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WSPP Webinar
Proposed Service Schedules
Operating Reserve Service (D)
Intra-Hour Supplemental Power (E)
February 4, 2010
Proposed Service Schedule D
Operating Reserve Service
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Recap for Schedule D (Reserves)
 Discussion and drafting revisions
have focused on three areas:
 Product definition
 Avoidance of Technical Impediments
 Damages
 Purpose of Webinar is to review the
1/20/10 draft with focus on these
areas and hear remaining concerns
ahead of March OC meeting
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Operating Reserve Service: Product
 The product definition is left to the parties,
but with reference to “Applicable
Standards” (reliability standards and
criteria of NERC and Designated Authority),
as defined in D-2.2.1
 Terms of Service
 D-3.1 specifies information required for Confirm
(DA, quantity, price, term, types of Reserves,
Contract Path and transmission terms,
communications protocols, other requirements
for Confirm to be effective (e.g. agreement with
DA); Damages Multiplier; performance
assurance under NERC INTs)
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Operating Reserve Service: Product
 D-3.2 Defines product, restricts use by DA of
capacity to satisfy DA’s Operating Reserve
obligation under Applicable Standards; D-3.3.2
requires Purchaser to assure DA’s compliance
 D-3.3 requires Seller to deliver energy
associated with Reserves upon DA request in
accordance with D-3.3.2, which allows call “in
good faith discretion reasonably exercised in
accordance with Good Utility Practice” to
respond to Contingency or other event for which
Reserves may be called upon under Applicable
Standards (or as otherwise stated in Confirm)
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Operating Reserve Service: Product
 D-3.4 allows Purchaser to audit to assure
that Seller’s provision of Reserves
conforms to Applicable Standards
 D-3.5 pertains to Contract Price and
incorporates price cap language
 D-3.6 refers to FERC filing requirement
for jurisdictional entities for transactions
exceeding one year
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Operating Reserve Service: Technical
Impediments
 Given the product terms, are there
any technical concerns?
 Note that the Schedule anticipates that if
Purchaser is not the Designated
Authority, the parties may need a
separate agreement that includes the DA
to address communications and other
requirements
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Operating Reserve Service: Damages
 Issue discussed extensively in prior Webinar and OC
meeting. Concern was need for remedy with teeth:
 Considering the reliability significance and potential
penalties, remedy should assure that Seller would
deliver energy upon call
 Likewise, remedy should assure that DA would call
only with good cause, and not use the capacity for its
own commercial purposes
 Therefore, more stringent remedies were needed
than exist for existing firm product
 On other hand, passing on penalties via damages was
unacceptable. The associated facts would likely be
ambiguous and disputed. Exposure in such
circumstances would be too harsh for Seller to
market the product
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Operating Reserve Service: Damages
 Damages paid by Seller for Seller’s Non-Performance
 D-4.3, damages for Seller’s non-performance, sum
of:
 Capacity charge for 30 days x Damages Multiplier (if
peak and off-peak are priced, higher price is used), plus
 Quantity of undelivered energy x price, x Damages
Multiplier, plus
 Transmission charge incurred by Purchaser
 D-4.4, Seller failure 3 times is Event of Default under
WSPP Sec. 22. Termination payment is pv of amount
remaining to be paid less pv of Replacement Cost,
but Purchaser shall not owe Seller
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Operating Reserve Service: Damages
 Damages paid by Purchaser for Purchaser’s nonperformance
 D-4.5 damages for DA’s unauthorized call
 Capacity charge for 30 days x Damages Multiplier (if
peak and off-peak are priced, higher price is used), plus
 Quantity of energy Seller was required to deliver x
energy price, x Damages Multiplier
 D-4.6, Purchaser (DA) non-performance 3 times is
Event of Default under WSPP Sec. 22. Termination
payment is pv of capacity charges and transmission
charges remaining to be paid less pv of replacement
capacity Cost, but Purchaser shall not owe Seller
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Proposed Service Schedule E
Intra-Hour Supplemental Power
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Recap for Schedule E (Intra-Hour)
 No significant issues have arisen regarding
this Schedule
 Again, focus is on:
 Product definition
 Avoidance of Technical Impediments
 Damages
 Again, Webinar is to review the 1/20/10
draft with focus on these areas and hear
remaining concerns ahead of March OC
meeting
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Intra-Hour Supplemental
Power (“I-HSP”): Product
 The product:
 Variable energy on call within the hour,
in increments the parties set or dynamic,
up to Maximum Capacity in whatever
shape
 Scheduling can be manual and dynamic
 Dynamic can be immediate, as load
following
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I-HSP: Product
 Terms of Service
 E-2.1.1.1 Manually Scheduled Product
 Energy request for each Interval, to be
communicated by electronic communication
to Seller and BA
 In whole megawatts up to Maximum
Capacity; quantity can vary from Interval to
Interval within any parameters the parties
may set, including variation limits and ramp
rates
 Quantity for an Interval will prevail until a
request to cease or for a different quantity
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I-HSP: Product (Dynamic)
 E-2.1.1.2 Dynamically Scheduled Product
 Requests need not be in whole megawatts;
variation can be subject to parameters
 Communications by “dynamic electronic
communication” to Seller and BA.
 Response subject to equipment capability
and other restraints stated in Confirm
 Quantity for an Interval will prevail until a
request to cease or for a different quantity
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I-HSP: Product (Dynamic)
 E-2.2 Purchaser bears transmission cost
and risk of unavailability
 E-2.3 Purchaser has an energy return
right but not obligation within 168 hours
after receipt, with flow not exceeding
Maximum Capacity.
 Parties can agree to exchange periodicity,
but if they do not specify the Schedule does
not require it. Is this a good approach?
 Purchaser bears transmission cost and risk
for return energy
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I-HSP: Product (Dynamic)
 E-2.4 Warranties
 Seller warrants sufficiency of
communications and automated control
facilities to enable timely and accurate
response
 Purchaser warrants sufficiency of
communications and automated control
facilities to convey requests and adjust for
receipt of energy.
 Are these drafted appropriately?
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I-HSP: Product (Manual and Dynamic)
 E-2.5 Pricing
 Flexible, may include capacity/energy
charges and transmission charge.
 On/off peak pricing is presumed, which can
vary seasonally (or otherwise)
 Invoice shall identify each charge
separately
 Price cap language is incorporated
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I-HSP: Technical Issues
 Given the product terms, are there
any technical concerns?
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I-HSP: Damages
 E-3 Damages: General agreement
that because of the reliability aspect
of the product (to firm a variable
energy resource) and possibility of
related penalties, this Schedule
should use a Damages Multiplier to
establish LDs (E-3.2)
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I-HSP: Damages
 Damages paid by Seller for Seller NonPerformance
 E3.3, damages for Seller’s non-performance,
sum of:
 Capacity charge for 30 days x Damages
Multiplier (if peak and off-peak are priced,
higher price is used), plus
 Quantity of undelivered energy x price x
Damages Multiplier plus
 Transmission charge incurred by Purchaser
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I-HSP: Damages
 Review and confirm:
 No damages to be paid by Purchaser for
failure to receive (none are specified)
 What about return energy? (We could state
that if it is provided per the schedule but
not received a credit must be given
 Other issues?
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Status of Proposed Schedules
 Sense of the group about voting on
these at the OC
 Any other discussion points?
Questions
 Thank you for your comments and
focus
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