1. Commercial Implications of ERR Calculations Option 3 method vs. Transaction method

2. A C B D E F G H I Sample 9-bus System

3. A C B D E F G H I A Purchases From B

4. A C B D E F G H I Flows for B to A

5. A C B D E F G H I B Purchases from G

6. A C B D E F G H I Flows for G to B

7. A C B D E F G H I G Purchases from F

8. A C B D E H I Flows for F to G F G

9. A C B D E H I Net Flows for F to A F G

10. A C B D E H I Assume Constraint on Flow-gate G-I F G Proposed Option 3: IRR: All BAs could have some congestion costs ERR: F and A would share in remainder of the congestion costs Note: Option 3 still requires the calculation of TDFs on flowgate G-I for a transaction from F to A

11. A C B D E F G H I B-A and F-G Impacts on Flowgate G-I Both F and A are imposing flows counter to constraint Question: On what commercial basis should F and A bear any ERR congestion cost responsibility?

12. A C B D E F G H I True Cause of Constraint Transaction G-B Caused flows that contribute to constraint More Appropriate Option: IRR: All BAs could have some congestion costs ERR: Transaction G-B bears remainder of the congestion costs Note: Uses same data to calculate TDFs on flowgate G-I, but for a transaction from G to B instead. Also, no weighted average involved.

13. Implications RC can still simply redispatch to resolve the G-I constraint. By submitting tags, the following is true –PSE A is willing to accept responsibility for congestion caused by transaction B-A –PSE B is willing to accept responsibility for congestion caused by transaction G-B –PSE G is willing to accept responsibility for congestion caused by transaction F-G The same TDF data set are required for both Option 3 and this modified proposal Improved IDC granularity will resolve any concerns regarding incremental generation vs. tag source –Tag Source -> ERR –Incremental generation -> IRR