Definition of Firm Energy and Interruptible Transmission Two Issues Causing Problems for Business in the Western Interconnection

Who is Carrying Reserves? When a Firm Transaction is made, must the Sending Control Area carry Reserves on the Transaction? When a Firm Transaction is made, must the Sending Control Area carry Reserves on the Transaction? –Is this a requirement? –How would the seller carry the reserves? –Is it reasonable to require the seller to carry reserves? –Is this needed for reliable system operations?

Is This a Requirement? Can an entity sell firm energy without reserve? Yes, it is a business transaction. Can an entity sell firm energy without reserve? Yes, it is a business transaction. Is this a reliability issue? Is this a reliability issue? –No. The entities involved need to know who is carrying reserves. Is it more reliable for the purchaser to carry its own reserves instead of the seller? YES! Is it more reliable for the purchaser to carry its own reserves instead of the seller? YES! –The purchaser has no right to call upon reserves held by the seller unless they are in the same RSG. –There is no transmission path for the delivery of reserves held by the seller of hourly or daily transactions nor has there been any evaluation to ensure reliable delivery.

How does the Seller Carry the Reserves? If a seller is MSSC, there is no change in reserves required by WECC rules. If a seller is MSSC, there is no change in reserves required by WECC rules. If the seller is Load Driven, there is a change in reserve required by WECC rules. If the seller is Load Driven, there is a change in reserve required by WECC rules.

Can a Firm Sale Result in a Reduction of Reserves Carried in the WECC? Yes. A firm sale can result in a combined decrease in reserves carried by two control areas if the sending control area is MSSC and the receiving control area has a load driven reserve requirement. Yes. A firm sale can result in a combined decrease in reserves carried by two control areas if the sending control area is MSSC and the receiving control area has a load driven reserve requirement.

Load Responsibility, Why Do We Have It? If the MSSC is correctly determined, there should be no reliability issues associated with doing away with the Load Responsibility section of MORC. If the MSSC is correctly determined, there should be no reliability issues associated with doing away with the Load Responsibility section of MORC. The reserve obligation is not affected based on commerce in any other NERC region. The reserve obligation is not affected based on commerce in any other NERC region.

Should the Seller Carry Reserves on Firm Energy Sales? If the seller holds the reserve and the buyer has a DCS event, no reserves will be provided by the seller. If the seller holds the reserve and the buyer has a DCS event, no reserves will be provided by the seller. –No transmission path is reserved for delivery –The buyer has no right to call for activation if the seller is in a different RSG –No evaluation has been made to determine if reserves can be delivered from seller to buyer without concern. Example - Reserves held in PJM will not be very useful for San Diego Gas and Electric. Example - Reserves held in PJM will not be very useful for San Diego Gas and Electric.

Is a Definition of Firm Energy Needed for Reliable Operation of the System? If the reserves for the WECC were determined based only on MSSC, there would be no issue. If the reserves for the WECC were determined based only on MSSC, there would be no issue. Load Responsibility used with no change in required reserves due to transactions would also solve the issue. Load Responsibility used with no change in required reserves due to transactions would also solve the issue. As done today, the Reliability Coordinator can not even determine where reserves will be held. As done today, the Reliability Coordinator can not even determine where reserves will be held. Answer – No! Answer – No!

Does This Mean That We Have a Reliability Issue? The issue of reserves associated with wholesale sales has never been identified as a contributor to a significant WECC event. The issue of reserves associated with wholesale sales has never been identified as a contributor to a significant WECC event. The real reliability issue is the constantly changing reserve requirements. The real reliability issue is the constantly changing reserve requirements. Defining an energy product should be a business practice, not a reliability issue. Defining an energy product should be a business practice, not a reliability issue.

Interruptible Transmission What is it, exactly??

Interruptible Transmission FERC tariff does not have a service schedule called interruptible transmission. FERC tariff does not have a service schedule called interruptible transmission. Non-Firm transmission is defined in the tariff but it is not interruptible for any reason. Firm transmission can also be curtailed under the tariff. Non-Firm transmission is defined in the tariff but it is not interruptible for any reason. Firm transmission can also be curtailed under the tariff. Under WECC Unscheduled Flow Mitigation Procedure, all transactions are subject to curtailed, so claiming only Non- Firm is interruptible seems questionable. Under WECC Unscheduled Flow Mitigation Procedure, all transactions are subject to curtailed, so claiming only Non- Firm is interruptible seems questionable.

Questions for the Group Is an overloaded transmission line a reliability issue? Is an overloaded transmission line a reliability issue? Is an overscheduled transmission line a reliability issue? Is an overscheduled transmission line a reliability issue? Once past the scheduling deadline, can transmission service be interrupted for economic reasons? Once past the scheduling deadline, can transmission service be interrupted for economic reasons?

13.8Scheduling of Firm Point-To-Point Transmission Service: Schedules for the Transmission Customer's Firm Point-To-Point Transmission Service must be submitted to the Transmission Provider no later than 1:00 p.m. (Pacific Time) of the Working Day prior to commencement of such service. Schedules submitted after 1:00 p.m. (Pacific Time) will be accommodated, if practicable. Hour-to-hour schedules of any capacity and energy that are to be delivered must be stated in increments of whole megawatts per hour. A Transmission Customer within the Transmission Provider's service area with multiple requests for Transmission Service at a Point of Receipt, each of which is under 1,000 kW per hour, may consolidate its service requests at a common point of receipt into units of whole megawatts per hour for scheduling and billing purposes. Scheduling changes will be permitted up to thirty (30) minutes before the start of the next clock hour provided that the Delivering Party and Receiving Party also agree to the schedule modification.

Summary of Tariff Section 13.8 Schedules must be submitted prior to XXXX the day ahead. Schedules must be submitted prior to XXXX the day ahead. Schedules submitted after XXXX will be accommodated if practicable. Schedules submitted after XXXX will be accommodated if practicable. Schedule changes will be permitted up 30 (20) minutes prior to the operating hour. Schedule changes will be permitted up 30 (20) minutes prior to the operating hour.

14.7Curtailment or Interruption of Service: The Transmission Provider reserves the right to Curtail, in whole or in part, Non-Firm Point-To-Point Transmission Service provided under the Tariff for reliability reasons when an Electrical Emergency or other unforeseen condition threatens to impair or degrade the reliability of its Transmission System. The Transmission Provider reserves the right to Interrupt, in whole or in part, Non- Firm Point-To-Point Transmission Service provided under the Tariff for economic reasons in order to accommodate (1) a request for Firm Transmission Service, (2) a request for Non- Firm Point-To-Point Transmission Service of greater duration, or (3) a request for Non-Firm Point-To-Point Transmission Service of equal duration with a higher price. The Transmission Provider also will discontinue or reduce service to the Transmission Customer to the extent that deliveries for transmission are discontinued or reduced at the Point(s) of Receipt. Where required, Curtailments or Interruptions will be made on a non-discriminatory basis to the transaction(s) that effectively relieve the constraint, however, Non-Firm Point-To-Point Transmission Service shall be subordinate to Firm Transmission Service. If multiple transactions require Curtailment or Interruption, to the extent practicable and consistent with Good Utility Practice, Curtailments or Interruptions will be made to transactions of the shortest term (e.g., hourly non-firm transactions will be Curtailed or Interrupted before daily non-firm transactions and daily non-firm transactions will be Curtailed or Interrupted before weekly non-firm transactions). Non-Firm Point-To-Point Transmission Service over secondary Point(s) of Receipt and Point(s) of Delivery will have a lower priority than any Non-Firm Point-To-Point Transmission Service under the Tariff. The Transmission Provider will provide advance notice of Curtailment or Interruption where such notice can be provided consistent with Good Utility Practice.

Summary of Tariff Section 14.7 Economic Interruptions may occur for Economic Interruptions may occur for –Firm Requests –Longer Duration Non-Firm Requests –Higher Priced Non-Firm Requests At least some Transmission Providers have a fourth reason: transmission service for Network Customers from non-designated resources At least some Transmission Providers have a fourth reason: transmission service for Network Customers from non-designated resources Can any of these be done during the operating hour? After the scheduling deadline? Can any of these be done during the operating hour? After the scheduling deadline?

Curtail Versus Interrupt Is a curtailment the same as an interruption? Is a curtailment the same as an interruption? Under current WECC rules, interruptible effectively means: a product which by contract is interruptible at the supplying systems discretion. Under current WECC rules, interruptible effectively means: a product which by contract is interruptible at the supplying systems discretion. Curtailability is defined in the WECC Definitions to mean an interruption caused by a reduction in capability. Curtailability is defined in the WECC Definitions to mean an interruption caused by a reduction in capability. FERC tariff says curtailment is for reliability reasons. FERC tariff says curtailment is for reliability reasons. Under these definitions, Non-Firm Transmission is clearly not interruptible during the operating hour, but is curtailable. Under these definitions, Non-Firm Transmission is clearly not interruptible during the operating hour, but is curtailable.

Financial Impacts Historically PSCO uses approximately 200 MWs of non-firm transmission for imports. No new Firm Transmission is available through WAPA nor is any likely to be built through the Rocky Mountains. Historically PSCO uses approximately 200 MWs of non-firm transmission for imports. No new Firm Transmission is available through WAPA nor is any likely to be built through the Rocky Mountains. Cost of generation to replace this would be $65/kW/year or $13 million per year. Cost of generation to replace this would be $65/kW/year or $13 million per year. Additionally, PSCo may need to have generation available to cover loss of generator at all times, or approximately 500 MWs of gas turbines, to meet reserve requirements. Additionally, PSCo may need to have generation available to cover loss of generator at all times, or approximately 500 MWs of gas turbines, to meet reserve requirements. Should PSCo curtail Retail Load to meet reserves under these conditions? Should PSCo curtail Retail Load to meet reserves under these conditions?

What Does It All Mean? The current MORCWG proposal before you creates a product that does not exist under the FERC tariff. The current MORCWG proposal before you creates a product that does not exist under the FERC tariff. The MORCWG proposal, if adopted, will cause confusion, and likely significant legal problems for WECC members. The MORCWG proposal, if adopted, will cause confusion, and likely significant legal problems for WECC members. There has not been an evaluation of the impacts of this proposal as required by the WECC Boards guidelines. There has not been an evaluation of the impacts of this proposal as required by the WECC Boards guidelines.

Conclusion PSCo asks that CMOPS either PSCo asks that CMOPS either 1.Send the MORCWG proposal back to the MORCWG to address the issues raised here. 2.Modify the MORCWG proposal to address the issues raised here. 3.Delay any movement on the MORCWG proposal until the WECC reserve requirements undergo a complete review and are adjusted to work with todays electric markets