

ResponsibilityResponsibility Can SRP deny the tags?Can SRP deny the tags?

Scenario Follow-upScenario Follow-up

Do all generators have access to BA Do all generators have access to BA reserves? If not, is this a reliability reserves? If not, is this a reliability issue or commercial issue?issue or commercial issue?

Should SRP deny the tags and if so Should SRP deny the tags and if so why, Reliability or Commercial?why, Reliability or Commercial?

What impacts are there on SRP and/or What impacts are there on SRP and/or SRSG?SRSG?– Increase in the SRSG MSSC?Increase in the SRSG MSSC?– Increase in the SRSG Load Responsibility?Increase in the SRSG Load Responsibility?

Actual Events as Actual Events as Presented to David Presented to David LemmonsLemmons 500 MW Generator built in the SRSG 500 MW Generator built in the SRSG

footprintfootprint Generator was told the host BA Generator was told the host BA

would not provide reserves because would not provide reserves because the generator sold all energy and the generator sold all energy and capacity outside of BAcapacity outside of BA

Generator was told SRSG Generator was told SRSG membership would provide 100 MWs membership would provide 100 MWs of reserves due to deliverability of reserves due to deliverability issue, anything above that could not issue, anything above that could not be sold “firm”be sold “firm”

Actual Events as Actual Events as Presented to David Presented to David LemmonsLemmons 10 MW Wind Generator built in 10 MW Wind Generator built in

NWRSG footprint.NWRSG footprint. Host BA did not want the energy, Host BA did not want the energy,

so a neighboring BA entity bought so a neighboring BA entity bought the energy “firm”the energy “firm”

Buyer said that the seller had to Buyer said that the seller had to provide reserves to make it firmprovide reserves to make it firm

Host BA said they would not Host BA said they would not provide reserves or take load provide reserves or take load responsibility.responsibility.

There is a market There is a market issue!issue! Can we all agree on this statement?Can we all agree on this statement? If so what is the market issue? Is it If so what is the market issue? Is it

Load Responsibility, the lack of Load Responsibility, the lack of reserves to ensure reliable grid reserves to ensure reliable grid operation or something else?operation or something else?

Can a level of reserves be determined Can a level of reserves be determined that ensures reliability but does not that ensures reliability but does not require changes to the host BA reserve require changes to the host BA reserve requirement due to transactions?requirement due to transactions?

ConclusionConclusion

The drafting team believes that it The drafting team believes that it is possible to separate the is possible to separate the reliability issue of reserve reliability issue of reserve requirements and the market requirements and the market issue of access to reservesissue of access to reserves

More importantly, it is neededMore importantly, it is needed The drafting team asks for your The drafting team asks for your

support on this important issuesupport on this important issue

Questions?Questions?