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Explanation of Latest Changes
to Draft Reserves Schedule,
Service Schedule D
Contact:
Arnie Podgorsky
Mike Thompson
Wright & Talisman PC
202-393-1200
The Proposed Schedule - general
 Product: from generation capacity that can
respond within applicable NERC etc. criteria.
 Purchaser is BA, RSG or entity having
obligation to provide operating reserve to
BA or RSG.
 Price may have capacity (demand) and energy
components
 Provide measure of damages tailored to
operating reserve product.
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August Revisions to Proposed Schedule D

Section D-3 – Terms of Service
o Most terms are same as in previous draft, but provision is
reorganized to create more logical flow and to clarify certain terms
in accordance with Subcommittee comments:
o Required designation of RRO/BA/RSG with whose standards/criteria
the parties agree to conform is moved to Section D-3.1.
o Section D-3.2 describes scope of Seller’s obligation to provide
Operating Reserve Service; D-3.3 describes scope of Purchaser’s
right to call on such service.
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August Revisions to Proposed Schedule D
(cont’d)

Section D-3 – Pricing (cont’d)
o Section D-3.4, Pricing, is reorganized in effort to clarify anticipated
pricing structure and when and to whom FERC-imposed price
caps apply.
o Generally applicable pricing term now incorporates peak/off-peak pricing per
Subcommittee’s discussion, subject to Parties’ ability to apply a different
pricing scheme in Confirmation (e.g., if service is contemplated only during
on-peak periods).
 The new terms “On-Peak” and “Off-Peak” are NERC-defined terms.
 Section D-3.4.3 elaborates on Purchaser’s right to return energy to Seller,
incorporates 1.5:1 maximum exchange ratio (like Service Schedule C), and
provides for a time limit on such returns, though exact time frame is TBD.
 Section D-3.4.5 now provides that monthly energy charge will be determined
by value of energy delivered by Seller netted against value of any energy
returned by Purchaser.
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August Revisions to Proposed Schedule D
(cont’d)
 Section D-3 – Pricing (cont’d)
 Price cap provision is now Section D-3.4.6; terms are the same
as in previous draft (and in other WSPP Service Schedules), but
are revised to try to make clearer, per Subcommittee comments,
when and to whom the price caps will apply.
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August Revisions to Proposed Schedule D (cont’d)
 Section D-4 – Damages
o Damages provisions are modified from the previous draft to reflect
Subcommittee’s direction to develop objective damages measures
while avoiding penalties.
o Prefatory legal language is added in Section D-4.2 stating that
damages calculated in accordance with the service schedule are
not a penalty.
o For Seller’s non-performance, Section D-4.3 of the new draft
provides that damages will be a pro rata share of the capacity
charge and any transmission reservation charge based on duration
of non-performance, plus the smallest of the following three
alternative amounts (but not less than zero):
o The quantity of energy Seller failed to deliver multiplied by an Hourly
Index Price (which is yet to be determined/defined), OR
o Replacement Price less Contract Price, plus any net increase in
transmission charges incurred to acquire replacement energy, OR
o Quantity Seller failed to deliver multiplied by 120% of Parties’
agreed energy charge.
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August Revisions to Proposed Schedule D (cont’d)
 Section D-4.3 - Seller Damages cont’d
o Alternatively, in lieu of any payment under the provisions just
described, Purchaser may require Seller to provide Operating
Reserve Service with no capacity or transmission charges for
three consecutive business days prior to the end of the Term.
o In addition, Seller will be liable to Purchaser for any NERC or
other penalties or fines imposed on Purchaser to the extent
such amounts are attributable to Seller’s failure to perform.
o Draft includes for discussion a possible cap on Seller’s
penalty liability equal to the amount of one or two months’
capacity charges for Operating Reserve Service.
o Purpose of cap would be to minimize disincentive to market
participants to sell Operating Reserve Service.
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August Revisions to Proposed Schedule D (cont’d)
 Section D-4.4 - Damages for Purchaser’s Unauthorized
Takes
o This provision applies in the event Purchaser (or Purchaser’s BA or
RSG) takes energy under Operating Reserve Service for any
purpose that does not conform with applicable standards/criteria for
deployment of operating reserve.
o In the event of unauthorized takes, Purchaser shall pay Seller as
damages the smallest positive amount under the following three
alternative calculations:
o The quantity of unauthorized energy taken multiplied by an
Hourly Index Price (index yet to be determined/defined), OR
o Resale Price less Contract Price for the unauthorized energy,
less the amount of any net additional transmission cost Seller
would have incurred to achieve Resale Price, OR
o Quantity of unauthorized energy multiplied by 120% of Parties’
agreed energy charge.
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August Revisions to Proposed Schedule D
(cont’d)
 Subcommittee may wish to consider whether Section
D-4.4 should also include an alternative amount of
damages to be paid by Purchaser in the event the
provisions just described would result in no payment to
Seller.
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Let’s Discuss
 Reactions to the modified provisions we have
discussed.
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