Transmission Congestion Management – IDC Granularity Option 3A Larry Kezele and Jeff Norman June 28, 2005 NERC/NAESB TLR Subcommittee

2 Summary of Responses to NERC’s Request for Information (RFI) ---- Selection of a Next Generation Transmission Congestion Management Tool (IDC Granularity Option 3)

3 Respondents ● ABB ● AREVA T&D ● ICF Consulting ● MCG (Minneapolis Consulting Group) ● Nexant – Energy Solutions Division ● OATI (Open Access Technology International) ● PowerWorld ● SunGard Enform Consulting

4 Overview of Responses ● Submitted as confidential and contain proprietary information ● Implementation of Granularity Option 3A is technically feasible – (i.e. similar technology implemented in RTO/ISO market areas) ● Phased implementation is possible, minimizing resource commitment ● Respondents have a variety of experience in the electric industry, and most have experience in financial markets

5 Projected Cost and Development Time ● $ 2 – 10 Million  Clear definition of project scope and requirements impacts projected cost  Multi-year service agreement acceptable ● “Forklift” IDC replacement project ● One to two year implementation time line  Customized development, or  Customized development of Application Program Interface modules to commercially available systems

6 System Security ● Digital Certificates required ● User names and passwords ● Adherence to NERC cyber security standards

7 Data Requirements ● Common practice among vendors is to accept third party data ● Near real time data to support security constrained economic dispatch (5-minute intervals)  System flow and loads  Generator outputs, ramp rates, capacity limits ● Existing data structures may be adequate ● Create data dependency that doesn’t exist today ● Acquisition and definition of financial data?

8 Implementation Concerns ● Staffing and training ● Paradigm shift in transmission congestion management ● Risk related to resolution of congestion management process issues in parallel with tool implementation ● Critical project success factor – Controlled scope

9 Definition - Project Scope and Requirements ● Implementation of supporting Business Practices  Option 3 provides for socialization of congestion costs to balancing authorities  Option 3A assigns congestion costs to contributing transactions and balancing authority load  PSEs may chose to curtail based on assignment of redispatch costs  Reservation and scheduling of redispatch energy

10 Definition - Project Scope and Requirements ● Implementation of supporting Reliability Standards  Inclusion of counterflows  Potential re-definition of the role of the NERC Reliability Coordinator  Reliability Coordinator Standards of Conduct (i.e. independence from market participants)

11 Definition - Project Scope and Requirements ● Definition of Financial Model(s)  Generator bid/offer system (i.e. bidding rules)  Settlements  Dispute resolution  Compliance with redispatch directives  Financial requirements for redispatch providers

12 Definition - Project Scope and Requirements ● Potential impacts to System Reliability  Delays in redispatch implementation (e.g., by allowing a PSE to decide at what financial threshold it is willing to accept redispatch costs) may actually compromise reliability.

13 Definition - Project Scope and Requirements ● Potential impacts to other NERC tools  E-tag specification  OASIS (redispatch transaction transmission service)  System Data Exchange  BA, TOP, PSE back end settlement systems

14 Definition - Project Scope and Requirements ● Potential impacts to non-NERC tools  BA, TOP, PSE back end settlement systems  Provision of supporting data  RTO/ISO market flow calculators

15 Definition - Project Scope and Requirements ● Regulatory Obstacles  Potential transmission tariff changes  State and Federal approvals required to allow participation in regional redispatch tariffs

16 Definition - Project Scope and Requirements ● Sarbanes-Oxley Compliance  Market participants subject to SAS 70 auditing requirements.  Extensive data retention requirements

17 Questions?