1 Credit for Redispatch Small Group Review of Unconstrained MFs NAESB BPS Meeting December 14-15, 2011

2 Unconstrained MFs Represents theoretical value had the market not redispatched to meet its relief obligation during TLR. Directional value that is provided to the IDC for the current hour and the next hour (both down to 0% values and 5% and greater values are reported. Used to determine relief obligations –forward value that is 5% and greater is used to assign market flow relief obligations. Used to determine reload component – difference between the forward unconstrained value down to 0% and the forward constrained value down to 0% is the reload component used in the Target MF calculation. The Credit for Redispatch Small Group recommends that the reload component be computed using the down to 0% values and the 5% and greater values with the higher of the two being used.

3 Problems Determining Unconstrained MF No mechanism to realistically determine MFs as if the market had not redispatched. MISO ran a study UDS case with flowgates in TLR not constrained. Over time, the markets adjust to TLR by changing their bidding behavior. Representative of the market not binding for first couple of binding intervals. Freeze constrained MFs at time of TLR Level 3 or higher. Probably ok for the first couple binding intervals. Beyond that, there are other factors that come into play such as changes in load, generation coming on and off the system, changes in tags/schedules and changes in topology. Situation can occur where constrained MF is greater than unconstrained MF. When this happens, IDC considers this illogical condition and sets unconstrained MF equal to constrained MF.

4 Problems Determining Unconstrained MF (cont.) Situation can occur where constrained MF is greater than unconstrained MF. When this happens, IDC considers this illogical condition and sets unconstrained MF equal to constrained MF. Increase relief obligation. Removes reload component (credit for redispatch) in Target MF calculation.

5 Problem Assigning Priorities to Unconstrained MFs Using flowgate allocations, hourly firm and non-firm allocations are known in advance. Even though the unconstrained flows are frozen, the mix of firm and non-firm is recognized each hour. This affects relief obligation by priority bucket in each hour, not the reload component. For hybrid option, no way of knowing in-advance the breakdown of firm and non-firm (based on generator output in real-time). Could freeze the GTL flows in the priority buckets at the start of the TLR. This seems unreasonable because even though you may take all non-firm generators off-line, your relief obligation is based on the mix when unconstrained flows are frozen.

6 Issues Want to Solve During Review of MFs/GTL Flows Freezing constrained flow at the beginning of the TLR and calling it unconstrained flows is a fiction. There is no easy way to determine unconstrained flows. We want to look at some options and pick one that makes the most sense. Once we go to the hybrid option where priority of the transmission service assigned to the generator will establish the priority of the GLT flows created by the generator in real-time, there is no easy way to establish the curtailment priority of unconstrained flows. Because we are switching to the hybrid option, there is an issue about meeting relief obligations due to non-firm curtailments. For example, if MISO receives a non-firm relief obligation in the first hour and uses economic dispatch to unload, a situation could occur where only firm generators get redispatched to meet its relief obligation. Depending on which unconstrained flow option gets selected, there may need to be a credit for redispatch where the reduced flows in the firm bucket are removed from both the firm bucket and the non-firm bucket.

7 Options for Changes to Unconstrained MFs Used in IDC Option 1 – Current Method Option 2 – No longer use Unconstrained MF in IDC Option 3 – Alternate Calculation of Unconstrained MF/GTL Flow Option 4 – Alternate Calculation of Unconstrained MF/GTL Flow

8 Option 1-Current Method Under the current method, we freeze constrained market flows when TLR level 3 or higher is implemented and call this unconstrained market flows. Under this option, we will use the curtailment priorities at the time we freeze constrained market flows and these curtailment priorities will stay fixed for the entire TLR event. Under this option, the IDC logic will kick-in every time the constrained market flow is greater than the unconstrained market flow. When this happens, the IDC resets the unconstrained market flow equal to the constrained market flow. When this happens, recommend that the curtailment priorities of the constrained market flow be also used to reset. The constrained market flow needs to have a credit for redispatch adjustment made. To make the credit for redispatch adjustment, the constrained market flow will be frozen in priority buckets at the start of TLR level 3 of higher.

9 Option 1-Current Method During each time increment when constrained market flows are recomputed and have a relief obligation for that hour, will compare the firm forward constrained and firm reverse constrained with the corresponding frozen values. If the firm forward constrained has gone down or the firm reverse constrained has gone up, that delta will be subtracted from the constrained firm value and will then be applied to the non-firm forward constrained value in its entirety. An example to understand: Priority 6Priority 7Total Constrained Market Flow Frozen at Start of TLRFor10 MW30MW40 MW Rev Net32023 Relief Obligation = 10 MW of Priority 6 Curtailments.

10 Option 1 Current Method 00:15 Unadj. Constrained Market FlowsFor10 MW27 MW37 MW Rev Net :15Adj. Constrained Market FlowsFor5 MW30 MW35 MW Rev Net If the total unconstrained market flow in the forward direction (after summing all priority buckets) is less than the total adjusted constrained market flow in the forward direction (after summing all priority buckets), a resetting of unconstrained market flows will occur by priority buckets. As move forward through each time interval, will do this comparison of the originally frozen unconstrained market flow by priority bucket with the adjusted constrained market flow and will reset the unconstrained market flow in each hour where it is appropriate. The comparison will be done for both real-time and next-hour constrained market flow. The next hour constrained market flow must consider binding that is already underway.

11 Option 1 Current Method This will result in a set of unconstrained market flows that are either the frozen values used at the start of the TLR event in the original priority buckets or the reset values that have been adjusted for any type of credit for redispatch between priority 6 and priority 7 buckets. For those intervals when the frozen unconstrained value is used, there will be a reload component in the target market flow calculation because the unconstrained value is greater than the adjusted constrained value. However, these intervals will also use the original mix of generator priorities to establish relief obligations and will not reflect a change in the mix of generators being used to redispatch the system. For those intervals when the unconstrained value is reset, there will not be a reload component in the target market flow calculation because the unconstrained value is equal to the adjusted constrained value. However, these intervals will use a latest mix of generator priorities that have been adjusted to reflect the credit for redispatch.

12 Option 2 – No Longer Use Unconstrained MF in IDC Under this option, we replace the use of the forward unconstrained market flow down to 5% by the IDC to compute relief obligations with the adjusted constrained market flow down to 5% calculated in Option 1. Since there is no unconstrained market flow, there is no reload component in the target market flow calculation but the adjusted constrained market flows will reflect the credit for redispatch. The adjusted constrained market flows are assigned curtailment priorities of generators running in real-time or expected to be running the next-hour after taking into account a credit for redispatch. If binding in the current hour, the next hour credit for redispatch must reflect expected binding in the next hour. The following rules describe how curtailments/holds will be established using this Option 2.

13 Option 2 - No Longer Use Unconstrained MF in IDC A situation could occur where the BA has met its relief obligation in the first hour by redispatching along with a number of tag curtailments. If the TLR extends into the second hour and the IDC allows some curtailed tags to come back, what is the expectation of the GTL flows? Could say if all priority 6 tags are being curtailed, you would have to cut any remaining priority 6 GTL flows and you would have to hold GTL flows so no new priority 6 flows are created (this is effectively an incremental relief obligation from your current set of GTL flows). This is a positive relief obligation. Could say if all priority 6 tags are being reloaded, would release the GTL flows and let them come back on the system. Could say if some portion of priority 6 tags are being allowed to reload (say they are allowed to increase by 50%), could also allow the GTL impacts to increase by the same percentage. If you know the amount of tag impacts and GTL impacts after the last reload/curtailment, you should be able to back into the amount of priority 6 GTL flows that can be reloaded (this is effectively an incremental loading that would be allowed from your current set of GTL flows). This is negative relief obligation.

14 Option 2 - No Longer Use Unconstrained MF in IDC The BA would get a GTL relief obligation based on their constrained flows. If they got a positive relief obligation, this would be incremental curtailments to any previous relief obligation and they would have to further reduce their flows. If they got a negative relief obligation, this would be a reloading amount where they could increase the priority bucket. If they did not get a relief obligation, but they had a relief obligation in the previous hour, will make three checks to determine what the BA will do: After reloaded tags are curtailed, if all priority 6 tags are cut, there should be no priority 6 flows and the BA must remove its priority 6 GTL flows. It can increase its priority 7 GTL flows but it should have no priority 6 GTL flows. After reloaded tags are curtailed, if there are still some priority 6 tags, this should be an indication that no additional priority 6 curtailments are needed but the BA must hold its priority 6 GTL flows. It can increase its priority 7 GLT flows but it cannot go above its current priority 6 GTL flows. After reloaded tags are curtailed, if there are no priority 6 tags that are cut, the BA can stop binding and allow all of its priority 6 GLT flows to come back on the system. It can also increase its priority 7 GTL flows.

15 Option 2 - No Longer Use Unconstrained MF in IDC In all cases, we will use the forward 5% constrained GLT flow by priority bucket that has been adjusted for redispatch accomplished using firm generators (credit for redispatch) and for increases in reverse flow when deciding what steps to take. So the BA will be told to either remove X MW of GTL flows, to add Y MW of GTL flows, to hold its priority 6 flows at current level, to stop binding and can add priority 6 flows, or to remove all of its priority 6 flows.

16 TLR Relief Amounts

17 Option 1 Rules Freeze constrained market flows whenever TLR Level 3 or higher is implemented and call this unconstrained market flows. Curtailement priorities will stay fixed for the entire TLR event. Exception: When constrained market flow > unconstrained market flow, reset curtailment priorities along with the unconstrained market flows equal to that of constrained market flows. Constrained market flow needs to have a credit for redispatch adjustment. Constrained market flows will be frozen at the effective time of TLR to determine the credit for redispatch adjustment. For subsequent time intervals, compare constrained market flows with the corresponding frozen values. If firm forward has gone down or firm reverse has gone up, adjust using delta applied to non-firm forward values.

18 Option 1 Rules cont. Total net market flows are the same for the adjusted and the unadjusted constrained market flows. After the adjustment, check if adjusted constrained > unconstrained, reset if necessary. If unconstrained market flows are reset, then no reload. If no relief obligation, then unfreeze the constrained market flows. Freeze again as soon as the relief obligation is effective next time during the same event. Same logic applies to both current hour and next hour. During credit for redispatch adjustment, adjust first ED-2 and then ED-6. Minimum ED-2 forward is 0 while ED-6 fwd can go negative.

19 Option 2 Rules Replace forward unconstrained flow 5% and greater with forward constrained flow 5% and greater to assign relief obligation. This option no longer uses unconstrained flow in the IDC. This results in reduced GTL relief obligations but no reload component in the target market flow calculation. The reduced GTL relief obligations are more than offset by removal of the reload component. For next-hour TLR events, it is important that the next-hour constrained market flows represent binding that is already underway in current hour. This could be addressed by using current hour constrained market flow for next hour relief obligations. Constrained market flow needs to have a credit for redispatch adjustment. Constrained market flows will be frozen at the effective time of TLR to determine the credit for redispatch adjustment.

20 Option 2 Rules cont. For subsequent time intervals, compare constrained market flows with the corresponding frozen values. If firm forward has gone down or firm reverse has gone up, adjust using delta applied to non-firm forward values. Total net market flows are the same for the adjusted and the unadjusted constrained market flows. If no relief obligation, then unfreeze the constrained market flows. Freeze again as soon as the relief obligation is effective next time during the same event. Same logic applies to both current hour and next hour. During credit for redispatch adjustment, adjust first ED-2 and then ED-6. Minimum ED-2 forward is 0 while ED-6 fwd can go negative.

21 Credit for Redispatch Examples

22 Credit for Redispatch Examples

23 Credit for Redispatch Examples

24 Apply Examples to Option 1 & 2 to Determine Relief Obligation and Target Market Flow

25 Apply Examples to Option 1 & 2 to Determine Relief Obligation and Target Market Flow

26 Apply Examples to Option 1 & 2 to Determine Relief Obligation and Target Market Flow

27 Apply Examples to Option 1 & 2 to Determine Relief Obligation and Target Market Flow

28 Next Steps The Credit for Redispatch Small Group has not seen these results yet. Further discussion is needed with the small group on this example. Whether need to apply the examples to Option 3 and 4. These other two options may not be viable for reasons given previously.

29 Credit for Redispatch Small Group Review of Unconstrained MFs Questions?