BAL-002-WECC-BAL-002-WECC-1 Contingency 1 Contingency

ReservesReservesDavid LemmonsDavid Lemmons

BAL-002 Drafting Team ChairBAL-002 Drafting Team Chair

March 6, 2008March 6, 2008

Albuquerque, NMAlbuquerque, NM

AcronymsAcronyms

ACE – Area Control ErrorACE – Area Control Error BA – Balancing AuthorityBA – Balancing Authority CR – Contingency ReservesCR – Contingency Reserves CRR Contingency Reserve RequirementCRR Contingency Reserve Requirement DCS – Disturbance Control StandardDCS – Disturbance Control Standard LR – Load ResponsibilityLR – Load Responsibility MSSC – Most Severe Single MSSC – Most Severe Single

ContingencyContingency RSG – Reserve Sharing GroupRSG – Reserve Sharing Group

Overview of PresentationOverview of Presentation What is and is not coveredWhat is and is not covered Discuss Existing Rules for CRDiscuss Existing Rules for CR Contrast Proposed Rules for CRContrast Proposed Rules for CR Provide Reasoning behind Drafting Provide Reasoning behind Drafting

Team RecommendationsTeam Recommendations

Proposed BAL-002:Proposed BAL-002:

Is a permanent replacement for the existing, Is a permanent replacement for the existing, FERC-approved WECC-regional standard, FERC-approved WECC-regional standard, BAL-002-WECC-0 (Operating Reserves)BAL-002-WECC-0 (Operating Reserves)

Responds to FERC and NERC request for Responds to FERC and NERC request for re-writere-write

Addresses comments provided to FERC Addresses comments provided to FERC and NERC by WECC entities during and NERC by WECC entities during approval process of BAL-002-WECC-0approval process of BAL-002-WECC-0

Maintains level of CR similar to existing Maintains level of CR similar to existing standardstandard

What is/is not in the What is/is not in the StandardStandard

Deals with:Deals with: minimum level of Contingency Reservesminimum level of Contingency Reserves what qualifies as Contingency Reserveswhat qualifies as Contingency Reserves

Does not deal with:Does not deal with: Who activates reservesWho activates reserves Why activate reservesWhy activate reserves When to activate reservesWhen to activate reserves How to activate reservesHow to activate reserves

Current WECC CR Current WECC CR Requirements Requirements

(BAL-STD-002-0 DCS)(BAL-STD-002-0 DCS) Requires a Minimum Level of CR Requires a Minimum Level of CR

equal to MSSC for BA/RSGequal to MSSC for BA/RSG If MSSC is less than 5% of LR served If MSSC is less than 5% of LR served

by Hydro plus 7% of LR served by by Hydro plus 7% of LR served by Thermal, required to carry this Thermal, required to carry this amount of reservesamount of reserves

Additional Reserves for Certain Additional Reserves for Certain Market TransactionsMarket Transactions

Restore Reserves within 60 Minutes Restore Reserves within 60 Minutes after Eventafter Event

Proposed Contingency Proposed Contingency Reserves BAL-002-WECC-1Reserves BAL-002-WECC-1

Changes CR requirement to greater of Changes CR requirement to greater of MSSC or 3% Load plus 3% GenerationMSSC or 3% Load plus 3% Generation

Specifies rules for reserve transactionsSpecifies rules for reserve transactions Reserve requirements are not Reserve requirements are not

increased or decreased due to energy increased or decreased due to energy transactions.transactions.

Requires CR to be deliverable to count Requires CR to be deliverable to count as meeting requirementas meeting requirement

Aligns reserve restoration period with Aligns reserve restoration period with NERC at 105 minutes from eventNERC at 105 minutes from event

Reasoning Behind Reasoning Behind ChangesChanges

FERC Order approving Tier 1 FERC Order approving Tier 1 standards require WECC to address standards require WECC to address issues raised in some way.issues raised in some way.

Drafting Team discussed multiple Drafting Team discussed multiple options including no changes to the options including no changes to the standard.standard.

When issues were discussed by the When issues were discussed by the drafting team, proposed solutions drafting team, proposed solutions were adopted into the standard.were adopted into the standard.

Reasoning Behind Reasoning Behind ChangesChanges (cont) (cont) Remove market issues from the Remove market issues from the

reliability standardreliability standard 1. WECC should focus on the

interpretation of reliability criteria. It should not define energy market products. (WECC Board of Directors Approved Definition of Load Responsibility)

Change to NERC formatChange to NERC format Only include Requirements, not philosophyOnly include Requirements, not philosophy Not a training documentNot a training document

No duplication of other standardsNo duplication of other standards

Load ResponsibilityLoad Responsibility Discussion PointsDiscussion Points

It has been documented that there is no It has been documented that there is no technical basis for the current 5/7 technical basis for the current 5/7 requirement.requirement.

Definition of LR is impacting efficient Definition of LR is impacting efficient market operations in the Western market operations in the Western Interconnection.Interconnection.

Reliability entities and market entities Reliability entities and market entities may not be on the same page when may not be on the same page when discussing LR and Firm Products.discussing LR and Firm Products.

The WECC Board determined that WECC The WECC Board determined that WECC should not be defining market products in should not be defining market products in its LR interpretation.its LR interpretation.

Unclear treatment of non-hydro, non-Unclear treatment of non-hydro, non-thermal generationthermal generation

Drafting Team Drafting Team RecommendationRecommendation

Remove LR from Reserve Requirement Remove LR from Reserve Requirement without significantly reducing the without significantly reducing the reserves required in the WECC.reserves required in the WECC.

Since Contingencies happen due to Since Contingencies happen due to generation and transmission, the generation and transmission, the drafting team voted to support the drafting team voted to support the proposed requirement that is proposed requirement that is calculated based on a split of load and calculated based on a split of load and generation for each BA/RSG.generation for each BA/RSG.

Reasons for DecisionReasons for Decision

Proposal ensures there is not a significant Proposal ensures there is not a significant reduction in existing WECC total reduction in existing WECC total requirementrequirement

Proposal does not cause a significant shift Proposal does not cause a significant shift of responsibility based on data availableof responsibility based on data available i.e. reserves in each RSG stayed basically the i.e. reserves in each RSG stayed basically the

samesame COMPROMISE!COMPROMISE!

Required to meet the time line given to the Required to meet the time line given to the drafting teamsdrafting teams

Impacts to the CR LevelsImpacts to the CR Levels

The next few slides show the impact The next few slides show the impact of the proposal to the WECC as a of the proposal to the WECC as a whole and each responsible entity.whole and each responsible entity.

Summer Peak Load Data is from July Summer Peak Load Data is from July 24, 2006.24, 2006.

Total Reserves Required in Total Reserves Required in WECCWECC

0

2,000

4,000

6,000

8,000

10,000

12,000

SummerOff

SummerOn

WinterOff

WinterOn

SpringOff

SpringOn

Fall Off Fall On

Reported Requirement Adjusted RequirementProposed Requirement Sum of All MSSCs

Reduction to CRR – Summer Reduction to CRR – Summer Peak LoadPeak Load

0

100

200

300

400

500

600

CISO RMRG NWRG SRSG SMUD TID CFE LDWD

As Reported As Adjusted

Reserve Requirement by Reserve Requirement by EntityEntity

0

500

1000

1500

2000

2500

3000

3500

4000

CISO RMRG NWRG SRSG SMUD TID CFE LDWD

Reported Adjusted Proposed MSSC

Reserve TransactionsReserve Transactions

Specific tag codes (INT-BPS-018-0) Specific tag codes (INT-BPS-018-0) must be used so all “parties” to the must be used so all “parties” to the transaction are aware of transaction are aware of expectations/requirements.expectations/requirements.

Requirement R1.2 dictates that if a Requirement R1.2 dictates that if a transaction is utilized by the source BA transaction is utilized by the source BA as part of its non-spinning reserve, the as part of its non-spinning reserve, the sink must increase the amount of sink must increase the amount of reserve it carries equal to the reserve it carries equal to the transaction. transaction.

This replaces the old language referring This replaces the old language referring to “interruptible transactions”to “interruptible transactions”

Reserve Transactions Reserve Transactions (cont.)(cont.)

Requirement R1.3 requires that the Requirement R1.3 requires that the source BA increase its reserve source BA increase its reserve requirement by an amount equal to requirement by an amount equal to transactions in which it will respond to transactions in which it will respond to an event in the sink BA. The delivery an event in the sink BA. The delivery must be on “Firm” Priority 7 must be on “Firm” Priority 7 Transmission Service. Transmission Service.

This is comparable to the language This is comparable to the language related to “on-demand obligations”related to “on-demand obligations”

It should be noted that this does not It should be noted that this does not impact how RSGs operate.impact how RSGs operate.

Spinning ReserveSpinning Reserve

At least one-half of the Contingency At least one-half of the Contingency Reserve must be Spinning ReserveReserve must be Spinning Reserve

To qualify, it must be automatically To qualify, it must be automatically responsive to frequency deviationsresponsive to frequency deviations

Types of ReservesTypes of Reserves

Requirement R3 sets out what Requirement R3 sets out what qualifies as meeting the reserve qualifies as meeting the reserve requirementsrequirements

Limits have been put on when Load Limits have been put on when Load (other than Interruptible Loads) can (other than Interruptible Loads) can be used to meet the Requirementbe used to meet the Requirement Reliability Coordinator must have Reliability Coordinator must have

issued an EEA for the BAissued an EEA for the BA

Other Changes to Other Changes to StandardStandard

Removed language requiring other NERC Removed language requiring other NERC standards be met since it is duplicativestandards be met since it is duplicative

Adopted NERC required violation and Adopted NERC required violation and time horizon items since the WECC has time horizon items since the WECC has agreed to abide by NERC Standards agreed to abide by NERC Standards requirementrequirement

Changed Reserve Restoration Period to Changed Reserve Restoration Period to match NERC requirement since WECC match NERC requirement since WECC PWG study shows no impact to reliability PWG study shows no impact to reliability

Questions?Questions?