Grid West: Regional Proposal for an Independent Transmission Organization

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Grid WestRegional Proposal for an Independent
Transmission Organization

• meeting title
• meeting date
• presenter name
• www.gridwest.org

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NWPCC Fifth Power Plan

• It is no longer a world composed of the
  Bonneville Power Administration and regulated
  public and investor-owned utilities. It is now a
  mix of regulated and unregulated elements. From a
  physical standpoint, the region currently has a
  modest generation surplus under critical-water
  conditions. That surplus is the result of reduced
  demand that has not yet returned to pre-crisis
  levels and a significant amount of new
  generation, most of which was built by
  independent power producers (IPPs). But the
  regions individual utilities currently are in
  deficit. The IPP generation is available to the
  region but, unless purchased for the long term,
  it will be sold at market prices. The role of the
  IPPs in the regions electricity future is
  unclear.

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NWPCC Fifth Power Plan

• Adequate transmission is key to any of the new
  generating resources identified in this plan. The
  move toward deregulation and expansion of
  wholesale electricity markets, along with changes
  in technology, has altered the character of the
  traditional transmission system. Questions of how
  to plan for, build, pay for, and manage the
  regions transmission system effectively are
  becoming critically important. Efforts to
  establish an organization to assess the long-term
  requirements of the transmission system and a
  mechanism to encourage investments to meet those
  requirements have been pursued for several years
  with little success. The Council supports and is
  an active participant in regional efforts to
  resolve these problems and believes that the time
  for resolving these issues is growing short.

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Presentation Overview

• Grid Wests History
• Grid West Stakeholders
• Regional Problems and Opportunities
• Options Considered in Regional Proposal
• Grid West Development Principles
• Development Principles and Accomplishments
• Grid West Developmental and Operational Bylaws
• Grid West Timelines and Work Plan

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Regional Scope

• Over 62,000 circuit miles of transmission lines
• Includes most transmission facilities shown in
  this region owned by the following companies
• Avista Corporation (AVA)
• Bonneville Power Administration (BPA)
• BC Hydro (BCH)
• Idaho Power Corporation (IPC)
• Nevada Power (NP)
• NorthWestern Energy (NWE)
• PacifiCorp (PAC)
• Portland General Electric (PGE)
• Puget Sound Energy (PSE)
• Sierra Pacific (SP)

Note The Grid West proposal is designed to
accommodate participation by Canadian
transmission owners and operators in British
Columbia and Alberta.
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Grid Wests HistoryRTO West

• FERC Order 2000 (December 1999)
• RTO West organized in Northwest to respond to
  FERC Order 2000
• July 2002 FERC initiates rulemaking on Standard
  Market Design (SMD)
• Summer 2003 Regional Representatives reconvened
  to identify regional problems and opportunities
• Active participation by state utility regulators
  is critical
• Fall 2003 3 organizational options developed to
  address problems and opportunities
• December 2003 Regional Platform Proposal
  developed to respond to regional problems and
  opportunities and to serve as foundation for
  further developmental work

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Grid West StakeholdersRegional Representatives
Group (RRG)

• Transmission providers
• Power producers
• End users, including state consumer advocates
• Public power (municipals, coops, PUDs)
• Environmental and other public interest
  organizations
• State and provincial regulators and siting
  agencies, and tribal officials

RRG meetings are open to all. Summaries and
development documents are posted to
www.gridwest.org
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Regional Problems

• Rules and practices that prevent full utilization
  of transmission infrastructure
• Impediments to region-wide transactions
• Congestion management by curtailment
• Absence of organized market structures for
  certain grid operations services

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(No Transcript)
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BPA Constrained PathsAdditional OASIS Posting
2003 2004 - Yellow
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Contract Path
12
Actual Flow Distribution
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Regional Opportunities

• Improvements possible in system planning and
  expansion procedures
• Identify strategies for addressing aging
  infrastructure
• Backstop mechanism for transmission construction
• Facilitate multi-party agreements
• Support for regional market monitoring
• Increased availability of operational data and
  analytical tools available to reliability
  coordinator/authorities

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Regional Platform Proposal

• Basics
• Create a new independent entity with provisions
  for regional accountability and governance.
• Use a staged implementation, phasing in features
  over time
• Voluntary control area consolidation option.
  Operated by independent entity on behalf of
  consolidating parties.
• Transition Principles
• Each step is a clear improvement over current
  approaches to managing and using the regional
  transmission system,
• Each stage of evolution is fully workable as it
  stands, and
• The proposed transition does not foreclose the
  ability to evolve to include extended features.
• Follow-on work by the Process Group to plan
  work streams and decision points.

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Development Principles

• Accountability to the Region
• Independent, Merit-based Decisions
• Preservation of Existing Transmission Rights
• Compatibility with Hydroelectric System
  Operations
• Improve Transmission Service and Reliability
• Facilitate Integrated Resource Planning, Provide
  Transmission Adequacy and Appropriate Congestion
  Backstop
• Effective, Regional Market Monitoring
• Avoiding Complex, Costly Structure

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Accomplishments in 2004

• Name changed from RTO West to Grid West
• Drafted and adopted Developmental and Operational
  Bylaws
• Membership and fee structure established
• Transmission Service Liaison Group (TSLG)
  developed transmission services market design and
  plan for further development
• Risk/Reward Group formed to begin evaluation of
  benefits, costs, risks and mitigation strategies
• Grid West became a membership organization on
  December 15, 2004

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Grid West Bylaws

• Developmental Bylaws
• Governs Grid West during the developmental stage
• Five member independent board elected after
  Decision Point 2
• Grid West offers no commercial services during
  developmental stage
• Operational Bylaws
• Attached to the Developmental Bylaws
• Members and Developmental Board must vote to
  adopt at Decision Point 4
• Governs Grid West in its operational stage
• Nine member independent board
• Grid West offers services pursuant to
  transmission service tariffs
• Cost control provisions written into bylaws (see
  Attachment C to Bylaws QA)
• Provisions common to both sets of bylaws
• Grid West Board of Trustees cannot make major
  decisions without first completing a robust
  consultation process.
• Developmental and Operational Boards must be
  independent of market participants,

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Accountability to the Region

• Grid West bylaws strike a balance between
  regional accountability and independence
• Supermajority of MRC to elect board trustees
• Authority of MRC to remove board trustees
• Required board consultation with members and
  Board Advisory Committee
• Five special issues identified for heightened
  regional consultation and voting procedures
• Open meeting requirements
• Supermajority votes of the Board and members to
  amend the Operational Bylaws
• Budget and other standing committees
• Authority of members to designate an auditor
• Other

MRC Member Representative Committee
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Five Special Issues

• The following issues require special voting
  procedures
• establishing backstop measures to address
  chronic, significant commercial transmission
  congestion problems
• adopting an alternative to the company rate
  approach for recovering fixed transmission
  service costs
• transition to financial transmission rights for
  stakeholders
• providing enforcement powers and direct
  intervention authority for the market monitor
• adopting a loss methodology that overrides
  individual company loss methodologies

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Stated Purposes of Grid West from Bylaws

• to serve as an independent transmission entity
  that endeavors to
• improve reliability of the regional transmission
  grid,
• improve efficiency in its use,
• provide nondiscriminatory access to transmission
  services and related markets,
• provide cost-effective regional transmission
  planning and expansion,
• to develop solutions to operational and
  commercial problems resulting from limited
  transmission capacity,
• support effective monitoring of wholesale power
  markets and transmission related services.

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Basic Features

• Planning capacity expansion services
• Cost recovery company rate and loss methodology
• Transmission reconfiguration services
• Scheduling operations services
• Voluntary consolidated control area (CCA)
  services
• Market monitoring
• Regional alternative dispute resolution

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Injection/Withdrawal Representation
Wthd _at_ B
Wthd _at_ D
S
R
T
Inj _at_ A
Inj _at_ C
V
Constraining Flowgate
U
P
Ownership Boundaries
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Development Stages of Grid West
Decision Point 1
Decision Point 2
Decision Point 3
Decision Point 4
Should a 5-member Developmental Board be elected?
Should Grid West offer Transmission Agreements
(TA)?
Should Grid West become Operational?
Bylaws Adopted
Corporation Activation Membership Process
TA negotiations w/ independent board
TA Offer Evaluation Risk/Reward Study
Draft Articles and Bylaws
Establish funding commitments
Member vote
RRG consensus
December 2004
2006
2007
Fall 2005
BPA ROD process on TA
Open TA negotiations
TA signed
BPA process
BPA process Technical Development, Risk Reward
Analysis
Note Dates shown are the best current estimates
and subject to change .
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Timelines for Developmental Board Seating
Information Production 170 days
Review Period 100 days
Bylaws Req. 50 - 75 days
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2005
Work Groups
Seminars
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Operational Stage
5-member Developmental Board continues as
caretaker board
Grid West preparations for offering service
Grid West offers transmission services
?
?
?

• Special Issues voting
• Expansion of backstop authority (chronic
  congestion)
• Change from Company Rate
• Authorization to issue financial transmission
  rights
• Granting authority to market monitor to
  penalize/intervene
• Authorization to change loss methodology

9-member independent Operational Board elected as
soon as practical
2007
Note Dates shown are the best current estimates
and subject to change .
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System Interconnections

• Purpose of Interconnection
• Reliability Systems are able to back-up each
  others generation and transmission outages.
• Economy Temporary surpluses can be traded among
  participants.
• Effect of Interconnection
• A single physical system with multiple owners
  that acts like a single large machine.
• All generators are synchronized, i.e., operate at
  the same frequency.
• Governors respond jointly to maintain frequency.
• Power flow on lines is governed by system
  physics
• Factors System topology, impedance and location
  of injections withdrawals.
• Flow control primarily by changing injections
  (generation schedules).
• The Problem of the Commons

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Contract Path Model
S
R
T
V
U
P
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System Usage Rules

• Today Contract Path
• Flows dont match physical effects of schedules.
• Adaptation of simple contract path (such as path
  rating catalog) mitigate effects but loop flow
  problems remain.
• Dual constraints on scheduling creates unusable
  capacity.
• Service requested owner-by-owner.

S
R
T
V
U
P
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Flow-Based Model
S
R
T
V
U
P
Ownership Boundaries
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System Usage Rules

• Today Contract Path
• Flows dont match physical effects of schedules.
• Adaptation of simple contract path (such as path
  rating catalog) mitigate effects but loop flow
  problems remain.
• Dual constraints on scheduling creates unusable
  capacity.
• Service requested owner-by-owner.
• Grid West Flow-based rights and scheduling
• Existing rights and new rights integrated using a
  injection withdrawal model for scheduling.
• New injection-withdrawal rights (IWRs) based
  using combined regional systems capacity.
• Regional Network Service offered across combined
  system a single point for access.
• Capacity Expansion Service
• Reconfiguration Service (RCS)
• Annual, Monthly, and Intra-Monthly RCS
• Daily RCS w/enhanced features
• Scheduling Services

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Reconfiguration Example

• Observations
• Reconfiguration cannot be done on a bilateral
  basis.
• An independent party must operate the auctions
  and be responsible for managing capacity for the
  combined system.

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Reconfiguration Service

• A tool for making additional transmission rights
  available.
• From AFC (Available Flow Capacity, i.e.,
  uncommitted capacity on a given facility or set
  of facilities.)
• From releases by right holders
• IWR holders.
• Pre-existing right holder.
• Enables trades between non-identical rights.
• In Day-ahead market enables IWR issuance based on
  release of existing scheduling flexibility
  options.
• Participation is voluntary.
• Awards based on the value of rights to sellers
  and purchasers (offers and bids).
• Revenue from released capacity goes to releasing
  parties.
• Revenue from AFC goes to Grid West to reduce
  costs of offering the services.

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Voluntary Control Area Consolidation (CCA)

• Parties considering consolidation have both
  reliability and economy objectives.
• Grid West uses Interconnected Operations Services
  (IOS) markets to enable its CCA operation.
• Reserve market
• Regulation Reserve.
• Contingency Reserve.
• Balancing Market.
• Voluntary offers to supply IOS may be made by any
  qualified party.
• Back-up limited obligation to offer on the
  consolidating parties similar to existing
  obligations to meet internal IOS needs.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Installed capacity or similar market to enforce.
• Must offer obligations accepted by generators who
  receive capacity payments.

• No generation resource adequacy standard imposed
• Resource adequacy remains a utility/state
  regulatory matter.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed RTO.

• No generation resource adequacy standard imposed
  by Grid West.

• Centralized unit commitment
• Pooling (i.e. uplift) of minimum return guarantee
  for generators.

• No centralized unit commitment.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed.
• Centralized unit commitment.

• No generation resource adequacy standard imposed.
• No centralized unit commitment.

• Day-ahead energy market.

• No day-ahead energy market.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No day-ahead energy market.

• Centralized scheduling with balanced schedule
  requirement
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical, flow-based
  Injection-Withdrawal Rights (IWRs).
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auction to
  facilitate transmission right trading and release
  of scheduling flexibility.

• Centralized scheduling without a balanced
  schedule requirement (may be short)
• Transmission rights not needed to schedule
  accept all schedules.
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges for
  all schedules
• Obligation type financial transmission rights
  (FTRs) to hedge congestion costs.
• Transmission right auctions for only annual and
  monthly FTRs auctions.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market
• Centralized scheduling without a balanced
  schedule requirement (may be short)
• Transmission rights not needed to schedule
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges .
• Obligation type FTRs.
• Only annual and monthly FTRs auctions.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No Day-ahead energy market
• Centralized scheduling with balanced schedule
  requirement
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical IWRs.
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auctions.

• Full marginal losses charged ex-post.

• Ex-ante losses for IWRs and no change for
  pre-existing rights.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market
• Centralized scheduling without a balanced
  schedule requirement (may be short).
• Transmission rights not needed to schedule
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges .
• Obligation type FTRs.
• Only annual and monthly FTRs auctions.
• Full marginal losses charged ex-post.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No Day-ahead energy market
• Centralized scheduling with balanced schedule
  requirement.
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical IWRs.
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auctions.
• Ex-ante losses for IWRs and pre-existing rights.

• No post-day ahead schedule changes
• Bid and offers in real-time market used to hedge
  exposure to resource contingencies.

• Post-day ahead adjustments
• Existing schedule adjustment rights can be
  retained.
• Remaining AFC available on first-come,
  first-served basis during schedule adjustment
  period.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market
• Centralized scheduling without a balanced
  schedule requirement (may be short).
• Transmission rights not needed to schedule
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges .
• Obligation type FTRs.
• Only annual and monthly FTRs auctions.
• Full marginal losses charged ex-post.
• No post-day ahead schedule changes.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No Day-ahead energy market
• Centralized scheduling with balanced schedule
  requirement.
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical IWRs.
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auctions.
• Ex-ante losses for IWRs and pre-existing rights.
• Post-day ahead adjustments.

• Real-time energy market, with all deviations
  between day-ahead and real-time settled.

• Real-time market for balancing service and only
  within control areas that voluntarily
  consolidate.

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market
• Centralized scheduling without a balanced
  schedule requirement (may be short).
• Transmission rights not needed to schedule
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges .
• Obligation type FTRs.
• Only annual and monthly FTRs auctions.
• Full marginal losses charged ex-post.
• No post-day ahead schedule changes
• Real-time energy market, with all deviations
  between day-ahead and real-time settled.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No Day-ahead energy market
• Centralized scheduling with balanced schedule
  requirement.
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical IWRs.
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auctions.
• Ex-ante losses for IWRs and pre-existing rights.
• Post-day ahead adjustments
• Real-time market for balancing service and only
  within control areas that voluntarily
  consolidate.

• Market monitoring

• Market monitoring

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Comparing Features
Grid West Basic Features
SMD Style RTO Features

• Generation resource adequacy standard imposed
• Centralized unit commitment.
• Day-ahead energy market
• Centralized scheduling without a balanced
  schedule requirement (may be short).
• Transmission rights not needed to schedule
• Conversion of pre-existing transmission rights.
• Explicit day-ahead congestion cost charges .
• Obligation type FTRs.
• Only annual and monthly FTRs auctions.
• Full marginal losses charged ex-post.
• No post-day ahead schedule changes
• Real-time energy market, with all deviations
  between day-ahead and real-time settled.
• Market monitoring.

• No generation resource adequacy standard imposed
• No centralized unit commitment.
• No Day-ahead energy market
• Centralized scheduling with balanced schedule
  requirement.
• Must have physical transmission rights to
  schedule.
• Existing transmission rights are unchanged.
• No explicit congestion charges.
• New rights issued as physical IWRs.
• Reconfiguration Service with annual, monthly,
  intra-monthly, and day-ahead auctions.
• Ex-ante losses for IWRs and pre-existing rights.
• Post-day ahead adjustments
• Real-time market for balancing service and only
  within control areas that voluntarily
  consolidate.
• Market monitoring.

Note Grid West changes from today underlined.
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Questions and Answers