2 Introduction Pacific Northwest Independent Integrated Balancing Authority (IIBA) Meeting Protocol Project Participants: –Project Lead: CECD - Constellation Energy Control & Dispatch –Technical, Operational and Policy Support Energy Expert Services NIPPC Opatrny Consulting The Energy Group Versify Solutions –Legal and Contracting Support K&L Gates Van Ness Feldman –Generators NIPPC generators Potentially other generators
3 Overview Why is the IIBA a good idea? It will enable generators to: –Get paid for what they provide now for free, e.g., frequency and voltage support, reactive supply –Reduce operating expenses, e.g., operating reserves, generation imbalance, integration charges It will allow money-making opportunities and add value to competitive markets: –Redispatch around transmission constraints –Support the integration of wind (indirectly or directly) –Pool transmission It will allow generators: –Greater autonomy –To play by market rules, not just BPA’s rules –New opportunities as well as new responsibilities –Last chance to operate as merchants These opportunities need to be prioritized and sequenced
4 Overview What is the IIBA? CECD sets-up/implements/certifies the BA –The BA is a reliability function –The BA function requires communications links and AGC The participating generators separately contract with CECD in order to: –Integrates resources –Maintains interchange-generation balance –Supports interconnection frequency –Manages transmission for these purposes As a BA, the participating generators will be enabled to: –Sell regulation to support the integration of wind –Participate in operating reserve sharing (through the NWPP) –Self-providing or contracting with third-parties for operating reserves
5 Overview How is a BA Established? –Certification Decision Prepare Questionnaire for NERC and WECC On-site Visit –Address Minimum Operating Reliability Criteria Generation Control Performance Transmission Interchange System Coordination Emergency Operations Operations Planning Telecommunications Operating Personnel and Training –This Process Takes About Six Months; there is a Six Month Probation
6 Overview When does this make sense to do? Why not now? There is a recognize lack of business opportunities in the region There are no plans to aggregate BAs in the PNW The region is hamstrung by hourly block markets Transmission constraints are being operated through BPA federal resource redispatch and curtailment BPA is projecting significant wind integration through 2010 (i.e., 6,000 MW) The region is now “capacity” constrained –Light-load hours –Heavy-load hours There is a need for within hour regulation Renewable portfolio standards are drivers
7 Overview Who could participate? Operating Resources –Calpine Hermiston, OR630 MWgas CCCT –EPCOR Fredrickson/Tacoma, WA 125 MWgas CCCT –Mint Farm Energy Center LLC Longview, WA286 MWgas CCCT –NESCO Sumas, WAN/Agas CCCT –Sierra Pacific Mt. Vernon, WA28 MWbiomass/cogen –Suez Energy America Chehalis, WA520 MWgas CCCT –TransAlta Centralia, WA1404 MWcoal 248 MWgas CCCT Resources Under Construction –Grays Harbor Energy Center LLC 650 MWgas CCCT –NW Energy Partners (enXco)125 MWwind Resources Permitted but Not Constructed –Horizon Ellensburg, WA125 MWwind Arlington, OR125 MWwind Source: Robert Kahn
8 Costs/Benefits What will this Arrangement Cost? Estimated Cost of Arrangement –Start-up/Implementation/Certification $175,000 first entrant $35,000 for each additional –Communications and hardware –Balancing Authority Service Operations $60,000/month first entrant $12,000/month for each additional The CECD Balancing Authority Services Agreement is an instrument already in operation
9 Cost/Benefits Experience of Other BAs Value of Load-only or Gen-only BA –Greater control over future commodities purchasing, risk and price management –Eliminate exposure to Generation Imbalance charges –Become a front runner rather than a follower –Take active role in Business Management and Regulatory and Compliance Issues –Actively involved in managing Transmission
10 Cost/Benefits What will this Arrangement Save? The BA will result in direct savings –Generation Imbalance Charges –Integration Charges ($3.10 – $4.80/MWh) –Operating Reserves (BPA’s rate is $7.93/MWh) The BA will enable intangible benefits –Provide needed in-hour services –Enhance redispatch opportunities Reliability Planning –Pool transmission –Avoid/reduce regulatory interface costs –Improve output profile (wind farm diversity) –Enhance Renewable Portfolio Standard Opportunities
11 Costs/Benefits How can benefits be analyzed? Evaluate BPA Tariff –Generation Imbalance –Avoid Generation Imbalance (BPA) Band 1: +2 MW or +1.5% of scheduled energy –No charge if returned –Charged, if not returned, at diurnally-differentiated incremental cost Band 2: Greater than +2 MW or +1.5% of scheduled energy –Charged 110% incremental cost –Credited 90% of incremental cost Band 3: Greater than +10 MW or +7.5% of scheduled energy –Charged 125% incremental cost; –Credited 75% of incremental cost –Operating Reserves (quantity and price) –Integration Charge (if applicable) Intangible Benefits –Identify which benefits need further evaluation Case-by-case, e.g., pooled transmission Generic analysis using existing data sets
TM Company Overview Headquartered in Chadds Ford, PA (Philadelphia) Focused on software applications and tools in two areas of the power industry –Generation asset performance management (V-Performance TM ) –Trading – LMP and market data analysis (V-Trader TM ) Advanced web-based software architecture with robust and secure data management capabilities and unique user interface 15 customers and growing Partnership with Constellation Energy Control and Dispatch
TM Key Functionality Real time monitoring and full range of asset performance dashboard reports –Operational and performance dashboards –Unit performance reports –Daily operational reports Key functionality enabled through web-based architecture –Integrates data from CECD PI, dispatch and other systems Complete visualization of asset performance Common view of operational status –Summary/graphical reporting with drill down capability –Simplifies data intensive collection and analysis –Security manager allows user-based report access
TM Applications Dashboard Reports Unit Status Event Log Real-Time Monitor SCADA Query Tool Daily Reports Unit Performance Full range of software applications to analyze, monitor and report on plant operations
TM Dashboards The Operations Dashboard summarizes weather, energy, emissions data and reports KPI type data, such as availability and capacity factor.
TM SCADA Query Tool Ad hoc charting and reporting of SCADA/historical data to assist back office and settlement activities.
20 Optimal Generation Mix Define Optimal Mix of Generators –Diversity in Fuel Mix Anchor tenant resources Sequencing additional resources –Diversity among same Fuel type, e.g., wind –Geographic Diversity in terms of Resource Location –Geographic Diversity in terms of Location of Loads –Various Renewable Portfolio Standards –Transmission Access Constraints can further enable redispatch Opportunities (e.g., counter-flows)
22 Natural Gas CT/CCCT Wind Energy System IIBA Participants Goodnoe Hills 125 MW Horizon 125 MW Calpine Hermiston 630 MW Mint Farm 286 MW Suez Chehalis 520 MW TransAlta 1404 MW Coal 248 MW CCCT EPCOR 125 MW Sierra Pacific 28 MW Biomass Grays Harbor 650 MW Baseload Coal
23 Load Centers - Interties Puget Sound Energy Snohomish PUD Seattle City Light Tacoma Power 5,000 MW est. Avista Spokane, WA PacifiCorp PGE Portland, OR John Day (PACI) Big Eddy (PDCI) BC Hydro Idaho Power NWE PacifiCorp Walla Walla, WA BPA Public Power Customers
24 Wind Energy Systems Hydroelectric Projects BC Hydro Thermal Powerplants Constrained Flowgates
31 Who are the Anchor Tenants? Any resource can be the anchor tenant –Needed to initiate the BA certification process –Realize cost savings Fossil fuel resource can support wind integration –In-hour shaping –Between hour shaping –Back-off generation during off-peak hours Wind can provide other opportunities –Enable RPS opportunities –Further cost savings through avoidance of integration charges –Potential wind farm diversity to improve capacity factor
32 Contractual Structure Contractual Arrangement –The Balancing Authority Execute BA Services Agreement The BA will not engage in commercial transactions The BA will offer services to enhance the value of member generators The BA generators can be “interconnected” through transmission and dynamic schedules –The Generators Execute the BA Services Agreement (cross contracts) The Generators will sell to end-users The Generators will address pooling opportunities Advise was to not limit participants –No “Anti-trust” issues identified The purpose is to facilitate commerce – enhance competition A bid structure will need to be designed for services Information sharing as long as such doesn’t impact competition
33 Procedural Next Steps Simple Start –Stage this Concept –Arrange Policy Representation (NIPPC) –Allow for full Expansion NERC certification –Process requirements WECC recognition –Process requirements
34 Procedural Next Steps The IIBA would need to –Become a member of the WECC –Become a member of the PNSC –Become a member of the NWPP Reserve Sharing Group –Consider signing the Western Interconnection Agreement (release of liability) –Consider joining ACE Diversity Interchange
35 Timeline Other questions? Define policy/PR needs for this effort. Execute Balancing Services Agreement (December 2007) Initiate certification process (January 2008) Engage in BPA’s wind integration pilot (Q1 or Q2 2008) Other “next steps”?