Discussion of Market Participant Choicefor Transmission Connections

Stakeholder Session

October 14, 2011

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Agenda

• Purpose

• Overview - what and why?

• Background

• AESO Connection Process

• Eligibility

• Own model

• TFO requirements and obligations

• Legislative framework

• Next steps

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Purpose

• AESO issued a discussion paper September 29, 2011

– Sets out concepts for discussion on market participant choice

• Purpose of today’s session

– Present the concepts

– Provide additional clarification

– Identify next steps

– Facilitate discussion

– Respond to questions

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Overview

What?

– The possibility of enabling a market participant who requests system access service to design, build, own and operate the transmission facilities dedicated to connecting its facilities to the AIES

– Market participant would become a transmission facility owner (TFO) in addition to taking system access service

Why?

– Some market participant concerns with cost & schedule for connections

– AESO supports practices that foster efficiencies and are in the public interest

Next Steps

– Requesting open discussion and written comments by October 31

Current Connection Example

• Incumbent TFO assigned the transmission line connection

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Proposed Connection Example

• Participant owns transmission connection to the grid

• TFO facilities connection6

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Background

• Investigation

– Obtained input from functional areas within the AESO: project managers, planning, operations, standards, legal, etc.

– Sought input from market participants - TFOs, AUC, DOE & customer associations

– Legal review

• Considered several options

– Design, build, own and / or operate

• Initial determination

– “Own” model

– Transfer is an option between TFOs (AUC approval required)

– ISO Rule 9.1 may need to be revised (AUC approval required)

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Current Process

• Participant files application for service (Stage 0)

• Incumbent TFO part of process, e.g. PPS (Stage 1 & 2)

• Project assigned to incumbent TFO (Stage 3)

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Current Process - Authority

• Section 35(1)(a) of the EUA:

35(1) On receipt of Board approval of a needs identification document the Independent System Operator, in accordance with that approval, may

(a) direct the owner of a transmission facility to submit, for Board approval under the Hydro and Electric Energy Act, a transmission facility proposal to meet the need identified

• AESO assigns all participant connections to the incumbent TFO during Stage 3 of the Connection Process

• Incumbent TFO prepares and files facility application

• Joint NID and Facility applications filed for some projects

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Proposed Process

• Participant files application for service (Stage 0) and declares intention to be a TFO (accepts obligations & responsibilities)

• Incumbent TFO assists with connection (Stages 1 & 2)

• AESO requests “proposal” from participant (Stage 3)

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Proposed Process - Authority

• Section 35(1)(b) of the EUA:

35(1) On receipt of Board approval of a needs identification document the Independent System Operator, in accordance with that approval, may

(b) request market participants to submit, for approval by the Independent System Operator, a proposal to meet the need identified

• AESO asks participant for proposal

• If proposal is accepted by the AESO, participant files facility application

• Commission still approves NID and facility applications

Connection queue administration

• Market participant may changes its election part way after Stage 0

• Connection project is cancelled and queue position revoked

• Market participant must submit a new system access service request and receive a new queue position

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Eligibility - Participants

• The following are categories of Market Participants that connect directly to the AIES:

– Generators

– Loads

– Dual use

– Industrial system designations (ISD)

– Distribution facility owners (DFO)

• Which of these should be eligible to provide their own connections, and why or why not?

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Eligibility – Connections

• The following are connection types that may be eligible:

– T-taps

– Switching stations

– In / Out arrangements

– Others?

• The following are connection types that are non-eligible:

– System lines

– System upgrades

– Connections serving multiple customers

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Own Model

• Market Participant would assume responsibility for entire transmission asset life cycle

– Legal ownership of transmission facilities

– Design, construct, maintain, replace, upgrade, retire asset

– File a tariff

– Operate asset

– May be required to upgrade to allow other participants to use the asset

– Transfer of transmission facilities to another party after energization can occur provided all legal, legislative and regulatory requirements are met

• AESO can not initiate transfer of assets

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TFO Requirements and Obligations

• TFOs (new and incumbent) are responsible to comply with requirements and obligations including:

– Electric Utilities Act (e.g. provide access)

– Hydro Electric and Energy Act (e.g. permit and license)

– Public Utilities Act

– Surface Rights Act (e.g. rights of way)

– Transmission Regulation

– Alberta Utilities Commission rules

– ISO Rules

– ISO Tariff

– Alberta Reliability Standards (e.g. all TFO related standards)

– Transmission TFO Terms and Conditions (e.g. agreements)

– TFO capital and operating cost recovery through Transmission Tariff applications to the AUC , as applicable

• TFOs (new and incumbent) are treated the same

• AESO may direct TFOs to undertake certain activities

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Legislative Framework

• Market Participant Choice is supported by legislation:

– Electric Utilities Act, s. 35(1)(b) the AESO may “request market participant(s) to submit, for approval by the Independent System Operator, a proposal to meet the need identified”

– Hydro and Electric Energy Act references not limited to TFOs but to “persons’’ in respect of transmission facilities

• Legislated obligations to make transmission facilities available include:

– Electric Utilities Act, s. 39(3)(e): each owner of a transmission facility must provide the AESO the use of such facilities

– Transmission Regulation, s. 28(3):generators may not prohibit access to the transmission interconnection facilities

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AESO Rules

• Section 24(1) of the Transmission Regulation sets out assignment to incumbent TFOs based on service areas

– AESO Rule 9.1 codifies the T-Reg s. 24(1) assignments

• Section 24(2) of the Transmission Regulation allows for alternate arrangements

– Market Participant Choice could be an alternate arrangement

– AESO Rule 9.1 may need to be revised to allow for s. 24(2) arrangements

• Facility and NID applications could allow for compliance with section 24 of the Transmission Regulation

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Next Steps

• Stakeholders provide written comments on the Discussion Paper

– Comments due October 28, 2011

• AESO posts stakeholder comments received

– November / December 2011

• AESO replies to stakeholder comments received

• Stakeholder information session held (if required)

• AESO prepares and posts a Recommendation Paper

• Stakeholder information session held (if required)

• Stakeholders provide written comments on the Recommendation Paper

• Implementation

– May include items such as:

• ISO rules changes, as required

• Connection process changes, as required

Thank you