Follow-up to decision D-2006-66
Report by the Task Force on
Discount Policy and Ancillary Services
for Point-to-Point Transmission Services
Participants
Brookfield Energy Marketing Inc. (BEMI)
Emera Energy Inc. (EEI)
Green Mountain Power Corporation (GMP)
Hydro-Québec Distribution (HQD)
Hydro-Québec Production (HQP)
New Brunswick Power Corporation (NBPM)
Newfoundland and Labrador Hydro (NLH)
Ontario Power Generation Inc. (OPG)
Powerex Corp. (PWXSC)
Vermont Public Power Supply Authority (VPPSA)
Hydro-Québec TransÉnergie (Transmission Provider)
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For convenience of the participants, the Task Force conducted its work
both in French and English. Some participants have informed the Task
Force members that the English version of the report is the only one that
they have reviewed. A French version has also been prepared but said
version has not been reviewed and adopted by all participants.
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Follow-up to decision D-2006-66
TABLE OF CONTENTS
1.
CONTEXT AND TASK FORCE MANDATE ..................................................................... 7
2.
TASK FORCE PARTICIPANTS AND DESCRIPTION OF WORK................................. 10
3.
DISCOUNT POLICY FOR POINT-TO-POINT TRANSMISSION SERVICES ................ 13
3.1
BACKGROUND OF DISCOUNT POLICIES FOR THE TRANSMISSION PROVIDER'S POINT-TOPOINT TRANSMISSION SERVICES .............................................................................. 13
4.
3.2
POLICY ASSESSMENT CRITERIA ................................................................................ 14
3.3
ANALYSIS OF THE DISCOUNT POLICY PROPOSALS ...................................................... 16
3.3.1
Proposals based on a prescriptive method.............................................. 17
3.3.2
Proposals based on an auction mechanism ............................................ 24
3.4
POINTS OF CONSENSUS AND OF DISAGREEMENT ....................................................... 31
3.5
TASK FORCE RECOMMENDATION FOR DISCOUNT POLICY ............................................ 32
ANCILLARY SERVICES FOR POINT-TO-POINT TRANSMISSION SERVICES.......... 34
4.1
NATURE OF ANCILLARY SERVICES ............................................................................. 34
4.2
PRESENT AND PROPOSED APPLICABILITY .................................................................. 35
4.3
POINTS OF CONSENSUS AND OF DISAGREEMENT ....................................................... 36
4.4
TASK FORCE RECOMMENDATION FOR ANCILLARY SERVICES ....................................... 41
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Follow-up to decision D-2006-66
APPENDICES
1. List of Customers with a Signed Service Agreement on May 17, 2006 Invited to
Join the Task Force
2. Minutes of Task Force Meetings and their Appendices
3. Monthly Utilization Rates on Three Transmission Provider Paths in 2005
4. Proposed Discount Policies – Assessment Matrix
5. Compilation of Potential Gains/Losses from Data Provided by Customers
6. Letters of Comments from Task Force Participants
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Follow-up to decision D-2006-66
1.
CONTEXT AND TASK FORCE MANDATE
In its decision D-2006-66, the Régie de l'énergie (the “Régie”) asked HydroQuébec when carrying on electric power transmission activities (the
“Transmission Provider”) to set up a Task Force on the discount policy and
ancillary services for point-to-point transmission services, specifying the
following on page 27 (translation of the official French text):
The Régie asks the Transmission Provider to set up a Task Force
to study the appropriateness and terms of such a discount
policy. Task Force participants are existing and potential users
of point-to-point transmission service, including Transmission
Provider affiliates: the Generator and the Distributor.
The Task Force is mandated to study and review, if necessary,
the rate structure for point-to-point services, including the
discount policy and ancillary services associated with point-topoint service. The objectives are to optimize power system use
and
Transmission
Provider
revenue
in
an
open
market
perspective. The Régie would like to receive the report from the
Task Force by October 31, 2006.
The Task Force will choose a recording secretary in charge of drafting
the report and collecting the signatures of Task Force participants.
Should unanimity not be reached, the report will present the proposals
participants wish to submit to the Régie.
The report must address the following concerns:
•
Optimization of the transmission system in a long-term
perspective;
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Follow-up to decision D-2006-66
•
Short-term, medium-term and long-term impacts of proposals on
transmission system use and on point-to-point transmission
service revenue.1
In accordance with this decision, Task Force participants consist of existing
and potential users of point-to-point transmission services, including HydroQuébec when carrying on electric power generation activities (the Generator
or "HQP") and distribution activities (the Distributor or "HQD").
Regarding the date for filing the report, the Task Force sent a letter to the
Régie on October 20, 2006 to inform it of the following (translated from
French):
Though the Task Force’s work is progressing swiftly, the short time
allotted has not sufficed to complete the analysis of proposals and
their impacts on power system use and Transmission Provider
revenue. Furthermore, in its decision D-2006-126 of August 18, 2006
and its letter dated October 3, 2006, the Régie excluded from ongoing
application R-3605-2006 matters relating to the applicability of
ancillary services for point-to-point transmission services and
indicated that, except for price, all other discussions regarding
ancillary services were to be referred to the Task Force.
Under these circumstances, the Task Force set the objective of filing the
report with the Régie at the end of January 2007.
On January 31, 2007 the Task Force sent a letter to the Régie to advise it that
discussions were still ongoing and therefore the Task Force intended to file
the report with the Régie in a few weeks.
With approval from the Task Force, the Transmission Provider has acted as
recording secretary. To respond to the Régie request, all Task Force
1
D-2006-66, page 27, available at http://www.regie-energie.qc.ca/audiences/decisions/D-2006-66.pdf
(in French)
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Follow-up to decision D-2006-66
participants were asked to send a letter expressing their agreement with the
final report or if it was the case, the extent to which they disagree with the
report. The letters received are included in Appendix 6 of the report.
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2.
TASK FORCE PARTICIPANTS AND DESCRIPTION OF WORK
On May 17, 2006, the Transmission Provider invited all customers having
signed a point-to-point transmission service agreement (as presented in
Appendix 1) and its affiliates, HQP and HQD to join the Task Force. In
addition, NLH requested to participate in the Task Force as it had submitted a
request for long term point-to-point transmission service. Alcan also attended
the first Task Force meeting as an observer.
All Task Force participants which attended at least one meeting received copy
of all the documentation submitted to the Task Force.
The table below lists the participants and their attendance at Task Force
meetings.
Table 1 – Participants at Task Force meetings
Meetings
June 15,
2006
July 13,
2006
Aug. 30,
2006
Oct. 5,
2006
Oct. 26,
2006 *
Dec. 13,
2006
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Participants
BEMI
EEI
GMP
HQD
HQP
NBPM
NLH
OPG
PWXSC
VPPSA
Transmission Provider
X
X
X
X
X
X
X
Jan. 15,
2007 *
* Conference call.
From the outset, the Transmission Provider proposed the Task Force to have
very flexible procedures. This was unanimously approved. The Transmission
Provider proposed an agenda when the invitation to each meeting was sent.
That agenda was then adjusted to meet participants' needs.
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X
X
X
X
Follow-up to decision D-2006-66
The Task Force entrusted the Transmission Provider to act as recording
secretary. During Task Force's proceedings, the final versions of documents
produced as part of the Task Force’s work were made available on the
Transmission Provider’s OASIS system. As of the second meeting, the
Transmission Provider closed each meeting by assessing the satisfaction of all
participants
around
the
table
regarding
meeting
content,
form
and
atmosphere. The assessment, always very positive, was recorded in the
minutes.
In May 2006, the Transmission Provider envisaged four Task Force meetings.
At its fourth meeting, the Task Force unanimously decided to write a letter to
the Régie to indicate that it would be unable to file its report by the end of
October 2006. Participants judged that with the amount of work remaining to
do, filing the report at the end of January 2007 would be more realistic.
Subsequently, given the ongoing discussions at the end of January 2007, the
Task Force notified the Régie that the report will be filed in a few weeks.
The minutes for each meeting with their appendices appear in chronological
order as Appendix 2 to this report. The following table gives the dates of Task
Force meetings and a brief description of the main matters addressed.
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Follow-up to decision D-2006-66
Table 2 – Task Force meetings and matters addressed
Date of meeting
1st meeting:
June 15, 2006
Matters addressed
2nd meeting:
July 13, 2006
1. Discount policy: Participants' proposals (OPG and PWXSC)
2. Comments by the Transmission Provider and other
participants regarding the proposed discount policies
3. Comments by the Transmission Provider and other
participants regarding ancillary services
3rd meeting:
August 30, 2006
1. Ancillary services and Régie decision D-2006-126
(August 18, 2006)
2. Study of the assessment matrix for proposed discount
policies as commented upon and completed by participants
2.1. Transmission Provider proposal
2.2. OPG proposal
2.3. PWXSC proposal
4th meeting:
October 5, 2006
1. Ancillary services: Transmission Provider's presentation and
discussion
2. Discount policy proposals:
2.1. BEMI proposal
2.2. Monthly utilization rates in 2005 on three paths
2.3. Analysis of the five proposals by all participants
3. Proposed table of contents for the report to be submitted to
the Régie de l’énergie
4. Timetable: letter to Régie to postpone filing of report
Discussion of Transmission Provider's discount policy
proposal F
Comments on the main sections of the draft Task Force report,
discussion on a pilot project and request for data to support a
pilot project
Comments on the second draft of the Task Force report and
further discussion on a pilot project2
Filing of the final Task Force report with the Régie
5th meeting (conference call):
October 26, 2006
6th meeting:
December 13, 2006
7th meeting (conference call):
January 15, 2007
Closure of the Task Force:
March 15, 2007
2
1. Task Force procedures and meeting schedule
2. Naming of a recording secretary
3. Presentation by the Transmission Provider of the discount
policy proposed in the application R-3549-2004 – Phase 2
and setting out criteria to meet
4. Participant comments on the discount policy
5. Presentation by the Transmission Provider of ancillary
services for point-to-point transmission services
6. Participant comments on ancillary services for point-to-point
transmission services
On January 30, 2007 an estimation of the impact of a pilot project on point-to-point transmission
revenues was sent by the Transmission Provider to all Task Force participants. That estimation was
based on data provided by customers.
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Follow-up to decision D-2006-66
3.
DISCOUNT
POLICY
FOR
POINT-TO-POINT
TRANSMISSION
SERVICES
3.1
Background of Discount Policies for the Transmission Provider's
Point-to-Point Transmission Services
Past discounts on point-to-point transmission services
The Transmission Provider's involvement with respect to a discount policy for
point-to-point transmission services is outlined below.
„ 1997 to 2001:
• The Transmission Provider applies the FERC Order 888
discount policy
„ Decision D-2002-95 (April 30, 2002) regarding application R-3401-98:
• The Régie rejects the proposed modifications to the discount
policy, which were based on price difference with neighbouring
markets and set on a per-interconnection basis (FERC 888-A)
• The Régie orders the application of a 25% discount on all shortterm point-to-point transmission services (May 2002 to
January 2003)
„ Decision D-2003-02 (January 10, 2003) regarding application
R-3401-98:
• Transitional discount policy – 25% discount on the off-peak
hourly rate for one year (January 2003 to January 2004)
„ Application R-3549-2004 – Phase 2:
• Outcome of the transitional discount policy – prior granting of a
fixed 25% discount on all paths fails to meet objectives since
most discounted transactions would have been made without the
discount (free-ridership)
• Following a Régie request, a policy is filed setting variable
discounts determined a posteriori on the basis of market price
and applicable transmission rates on neighbouring systems
„ Decision D-2006-66 (April 18, 2006) regarding application R-3549-2004
– Phase 2:
• The Régie does not approve any discount policy and orders that
a Task Force be set up including existing and potential users of
point-to-point transmission service
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Monthly utilization rates (peak and off-peak)
The Task Force agreed that in order to help with its study, the Transmission
Provider would produce for 2005 the monthly utilization rates for point-to-point
transmission services during peak and off-peak periods as defined by NERC
on three of its most heavily used paths: HQT-MASS, HQT-NE and OTTOHQT.
Appendix 3 provides this information, which shows the available capacity for
additional transactions during peak and off-peak periods.
3.2
Policy assessment criteria
At the first meeting, the Transmission Provider suggested criteria to use for
guidance in studying and assessing the viability of discount policies to be
proposed. In the course of discussions, the criteria below were established by
the Task Force participants:
•
Regulatory feasibility: Policies should comply with the Act
respecting the Régie de l'énergie and past Régie decisions, allow
non-discriminatory access to the transmission system, and be
transparent and fair.
•
Optimization: Use of the transmission system and the Transmission
Provider's revenue should be optimized. To be fair to all its
customers and favour the reduction of all transmission rates, the
Transmission Provider’s discount policy must minimize freeridership, i.e., transactions that would have been made even without
a discount, and must cover discount policy development and
management costs. The discount policy should not result in an
increased transmission rate paid by HQD to obtain transmission
service for the native load.
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Follow-up to decision D-2006-66
•
Feasibility: It must be feasible for the Transmission Provider to
implement and manage the policy within reasonable costs and time
efforts, and for customers to operate under it.
The only criterion on which participants were not unanimous was one aspect
of regulatory feasibility: uniform rates throughout the territory served. The
Transmission Provider informed the participants that the Act respecting the
Régie the l'énergie, section 49, first paragraph, subparagraph 11, indicates
that the Régie shall "maintain, subject to any government order to the
contrary, uniform rates throughout the territory served by the electric power
transmission system."
One of the greatest challenges in assessing the options is ensuring that the
criterion of minimizing free-ridership is met and at the same time avoiding
discrimination in the availability of the discount. The participants’ views differed
on how to interpret and accommodate both of these objectives and in turn,
minimize the impact on native load.
Some participants, particularly BEMI, PWXSC, NBPM and OPG, favoured
discounting solely for wheel-through transactions. They argued that such a
proposal was not discriminatory since all registered customers, including HQP,
would be able to participate in such a discount policy on the same playing field
knowing in advance the applicable rules. They argued as well that this was the
only mechanism by which new customers could be attracted from outside
Québec, while mitigating the free-ridership issue.
The analysis of the proposed discount policies will be done with due
consideration for the Régie's concerns regarding "optimization of the
transmission system in a long-term perspective" and "short-term, medium-term
and long-term impacts of proposals on transmission system use and on pointto-point transmission service revenue."
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3.3
Analysis of the discount policy proposals
A total of six discount policy proposals (labelled A to F) were tabled, three by
the Transmission Provider, one by BEMI, one by OPG and one by PWXSC. A
presentation on each of these proposals was given to the Task Force,
followed by discussion. Three proposals use a prescriptive method to set the
applicable discount (proposals A, B and D), while the other three use an
auction mechanism (proposals C, E and F). Appendix 4 is an assessment
matrix summarizing how the latest version of each proposal meets the criteria
set out above. Also, the Task Force agrees to discuss a pilot project derived
from proposal D, referred to as D-revised.
The proposals are presented below in those two categories. Each proposed
discount policy is described, followed by a summary of comments on how the
policy meets, or fails to meet, according to some of the participants, the criteria
outlined above.
As a general comment in line with the optimization criterion, HQD considers
that any discount policy to be applied by the Transmission Provider should
have the effect of increasing the point-to-point revenues of the Transmission
Provider and consequently should not increase the transmission rate for the
native load.
Note that comments for the feasibility criterion address qualitative aspects
only. They do not go into detail regarding the terms and conditions under
which any of the discount policies may be implemented, managed and
operated.
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3.3.1 Proposals based on a prescriptive method
Proposal A (prescriptive method)
The initial proposal by the Transmission Provider was presented at the first
meeting. This is the discount policy proposed to the Régie in application
R-3549-2004 – Phase 2. Under this proposal, the discount is determined a
posteriori on basis of the difference in prices on neighbouring markets for the
hours when the transaction took place and only for off-peak periods as defined
by NERC. Some intervenors criticized this proposed policy as lacking proper
incentive to attract new customers. The Régie did not rule on the proposal in
decision D-2006-66, instead ordering the Transmission Provider to set up a
Task Force to study the appropriateness and terms of a discount policy.
Comments on proposal A
The Transmission Provider views this proposal, where discounting is offered to
all customers and could vary with the time of day and path, as the best one for
minimizing free-ridership since it shows that without a transmission rate
discount, the transaction would not have been made.
Some participants agree that the proposal protects anticipated Transmission
Provider revenue. All participants, however, indicate that they prefer to know
in advance the applicable discount in order to determine more precisely the
advantage of their potential transactions.
BEMI, PWXSC, OPG and NLH are of the opinion that this proposal is not a
sufficient incentive for making more transactions, since the amount of the
rebate will be unknown at the time the decision is made whether to carry out a
transaction or not. It is an insurance policy of sorts that limits a potential loss
when there is little anticipated difference between markets.
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Follow-up to decision D-2006-66
NLH is of the opinion that the implementation of this proposal seems very
cumbersome and furthermore its complexity could generate time-consuming
misunderstandings during invoice reconciliation that could lead to additional
expenses, thus discouraging further participation.
Given the volume of information to process, Task Force participants anticipate
that the proposal would entail significant development and management costs.
Proposal B (prescriptive method)
OPG initially proposed a policy with pre-defined discounts to be made
available based on the moment the customer made a reservation and on
reaching pre-established reservation thresholds on certain paths and for
certain products. Therefore at certain pre-defined times, if reservations across
an interface had not reached a pre-defined level, some of the excess capacity
would be made available at a previously established discount. While this type
of discounting could be made available to all users, the problem of preserving
existing revenues is reduced if the discount is applied only to wheel-through
reservations.
As an alternative to be considered if the concept of applying the discount to
wheel-through customers was not acceptable and the preservation of existing
revenues was deemed essential, a revised version of the proposal was later
offered by OPG that would be applicable to all forms of wheeling. The revised
proposal consists in offering a fixed-price discount with a pre-defined
maximum (e.g., not so much as to encroach on the $2/MW-hour minimum rate
needed to cover development and management costs). The discount would
only be offered at times and over specific interfaces where historical usage
was low (for example, in OPG's view, less than 50% of rating), thus minimizing
the risk to traditional revenues. For these times and interfaces, every day, one
hour after the deadline for firm day-ahead reservations, the Transmission
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Provider would thus post on OASIS what blocks of power were available for
purchase at the discounted price.
Comments on proposal B
OPG suggests that its initial proposal, if applied only to wheel-through
transactions, represents a viable method for increasing transmission system
usage and thus the Transmission Provider's revenue, but recognizes that the
task of determining the times and thresholds at which discounts would be
triggered, as well as the level of the discounts, would be considerable. The
alternative proposal, available only after the deadline for submitting day-ahead
transactions, was offered on the assumption that it was not possible to provide
different rates for wheel-out and wheel-through transactions. If this assumption
is true, OPG believes that the only way to prevent free-ridership was to offer
the discount on underutilized interfaces at the “last minute”. At such a time the
traditional users would have already made their reservations.
BEMI believes this is a better proposal than proposal A since it is based on the
attractiveness of the product for market participants at any given time.
The Transmission Provider considers that under this proposal it may not
achieve its projected revenue, since the biggest part of its short-term revenues
comes from hourly reservations, which are mostly made after the proposed
deadline. The Transmission Provider believes that it is very unlikely that the
additional revenue generated on days with discounts offered (i.e., those when
the daily revenue threshold is reached) would offset revenue not generated at
the regular rate on days when the revenue threshold is not reached. Taking
the example of a fixed $6.33/MW-hour discount (meaning a $2/MW-hour
price), for each MW not sold at $8.33/MW-hour, the Transmission Provider
would have to sell more than 4 MW (hence four times more) with the discount
to hope to achieve its annual revenue threshold. The question which arises
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then relates to the existence of a market to create additional reservations on
the Transmission Provider's system to compensate for the lost revenues on
existing reservations.
Furthermore the Transmission Provider believes that a discount only available
after the deadline for submitting day-ahead reservations makes the
transaction scheduling system less efficient since it induces customers to
postpone reservations in order to take advantage of the discounts, thus
increasing the number of last-minute reservations to be processed in a realtime environment. Additionally, there is an administrative overhead in
establishing,
posting
and
billing
discounts
daily,
and
hence
higher
management costs than those foreseen for other proposals. Finally, under the
alternative proposal, the 50% threshold suggested by OPG is much too high,
and should that proposal be considered by the Régie, rebates should be
offered only when historical usage would be under 10% or 15% of rating.
HQP views this proposal as discriminatory in that it excludes all power
producers located on the Transmission Provider's system in Quebec and is
also not in line with the principle of uniform rates throughout the territory.
Furthermore, the proposal offers no guarantee to optimize the Transmission
Provider's revenues.
NLH is of the opinion that this approach may be better designed for a mature
market where scarcity would motivate participants to compete for the
remaining available transmission, on a path or in a time frame. At this point,
the market conditions are such that players may prefer to wait until the
greatest rebates are made available. This process would probably require a
major re-design of the software supporting the existing OASIS platform.
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The Transmission Provider confirms that this proposal requires important
modifications to the OASIS system and consequently added costs of
implementation.
Proposal D (prescriptive method)
The second proposal by the Transmission Provider is the one set out in the
pro forma OATT of FERC Order 888. Under that method, the Transmission
Provider may offer discounts on point-to-point transmission service, provided
that the same discount which is offered to the Transmission Provider's affiliate
is offered to all eligible customers on the same path. Information regarding
discounts must be posted on the OASIS pursuant to Part 37 of FERC's
regulations. In addition, discounts to non-affiliates must be offered in a not
unduly discriminatory manner. That discount policy was applied by the
Transmission Provider after open access to the bulk transmission system
began in 1997. However, in its April 2002 decision D-2002-95, the Régie
struck down an amendment proposed by the Transmission Provider to update
the discount policy in line with the FERC pro forma OATT on the grounds that
it was contrary to the principle of uniform rates throughout the territory set out
in the Act respecting the Régie de l'énergie, section 49, first paragraph,
subparagraph 11, and that a discount policy must be transparent to all existing
and potential customers.
Comments on proposal D
The Transmission Provider views the FERC OATT discount policy as nondiscriminatory and easier to manage. Furthermore, in its view, this policy helps
minimize free-ridership by giving the latitude needed to set discounts
applicable to all on the basis of market conditions. Such a discount policy also
ensures that the Transmission Provider is able to maintain and optimize its
revenue.
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All participants consider proposal D to be an acceptable option for
implementing a discount policy on a trial basis, providing that criteria described
in section 3.2 of this report are met and that management rules on how
discounts are set are approved in advance by the Régie in order to establish
the latitude given to the Transmission Provider.
HQP is of the opinion that the Transmission Provider should seriously consider
offering two types of rebates, one applicable to on-peak reservations and
another to off-peak reservations. Though maintaining the revenue level
required by the Transmission Provider, the rebate level should be such that it
creates a significant financial incentive for all market players.
NLH believes that the strength of this proposal is its simplicity. The OASIS
system appears able to accommodate it and reconciliation of invoices would
remain rather simple. The Régie needs to authorize the underlying triggers for
such rebates, thus insuring that the Transmission Provider does not have an
unacceptable level of discretion in applying the rebates. Yearly assessments
and audits would be possible to monitor the proper application. Clearly defined
parameters should be known in advance by all potential customers. Moreover,
according to NLH, this discount policy could be introduced as a pilot program
to limit any adverse economic results. However, in order to be effective, the
rebates should be triggered on all short-term services (on-peak and off-peak,
hourly, daily, weekly and monthly services). The rebated price should also be
competitive versus neighbouring transmission providers. Further details on the
way rebates would be set by the Transmission Provider are needed.
In order to test the feasibility of such a discount policy, the Transmission
Provider proposes to the Task Force a mechanism by which any time the
historic use on a monthly basis on an interconnection would have been below
a certain percentage of Available Transmission Capacity (ATC) (e.g. 20%), the
hourly off-peak tariff for that intertie would be discounted (e.g. the off-peak
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hourly rate for any intertie with less than 20% historic use of ATC would be
discounted, for example, by $4/MW-hour) and posted on OASIS. The priorities
set out in FERC's OATT for discounted service would apply (e.g. a request for
service at a higher price will have priority over one at a discounted price and in
case of curtailment or interruption of service, the higher price reservation will
have priority over the discounted reservation).3 Although BEMI at first did not
agree with a prescriptive method and would have favoured the auction
process, it is prepared to rejoin the majority and consider the advantages of a
three-month pilot project.
However, some participants, regrouped in a Coalition shortly after the last
meeting of the Task Force, suggested an alternative mechanism and
proposed to use a discount of $6/MW-hour for an historic use lower than 20%
and a discount of $4/MW-hour when the historic use of the interconnection
would be between 20% and 40%. After receiving the submission from the
Coalition, the Transmission Provider made some calculations to evaluate the
potential gains/losses of the proposed pilot project. The results from those
estimations are summarized hereunder.
Possible impact of a three-month pilot project (proposal D-revised)
Table A and Table B in Appendix 5 provide a compilation of the possible net
impact of a discount of $4/MW-hour during peak and off-peak periods on
point-to-point transmission revenues generated from certain Task Force
participants during a three months period in 2006 (April, May and October).
The Transmission Provider asked participants to supply data based on their
own experience, of the potential increase in their reservations with such a
rebate of $4/MW-hour. BEMI, HQP, NBPM, OPG and PWXSC provided an
estimate of the potential increase in their reservations with the 4$/MWh rebate
during the identified period. In summary, based solely on the possible impact
3
The priority rules are described in sections 14.1 and 14.7 of FERC's OATT (Order 888 Final Rule,
18 CFR Parts 35 and 385, and Order 888-A, 18 CFR Part 35.
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on the reservations from the responding participants, a $4/MW-hour rebate
applied during all hours for peak and off-peak periods for three months in 2006
would have caused a reduction in point-to-point transmission revenues
estimated at $4.5 millions (Table A), while the same rebate applied only for offpeak periods would have caused a reduction in revenues estimated at $0.4
million (Table B). This analysis is however incomplete, as it does not take into
consideration the potential for additional reservations that could result from
non Task Force participants attracted by the discount, if any.
With the data received from participants, it was not possible to extrapolate the
estimated impact of a $6/MW-hour rebate applied during off-peak periods
when ATC use was lower than 20%, in addition to a $4/MW-hour applied
during peak and off-peak periods where ATC use was between 20% and 40%,
because only one customer provided data on potential additional reservation
with a 6$/MW-hour rebate and those data were not differentiated for the level
of use of the interconnections during different periods. No data were available
to provide an estimate for the long term impact of the rebate mechanisms.
3.3.2 Proposals based on an auction mechanism
Proposal C (auction mechanism)
The PWXSC proposal is based on a year-long pilot project with an auction
open only to customers wishing to make wheel-through transactions. The
proposal sets a floor price (e.g., $1/MW-hour or $2/MW-hour) to cover
discount policy development and management costs. More specifically, under
the PWXSC proposal, the Transmission Provider holds an auction for a
particular type of service (hourly, daily, weekly, monthly) during the period
preceding the effective service date. For firm daily service, the auction would
thus be held the day before the service is used. Auctioning would only exclude
very high-use periods like summer peaks.
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Comments on proposal C
The Transmission Provider views this proposal as discriminatory in that it
excludes all power producers located in Québec and is not in line with the
principle of uniform rates throughout the territory. Furthermore, the proposal
offers no assurance to optimize the Transmission Provider's revenue and
therefore it could have an impact on the transmission rate paid by HQD to
obtain transmission service for the native load.
Some participants consider it is not discriminatory since all potential players
would be on a level playing field, including HQP, who would be able to
participate in the auction in the same fashion as the others. Furthermore,
some participants consider that the additional revenue generated by such a
discount policy would mitigate the effect on local power producers by tending
to lower the rates the Transmission Provider charges them the following year.
HQP considers the proposal as discriminatory since it excludes all power
producers located in Québec and is not in line with the principle of uniform
rates throughout the territory. Additionally, in cases where ATC is insufficient
to accommodate all requests, no curtailment should benefit a discountedservice reservation over a reservation made at the higher price. In this regard,
the standard FERC OATT provisions regarding higher priority assigned to
higher priced service should be applied to any rebate policy. Finally, HQP
believes that the mitigating argument expressed by some participants is highly
speculative and is not supported by the facts, and that in any case it would not
negate the discriminatory nature of the proposal.
NLH is of the opinion that the competitive structure of the auction is such that
prices will tend to increase as deadlines for flows approach, inasmuch as a
certain level of scarcity is present to motivate bidders. In theory the risk of a
“wait and see” attitude, which other auction structures may create, is thus
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reduced. With this proposal, reconciliation of invoices may be less
burdensome. However, the software needed to implement it might require a
major overhaul.
The Transmission Provider confirms that any form of real-time auction involves
a major effort for designing and implementing software for the bidding process
and to make it compatible with reservations and scheduling done through
OASIS.
Proposal E (auction mechanism)
In this Task Force initiative, BEMI submitted a proposal, based on the notion
of “vouchers”, whereby the Transmission Provider would determine for all
short-term services an amount of energy (in TWh or a percentage of ATC) that
it would auction off at least one month prior to the period of use. The
Transmission Provider would hold an electronic auction via OASIS (format to
be determined, but clearing price approach preferred by BEMI since
consistent, according to BEMI, with industry practices) for option rights on
daily firm (convertible to daily, weekly or monthly firm or hourly non-firm) pointto-point wheel-through service only to be exercised within a prescribed period
(preference for one year to provide sufficient incentive to attract new clients)
and valid for all interconnections (subject to availability). The auction would
only be opened to customers wishing to make wheel-through transactions
between any interconnections to protect any expected point-to-point revenues.
Bids accepted by the Transmission Provider would be used by participating
customers under the usual OATT priority management rules. Each month, the
Transmission Provider would only bill customers for the vouchers used during
that month. The value of vouchers not used by customers would be billed at
the end of the period covered by the auction.
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Comments on proposal E
BEMI considers that the proposal is not discriminatory since Québec
producers are not excluded and would be able to participate in the auction on
an equal footing, with complete liberty to decide the level of their respective
bids. Furthermore, the point-to-point revenue base would also be protected,
while the wheel-through utilization factor would increase. It would provide a
true reflection of how the market participants value the transmission service
and should provide sufficient incentive to attract new customers. The
additional revenue generated by such a discount policy has a positive impact
on the native load invoices according to BEMI. Also, the proposed rebate
scheme would comply with the principle of uniform rates since it would apply
across the entire service territory and the rules would be known in advance to
all potential players.
The Transmission Provider views the proposal as discriminatory since it
excludes all power producers located in Québec. Furthermore, it is not in line
with the principle of uniform rates throughout the territory and does not ensure
a minimum revenue to the Transmission Provider. On the implementation side
of such a proposal, it is important to mention that OASIS was never designed
to operate such an auction mechanism and that important software
development would be required to implement such a mechanism and make it
compatible with the reservation and billing process to flow seamlessly through
OASIS.
NLH is of the opinion that this option could increase the use of the
transmission grid. However, the details of the auction process and the ability
to exchange vouchers for any type of short-term transmission service would
need to be defined and approved by the Régie. Platforms for electronic open
season exist and reconciliation of invoices would remain rather simple. This
formula could be tested as a pilot but the auction process would first need to
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be better defined, to ensure an appropriate price setting mechanism. If the
objective is to diversify the Transmission Provider’s customer base, the
challenge here stems from the fact that, as opposed to a clearing price where
both competing loads and generators send a price signal to affect the final
price, this type of auction is one sided and includes a major player who could
bid up the vouchers. Although this proposal shows a lot of promise, it includes
many variables that could have a significant impact on its efficacy.
OPG does not view this proposal as discriminatory since the wheel-through
service is a different product which would be made available through the same
auction mechanism to all potential customers including HQP. Furthermore,
OPG believes that offering this new product is the only mechanism by which
new customers can be attracted while meeting the Transmission Provider’s
second criterion of minimizing free-ridership. Also, in OPG's opinion, as this is
a different product which can be purchased by any entity exporting from
Québec, there is no discriminatory effect to be mitigated.
HQP considers the proposal as discriminatory in that it excludes all power
producers located in Québec and is also not in line with the principle of
uniform rates throughout the territory. Additionally, in cases where ATC is
insufficient to accommodate all requests, no curtailment should benefit a
discounted-service reservation over a reservation made at the higher price.
Finally, HQP believes that the mitigating argument expressed by some
participants is highly speculative and is not supported by the facts, and that in
any case it would not negate the discriminatory nature of the proposal, should
it be applied to wheel-through service only.
Proposal F (auction mechanism)
The third proposal by the Transmission Provider is inspired by the BEMI
proposal above. It consists in a semi-annual auction with two rounds of
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bidding open to all customers. The Transmission Provider would determine, in
advance, low-use hours or periods on paths during which the vouchers can be
redeemed and would establish a threshold revenue to be obtained based on
the mean revenue generated by hourly non-firm point-to-point transmission
service reservations in past years for those precise periods. In round one, all
customers would be asked to bid on vouchers for the number of MW-hour and
at the price of their choice. The auction would only be valid if the total value of
bids equalled or exceeded the pre-established threshold, in which case round
two would proceed. During this round, all participants could make or confirm
their bid (the quantity) at the price of the winning bid in round one. The auction
would again only be valid if the total value of bids equalled or exceeded the
pre-established revenue threshold.
Comments on proposal F
The Transmission Provider views this proposal as non-discriminatory,
providing uniform rates throughout the territory, optimizing both the use of
paths and its revenue, and being relatively easy to implement and operate.
That proposal would also be sure not to increase the tariff paid by HQD to
obtain transmission service for the native load.
Some participants, notably BEMI, PWXSC and OPG, pointed out the main
weakness of the proposal, namely that the result of such an auction would
largely depend on the bidding behaviour of a single player, HQP. Indeed,
whether or not the set threshold is reached depends on whether HQP places a
sufficient bid for a large quantity of vouchers. They thus propose a more
restrictive variant of the proposal where it would only apply to wheel-through.
They also propose a single-round auction where each bidder obtains vouchers
at the bid price if the revenue threshold is met, or alternatively at a clearing
price based on the last bid accepted (i.e. the lowest), according to the
practices of surrounding jurisdictions for energy, capacity and ancillaries
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markets. BEMI, PWXSC, OPG and NLH would also prefer the vouchers to be
valid for daily firm service, but convertible to daily, weekly or monthly firm or
hourly non-firm reservations. OPG also suggests that if the vouchers are only
valid for daily non-firm service they are of very limited value.
NLH is of the opinion that this proposal is essentially confronted with the same
challenges as proposal E. The design of the auction process is paramount.
What type of price should the auction generate: a clearing price, an average
price, one as-bid price per bidder? NLH does not believe that a threshold
should be applied if pre-approved, non-eligible “black-out periods” are
adopted; particularly given that short-term point-to-point revenues are such a
small portion of the Transmission Provider’s total revenues. Although this
proposal shows a lot of promise, it includes many variables that could have a
significant impact on its efficacy.
In the Transmission Provider’s view, the wheel-through-only variant, as for
proposals B, C and E, contravenes regulatory feasibility criteria as it would
apply solely to a new type of service to be created, the wheel-through service,
which is not defined in FERC's OATT nor in the Hydro-Québec Open Access
Transmission Tariff. Also, this proposal would not ensure the maintenance of
point-to-point revenues, because it would not generate a price greater than
zero except for only the few hours of the year where the usage of the
interconnection would be close to 100%.
HQP opposes the views expressed by BEMI, PWXSC and OPG and considers
their counter-proposal as discriminatory in that it excludes all power producers
located in Québec and is also not in line with the principle of uniform rates
throughout the territory. Additionally, in cases where ATC is insufficient to
accommodate all requests, no curtailment should benefit a discounted-service
reservation over a reservation made at the higher price.
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3.4
Points of consensus and of disagreement
The points of consensus below emerged when all Task Force participants
studied the six proposals.
•
The data submitted by the Transmission Provider on the monthly
utilization rates of three of its interconnection paths in 2005 suggests
that additional transactions are possible, especially during off-peak
periods.
•
The participants agree that proposal D, with management rules on how
discounts are set by the Transmission Provider being first approved by
the Régie is the best proposal on a trial basis to look at for a discount
policy. The approved rules would ensure that the Régie does not
delegate to a third party, namely the Transmission Provider, the
authority given to it by the Act respecting the Régie de l'énergie, to set
the transmission tariffs applicable by the Transmission Provider.
•
If the criteria identified by the Task Force were met, a pilot project
lasting at least three months could be implemented to study the impact
of any discount policy and would have been best run before the
commissioning of the new 1,250 MW interconnection between Québec
and Ontario, scheduled for 2009. The new interconnection is likely to
substantially
increase
wheel-through
between
Ontario
and
the
northeast U.S. (New York and New England), making historical
reservation levels an inappropriate basis for establishing future revenue
thresholds. The bias arising from the new interconnection will taper off
naturally in the years following its commissioning.
•
A minimum price would be needed to cover development and
management costs of such a pilot project to minimize the potential
impact on rates for native load.
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•
All terms and conditions of a discount policy must be available to all
customers on OASIS with a reasonable time given to respond.
The points of disagreement are primarily related to:
•
The application of a discount policy solely to wheel-through
reservations or not for discounting and whether such an application of
the policy discriminates against power producers located in Québec.
•
The possibility that for identical service over the same path, users pay
several different prices and further, the relationship between the priority
of a service and the price paid for it.
•
The impact of the discount policy on optimizing the Transmission
Provider's revenue, the impact on the transmission tariff paid by HQD to
obtain transmission service for the native load, and the prevention of
free-ridership.
3.5
Task Force recommendation for discount policy
After some lengthy discussions, and based on the data provided by the
participants, their was no agreement of the Task Force as a whole on
implementation of a pilot project.
The Transmission Provider is of the opinion that such a pilot project would not
satisfy the criteria agreed upon by the Task Force participants and more
specifically, would not optimize revenues from point-to-point transmission
services based on the forecast of increased use of the transmission system at
a lower price, which would at least compensate for the loss of revenues
coming from free-ridership (i.e. reservations done at the lower price which
would have been done anyway at the undiscounted price).
However, as part of the Coalition, BEMI, EEI, NBPM, NLH, OPG and PWXSC,
continue to support the implementation of a pilot project of at least three-
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month duration to better evaluate a discount policy and to provide necessary
data, which according to these participants is otherwise difficult to obtain, as to
the impacts of different discounts to the Transmission Provider's transmission
rates.
Accordingly, no unanimous recommendation has come out of the Task
Force’s for a policy which would satisfy the criteria set by Task Force
participants.
HQD wishes to reiterate that any discount policy applied by the Transmission
Provider should increase the point-to-point revenues and consequently should
not increase the transmission rate for the native load.
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4.
ANCILLARY SERVICES FOR POINT-TO-POINT TRANSMISSION
SERVICES
4.1
Nature of ancillary services
•
Ancillary services are crucial to ensuring transmission system reliability.
•
Except for system control, they are provided by generating units located
in the control area and under the Transmission Provider’s operational
control (voltage control, frequency control, spinning reserve and nonspinning reserve).
•
The Transmission Provider is responsible for matching customer
deliveries and receipts (energy balancing – receipt and delivery).
•
The Régie has approved a postage-stamp rate structure for ancillary
services.
•
Those supplying ancillary services are entitled to receive a Régieapproved rate for those services.
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4.2
Present and proposed applicability
Table 3 – Present applicability
Hourly rate
($/MW-hour)
Reservations to
which applied
System
control
Included
Voltage
control
0.04
Frequency
control
0.04
Supplier
Transmission
Provider
Third party
or customer
All
Exclusively
No
All
Exclusively
No
Offered
Those serving
a load in the
Transmission
Provider’s
control area
Spinning
reserve
0.16
Offered
Non-spinning
reserve
0.08
Balancing –
Receipt
+ = 37.50
– = 112.50
Offered
Balancing –
Delivery
+ = 112.50
– = 37.50
Offered
Offered
Customer
must
demonstrate
that it has
acquired or
provided the
service from
a source
located in
the control
area.*
* The capacity available to supply this service must be identified and be under the
operational control of the Transmission Provider.
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Table 4 – Applicability proposed by the Transmission Provider
(Application R-3605-2006)
Hourly rate
($/MW-hour)
Reservations to
which applied
Supplier
Transmission Third party
Provider
or customer
System
control
All
Exclusively
No
Voltage
control
All
Exclusively
No
All
Offered
Frequency
control
Spinning
reserve
To be given in
the next rate
case to be
filed by the
Transmission
Provider with
the Régie
All
Offered
All
Offered
Balancing –
Receipt
Source in the
control area
Offered
Balancing –
Delivery
Load in the
control area
Offered
Non-spinning
reserve
Customer
must
demonstrate
that it has
acquired or
provided the
service from
a source
located in
the control
area.*
* The capacity available to supply this service must be identified and be under
the operational control of the Transmission Provider.
4.3
Points of consensus and of disagreement
As part of the Task Force’s work, the Transmission Provider gave two
presentations on ancillary services. The first covered the definition of each
ancillary service and the present and proposed applicability of each. The
second covered the technical nature of ancillary services and their role in
maintaining power flows on the Transmission Provider’s grid.
The technical presentation to the Task Force participants explains the
technical and design features specific to the Hydro-Québec transmission
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system. Since the Transmission Provider's system is not synchronized to other
North American transmission systems, it must maintain its own distinct stability
reserve; other power systems cannot be counted upon to provide this.
Transmission Provider's planning engineers explained to the Task Force
participants that it is thus necessary that generating plants located on the
Transmission Provider's system offer frequency control, spinning reserve and
non-spinning reserve services. As per the Transmission Provider, offering
such services using generating facilities not included in the Transmission
Provider’s rate base is at the cost of lowering the capacity that can be sold by
such facilities, and this in turn results in suboptimal hydroelectric generation.
Implementing load frequency control puts constraints on generating stations
designated for load following, forcing them to depart from optimal generation
and to maintain the required reserves at all times. The Transmission Provider
must thus obtain from those generating plants the required ancillary services
to meet NERC and NPCC reliability requirements. The points below were
noted during discussions following these presentations.
The points of consensus are as follows:
•
Certain participants recognize that some technical and current
commercial aspects concerning the present and proposed applicability
of system and frequency control services and energy balancing
(delivery and receipt) are well founded.
•
Certain participants agree that frequency control and operating reserve
(spinning and non-spinning) services are required to carry their power
flows over the Transmission Provider's interconnected system, given
the specific nature of that system, which is electrically isolated from all
neighbouring transmission systems outside the Québec grid and
therefore must maintain its own frequency and reserves at all times,
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Follow-up to decision D-2006-66
since it does not benefit from such services from neighbouring systems
as the other electrically synchronous systems do.
NLH indicated that the frequency is unique to the Transmission Provider. In
the rest of the eastern region interconnection, wheel-throughs are charged
only for the two ancillary services: system control and voltage support. The
Transmission Provider's system has no synchronous ties with neighbouring
systems outside Québec. The system must rely exclusively on its own inertia
and governors for frequency control. NLH understands that the nonsynchronous nature of the system makes a wheel-through a set of two distinct
transactions: the first is a sink while the second is a source. Although it may be
possible to link both contractually, the physical transaction requires the use of
local regulation and reserves.
However, the following points of disagreement were raised by some
participants:
•
Operating reserve – Spinning and non-spinning reserve services: BEMI
believes that wheel-through reservations have no impact on the level of
reserves necessary to meet reliability standards and that the
Transmission Provider must demonstrate the incremental cost of
service caused by wheel-through reservations before requesting a
change in current commercial practices. According to BEMI, this has
already been decided by the Régie in decision D-2006-66, page 29,
and it questions the scope of the Task Force's mandate in light of the
said decision. Also, in its opinion, based on the practices in other
jurisdictions, these services should not be charged to wheel-through
customers. Furthermore, BEMI questioned the motivation behind such
a request considering the practice in place for close to ten years now.
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•
Energy balancing – Receipt: in BEMI’s view, energy imbalances
between systems are always caused by operational factors, not
commercial considerations, and are usually settled in kind between
operators of surrounding networks. Furthermore, BEMI's control room is
located in a separate building in a distinct location and commercial staff
is informed of such situation after the fact. Thus, BEMI believes such a
proposal would be discriminatory and proposed to maintain the
historical practice of balancing such inadvertent interchanges on a daily
basis with the same off-peak and on-peak profile or by applying the
same energy deficiency settlement rate of $75/MW-hour for both
positive and negative balances, in the interest of fairness.
•
PWXSC does not agree that the proposal made by the Transmission
Provider for ancillary services is comparable to the FERC pro-forma
OATT. In the pro-forma OATT, scheduling and dispatch, system
control, and reactive supply and voltage control are services that must
be purchased from a transmission provider by all users of the
transmission system. Losses may be purchased or self-supplied by
users of the transmission system. The other ancillary services are only
applicable to load-serving entities and generators. Regulation and
frequency response and operating reserves (spinning and nonspinning) are services used by load-serving entities, and energy
imbalance service is supplied by the transmission provider to
generators and load-serving entities.
•
OPG and PWXSC state that they do not believe that the Transmission
Provider proposal for ancillary services, summarized in Table 4, meets
with the FERC pro-forma OATT, whereas the current Hydro-Québec
tariff for ancillary services, summarized in Table 3, does. OPG adds
that while it acknowledges that there are unique aspects to the
Transmission Provider's system, the services it provides through the
ancillary services to wheel-through customers as compared to those
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provided to native load customers are analogous to those provided by
other transmission providers that follow the FERC pro-forma OATT.
Since FERC compatibility has been an important feature of the
Transmission Provider's tariff, OPG sees insufficient justification for
deviating at this time.
•
PWXSC further notes that if the Transmission Provider can determine
from a cost causation point-of-view that its proposal has merit, then the
Transmission Provider's proposal is essentially treating exports on the
same basis as native load. The fact that exports (as part of a wheelthrough transaction) must pay for load-based ancillary services (e.g.
frequency control, spinning and non-spinning reserve) means that from
a transmission service perspective, the Transmission Provider must
back the export for the balance of the hour in the event the import leg
has been cut. In the event the Transmission Provider cannot support
both exports and native load from generation capacity under its control,
there would be pro-rata cuts to service for exports and native load.
PWXSC believes that the Transmission Provider has clearly stated that
its proposal for ancillary services does not provide exports with the
same priority or service levels as native load for the same ancillary
services. PWXSC believes that the Transmission Provider's proposal is
thus clearly discriminatory since it requires both exports and load to pay
the same rate for the same ancillary services but provides customers
with a different level of service. In other words, PWXSC believes that
the Transmission Provider expects to cut exports ahead of native load
in the event of a contingency even though both customers are paying
for the same ancillary services to firm up their energy schedules.
•
EEI does not agree with adding three additional ancillary services for
non-load transactions on the Transmission Provider's system nor that
point-to-point transactions should have any additional ancillary services
than what is FERC standard "Dispatch" (Schedule 1) and "Voltage
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Control" (Schedule 2). Quebec may have an electrically isolated system
through its interconnects; however, so does Texas, and to EEI's
knowledge
Texas
conforms
to
FERC
standards
that
regulation/frequency control and operating reserves are load-related
services, not generation.
•
NBPM strongly disagrees with the proposal for wheel-through
transactions being charged for reserve on the Transmission Provider's
system. While NBPM states that it fully appreciates the unique nature of
the Quebec power system, it believes that participants in Quebec also
appreciate the unique qualities of the NB system where there are no
wheel-through reserve tariffs.
4.4
Task Force recommendation for ancillary services
The Task Force reached a consensus on the technical and current commercial
aspects of two ancillary services: system control and voltage control.
Regarding the other five services, i.e., frequency control, operating reserve –
spinning and non-spinning, and energy balancing – receipt and delivery,
participants agree that these basic services are expected from all transmission
providers and remain a prerequisite to their participation on the Transmission
Provider’s interconnected system.
BEMI disagrees, however, with the applicability of those five services as
presently proposed by the Transmission Provider, since they are already
covered by the current tariff structure and the lack of arguments presented to
justify a change in current commercial practices at that level. Also, BEMI does
not agree with the Transmission Provider's point of view that even if there is
no incremental cost to offering the ancillary services to any specific MW
transmitted on the system, under a postage stamp methodology, each one
must share the cost of providing those ancillary services, not only the native
load.
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The Transmission Provider supports the point of view that each user of the
transmission system must share the cost of providing the ancillary services
required for the reliability of the system even though there might not be for the
moment an incremental cost related to the use of the system by such user.
The postage-stamp methodology used for ancillary services pricing is based
on average costs, not incremental costs and cost recovery supposes that each
reservation assumes its share of the costs. With increased short term and long
term point-to-point reservations on the transmission system in the future, this
subject may become an important issue very shortly.
The following table summarizes the points of agreement and the points to
clarify further.
Table 5 – Summary on ancillary services
Ancillary services
System control
Voltage control
Frequency control
Spinning reserve
Non-spinning reserve
Energy imbalance – Delivery
Energy imbalance – Receipt
Original : 2007-03-19
Agreement
Participants agree on all
technical
and
current
commercial aspects. These
services must be maintained
as is.
Participants agree that these
ancillary
services
are
expected and remain a
prerequisite to participate in
the interconnected grid given
the
specific
nature
of
Transmission
Provider's
system, which is electrically
isolated from all neighbouring
transmission systems outside
the Québec grid.
However, BEMI, EEI, NBPM,
OPG and PWXSC believe
that actual applicability of
ancillary services as detailed
in Table 4 should be
maintained.
Participants agree that this
service should apply to all
point-to-point reservations.
To clarify
According to FERC's OATT,
those services are supplied
to native load and generators
by the Transmission Provider
and there is no incremental
cost
for
point-to-point
services.
How will the Transmission
Provider obtain the incremental ancillary services
which may be needed in the
future should there be a
major increase in short-term
and long-term point-to-point
transmission services, if it is
a free-ride for the user? Who
will pay for it?
BEMI should be treated in a
similar fashion as other
neighbouring
transmission
systems, not as a marketer.
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