Transcript BCTC OATT Decision Summary

BCTC Open Access Transmission
Tariff (OATT)
Transmission Re-dispatch Options
January, 2006
Overview of Presentation
• Background
• Design Principles
• Design Parameters
• Options for Discussion
• Overview of Options
• Comparison
• Discussion/Comments
Re-dispatch Options
January 2006
Page 2
Background
• Issue of re-dispatch Tariff was discussed at the OATT Hearing
• In the OATT decision, BCUC ordered BCTC to develop and
submit a re-dispatch tariff as soon as possible extending the
deferral credit to existing customers
• BCTC wants to consult to determine interest in a more general
“Re-dispatch option” in light of the most recent Capital Plan
decision directing BCTC to look at other “non-wires”
opportunities
Re-dispatch Options
January 2006
Page 3
Design Principles
1. New service should increase utilization of transmission
assets
•
Increase availability of short term service
•
Increase long term access
2. Revenues from the new service should cover incremental
costs. This assures the service is fully self-supporting
3. Service should avoid shifting of embedded transmission
costs among customers
4. The service should be voluntary
If these four principles are met, the rate produces net
benefits and has no losers. It is a self-supporting rate
option
Re-dispatch Options
January 2006
Page 4
Design Parameters
• Re-dispatch Market
• Can be limited to only those customers wanting to buy or sell
transmission reservations (facilitate trading on secondary
market)
• Can include existing and new generators (“Incremental” and
“Decremental”)
• Different Time Frame of Products
• Very Short Term (1 day to 1 hour ahead of Real Time)
• Short Term (1 day to 1 year ahead of Real Time)
• Long Term (greater than 1 year)
Re-dispatch Options
January 2006
Page 5
Role of BCTC
BCTC cannot:
• Become a market maker in an “accept all schedules” market
design
• BCTC can:
• Match buyers and sellers for transmission product through
OASIS
• Could include a reconfiguration of transmission products
• Use generation re-dispatch (a paired Inc and Dec) to provide
additional transmission service
• The Re-dispatch option is voluntary
Re-dispatch Options
January 2006
Page 6
Options for Discussion
Option 1
• Expand the Deferral Credit (75%) eligibility to include existing
generators. The goal of this option is to increase availability
and decrease the costs of long term service
Option 2
• Facilitate secondary trading of transmission service through
additional OASIS postings. Since hourly service is already
released if not used, the goal of this option is to increase the
liquidity of intermediate term service between 1 day to 1 year
• Two Options
• Option 2(A) Facilitate secondary sales
• Option 2(B) Promoting secondary transmission
Re-dispatch Options
January 2006
Page 7
Options for Discussion
Option 3
• Facilitate additional transmission use by contracting with
market participants for counterflows. Since existing rights
holders become more likely to release transmission or produce
a counterflow nearer to real time, the goal of this service is to
increase very short term use between 1 hour and one day
• BCTC contracts with generators to submit a counterflow
schedule
Option 4
• Facilitate additional long term use by allowing Customer to selfdispatch through congestion
Re-dispatch Options
January 2006
Page 8
Option 1: Extend Deferral Credit to Existing
Generators
How does this option work?
• Participating existing generators would receive a credit against future
transmission bills in exchange for signing a re-dispatch contract that
allows BCTC to defer planned upgrades
• A critical requirement is that the generator’s transmission use is a modification from their
assumed base case use. The base case use will be established in BCTC’s long term plan
• Per Commission Decision, the deferral credit would not be made available to end-use
customers of BC Hydro to avoid the possibility of double compensation
• Prior to any upgrade, all existing generators that had the potential to
contribute to the ATC needed to fulfill the long term request would be
notified
• Could be notified through OASIS
• Could be part of Long Term Planning Process
• Could be part of Open Season
• The participating generator would then enter into a “re-dispatch
agreement” with BCTC in exchange for a credit against future
transmission service
Re-dispatch Options
January 2006
Page 9
Option 2 (a) : Facilitate Secondary Transmission
Sales
How does this option work?
• This service would be similar to the sales or assignment of transmission
service under Section 23.1 of OATT
• When a customer has a service request rejected due to insufficient ATC,
the customer can then post OASIS request with bid price, path, quantity
and time to all transmission customers
• Likewise, a transmission customer with unused PTP service can post
OASIS offer
• If a match is found, notification is sent to BCTC of the service transfer
• All restrictions in Section 23.1 of OATT applies
• The role BCTC could be that of a clearing house, making availability and
requirements of services transparent. Note that BCTC only facilitates
communication and recording of the transaction, but plays no role in
matching, negotiation and financial settlement
Re-dispatch Options
January 2006
Page 10
Option 2 (b) : Promoting Secondary Transmission
Sales
How does this option work?
• Similar to Option 2(a)
• BCTC would take the unused service on consignment and actively
promote the sales of such service
• BCTC would charge a service fee
• The risk of stranded unused transmission rests with Transmission
Customer
Re-dispatch Options
January 2006
Page 11
Option 3: Counterflow
How does this option work? [Assume that BCTC is
purchasing generator redispatch]
• This would occur in the hourly market after general flow patterns are
known
• Customers would submit voluntary incremental and decremental
energy offers (“incs” and “decs”) along with their energy schedules
• BCTC would match incs and decs and post additional ATC
• Pricing could take a number of forms:
• Each block of incremental transmission is priced separately at the inc/dec
cost (cost-based supply curve of incremental transmission)
• All transmission is priced at the applicable ST rate (implies that BCTC
would only accept inc/dec pairs that cost less than the ST rate)
• All incremental transmission is priced at an inc/dec clearing price
Re-dispatch Options
January 2006
Page 12
Option 4: Customer Self-dispatch
How does this option work?
• This service would be initiated by a customer having their service
rejected due to insufficient ATC
• Instead of taking shaped service, the customer would take block
service and the customer’s service in the months where ATC is
insufficient becomes recallable
• If the customer’s service got recalled, it would have to arrange for its
own dispatch to meet its energy delivery obligations
• Customer would pay Long-term Firm Point To Point rate and get
refund for service curtailed at the Short term, Non-firm rate
Re-dispatch Options
January 2006
Page 13
Comparison of Alternatives
Option 1: Extend Deferral Credit to Existing Generators
• Relatively easy to implement
• May be infrequently used
• Could create perverse incentives for existing generators to create
congestion and then get paid to redispatch
• The generators would not have an incentive to increase their own
transmission costs and then receive 75 percent of the deferral cost
savings
• Relatively low value, because participants only get paid a 75 percent
of cost savings from deferral cost savings rather than market value
• May not increase use of the system
Re-dispatch Options
January 2006
Page 14
Comparison of Alternatives
Option 2 : Facilitate Secondary Transmission Sales
• No need for new service (just modification of OASIS and business
practice/customer training)
• Much more flexible than Option 1
•
•
•
•
Potential for increased use of the interties on a firm and non-firm basis
Small Potential for BCTC to lose revenue because it sells less hourly
Does not create possible use of generation to create ATC
Can create export ATC only if transmission is released in same
constrained direction
Re-dispatch Options
January 2006
Page 15
Comparison of Alternatives
Option 3 : BCTC Purchases Counterflow
• Option 3 is a new service that is more difficult to implement than either
Options 1 or 2
• Option 3 is more flexible than the other options and would probably be
used more frequently
• Costs to implement, depend on number of participants, number of
products and how much BCTC has to implement
• Can only be implemented on internal paths due to WECC rules
Re-dispatch Options
January 2006
Page 16
Comparison of Alternatives
Option 3 : BCTC Purchases Counterflow (con’t)
• Potential for customers to hold back beneficial flows to create
congestion, then get paid to relieve it. This problem is present in
Options 1 and 2, but since problem is proportional to the benefits, the
problem is magnified in this option
• Is this a real problem? Beneficial flows do have value that are not
recognized under current system
• Can create firm export ATC only if transmission is released in same
constrained direction or re-dispatch relieves internal path constraint
Re-dispatch Options
January 2006
Page 17
Comparison of Alternatives
Option 4 : Customer Self-dispatch
• Option 4 provides an alternative to shaped service where a customer
can arrange for alternative delivery at times of congestion
• It is relatively simple to implement
• It would make full use of the system
• It may reduce ST PTP opportunities
• May also crowd out shaped service
• May not fit well with customer financing and contracting needs
Re-dispatch Options
January 2006
Page 18
Questions for Discussion
• Which option would you be most interested in?
• Are we missing anything?
Re-dispatch Options
January 2006
Page 19