EIM Tariff Changes Round 2 #1 #2 Southern Intertie (Attachment O) LAP Pricing for Losses on Southern Interie (Schedule 12A) Powerex Powerex In its responses to stakeholders comments on the first round of tariff revisions, Puget stated that The EIM scheduling timelines will not apply to schedules utilizing PSE transmission on the Southern Intertie and Colstrip facilities. Puget also stated more generally that The Southern Intertie and Colstrip are not in PSE s Balancing Authority ( BA ). Therefore, purchases on these paths are not subject to the requirements of the EIM[.] Under the proposed Schedule 12A, losses for transmission service over PSE s Southern Intertie facilities will be settled based on the EIM LAP price for PSE s system. This is the case even though, as Puget has acknowledged in its responses to Powerex s comments on the first round of EIM OATT revisions, the transmission service used in the EIM (and the calculation of EIM LAP prices) will not include PSE s Southern Intertie facilities. Neither PacifiCorp nor NV Energy have encountered a similar situation; thus, this issue has not been addressed by the Commission in the context of the EIM. Consequently, pointing to the Commission s prior EIM related orders, as PSE did in its response to Powerex s comments on the first round of tariff revisions, does not address Powerex s concern.[...] Puget represented in its November 17, 2015 stakeholder meeting presentation that it supplies physical losses for service over the Southern Intertie.[...] Permitting physical supply of losses would also be consistent with PacifiCorp s post EIM implementation OATT provisions. Powerex requests that Puget clarify what aspects of the EIM related tariff revisions, if any, will apply to PSE transmission customers taking service on the Southern Intertie. In particular, please clarify whether Puget transmission customers scheduling on their OATT reservations on the Southern Intertie will be subject to any EIM based settlement charges, including charges for imbalance energy, congestion, or losses. Powerex requests that Puget provide a more thorough explanation as to why PSE s proposed loss charges should apply to service over the Southern Intertie facilities. Powerex therefore also requests that Puget reconsider whether transmission customers should, in turn, be permitted to provide physical losses, as opposed to settling financially at LAP pricing. Powerex requests that Puget reconsider permitting transmission customers to physically supply losses on all segments, but particularly across the Southern Intertie, as opposed to settling losses financially at EIM based pricing. As the PSE OATT is currently drafted, transmission service on the PSE Southern Intertie and Colstrip facilities will not be subject to EIMrelated settlements. However, Schedule 12A will settle losses for Colstrip and the Southern Intertie service based on the PSE EIM LAP as the energy price (see response #2 below for more detail). PSE s existing business practice requires the financial settlement of losses and does not intend to change this practice when participating in the Energy Imbalance Market. PSE proposes to replace the MIDC ICE index for the EIM LAP pricing, which best represents of the cost of lost energy supplied by PSE on all segments.
2 #3 EIM Administrative Charge (Schedule 1A) Industrial Customers of Northwest Utilities () Administrative Costs pursuant to the proposed schedule 1A should be assigned only to Transmission Customers with PSE Participating Generation Resources. Transmission Customers with PSE Participating Generation Resources are the beneficiaries of the EIM because they have the ability to recognize subhourly dispatch benefits through the 15 and 5 minute instructions from the CAISO Market Operator. Nonparticipating Transmission Customers that do not operate PSE Participating Generation Resources do not recognize any of these incremental market benefits, and therefore, should not be responsible for the Administrative Costs, or other similar costs, associated with PSE s entrance and ongoing participation in the EIM. This service recovers the Administrative Costs assessed by the CAISO as the MO of the EIM to the PSE EIM Entity in accordance with Sections 4.5.1.1.4, 4.5.1.3, 11.22.8, and 29.11(i) of the MO Tariff (EIM Administrative Costs). All Transmission Customers with PSE Participating Generation Resources shall be required to acquire EIM Administrative Service from the Transmission Provider. EIM Administrative Costs assigned to the PSE EIM Entity shall be sub allocated to Transmission Customers with PSE Participating Generation Resources on the basis of Measured Demand for themonth in which the EIM Administrative Costs were incurred. The EIM enables PSE to provide imbalance service in a more efficient manner and more accurately reflect the costs associated with providing this service. Schedule 1A allocates ongoing EIM administrative costs to PSE transmission customers consistent with the cost. #4 EIM Imbalance Service (Schedule 4R) objects to PSE s proposed revisions to Schedule 4R. These revisions are inconsistent with the stipulation agreement reached in Docket Nos. UE 001952 and UE 001959 before the Washington Utilities and Transportation Commission, and the Schedule 448 and 449 tariffs that implement that settlement. The stipulation requires PSE to provide Retail Load Following Service at prices dictated by the stipulation, to which PSE is bound. The current version of PSE s OATT accurately reflects these requirements and should not be changed. Maintain the current version of Schedule 4R. PSE proposes to balance its obligations under the stipulation agreement with its responsibility to fairly allocate costs along cost causation principles. Furthermore, PSE is committed to ensure fair treatment of all OATT transmission customers as it prepares to participate in the EIM, which will bring a more efficient and effective system for providing energy imbalance service for all customers. PSE is proposing pricing that is closer to real time and aligned with PSE s imbalance costs.
3 #5 #6 Losses (Schedule 12) 448/449 Customers Generally (Attachment O) Under the stipulation agreement reached in Docket Nos. UE 001952 and UE 001959 before the Washington Utilities and Transportation Commission, and the Schedule 448 and 449 tariffs that implement that stipulation, customers taking service under Schedules 448 and 449 self supply their own losses. A separate financial settlement for Real Power Losses under proposed Schedule 12 is inconsistent with this requirement of the stipulation and may result in these customers being charged twice for losses. Attachment O should not apply to Schedule 448 and 449 Transmission Customers. These customers have no ability to participate in the EIM. They schedule their loads on an hourly basis and are subject to imbalance charges or credits on an hourly basis. Therefore, there is no opportunity, nor ability, for Schedule 448 or 449 customers to participate in a sub hourly market. While Schedule 448 and 449 customers utilize PSE s transmission system, they are retail customers and, therefore, are fundamentally different from other Transmission Customers that use PSE s transmission to transfer their generation either into or through PSE s BAA. Exempt Transmission Customers taking service under Schedule 4R from the requirements of proposed Schedule 12. Add the following language in red to the beginning of the second paragraph in Section 1 of Attachment O:Except Transmission Customers taking service under Transmission Provider s Schedule 448 and Schedule 449 pursuant to Schedule 4R of this Tariff, this Attachment O shall apply to all Transmission Customers and Interconnection Customers, as applicable, with new and existing service agreements under Articles II and III and Annexes A and B of this Tariff, as well as all Transmission Customers with legacy transmission agreements that pre existed this Tariff and that expressly incorporate by reference the applicability of PSE s Tariff and/or this Attachment O in particular. All references to Transmission Customers in this Attachment O shall be deemed to exclude customers taking service under Transmission Provider s Schedule 448 and Schedule 449. PSE will ensure that no customer is charged twice for losses under the final EIM construct. Accordingly, PSE will propose modifications to the State Tariff (Schedules 448 and 449) necessary to incorporate EIM related changes. The adjustment for losses will be removed from the calculation for energy imbalance and will be billed separately under the OATT s Schedule 12. This will ensure that Schedule 448 and 449 customers will not be double charged for losses. PSE s Schedule 448 & 449 customers are also Network Integration Transmission Customers under PSE s OATT. PSE, as the transmission provider, is treating all transmission customers fairly, regardless of the specific type of transmission service they receive. The EIM enables PSE to provide imbalance service in a more efficient manner and more accurately reflect the costs associated with providing this service. PSE is proposing pricing that is closer to real time and aligned with PSE s imbalance costs. Loads and generators are eligible to participate in the EIM, pursuant to PSE s OATT.
4 #7 #8 Interconnection Customers Section 1) Pseudo tie implementation costs (Attachment O, Section 3.2.2) The final sentence in the second paragraph of Attachment O 1 is overly ambiguous and gives PSE discretion that is too broad in treating an Interconnection Customer as a Transmission Customer. It is not clear what circumstances might necessitate classifying an Interconnection Customer as a Transmission Customer and it would not be fair for the PSE EIM entity to make such a determination at its sole discretion. Pseudo tie implementation costs should be directly assigned to the Participating Resource and not treated as a network upgrade. The Transmission Customers that desire to pseudo tie into the balancing area in order to market power in the EIM from Participating Resources should be solely responsible for the costs of obtaining the dynamic capability to access the EIM market. Those pseudo tie costs should not be treated as a network upgrade, ultimately assigned to all Transmission Customers. Strike the following sentence: To the extent an Interconnection Customer controls the output of a generator located in PSE s BAA, the PSE EIM Entity may require the Interconnection Customer to comply with a requirement in this Attachment O that on its face applies to a Transmission Customer to the extent that the PSE EIM Entity makes a determination, in its sole discretion, that the Interconnection Customer is the more appropriate party to satisfy the requirements of Attachment O than any Transmission Customer. "Pseudo tie implementation costs shall be directly assigned to the Interconnection Customers operating Participating Resources or the Transmission Customers Operating the Participating Resource seeking to Pseudo Tie into PSE s BAA." Under PSE s current tariff, if a load in PSE s BAA (for this example a Schedule 449 customer) purchases energy from a generator also in PSE s BAA, the charges for Schedule 9 Generator Imbalance will be allocated to the Schedule 449 customer because they are the Transmission Customer in the transaction. It is more appropriate to bill charges for Generator Imbalance to the entity that has operational control of the generator, which may not necessarily be the Transmission Customer, and will more appropriately be the Interconnection Customer. PSE proposed this provision in response to specific requests from Schedule 449 customers. PSE has an existing pseudo tie business practice which is posted on its OASIS. The current business practice states costs associated with facilitating a Pseudo Tied resource will be allocated in a manner consistent with PSEI s OATT or any relevant contracts between the Transmission Customer and PSEI. PSE intends to maintain the existing cost allocation principles for any new pseudo ties and will be evaluated on a case by case basis.
5 #9 Schedule 4R Imbalance Calculation 4.2.4.3) This section seems to provide a formula to calculate the load component of the base schedule. The formula is not entirely clear, nor is it clear why it is necessary to use the term Forecast Data to modify each component of the calculation. Please clarify. The load component calculation in Attachment O Section 4.2.4.3 will be covered in more detail in the PSE EIM BP. The load component is the sum of the Transmission Customer s forecast generation, Interchange and Intrachange. For example, if a customer submits a forecast of 10 MW generation, and Interchange export e tag of 4 MW would equal 6 MW of load (10 MW generation 4 MW export = 6 MW load component). If a customer without load in the PSE BAA does not own any generation in PSE s BAA, their load component calculation (Base Schedule) is simply the sum of the e tags as of 57 minutes prior to the Operating Hour sinking at their load. #10 Instructed Imbalance Energy Allocation Section 8.1) Instructed Imbalance Energy under Attachment O, 8.1 should be directly assigned to the Transmission Customer responding to, or creating, the instructed imbalance. From the text, it is not clear if it is intended to allocate the cost/revenues to all Transmission Customers, or just the Transmission Customers responding to the instructed imbalance. Clarify that Instructed Imbalance Energy is suballocated directly to the Transmission Customers creating the instructed imbalance. Forecast Data is a defined term in the PSE OATT. PSE appreciates this suggestion and will revise accordingly in Attachment O, Section 8.1. Therefore, PSE will clarify in its tariff that it will directly assign and settle Instructed Imbalance Energy to the Transmission Customers creating the imbalance, rather than to all Transmission Customers.
6 #11 Uplift Charges Section 8.5) The uplift charges detailed in 8.5 should be assigned only to Transmission Customers with PSE Participating Generation Resources. Transmission Customers with PSE Participating Generation Resources are the beneficiaries of the EIM because they have the ability to recognize sub hourly dispatch benefits through the 15 and 5 minute instructions from the CAISO market operator. Non participating Transmission Customers that do not operate PSE Participating Generation Resources do not recognize any of these incremental market benefits, and therefore, should not be responsible for the uplift associated with PSE s entrance and ongoing participation in the EIM. Each subsection should be changed such that the allocation is to Transmission Customers with PSE Participating Generation Resources on the basis of Measured Demand. The EIM enables PSE to provide imbalance service in a more efficient manner and more accurately reflect the costs associated with providing this service. PSE is proposing pricing that is closer to real time and aligned with PSE s imbalance costs. Uplift charges and payments are allocated to transmission customers, regardless of whether they elect to become a Participating Resource, and are allocated consistent with the cost. The allocation of uplifts to all customers based on Measured Demand has been accepted as just and reasonable in the case of PacifiCorp and NV Energy. See PacifiCorp, 147 FERC 61,227 at P 184 (2014).
7 #12 Operating Reserve Payments Section 8.12.2) Application of additional operating reserves costs to Transmission Customers with load is duplicative of cost based Schedules 5 and 6 of the OATT. Schedule 449 customers are already paying for operating reserves based on metered loads. Any payments for incremental operating reserve should be assigned to participating generation resources, not assigned to imbalance. 8.12.2: Any charges to the PSE EIM Entity pursuant to Section 29.11(n)(2) of the MO Tariff for operating reserve obligations shall be suballocated to Transmission Customers with PSE Participating Generation Resources. Schedules 5 and 6 provide operating reserve service for load and generation inside the PSE BAA, whereas Attachment O Section 8.12.2 allocates operating reserve charges from generation from outside PSE s BAA when PSE is importing energy for its imbalance service. The Attachment O operating reserve charge (Section 8.12.2), as part of the revised imbalance service, is separate and distinct from the operating reserve service provided under Schedules 5 and 6. PSE will revise Attachment O Section 8.12.2 to allocate these charges based on measured demand rather than the positive load imbalance originally proposed. #13 Base Schedule Submission for Wheeling Customers Section 4.2.4.4) PacifiCorp [In Section 4.2.4.4] it does not seem appropriate to include Intrachange (for wheeling customers) as it seems Intrachange would not happen if the transmission customer has no resources and no load in PSE s BAA. PacifiCorp suggests removing and Intrachange from this provision. 4.2.4.4 Transmission Customers Wheeling Through Without Resources or Load in PSE s BAA A Transmission Customer wheeling through PSE's BAA which does not have any resources or load within PSE's BAA shall submit a Transmission Customer Base Schedule that includes Interchange and Intrachange Forecast Data to the PSE EIM Entity as set forth in Section 4.2.4 of this Attachment O. This submission shall include data on import Interchange which balances to the Transmission Customer s export Interchange. The proposed tariff language is due to some of PSE s unique customer transactions where transmission customers with load periodically have interchange transactions on PSE s system.
8 #14 Administrative Charges for Telemetered Loads (Schedule 1A) Bonneville Power Administration (BPA) BPA appreciates PSE clarifying in its business practice that loads that are telemetered out of PSE s balancing authority area are excluded from Measured Demand and, therefore, are not sub allocated charges based on Measured Demand, including EIM administrative charges found in Schedule 1A. However, BPA recommends revising Schedule 1A to eliminate any potential confusion as to whether EIM administrative charges apply to customers with loads that are telemetered out of PSE s balancing authority area. Revise the second sentence of Schedule 1A to read: All Transmission Customers must acquire EIM Administrative Service from the Transmission Provider for any purchases ofing Long Term Firm Point to Point Transmission Service, Short Term Firm Point to Point Transmission Service, Non Firm Point to Point Transmission Service, or Network Integration Transmission Service that are used to serve load located in the PSE Balancing Authority Area or to export generation located in the PSE Balancing Authority Area out of the PSE Balancing Authority Area. from the Transmission Provider shall be required to acquire EIM Administrative Service from the Transmission Provider PSE appreciates BPA s comment. PSE believes the Business Practice is the more appropriate venue to bring clarity and specific guidance to the allocation of EIM administrative charges for telemetered loads. PSE will be incorporating this suggestion in the next iteration of our Business Practice. We welcome input in our Business Practice stakeholder process (comments are due by January 1, 2016). #15 Pseudo Ties Section 3.2) BPA CAISO already allows resources that are external to its balancing authority area to participate in its 15 minute market without being pseudo tied into its balancing authority area. This expands the number of resources eligible to participate in its 15 minute market and increases competition. PSE should follow this model and allow parties to voluntarily submit bids from external resources. Revise Attachment O to allow for participation of external resources. PSE is encouraged to learn that BPA is open to exploring ways to participate in the CAISO EIM and agrees that, if designed correctly, increasing the number of resources participating could increase competition and bring further benefits to the market. PSE encourages BPA to express its interest to CAISO to discuss ways for BPA to become involved in the EIM in the near future.
9 #16 Infeasibilities (Schedules 4 & 9, Section 8) BPA It is not appropriate for EIM Entities to allocate penalties for power balance infeasibilities to their transmission customers. PSE is responsible for submitting balanced schedules and has significant ability to control how frequently power balance infeasibilities occur in its portion of the EIM through its ownership or control of a majority of the generation in its balancing authority area. PSE can elect to offer this generation into the EIM as participating resources. PSE can also determine which non participating resources to designate as available balancing capacity for the EIM. Additionally, as the balancing authority, PSE is responsible for maintaining load resource balance in its balancing authority area. In short, PSE has the ability to prevent power balance infeasibilities in its balancing authority area. The penalty incentive works best if applied to the EIM Entity. Transmission customers cannot designate available balancing capacity. The EIM has also decreased the ability of transmission customers to manage their imbalance by requiring load and resource data much further in advance of the operating hour than was required prior to implementation of the EIM. As a result, transmission customers do not have the tools that the PSE EIM Entity has to ensure the correct functioning of the market. If PSE does not utilize these tools effectively, then it should have to bear the penalty, not its transmission customers. Insert a new section 8.13 to Attachment O that reads: Notwithstanding any other provision in Transmission Provider s Open Access Transmission Tariff, any charges or penalties assigned to the PSE EIM Entity pursuant to the MO Tariff when the sum of PSE EIM energy offers and Available Balancing Capacity are insufficient to meet the CAISO forecast of PSE EIM demand shall not be sub allocated to Transmission Customers. PSE appreciates BPA s comments regarding the allocation of penalties for power balance infeasibilities. Comments similar to BPA s were addressed by FERC in consideration of NV Energy s proposed EIM tariff revisions (in Docket ER15 1196). Commenters in that docket claimed that, given the price excursions occurring in the EIM, the application of LMP pricing to transmission customers under Schedules 4 and 9 was unjust and unreasonable. Despite the price excursions, the Commission found NV Energy s application of LMPs to reflect the actual cost that NV Energy pays for imbalance energy. See 151 FERC 61,131, starting at P 174 (pending compliance filing in accordance with ER15 861 and EL15 53 (ABC dockets)). Like NV Energy, PSE will follow the Commission s guidance and will update its tariff in accordance with all final orders issued by the Commission. PSE has proposed tariff revisions very similar to those proposed by NV Energy and PacifiCorp, which have been accepted or conditionally accepted by the Commission as just and reasonable.
10 BPA s comments infer that PSE may control any infeasibilities occurring in its BAA once in the EIM. This comment is very similar to Truckee Donner s claim in response to NV Energy s tariff proposal that NV Energy would be able to manufacture scarcity events in its BAA. The Commission dismissed this claim citing the authority of the Department of Market Monitoring (DMM) to review and address manipulative or anti competitive market behavior. See Id., at P 178. Like NV Energy, PSE will continue to satisfy all reliability requirements to reduce infeasibilities and any anticompetitive behaviors by PSE or other EIM Entities can be addressed by DMM.
11 #17 Contingency Reserves (Sections 1.11F and 1.42A) BPA Contingency reserves should be explicitly excluded from the definition of Available Balancing Capacity. Reliability standard BAL 002 WECC 2 contains specific requirements for the amounts of, and conditions of use for, contingency reserves.1 PSE s definition for EIM Available Balancing Capacity encompasses resources included in the PSE EIM Entity s Resource Plan. The Resource Plan definition includes ancillary services plans of the Puget EIM Entity[.] The phrase ancillary services plans is not defined, but PSE s tariff does define Ancillary Services. And contingency reserves are included in the required ancillary services under the pro forma OATT.2 It is important, therefore, to exclude contingency reserves, making it clear that contingency reserves cannot be used for EIM purposes. As a member of the NWPP reserve sharing group it is essential that PSE meets its contingency reserve obligations and if there is any potential for contingency reserves to be included as EIM Available Balancing Capacity, other NWPP members will likely have concerns about PSE meeting its obligations. Finally, explicitly excluding contingency reserves from Available Balancing Capacity is consistent with tariff revisions proposed by the CAISO.3 Specifically section 29.34(e)(3) of CAISO s tariff would require PSE to separately identify Available Balancing Capacity and contingency reserves. Revising PSE s OATT to better align with CAISO s clarifies PSE s obligations and ensures that both documents are consistent with each other. Revise section 1.11F to read: Any upward or downward capacity from a Balancing Authority Area Resource that: 1) has not been bid into the EIM, 2) and is included in the PSE EIM Entity s Resource Plan, and 3) is not used to provide Operating Reserve Spinning Reserve Service or Operating Reserve Supplemental Reserve Service under Schedules 5 or 6. PSE recognizes the importance of meeting contingency reserve obligations; satisfying NERC and WECC requirements; complying with NWPP Reserve Sharing agreement; and complying with the applicable provisions of CAISO s tariff. PSE maintains these obligations upon entry into the EIM. PSE has proposed draft revisions to its OATT in accordance with revisions proposed by NV Energy and PacifiCorp in anticipation of a final Commission Order accepting the Available Balancing Capacity proposal filed by CAISO in Docket ER15 861 003 and EL15 53 ( the ABC proposal ). Recently, FERC rejected NV Energy s and PacifiCorp s tariff filings proposing revisions to implement the ABC proposal as premature. PSE will be following the developments in all applicable dockets and will update its tariff accordingly.
12 #18 Available Balancing Capacity of a Non Participating Resource Section 4.1.3.4) BPA Section 4.1.3.4 to Attachment O states that PSE shall notify non participating resources designated as EIM Available Balancing Capacity of market Dispatch Operating Points except in circumstances in which the PSE EIM Entity determines the additional capacity is not needed for the BAA or has taken other actions to meet the capacity need. PSE already has discretion about whether to include capacity from a resource as EIM Available Balancing Capacity. If PSE does not include the capacity in its EIM Entity Resource Plan, then it is not EIM Available Balancing Capacity. Thus, if PSE believes it may need more flexibility to determine how to deploy a resource, it should not designate it as Available Balancing Capacity. But if it does include the capacity, the proposed exceptions are contrary to the purpose of the CAISO s reforms. Specifically, the CAISO has claimed it needs greater visibility into the dispatches of EIM Entity capacity used to support reliability. It is unclear how, after designating capacity as EIM Available Balancing Capacity, PSE can determine that additional capacity is not needed when the CAISO is now expecting it to be available to prevent power balance infeasibilities. And if PSE takes other actions to meet the capacity need, then those actions will not be visible to the CAISO. This completely undermines the CAISO s proposal and recreates the circumstances that the CAISO asserts were a cause of the EIM price spikes. Remove except in circumstances in which the PSE EIM Entity determines the additional capacity is not needed for the BAA or has taken other actions to meet the capacity need from Attachment O, section 4.1.3.4. Upon entry into the EIM, PSE will continue to be subject to and comply with all applicable NERC and WECC reliability standards. PSE must maintain the flexibility to make dispatch decisions within its BAA, including the dispatch of Available Balancing Capacity (ABC). PSE will continue to work closely with CAISO to ensure timely and efficient market notifications of all dispatch instructions for energy and ABC in the market. Additionally, Attachment O Section 4.1.3.4 was updated to incorporate proposed revisions relating to the ABC proposal by CAISO, which has not yet been approved by the Commission. PSE s draft revisions to its OATT, relating to the ABC proposal, are similar to revisions proposed by NV Energy and PacifiCorp in anticipation of a final Commission Order accepting the ABC proposal filed by CAISO in Docket ER15 861 003 and EL15 53. Recently, FERC rejected NV Energy s and PacifiCorp s tariff filings proposing revisions to implement the ABC proposal as premature. PSE will be following the developments in all applicable dockets and will update its tariff accordingly.