SUPPLIMENTARY EVIDENCE BY THE INTERVENOR
NEWFOUNDLAND AND LABRADOR HYDRO (“NLH”)
REGARDING A REQUEST BY
HYDRO-QUÉBEC CONTRÔLE DU MOUVEMENT DES ÉNERGIES
(the “Reliability Coordinator”)
TO ADOPT RELIABILITY STANDARDS
FILE R-3699-2009
Presented to the Régie de l’énergie du Québec (the “Régie”)
Montréal, Québec
October 1, 2010
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INTRODUCTION
NLH originally filed a factum on January 8, 2010, as its evidence in file R-3699-2009. Since
then, the Reliability Coordinator has brought many changes to its evidence, the latest being the
filing, on September 30, 2010, of revised versions of some of its exhibits, notably exhibit
HQCME-2, Document 4. This last change relates to the concept of “extended supervision”.
NLH’s comments in the present document focus on three specific issues: (1) the Reliability
Coordinator’s concept of “extended supervision” and the NERC concept of “wide-area view”
which is found at reliability standard IRO-003-2; (2) the adoption of the Glossary of terms; and
(3) the coming into force of the reliability standards.
As a side note, NLH would also like to take the opportunity to indicate that it agrees with the
Régie’s decision to postpone the hearing on the adoption of the Sanctions’ guide to a second
phase of the present file. It therefore reserves its right to comment on that issue in the second
phase of file R-3699-2009.
(1)
“Extended supervision” and “wide-area view” (IRO-003-2)
In the Reliability Coordinator’s amended evidence, on page 14 of the previous versions of the
Registre des entités visées par les normes de fiabilité, HQCME-2, Document 4, HQP was
identified as a “producteur et négociant”; in relation to this status, there was a footnote located at
the end of the table, on page 18. This footnote read as follows:
“*Les installations situées au Labrador (CF(L) Co.) et en Ontario (réseau de CRT et
partie de la centrale Chat-Falls) sont sous la supervision étendue de la direction Contrôle
et exploitation du réseau (DCER) dans ses fonctions de coordonnateur de la fiabilité, de
responsable de l’équilibrage, d’exploitant du réseau de transport et de responsible des
échanges, le cas échéant.”
This note was the subject of an official request for information by NLH on September 14, 2010,
which the Reliability Coordinator’s responded to on September 22, 2010.
The Reliability Coordinator’s response was in many parts.

The expression “supervision étendue” (“extended supervision”) can be inferred
from the “wide-area view” referred to in the reliability standards IRO-003-2 (see
answers R1.1 and R1.2);

As for the Reliability Coordinator’s powers under “extended supervision”, these
would be the result of certain agreements between Hydro-Québec and CF(L)Co,
notably two documents which the Reliability Coordinator refers to as “common
instruction” and “Operating Procedure” (see answers R1.2 and R2.3);
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-3
“Extended supervision” would apply to the Churchill Falls generating station, as
well as the Labrador substation, and the lines which are the continuation of lines
7051, 7052 and 7053, as well as their switchyards (see answer 1.3)

The Reliability Coordinator’s “extended supervision” therefore does not stem
from the Québec reliability standards, since, according to the Reliability
Coordinator, these do not apply to equipment which is located outside of the
boundaries of the Province of Québec (see answers R1.4 and R2.2);

However, the Reliability Coordinator considers that some of CF(L)Co’s facilities
in Labrador are part of HQT’s “réseau de transport principal” (“RTP”) – some of
these would also be part of HQT’s Bulk network (see answer R2.1), therefore
under the supervision of the Reliability Coordinator;

The Reliability Coordinator also seems to claim that under “extended
supervision”, the “Direction DCER” acts as reliability coordinator, Balancing
Authority, Transmission Operator and Interchange Authority for Labrador, on the
basis that NERC’s reliability model has not been applied there (see answers R1.2
and R1.6).
NLH does not understand why the Reliability Coordinator would make such statements here: not
only are they misleading, but they are irrelevant in the present file, R-3699-2009, which is aimed
at adopting reliability standards for the Province of Québec.
NLH owns transmission and distribution assets which are connected to the Churchill Falls plant
in Labrador; NLH is also planning the construction of a major hydroelectric project of 2,800
MW which will be connected to these assets, most likely through synchronous ties. As such,
NLH is concerned by the Reliability Coordinator’s allegations of control over assets which are
located in the Province of Newfoundland and Labrador with synchronous ties to the HQT grid.
In its September 29, 2010 letter to the Régie, the Reliability Coordinator agreed to remove the
footnote at the bottom of page 16 of HQCME-2, Document 4, which mentioned the Reliability
Coordinator’s alleged “extended supervision” over CF(L)Co’s assets and the Chat Falls
generating station. However, the Reliability Coordinator also added that the reason for removing
this footnote is that the “supervision required by a reliability coordinator is already defined in
the reliability standards that it must abide by” [our translation]. Furthermore, the Churchill Falls
substation is still mentioned as a “Bulk element” at HQCME-2, Document 5, therefore,
according to the Reliability Coordinator, part of HQT’s RTP.
The removal of the reference to “extended supervision” in HQCME-2, Document 4 does not
provide the clarity necessary on this fundamental issue of concern to NLH. As long as the
Reliability Coordinator is claiming control over assets in Labrador, NLH must present its
evidence on the factual circumstances in Labrador that are contrary to this claim in order to
ensure that the official record on this matter is accurate.
Therefore, for clarity purposes, NLH would like to address the following points:
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-41.
The term “extended supervision” should not be used by the Reliability Coordinator in
lieu of the term “wide-area view”. “Monitoring” as required under the “wide area view”
standard and the term “Supervision” which implies control are not the same concepts and
should not be used interchangeably
2.
The laws of Québec do not apply in the Province of Newfoundland and Labrador.
3.
Neither the Reliability Coordinator nor any other division of Hydro-Québec has been
granted authority by the Province of Newfoundland and Labrador to act as reliability
coordinator (RC), balancing authority (BA), transmission operator (TOP), or interchange
authority (IA) in Labrador. Hydro-Québec is a customer of CF(L)Co and when it requires
energy or power on the LAB-HQT interconnection, it must at all times make a request to
CF(L)Co: such a request must be accepted by CF(L)Co.
4.
The documents referred to by the Reliability Coordinator – the “common instruction” and
“Operating Procedure” – do not grant any right or power whatsoever to the Reliability
Coordinator in relation to the reliability of the electrical facilities located in the Province
of Newfoundland and Labrador.
1.1
Wide-area view (IRO-003-2) and the notion of supervision
The Reliability Coordinator claims that the concept of “extended supervision” can be “inferred”
from that of “Wide-area view” which is found at the reliability standards IRO-003-2. If such is
the case, there is no need to create a new term (“extended supervision”) when one already exists
(“Wide-area view”).
Furthermore, the notion of “supervision” is ill-chosen since it refers to the notion of “control”:
the French term “supervision” is defined in the French language dictionary Le Robert as
“action de superviser” (Our translation: “action consisting of supervising”)
where “superviser” (“supervising”) is itself defined as
“Contrôler (un travail), sans entrer dans les détails.” (Our translation: “To control (an
undertaking), without going into detail”)
As will be demonstrated in sections 1.3 and 1.4 (below), neither the RC nor any other division of
Hydro-Québec have “control” of CF(L)Co’s facilities.
At any rate, the Reliability Coordinator did not need to go so far as to claim that it has “extended
supervision” or “control” over CF(L)Co’s assets in Labrador to meet the reliability standard
IRO-003-2 since this standard only requires that the Reliability Coordinator “monitor” and be
aware of what is happening in neighbouring reliability coordinator areas, at the Bulk level.
Standard IRO-003-2 reads:
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“R1. Each Reliability Coordinator shall monitor all Bulk Electric System facilities,
which may include subtransmission information, within its Reliability Coordinator Area
and adjacent Reliability Coordinator Areas, as necessary to ensure that, at any time,
regardless of prior planned or unplanned events, the Reliability Coordinator is able to
determine any potential System Operating Limit and Interconnection Reliability
Operating Limit violations within its Reliability Coordinator Area.
R2. Each Reliability Coordinator shall know the current status of all critical facilities
whose failure, degradation or disconnection could result in an SOL or IROL violation.
Reliability Coordinators shall also know the status of any facilities that may be required
to assist area restoration objectives.”
[Our emphasis]
1.2
Jurisdictional issues
The Reliability Coordinator has clearly stated that it does not request the application of its
reliability standards outside of the boundaries of the Province of Québec: in its September 22,
2010 answers to NLH’s third request for information, the Reliability Coordinator said that
[Our translation]“R2.2 (…) The NERC reliability standards that the reliability
coordinator has filed for adoption by the Régie are only aimed at the facilities located in
Québec and within Québec Balancing Authority Area.”
“R2.2 (…) Les normes de fiabilité de la NERC que le coordonnateur a déposées pour
adoption par la Régie visent uniquement les installations situées au Québec et comprises
dans la zone d’équilibrage du Québec.”
In its September 28, 2010 letter to the Régie, Reliability Coordinator counsel added that
[Our translation]“[t]he reliability standards filed in the present for approval do not apply
to CF(L)Co”
“[l]es normes de fiabilité déposées au présent dossier pour approbation ne s’appliquent
pas à CF(L)Co (…)”
However, the Reliability Coordinator does state that CF(L)Co’s facilities are located on HQT’s
RTP , a group of assets under the supervision of the Reliability Coordinator, and seems to hint to
the fact that it acts as reliability coordinator, Balancing Authority, Interchange Authority and
Transmission Operator for Labrador. Here again, the Reliability Coordinator is asserting that it
has some degree of control over CF(L)Co. This is misleading.
Without the express consent of the Province of Newfoundland and Labrador, Hydro-Québec and
its divisions cannot act as reliability coordinator, Balancing Authority, Interchange Authority or
Transmission Operator for Labrador, and CF(L)Co’s facilities cannot be part of HQT’s RTP, nor
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-6can any other facility located in the Province of Newfoundland and Labrador be part of this RTP
without such consent.
A decision by the Régie to the contrary would be illegal since neither the Régie nor the
Reliability Coordinator have jurisdiction in the Province of Newfoundland and Labrador. In fact,
the Province of Newfoundland and Labrador has its own regulatory body overseeing its
electricity activities: the Newfoundland and Labrador Board of Commissioners of Public
Utilities.
If the Régie was to include CF(L)Co’s equipment and facilities in the RTP, a group of assets
which, according to the Glossary of terms filed as HQCME-2, Document 10, is “under the
supervision of the Reliability Coordinator”, or otherwise decide that a division of Hydro-Québec
acts as reliability coordinator, Balancing Authority, Interchange Authority and Transmission
Operator for Labrador, it would be infringing directly upon the jurisdiction of the legislature of
Newfoundland and Labrador.
As mentioned, the Reliability Coordinator stated that it does not request for its reliability
standards to apply outside of the Province of Québec. Yet since it also stated that CF(L)Co’s
equipment was part of its RTP, and that its Balancing Authority Area included Labrador or part
thereof, and, in general, because of the allegations it made in relation to “extended supervision”,
NLH believes that the Régie should confirm that the reliability standards it will adopt only apply
in the Province of Québec, and that CF(L)Co’s equipment is neither part of HQT’s RTP nor is it
included in the Québec Balancing Area.
1.3
Absence of explicit consent by the Province of Newfoundland and Labrador
(a) Generally
In order to claim control over electrical assets located in another jurisdiction, as reliability
coordinator, Balancing Authority, or otherwise, it is not sufficient to rely on the fact that one has
entered into a power-purchase agreement with the owner of these assets, or that this other
jurisdiction has not applied the NERC reliability model to its grid.
To grant such control to Hydro-Québec or to the Reliability Coordinator, CF(L)Co and the
Province of Newfoundland and Labrador would have to enter into an explicit agreement to this
effect with their counterparties in the Province of Québec, as mentioned in the previous section.
This was not done.
The fact that the LAB-HQT interconnection is synchronous does not change this. An example
can demonstrate this fact. The entire Eastern Interconnection is synchronous, and hundreds of
trades occur there every day. The fact that an entity located on the grid of NYISO sells electricity
to another entity located on the grid of PJM does not entail that this latter entity controls or
supervises the former; nor does it allow the Balancing Authority from PJM to act as Balancing
Authority in New York.
Moreover, the Provinces of Québec and Newfoundland and Labrador have not entered into a
power pool agreement, nor did NLH or CF(L)Co conclude such an agreement with Hydro-
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-7Québec. One could not claim that a power pool was created de facto or implicitly between the
Province of Newfoundland and Labrador and the Province of Québec since such power pool
would need to be ratified by both Provinces.
Lastly, and for the same reason (absence of express consent by the Province of Newfoundland
and Labrador) the Reliability Coordinator could not claim that CF(L)Co and HQT are part of a
common regional transmission organization (RTO); no such entity exists in the Province of
Newfoundland and Labrador.
(b) Specific limitations on the Québec Balancing Authority Area
Of these four above-mentioned NERC model functions, the Reliability Coordinator, in its
September 22, 2010 answers, put the most emphasis on “Balancing Authority”, invoking it not
only in its answer R1.6 but also in its answer R1.2.
The term “Balancing Authority” is defined in NERC’s Glossary of terms1 as “the responsible
entity that integrates resource plans ahead of time, maintains load-interchange-generation
balance within a Balancing Authority Area, and supports Interconnection frequency in real
time.”
As for the term “Balancing Authority Area”, it is defined as “the collection of generation,
transmission, and loads within the metered boundaries of the Balancing Authority. The
Balancing Authority maintains load-resource balance within this area.”
NLH understands that the division of HQT acting as Reliability Coordinator also acts as
Balancing Authority for the Province of Québec. As such, this division is responsible for
balancing the load, generation, and losses in Québec with the interchanges on Québec’s
interconnections such as HQT-ON, HQT-NY, HQT-NE, HQT-NB, and HQT-LAB; however,
this division is not responsible for, and has no jurisdiction over, any facility located on the other
side of these interconnections.
NLH further understands that the Québec Balancing Authority has removed the four Chat Falls
generators located in the Province of Québec from its jurisdiction. This is evident in the
exchange of correspondence between the IESO and HQT which the Reliability Coordinator filed
on September 22, 2010 as HQCME-2, Document 4.1. In this sense, NLH understands that the
Balancing Authority Area of Québec differs from the territory of the Province of Québec, since
the former does not include the four Chat Falls generators located in the Province of Québec.
However, the same rationale does not extend to the Province of Newfoundland and Labrador:
although the Reliability Coordinator for the Province of Québec may decide to exclude assets
located in this Province from its jurisdiction, it cannot unilaterally decide that its Balancing
Authority Area, or that its Reliability Coordinator Area, will extend to assets located in other
provinces.
Furthermore, although the Province of Newfoundland and Labrador may not apply the NERC
reliability model, the different entities located in Labrador and linked through a transmission
network do ensure that load (mainly Twinco, mining operations and communities such as Happy
1
The latest version, dated April 20, 2010, can be found on NERC’s website :
http://www.nerc.com/page.php?cid=2|20|283
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-8Valley - Goose Bay) is reliably served and that it is balanced with generation, losses, and
interchanges.
This is reflected in day-to-day operations: when Hydro-Québec wishes to change the quantity of
power that it imports from Labrador, a representative from Hydro-Québec has to contact his
counterparty at CF(L)Co and request that the deliveries into Quebec be adjusted; the CF(L)Co
representative must then accept this request if it can deliver the requested power, or deny it if it is
unable to deliver it.
This rationale applies to the other NERC functions invoked by the Reliability Coordinator in its
September 22, 2010 answers: they are limited to the Province of Québec.
In the next section we will look into the documents that, in the opinion of the Reliability
Coordinator, grant it “extended supervision” over CF(L)Co’s assets in Labrador.
1.4
Interpretation of the CF(L)Co/Hydro-Québec “reliability documents”
The Reliability Coordinator filed four documents on September 22, 2010, in support of its
alleged “extended supervision” over CF(L)Co’s equipment:

Three “operating procedures”

One set of “common instructions”
The “operating procedures” are three internal HQT documents which do not bear the signature of
anyone at CF(L)Co; as such, they do not qualify as “agreements”, and, for this reason, cannot
grant any right or power whatsoever to Hydro-Québec or any division thereof in relation to
equipment owned by CF(L)Co and located in another province.
As for the “common instruction”, when one reads this document, one does not find provisions
related to control by HQT over CF(L)Co’s equipment; instead, this document contains certain
communications procedures agreed upon by HQT and CF(L)Co, which, in any event, can be
terminated by either party. This is not a contract creating enforceable rights.
The fact that HQT and CF(L)Co have instituted proper communication procedures regarding the
LAB-HQT interconnection through a procedural document entitled “Common System Operating
Instruction for Hydro-Québec TransÉnergie and Churchill Falls (Labrador) Corp. 735 kV
interconnection lines” does not grant HQT control over the Churchill Falls station and related
infrastructure.
Once again, for the Québec Reliability Coordinator to be recognized as reliability coordinator,
Balancing Authority, Transmission Operator or Interchange Authority in Labrador, it would
need, amongst other things, to obtain the consent of the Province of Newfoundland and
Labrador; the consent of CF(L)Co would also be required to grant control over its facilities. For
such an important issue, the signature of a superintendant would not suffice: a resolution by the
board of directors of CF(L)Co would also be required. Since this is not the case here, one cannot
conclude that the common instruction granted control of any form to HQT or to the Reliability
Coordinator.
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Conclusion on “extended supervision”
As is demonstrated by the facts presented in this evidence , neither the Reliability Coordinator
nor any division of Hydro-Québec can claim to have any degree of “control” over CF(L)Co’s
facilities; therefore, these entities do not have an “extended supervision” over CF(L)Co’s
equipment. At best, if it meets the requirements of the reliability standard IRO-003-2, the
Reliability Coordinator can claim, like other reliability coordinators in North America, to have a
“wide-area view” of equipment located in Labrador, which is nothing more than a monitoring
requirement.
(2)
Glossary of terms
Another issue which NLH wishes to discuss here is the fact that the Reliability Coordinator has
decided not to request the adoption of its glossary of terms.
NLH believes that the glossary should be subject to the same approval process and given the
same force as the reliability standards themselves. Laws, regulations and similar rules are of no
use if their terms are not defined: this is even truer in the case of technical rules such as
electricity reliability rules. This is why statutes and regulations (Québec and Federal) include
definitions, or, in some cases, refer to definitions in other statutes and regulations, which have
been duly adopted.
It is also relevant to consider that NERC’s glossary of terms was adopted by FERC when it
adopted the reliability standards in the USA. This is what FERC said on this issue:
“1893. The Commission approves the glossary. The terms defined in the glossary have
an important role in establishing consistent understanding of the Reliability Standards
Requirements and implementation. The approval of the glossary will provide continuity
in application of the glossary definitions industry-wide, and will eliminate multiple
interpretations of the same term or function, which may otherwise create
miscommunication and jeopardize Bulk-Power System reliability. The glossary should
be updated through the Reliability Standards development process whenever a new or
revised Reliability Standard that includes a new defined term is approved, or as needed to
clarify compliance activities. For example, the ERO will need to update the glossary to
reflect modifications required by the Commission in this Final Rule”2
(3)
Coming into force of the reliability standards
At page 40 of its application, HQCME-1, Document 1, the Reliability Coordinator requested that
the reliability standards come into force 60 days after their adoption by the Régie, and that
monetary sanctions be applicable 120 days after this date:
2
FERC Order No. 693, issued March 16, 2007, Docket No. RM06-16-000: Mandatory Reliability Standards for
the Bulk-Power System, page 490
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- 10 “S'inspirant de ce qui a été fait aux États-Unis, le coordonnateur de la fiabilité propose, à
cet égard, une période de 60 jours après l'adoption des normes pour leur entrée en
vigueur et une période de 120 jours de transition après la mise en vigueur des normes
pour l'application de sanctions monétaires en cas de non-conformité.(…)”
However, different “effective dates” are indicated in the different reliability standards, and in
most, if not all cases, these dates have passed already. It is difficult to reconcile this with the
Reliability Coordinator’s request for the coming into force of the reliability standards 60 days
after their adoption.
Moreover, the Régie de l’énergie Act does not explicitly give the Régie the power to adopt
reliability standards retroactively:
“85.7. The Régie may request the reliability coordinator to modify a standard filed or
submit a new one, on the conditions it sets. It shall adopt reliability standards and set the
date of their coming into force.”
The Régie therefore cannot give a retroactive effect to the reliability standards. NLH would
therefore recommend, as the Reliability Coordinator did, in its application, that the reliability
standards come into force no sooner than 60 days after their adoption by the Régie.
CONCLUSION
Although the Reliability Coordinator has removed the reference to “extended supervision” in
HQCME-2, Document 4, this action has not provided clarity on the limitation of the Reliability
Coordinator’s responsibilities as it relates to assets located in the Province of Newfoundland and
Labrador. The official record on this matter must be clear and accurate.
It is important to recognize that the Reliability Coordinator’s responsibilities under the “Wide
Area Review” (IRO-003-2) are limited to monitoring of adjacent areas and that these
requirements do not imply any degree of control authority over assets in the Province of
Newfoundland and Labrador.
Therefore, NLH respectfully requests that the Régie acknowledge that neither the Reliability
Coordinator nor Hydro-Québec - or any division thereof – has control, supervision, or “extended
supervision” over assets located in the Province of Newfoundland and Labrador, whether
through the common instruction, Operating Procedures, or otherwise.
NLH further requests that the Régie adopt the Glossary of terms which was filed as HQCME-2,
Document 10, and give it the same force and effect as it does the reliability standards.
Finally, NLH requests that the Régie make the reliability standards come into force no sooner
than 60 days after their adoption.
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