ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-001 (a)-(b)
Page 1 of 1
Reference:
Amended Application, section 2.2, line 27
Preamble:
“…the AESO has experienced a requirement to procure an ancillary service over
the medium to long-term, on a conscripted basis. The service was required in
the northwest region of Alberta to ensure voltage stability and reliable electrical
service for an extended period. AESO foresees other situations may arise.”
Request:
(a)
(b)
Please describe the circumstances requiring the AESO to procure ancillary
services over the medium to long term on a conscripted basis.
Please describe other situations which the AESO foresees may require it to
procure ancillary services over the medium to long term on a conscripted basis.
Response:
(a) & (b) Please refer to IPPSA.AESO-004 (a) & (b).
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-002 (a)
Page 1 of 1
Reference:
Amended Application, section 2.2, line 34
Preamble:
“Although the AESO is actively assessing the shortage of transmission in the
northwest region, it is the case that an expected transmission solution will take
three to five years to complete, and therefore, long duration TMR services must
be procured in the interim.”
Request:
(a)
Response:
(a)
Please describe the expected transmission solution for the northwest region.
The AESO is currently performing detailed evaluation on a number of
transmission alternatives to address the identified transmission need within the
northwest region. The AESO will be scheduling stakeholder consultation in
October 2005 to discuss the detailed assessment and recommendation for
transmission development in the Northwest region. As part of a public
stakeholder consultation process, the AESO has provided descriptions and
schematic diagrams of these alternatives in the Northwest Alternative Screening
document posted to the AESO’s website July 28, 2005. In addition, the AESO
also posted Alternative Screening Stakeholder Questions & Answers which relate
to these alternatives: http://www.aeso.ca/transmission/7689.html. The AESO
considers, and has included, Powerex an active stakeholder in the Northwest
consultation process.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-003 (a)
Page 1 of 1
Reference:
Amended Application, section 2.2, line 30
Preamble:
“In addressing the longer-term requirement the AESO generally reviewed
experience with the AS Article and other relevant events since Decision 2002103.”
Request:
(a)
Response:
(a)
Please describe the AESO’s experience with the AS Article and other relevant
events that led it to review Article 24.
Please refer to the response found in IPPSA.AESO-001.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-004 (a)
Page 1 of 1
Reference:
Amended Application, section 3.4.2, line 11
Preamble:
“Aggregate compensation under Options 1 and 3 for short-term conscriptions
may differ according to the specific short-term circumstances.”
Request:
(a)
Response:
(a)
Please explain how aggregate compensation under Options 1 and 3 for shortterm conscriptions may differ.
Please refer to BR.AESO-004 (a).
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-005 (a)
Page 1 of 1
Reference:
Amended Application, section 3.4.5, line 28
Preamble:
“Neither Option 2 nor Option 3 contains perverse incentives that would interfere
with the generator’s participation in the market.”
Request:
(a)
Response:
(a)
From a market-entry perspective, please explain whether the AESO expects that
new generation will be incented under Option 3 to locate in areas with TMR
requirements. If so, on what basis? If not, why not?
The ADOE’s Transmission Development Policy and now the Transmission
Regulation call for specific locational signals to be provided to generators
including losses, a system contribution payment and local interconnection
charges. There is no intent to signal generators through Article 11 compensation
to voluntarily invest in certain areas to provide TMR services. In the event that
non-wires solutions are required to address TMR issues, AESO would ensure
such non-wires solutions complied with Section 8(4) of the Transmission
Regulation and conduct a specific competitive process to meet the specific
requirements.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-006 (a)
Page 1 of 1
Reference:
Amended Application, Appendix A, section 11.4
Preamble:
“Fuel Cost for a gas generating unit is Market Gas Price ($/GJ) is the “Daily Spot
Price at AECO C and NIT”, excluding weekends, as published in Canadian Gas
Price Reporter, for natural gas on the applicable day.”
Request:
(a)
Response:
(a)
Please describe what accommodation will be made for units whose fuel
source is linked to an index other than the AECO C and NIT.
AESO expects to contract for most TMR services. Contracts can be customized
to individual circumstances such as the one mentioned. AESO does not propose
to deal with such accommodations in Article 11.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-007 (a)
Page 1 of 1
Reference:
Amended Application, Appendix A, section 11.4
Preamble:
“Variable O&M Proxy ($/MWh) is the all in cost, fixed at $4/MWh, of providing
incremental output from the unit, excluding fuel costs and STS charges.”
Request:
(a)
Response:
(a)
Please explain the basis for using $4/MWh to compensate for average variable
O&M costs.
Please refer to IPPSA.AESO-032 (d).
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-008 (a)
Page 1 of 1
Reference:
Amended Application, Appendix A, section 11.4
Preamble:
“Directed Out-of-Merit Ratio (%) is the ratio for all hours of the month, including
hours when TMR service was not directed, of (1) the number of hours in the
month when TMR service was directed and the Benchmark price exceeded the
pool price; to (2) the sum of the number of hours in (1) above, and the number of
remaining hours in the month that the pool price exceeded the average
benchmark price for the month. The number of hours in the month that the pool
price exceeds the average benchmark will be reasonably adjusted to reflect the
physical characteristics of the Customer’s unit and its ability to capture the “inmerit” hours.”
Request:
(a)
Response:
(a)
Please explain, providing examples, how the AESO would reasonably adjust the
number of hours to reflect the characteristics of a Customer’s unit.
Please refer to FIRM.AESO-024 (i).
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-009 (a)-(b)
Page 1 of 1
Reference:
Amended Application, Appendix A, section 11.3(c)
Preamble:
“The verifiable net opportunity cost related to foregone electricity sales incurred
by the Customer to supply the directed Ancillary Services taking into account all
offsetting revenues from any source, such as pool energy receipts.”
Request:
(a)
(b)
Response:
(a)
(b)
Please confirm whether the AESO would deny a plant operator the ability to
claim opportunity costs from natural gas sales if the operator’s circumstances
make it more economic to sell gas rather than generate electricity.
Please explain why there should be any limit on what a party can demonstrate as
its “verifiable net opportunity cost”.
The Benchmark Price paid to a generator is based on a recognized market value
of natural gas so any lost opportunity from gas sales would be associated with
potential sale of the gas at above recognized market prices. The proposal is to
simply recognize the market value in the Benchmark Price and avoid further
market valuation and verification exercises.
The limitation is to maintain simplicity and avoid requirements to determine and
verify opportunities which are secondary to the operating of the generating unit,
such as lost sales of by-products or products of other operations which may be in
some way related to the generating unit.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-010 (a)
Page 1 of 1
Reference:
Original Application, paragraph 57
Preamble:
“A review of practices in other jurisdictions found only one example of proxy unit
use.”
Request:
(a)
Response:
(a)
Please describe proxy unit use in other jurisdictions.
Electric Reliability Council of Texas currently uses proxy units for what they call
OOM dispatches and RMR.
ERCOT Market Guide version 2005.1 at page 42 states:
“ERCOT deploys Out-of-Merit order energy from resources for resolving
congestion, or an emergency when no Market Solution exists. In other words,
there are insufficient unaffiliated resources in the area needed to resolve local
congestion (within a congestion zone).
Out-Of-Merit Capacity payments are made to providers in predetermined or
“generic” dollars per unit based on a proxy of generation technology or resource
category. An Example of this is “Gas Steam Supercritical Boiler”, describing
what type of generator and how it is being used. If the resource entity
determines that the “generic” payment does not recover sufficiently their cost
their QSE can submit “verifiable” cost information to ERCOT to replace the
“generic” payment in a subsequent settlement.
ERCOT analyzes and
approves/denies the “verifiable” cost submittal for completeness and audit ability
of supporting data.”
No other examples were found.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-011 (a)-(b)
Page 1 of 1
Reference:
Original Application, paragraph 58
Amended Application, section 2.3.3, line 3
Preamble:
“The proposed amendments remove several aspects which create the potential
for reduced market efficiency through altered offer behavior.”
“The potential for extra TMR compensation can incent generators to submit high
offer prices or withdraw supplies from the energy market to gain extra
compensation.”
Request:
(a)
(b)
Please confirm that it is the MSA’s role to investigate concerns with market
participant behavior and determine whether and what type of modifications are
necessary. If the AESO disagrees, please explain why.
Please advise whether the AESO has asked the MSA to investigate market
participant behavior with respect to TMR service. If so, please confirm whether
the MSA has provided any findings to the AESO in this regard.
Response:
(a)
The MSA mandate includes investigation of conduct of market behavior. More
information regarding the MSA is available in the Electric Utilities Act and at
WWW.ALBERTAMSA.CA.
AESO’s mandate includes establishing tariffs. The design of such tariffs includes
selection of appropriate signals and incentives for efficient use of the
transmission system and to minimize interference in the energy market.
(b)
AESO has periodically raised and discussed issues and concerns with the MSA.
AESO is not aware that the MSA has issued specific findings respecting those
discussions.
The MSA has released an investigation report on TMR, which is available on
their website.
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-012 (a)
Page 1 of 1
Reference:
Additional Evidence, line 25
Preamble:
“The AESO is aware of other potential circumstances where similar interpretation
issues may exist in respect of this provision.”
Request:
(a)
Response:
(a)
Please describe the other potential circumstances of which the AESO is aware
where similar interpretation issues may exist.
Please refer to FIRM.AESO-038 (e).
ALBERTA ELECTRIC SYSTEM OPERATOR
Ancillary Services Article Amendment (1357161)
Monday, September 26, 2005
PWX.AESO-013 (a)
Page 1 of 1
Reference:
AESO October 8, 2004 Written Submission, section 5, page 10
Preamble:
“The AESO is also obtaining services from another TMR service provider, but not
on a conscripted basis. The amount of TMR Service taken under the existing
contractual arrangement may be reduced if and when the Board approves, on a
final basis, the applied-for tariff changes.”
Request:
(a)
Response:
(a)
Please explain on what basis TMR Service taken under existing contractual
arrangements may be reduced if and when the Board approves the proposed
tariff change.
Use of the contracted service as referenced in AESO’s October 8, 2004 letter
was reduced in December 2004 when ATCO Power and AESO reached
agreement on use of Rainbow units 4 and 5 for TMR service. A Board decision is
now not expected to have any impact on use of any contracted services.