Reserves Issue

1
Reserves Issue

• For years there has been disagreement over
  reserves issues and what constitutes firm power.
• Weve been able to function as a market, despite
  this, largely because nothing has forced these
  issues to be decided.
• Recent developments are now forcing the issue to
  a head.

2
Letter from WECC MIC to WSPP EC and OC Chairs

• Upcoming changes to contingency reserve
  responsibility.
• Two objectives of the letter
• Inform the members of the issue
• Request that WSPP evaluate actions available to
  WSPP that would mitigate market (and reliability)
  impacts.
• Encourages resolution of short-term issue
  (December 4) and long-term issues.

3
What the Agreement says

• Service Schedule C
• C-3.10 Seller shall be responsible for ensuring
  that Service Schedule C transactions are
  scheduled as firm power consistent with the most
  recent rules adopted by the applicable NERC
  regional reliability council.
• For years weve had tacit agreement over what the
  WECC rules were. Now they have changed.

4
WECC Interpretation of Load Responsibility

• Approved on September 7, 2007
• Energy product definitions are determined by the
  entities that are parties to the transaction.
• It is up to Purchasing Selling Entities to
  determine their level of acceptable
  deliverability risk and determine who has
  contingency reserve responsibility.

5
INT-BPS-014-0 (Identification of Contingency
Reserve Responsibilities in the e-Tag)

• B. Requirements
• WR1. When both the Source and Sink Balancing
  Authorities (BAs) are within the Western
  interconnection, e-Tag Authors will identify the
  BA or Reserve Sharing Group member responsible
  for including the transaction in their
  calculation of Contingency Reserve requirements.
  This entity will be referred to as the
  Responsible Entity. Only one selection will be
  made.

6
INT-BPS-014-0 (Identification of Contingency
Reserve Responsibilities in the e-Tag)

• C. Measures
• WM1. Interchange Authorities will provide
  evidence that they only accept e-Tags containing
  the Responsible Entity.
• WM2. Balancing Authoritieswill provide evidence
  of correctly adjusting their Contingency Reserve
  Obligations by the amounts shown on the
  implemented e-Tag.

7
NWPP Response

• NWPP RSG members (if the source) will not carry
  reserves for exports outside the NWPP unless the
  e-Tag states otherwise.
• NWPP RSG members (if the sink) will carry
  reserves for imports into the NWPP unless the
  e-Tag states otherwise.
• For transactions in the NW where the source and
  sink are NWPP RSG members, the source BA will
  carry the reserve responsibility.

8
California/BPA situation

• Sellers claim they can not arrange to provide
  reserves, as this is a function of the ISO.
• ISO is the BA for many of the transactions
  originating in California.
• BPA claims its merchant can not obligate its BA
  to provide reserves for sales. It can for
  purchases, as the sink BA is the provider of last
  choice for reserves.

9
What the Agreement says

• Operating Procedure No. 1
• Requires sending control area to notify receiving
  control area (and all intermediaries) of the
  reserve responsibility.
• Seller, if different from the sending control
  area, shall notify sending control area.
• Buyer, if different from the receiving control
  area, shall notify the receiving control area.

10
ICE issue

• Significant quantity of preschedule and term
  trades done on ice.
• Does not specify who carries reserves.
• Do not know who your counterparty is until
  transaction is consummated.
• Discussions with ICE.

11
Actions available to WSPP

• Amend the contract to have a default, with the
  ability to agree otherwise.
• Amend the contract to have different default
  provisions specific to different
  regions/transaction.
• Post a list of members on the website who
  interpret the agreement a certain way.
• (ICE interface)
• Let market forces shape itself.

12
At a minimum

• Get the word out campaign notifying members of
  the issue.
• Letter from Sempra.
• Long-term thinking next steps.