Follow-up to decision D-2006-66
Report by the Task Force on
Discount Policy and Ancillary Services
for Point-to-Point Transmission Services
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
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
APPENDIX 1
List of Customers with a Signed Service Agreement
on May 17, 2006 Invited to Join the Task Force
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
Appendix 1: List of Customers with a Signed Service
Agreement on May 17, 2006 Invited to Join the Task Force
Aquila Energy Marketing Corporation (AEMC)
Brookfield Energy Marketing Inc. (BEMI)
Cargill Energy Trading Canada Inc. (CETC)
The Cincinnati Gas & Electric Company (CGEHOU)
Constellation Power Source Inc. (CPSRC)
Coral Energy Canada Inc. (CCAN)
Duke Energy Trading and Marketing L.L.C. (DETM)
EPCOR Merchant and Capital L.P. (EPCR)
Green Mountain Power Corporation (GMP)
Hydro-Québec Production (HQP)
Merrill Lynch Capital Services Inc.
Mirant Americas Energy Marketing, L.P. (MAEM)
Morgan Stanley Capital Group Inc. (MSCGI)
New Brunswick Power Corporation (NBPM)
New York State Electric & Gas Corporation (NYETET)
NRG Power Marketing Inc. (NRGCG)
Ontario Power Generation Inc. (OPG)
PG&E Energy Trading – Power, L.P. (PGET)
Powerex Corp. (PWXSC)
PPL EnergyPlus, L.L.C. (EPLU)
Sempra Energy Trading Corp. (SETC)
Tractebel Energy Marketing Inc. (TEMI)
TransAlta Energy Marketing Corp. (TEMC)
TransCanada Power Marketing Ltd. (TCPM)
Vermont Public Power Supply Authority (VPPSA)
Williams Energy Services Company (WESC)
WPS Energy Services, Inc. (WPSE)
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
1st Meeting
•
Minutes of 1st meeting on June 15, 2006
•
Discount policy (Transmission Provider presentation)
•
Ancillary services for point-to-point transmission services
(Transmission Provider presentation)
Original : 2007-03-19
Bundled
A
Meeting Minutes –
Final version
No.
(Filing code)
st
Task Force on Discount Policy and Ancillary Services – 1 Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Date:
2006-06-15
Location:
Montréal Sheraton Centre, Kafka and Lamartine Rooms
Prepared by:
The Transmission Provider (HQT)
BETTLE, Peter (BEMI), CHÉHADÉ, Albert (HQD), COLE, Chris (GMPM), GREEN, Barry (OPG), JUNG, Gifford (PWXSC),
LOUIS, Sandra (HQP), MONGEON, Brian Evans (VPPSA), MONGEON, Daniel (HQD), ST-ONGE, Daniel (BEMI), GAGNON,
Denis (HQT), GECA, Delija (HQT), GUIMONT, Chantal (HQT), HÉBERT, François G. (HQT), LAROCHELLE, Claire (HQT).
Attendees:
Agenda Item
Action Items / Decisions to be Taken
1.
Participant
introduction
Attendees introduce themselves in turn (name, company, expectations regarding the
task force).
2.
Approval of the
agenda
The draft agenda given in the May 17, 2006 letter of invitation is accepted
unchanged.
3.
Task force
procedures and
meeting schedule
Chantal Guimont proposes that the task force have very flexible procedures. It
should meet four times as mentioned in the May 17, 2006 letter of invitation.
Responsible Party
Deadline
At this first meeting on June 15, 2006, HQT presents to participants its thoughts on
the two issues the task force is to address, the discount policy and ancillary services,
and then answers clarifying questions and receives initial feedback.
Daniel St-Onge raises the question of the scope of the mandate given the task force
under Régie Decision D-2006-66. He considers it should be broader than the scope
presented by HQT (i.e., a discount policy and ancillary services for point-to-point
transmission services) and should primarily cover optimizing use of the grid in an
open market perspective and protecting HQT revenue in that context.
At the second meeting, scheduled for July 13, 2006, HQT suggests that each party
present its assessment of the HQT proposals and any of its own proposals.
Participants other than July 13, 2006
HQT
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Agenda Item
Action Items / Decisions to be Taken
Responsible Party
Deadline
HQT
July 2006
All
July 13, 2006
The date of the third meeting, initially scheduled for August 23, 2006, was pushed
back to August 30, 2006. The fourth meeting is still scheduled for September 27,
2006. These meetings are to prepare a report to be filed with the Régie no later than
October 31, 2006. Participants agree to these meeting dates.
Peter Bettle from BEMI proposes that meeting documents (agenda, presentations,
documents tabled and minutes) be posted on the HQT OASIS site. The task force
agrees to this proposal.
4.
Naming of a
recording secretary
Chantal Guimont proposes that HQT representatives on the task force draft minutes
of major points discussed during this first meeting. The minutes will then be
submitted to participants for comments. A softcopy of presentation documents will
be appended.
All participants agree to function accordingly for the first meeting. The task force’s
final decision regarding the need to name an external recording secretary will be
dealt with during the second meeting.
5.
Presentation by
HQT of the discount
policy proposed in
File R-3549-2004 –
Phase 2 and setting
out criteria to meet
Denis Gagnon presents the HQT proposal regarding the discount policy. The French
and English versions of that presentation are given in Appendix 1 and 2 to these
minutes. Denis Gagnon and Chantal Guimont answer questions from participants on
the discount policy proposed by HQT and explain the four criteria to meet:
- Optimize use of the power system
- Optimize transmission provider revenue
- Manage risks to avoid cross-subsidization
- Ensure that fixed costs of the discount policy are covered
Page 2 of 7
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Agenda Item
Action Items / Decisions to be Taken
Responsible Party
Deadline
On page 11 of its presentation, HQT shows the issue raised by applying a discount
policy just to some reservations, e.g., off-peak reservations. If it wishes to maintain
revenue streams and thus avoid impacting native load rates, the volume of
reservations must increase substantially, more than twofold in the hypothetical
example given.
Denis Gagnon clarifies certain points, such as:
1. The second criterion, optimizing HQT revenue, is intended to help lower all
rates (native load and point-to-point) and not to boost HQT’s financial
performance.
2. To minimize risks to customers, the discount policy would apply, as do HQT
rates, to actual reservations on the power system, including reservations
related to swaps (financial transactions) carried out by the customer on other
grids.
3. The discount policy should not apply to on-peak reservations to avoid
revenue loss related to free riders.
4. The proposed $2.00/MW/h minimum hourly rate is intended to cover fixed
costs to operate such a discount policy, including those for information
system development.
5. Determining exactly what data from neighboring systems is to be used to
calculate discounts requires much thought and could be considered while the
discount policy is being implemented (e.g., for Ontario, New York and New
England, use of DAM or HAM data, Phase II transmission costs in the U.S.).
Page 3 of 7
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Agenda Item
Action Items / Decisions to be Taken
Responsible Party
Deadline
HQT
July 13, 2006
Brian Evans Mongeon from VPPSA points out that the customer needs to know
beforehand the discount applied in order to adequately plan its reservation.
Chris Cole from GMPM proposes that forward prices be used to set a priori
discounts. HQT proposes to study publicly available data on the subject, on how
such prices are used and on their impact.
Daniel St-Onge requests that HQT provide participants the following information :
¾ The load factor for each point-to-point path in its transmission system,
which he deems necessary to establish a baseline for setting objectives for
additional reservations.
¾ Cost estimates on which are based the $2/MW/h minimum hourly rate in
HQT’s proposed discount policy.
¾ HQT's marginal cost to accept additional reservations.
¾ An explanation of the reasons for the present trend from a majority of longterm reservations in 2002 toward short-term reservations now.
Regarding the capacity and on- and off-peak use of interconnections and the trend in
long- vs. short-term reservations since 2002, HQT filed relevant information with
the Régie d’énergie as part of its 2005 rate application (R-3549-2004 – Phase 2).
Regarding HQT forecasts for 2006 and 2007 (native load, and short- and long-term
point-to-point), data will be available when the 2007 rate application (R-3605-2006)
is filed with the Régie d’énergie in the coming weeks.
6.
Participant
comments on the
discount policy
The main comments by participating customers are as follows:
• It is hard to establish the true cost of and profit on transactions using a
variable discount determined a posteriori and thus not known beforehand.
• There is a preference for a discount formula using the published forward
prices from a previous period (preceding day, week or month), e.g. NYMEX
forward prices. Denis Gagnon states that HQT is prepared to test the
Page 4 of 7
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
feasibility of its proposal using such data during the period the proposed
discount policy is to be implemented, provided the policy is shown to be
profitable. The precision of the data would then be checked to see whether
the four criteria listed above are met.
Chantal Guimont reminds participants that it would be important for the next
Participating
meeting to check whether their organization would be able to operate with a discount customers
policy based on forward prices and to estimate additional reservations they might
make depending on how great the discount was.
July 13, 2006
Page 5 of 7
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Agenda Item
Action Items / Decisions to be Taken
Responsible Party
Deadline
7.
Lunch
8.
Presentation by
HQT of ancillary
services for pointto-point
transmission
services
Denis Gagnon presents the HQT proposal regarding ancillary services, which will be
part of the HQT 2007 rate application to be filed with the Régie de l'énergie. The
French and English versions of that presentation are given in Appendix 3 and 4 to
these minutes.
9.
Participant
comments on
ancillary services
for point-to-point
transmission
services
Daniel St-Onge of BEMI points out that HQT’s proposed application of ancillary
services to all point-to-point transmission service reservations goes beyond the task
force’s terms of reference and must be discussed in a rate application before the
Régie. He intends to present orally BEMI’s position on the matter at the second
meeting to be held on July 13, 2006.
Daniel St-Onge
July 13, 2006
10.
Next steps
HQT is to draft the minutes and send them to all task force participants for
comments.
HQT
End of June
2006
Denis Gagnon repeats that HQT is open to changes to the proposed ancillary services
but that any changes must have advantages for all customers (point-to-point and
native load) and be compatible with both practices on neighboring systems and the
context of electricity transmission in Québec.
Page 6 of 7
Final Version of the Minutes of the 1st Meeting of the
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Legend:
BEMI:
GMPM:
HQD:
HQP:
HQT:
OPG:
PWXSC:
VPPSA:
Brookfield Energy Marketing Inc.
Green Mountain Power Corporation
Hydro-Québec Distribution
Hydro-Québec Production
Hydro-Québec TransÉnergie
Ontario Power Generation Inc.
Powerex Corp.
Vermont Public Power Supply Authority
List of Appendices
• Appendix 1:
• Appendix 2:
• Appendix 3:
• Appendix 4:
Groupe de travail sur la politique de rabais – Suivi de la décision D-2006-66 – Politique de rabais - 2006-06-15
Discount Policy Task Force – Follow-up to Régie Decision D-2006-66 – Discount Policy – 2006-06-15
Groupe de travail sur la politique de rabais – Suivi de la décision D-2006-66 – Services complémentaires pour les services de point à
point - 2006-06-15
Discount Policy Task Force – Follow-up to Régie Decision D-2006-66 – Ancillary Services for Point-to-Point Transmission Services –
2006-06-15
Page 7 of 7
HI
Une division d’Hydro-Québec
Discount Policy Task Force
Follow-up to Régie Decision D-2006-66
Discount Policy
2006-06-15
1
Presentation Overview
A.
Background
B.
Criteria to meet
C.
Proposed Discount Policy
D.
Conclusion
A
2
A. Background
1.
Electricity Transmission in Québec
2.
Evolution of the Discount Policy
3.
Rates, Reservations and Revenue
4.
Neighbouring Systems
A
3
1. Electricity Transmission in Québec
„
Open Access Transmission Tariff approved by
the Régie – similar to FERC Order 888 OATT
„
Postage-stamp rates for point-to-point and
ancillary services
„
Customers:
z
z
29 customers with one or more service agreements
HQ Distribution for native load
„
Transmission system not congested
„
No hourly electricity market
A
4
2. Evolution of the Discount Policy
„
1997–2001: TransÉnergie applies the FERC
Order 888 discount policy (discretionary basis)
„
Decision D-2002-95 (April 2002):
z
z
„
Régie rejects the proposed policy to set discounts on a perinterconnection basis depending on the price differential with
neighbouring markets (FERC 888-A)
Régie orders the application of a flat 25% discount on all
short-term services (May 2002 to January 2003)
Decision D-2003-02 (January 2003):
z
A
Transitional discount policy sets a 25% cut on off-peak
hourly rate for 1 year (January 2003 to January 2004)
5
2. Evolution of the Discount Policy (cont.)
„
Application R-3549-2004 (Phase 2) :
z
z
„
Outcome of transitional discount policy: prior granting of a
flat 25% discount on all paths fails to meet objectives since
most discounted transactions would have been made without
the discount (free riders)
Following Régie's request, filing of a policy calling for a
variable a posteriori discount based on market prices and
applicable transmission rates on neighbouring systems
Decision D-2006-66 (April 2006):
z
A
Régie does not approve any discount policy and orders that
a task force be set up and that it files its report by Oct. 31,
2006
6
3. Rates, Reservations and Revenue
2001
2005
Diff.
Native Load (G$/yr)
2.313
2.483
+7.3%
L-Term P-to-P ($/kW/yr)
72.91
72.90
–
8.33
–50%
Transmission Rates
S-Term P-to-P ($/MW/h) 16.69 / 8.33
Reservations
Native Load (MW)
31,726
34,060
+7.4%
L-Term P-to-P (MW)
3,844
405
–89%
1.7
9.4
+453%
S-Term P-to-P (TW/h)
Transmission Provider Point-to-Point Revenue (M$)
A
Long-Term Service
280
30
–89%
Short-Term Service
16
78
+387%
Total
296
108
–64%
7
3. Rates, Reservations and Revenue (cont.)
„
Findings from preceding table:
z
z
A
Native-load rate increased by the same percentage
as the load increased (constant $/kW cost, same as
long-term point to point rate)
Revenues from point to point services decreased
by 64% from 2001 to 2005 :
z Outside deliveries reduced by 30% during this
period
z Long-term reservations greatly reduced
z Short-term markets enhanced in neighbouring
markets
8
4. Neighbouring Systems
Ontario
Brookfield
N.Y.
N. Eng.
N.B.
3
1
(incl. CRT)
Interconnections
6
2
1,295
720
Real-Time
215
330
None
Fixed +
Congestion
OATT
2
Capacity (MW)
Export
Import
Short-Term
Market
Transmission
Tariff
Transactions
are driven by
the market in
…
A
X
2,125
2,305
1,000
1,870
DAM
DAM
Real-time Real-Time
LMP
LBMP
(nodal/zonal)
(nodal/zonal)
X
X
1,200
785
None
OATT
9
B. Criteria to meet
„
Optimize use of the power system
z
z
„
Increase power flows over system
Promote open access
Optimize Transmission Provider revenue
z
Increase point to point revenue to help achieve lower rates (point
to point and native load)
„
Manage risks to avoid cross-subsidies between shortterm point to point, long term point to point and native
load
„
Ensure that fixed costs for implementing the discount
policy (computer system development, O&M, etc.) are
covered
A
10
B. Criteria to meet (cont.)
Neutral Effect of Discount on Revenue
(example – sample data)
Without
Discount
Basic rate
($/MW/h)
Discounted
Rate
($/MW/h)
Hourly
reservations
(TW/h)
Revenue
(M$)
8.33
10
With Discount
Same volume
Same revenue
8.33
8.33
4.00 (52% discount)
4.00
7.5 +
7.5 +
2.5 (25 % of volume with 5.2 = 12.7
discount)
83.3
72.5 (– 13 %)
83.3
Required increase in reservations with discount + 2.7 TW/h
+ 108 %
A
11
C. Proposed Discount Policy
Discount = THQT – [ (Pb–Tb) – (Pa+Ta) ]
0 ≤ discount ≤ 6.33
„
Where:
z THQT = $8.33/MW/h
z Pb–Tb = market price – Neighbouring system transmission charge (sink)
z Pa+Ta = market price + Neighbouring system transmission charge (source)
„
Discounts are calculated a posteriori, once market prices are known, and
guarantee the customer a minimum price difference of $6.33/MWh so as to
generate additional transactions
„
Where no short-term market exists (HQT, Brookfield and N.B.), Pa is the
lowest related market price and Pb is the highest related market price for
the hour
„
Applies only to hourly off-peak point-to-point service
A
12
C. Proposed Discount Policy (cont.) –
Examples (Cdn$/MW/h)
Customer Bid
Pb-Tb
Pa+Ta
Difference
Actual Market Price
Pb-Tb Pa+Ta Actual Discount
(anticipated
discount)
Case 1 75.00 – 64.00+
0.00
6.00
Case 2 75.00 – 64.00+
0.00
6.00
Case 3 75.00 – 64.00+
0.00
6.00
Case 4 85.00 – 64.00+
0.00
6.00
Case 5 85.00 – 64.00+
0.00
6.00
Case 6 85.00 – 64.00+
0.00
A
6.00
Customer
Net
difference
applied
(Actual diff.
– 8,33
+
discount)
5.00
(3.33)
5.00
(3.33)
5.00
(3.33)
75.000.00
64.00+
6.00
5.00
3.33
0.00
85.00
– 0.00
58.00
+6.00
21.00
0.00
12.67
74.00
– 0.00
65.00
+6.00
3.00
15.00
(0.00)
15.00
(0.00)
85.000.00
64.00+
6.00
15.00
0.00
6.67
95.00
– 0.00
58.00
+6.00
31.00
0.00
22.67
15.00
(0.00)
84.00
– 0.00
65.00
+6.00
13.00
Bids not filled under
market conditions
Bids not filled under
market conditions
13
D. Conclusion
„
Proposed discount policy:
z
z
„
Open to new proposals that:
z
z
z
„
Meet established criteria:
z Optimize use of the power system
z Optimize transmission revenue
z Manage risks (no cross-subsidies)
z Should cover fixed costs
Avoid free riders
Promote access to transmission system for all customers
Meet the set criteria
Take into account the structure of neighbouring systems
Next meeting:
z
z
A
Comments on the Transmission Provider’s proposal
Other proposals from stakeholders
14
HI
A
HI
Une division d’Hydro-Québec
Discount Policy Task Force
Follow-up to Decision D-2006-66
Ancillary Services for Point-to-Point
Transmission Services
2006-06-15
1
Presentation Overview
A.
Introduction
B.
Actual Ancillary Services – Decision D-2006-66
C.
Proposed Ancillary Services
D.
Conclusion
A
2
Introduction
„
„
„
„
„
Ancillary services are needed to ensure system
reliability
Except for System Control Service, all other Ancillary
Services (voltage and frequency control, spinning and
non-spinning reserve) are supplied by generation
equipment within Transmission Provider's operational
control
The Transmission provider has the Balancing Authority
responsibility for the control area (imbalance – receipt
and delivery)
Rates for Ancillary Services approved by Régie is of a
postage stamp type
Ancillary Services suppliers are entitled to receive the
rates appoved by the Régie for the services they
provides
A
3
A. Actual Ancillary Services – Decision D-2006-66
Hourly Rate
($/MWh)
Applicable
Reservations
System
Control
Voltage
Control
Frequency
Control
Included
All
Exclusively
No
0.04
All
Exclusively
No
Spinning
Reserve
0.16
Non-Spinning
Reserve
0.08
Imbalance –
Receipt
(+) 37.50
(–) 112.50
Imbalance –
Delivery
(+) 112.50
(–) 37.50
0.04
Ancillary Service Provider
Transmission Customer or
Provider
Third Party
Offered
Those
supplying a load
in the
Transmission
Provider’s
control area
Offered
Offered
Offered
Offered
Customer
must
demonstrate
that the
service is
acquired
from or
provided by
a source
inside the
control area*
* The available capacity for providing these services must be identified and under the Transmission
Provider’s operational control.
A
4
B. Proposed Ancillary Services
Hourly Rate
($/MW/h)
System
Control
Voltage
Control
Frequency
Control
Spinning
Reserve
Non-Spinning
Reserve
Imbalance –
Receipt
Imbalance –
Delivery
Applicable
Reservations
All
As in the
Transmission
Provider’s
upcoming rate
case to be
filed with the
Régie
Ancillary Service Provider
Transmission Customer or
Provider
Third Party
Exclusively
No
All
Exclusively
All
Offered
All
Offered
All
Offered
All whose
source is
located in the
control area
All whose sink
is located in the
control area
Offered
No
Customer
must
demonstrate
that the
service is
acquired
from or
provided by
a source
inside the
control area*
Offered
* The available capacity for providing these services must be identified and under the Transmission
Provider’s operational control.
A
5
C. Conclusion
„
„
„
Ancillary Services are needed to ensure the reliability for
point to point reservations
All reservations benefits from the system's reliability and
postage-stamp rates for ancillary services must be paid
Transmission Provider open to new ways who would
benefit all customers and agree with commercial practices
in neighbouring systems
A
6
HI
A
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
2nd meeting
•
Minutes of 2nd meeting on July 13, 2006
Original : 2007-03-19
Bundled
A
Meeting Minutes
– Final Version
No
(Filing code)
Task Force on Discount Policy and Ancillary Services – 2nd Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Date :
2006–07–13
Location:
Salle du Président, 12th Floor, East Tower,
Complexe Desjardins, Montréal
Prepared by:
The Transmission Provider (HQT)
CHÉHADÉ, Albert (HQD), COLE, Chris (GMPM), GREEN, Barry (OPG), HARRIS, Joanna (NLH), JESSOME, Donald (EMERA),
JUNG, Gifford (PWXSC), LAMOTHE, Normand (HQP), LOUIS, Sandra (HQP), MACDOUGALL, Mike (PWXSC), McGIVNEY, Rick
(NBPM), O'DONNELL, Kirby (NBPM), PLANTE, Pierre (NLH), RACINE, Sylvie (HQD), ST-ONGE, Daniel (BEMI), GAGNON, Denis
(HQT), GECA, Delija (HQT), GUIMONT, Chantal (HQT), LAROCHELLE, Claire (HQT)
Attendees:
Agenda Item
Action Items / Decisions to be Taken
1.
Participant
introduction
Welcome to new attendees. Attendees introduce themselves in turn (name,
company, expectations regarding the task force).
2.
Approval of the
agenda
Daniel St-Onge proposes the following changes to the agenda :
¾ Add a specific item on clarification of the scope of the task force’s mandate,
including HQT’s role.
¾ Combine items 3 and 4, and likewise items 6 and 7. After members present
their proposals, he thus suggests that the meeting continue as a brainstorming session on the concepts presented.
3.
Clarification of
scope and HQT’s
role
The changes are approved unanimously.
After rereading Régie Decision D-2006-66, members agree that the task force’s
mandate covers the rate structure of point-to-point transmission services, not
excluding a priori long-term services, while specifically including the discount
policy and ancillary services associated with point-to-point services.
Chantal Guimont points out that “long-term” means one year or more, and that such
reservation must also factor in the cost of the changes to the transmission system
required to provide the service. Participants agree to deal with both the short and
long term in subsequent discussions since the two standpoints differ.
Responsible Party
Deadline
Meeting Minutes – Final Version
2nd Meeting of the Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
For the benefit of new participants, Denis Gagnon restates the major points in HQT’s
proposed discount policy. He also mentions that HQT filed the same proposal with
the Régie as part rate case R-3549-2004 Phase 2. In a subsequent decision, the Régie
neither rejected nor approved the proposed discount policy but ordered that this task
force to be set up to discuss it. Denis Gagnon also points out that the Régie set down
guidelines for a discount policy. HQT will provide members with certain applicable
legislative and regulatory references (Appendix 1 attached).
HQT
August 2006
With respect to the HQT proposal, Daniel St-Onge comments that several factors
must be considered besides “clearing prices”: prices on other markets, transmissionrelated operational constraints, risk assessment and market participants’ clearly
inadequate knowledge of the context in Québec.
4. Discount policy
proposals by
members and
discussion
Mike MacDougall of Powerex mentions that in British Columbia there are no
charges for third-party wheel-through reservations that are pre-empted by a higher
priority reservation supplying native load.
Two proposals are presented, one by Mike MacDougall of Powerex (Appendix 2
attached) and the other by Barry Green of OPG (Appendix 3 attached).
The Powerex proposal applies to short-term point-to-point rates. It is an auctioning
scheme. The customer proposes a reservation at a given price and has a right of first
refusal to match a bid by another customer at a higher price for the same capacity.
Denis Gagnon points out that the scheme is similar to the one in FERC’s OATT,
which the Régie rejected in Decision D-2002-95 on the grounds that it was contrary
to the principle of territorial uniformity of rates stipulated in the Act respecting the
Régie de l'énergie.
According to Barry Green, the OPG proposal is based on a concept similar to that
used for air flight bookings: the discount offered increases as the time service is to
start approaches until the Transmission Provider’s sales target is reached. Chantal
Guimont reminds members that under the Act respecting the Régie de l'énergie,
HQT must maintain uniform rates across the territory served by its grid. Rick
Page 2 of 5
Meeting Minutes – Final Version
2nd Meeting of the Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
McGivney asks for whom and for what (wheel-in or wheel-through) such uniformity
applies? Kirby O’Donnell mentions that HQT would need more players making
transactions on its grid to have a genuine market. Pierre Plante points out that a
concept is needed that would result in creating scarcity over paths in the HQT grid.
Chantal Guimont asks whether the two concepts could be combined to have a third
proposal to analyze. All agree to this and the need to draft an assessment matrix for
comparing proposals. HQT undertakes to draft an assessment matrix for proposals
already or yet to be submitted based on the four criteria given under item four of the
June 15 meeting minutes plus the following two criteria :
¾ Regulatory feasibility
¾ Feasibility of implementing and operating.
5.
Lunch
HQT (Denis Gagnon) July 2006
HQT
Regarding the data participants requested to assess the discount policy, members
agree that they initially need hourly reservations and available capacity for the points
that customers use most—OTTO, MASS and NE—covering the entire year of 2005.
All
August 2006
Page 3 of 5
Meeting Minutes – Final Version
2nd Meeting of the Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Agenda Item
6.
Brainstorming on
ancillary service
proposals
Action Items / Decisions to be Taken
Responsible Party
Deadline
Members from BEMI, PWXSC, NBPM and EMERAS state that they have no
proposal to make regarding ancillary services but that customers should not have to
pay more for such services and that the onus is on HQT to prove to the Régie that its
proposal is needed.
Denis Gagnon reminds members of the main point in the HQT ancillary service
proposal, i.e., that the ancillary services that the Régie approved in its last decision
should apply to all point-to-point service deliveries on the grid and not just to
deliveries supplying loads in the HQT control area.
7.
Next steps:
After discussion of the ancillary services actually provided, Daniel St-Onge says that
BEMI had only a limited capacity to supply ancillary services meeting transmission
system requirements.
HQT will draft the minutes and send them to all task force members for comments
HQT
before posting them on OASIS, together with legislative (Act respecting the Régie de
l'énergie) and regulatory (Régie decisions) references, as well as the proposal
assessment matrix (Appendix 4 attached).
The task force’s third meeting is scheduled for August 30, 2006 and will be devoted
to studying all assessment matrices completed by members for each discount policy
proposal. Members must submit their completed assessment matrices at least one
week before August 30 so other members can have a look at them before the third
meeting.
All
Beginning of
August 2006
August 22,
2006
Members express their satisfaction with the way the task force is proceeding and
with discussions during this second meeting.
Page 4 of 5
Meeting Minutes – Final Version
2nd Meeting of the Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Legend:
BEMI: Brookfield Energy Marketing Inc.
EMERA: Emera Energy
GMPM: Green Mountain Power Corporation
HQD: Hydro-Québec Distribution
HQP: Hydro-Québec Production
HQT: Hydro-Québec TransÉnergie
NBPM: New Brunswick Power Marketing
NLH: Newfoundland and Labrador Hydro
OPG: Ontario Power Generation Inc.
PWXSC: Powerex Corp.
VPPSA: Vermont Public Power Supply Authority
List of Appendices
•
•
•
•
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Act respecting the Régie de l'énergie and past Régie decisions (in French) : D-2002-95 sec. 6.1 et 6.4, D-2003-02 (Motifs), D-2006-66 sec. 4
Auction Proposal and Other Non-Tariff Items, Powerex, 2006-07-13
Sales of Daily Available Transmission Capacity by Interface (for this product) – OPG, 2006-07-13
Discount policy proposal – Assessment matrix
Page 5 of 5
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
3d meeting
•
Minutes of 3d meeting on August 30, 2006
•
HQ TransEnergie Discounting Proposal for ST PTP
Service, Powerex (presentation)
•
OPG Proposal (presentation)
Original : 2007-03-19
Bundled
A
Draft Meeting Minutes
– Final version
Task Force on Discount Policy and Ancillary Services – Third Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Date:
2006-08-30
Location:
Salle du Président, 12th Floor, East Tower, Complexe Desjardins, Montréal
No.
(Filing code)
Prepared by:
Transmission Provider (HQT)
CHÉHADÉ, Albert (HQD), GREEN, Barry (OPG), HARRIS, Joanna (NLH), JESSOME, Donald (EMERA), JUNG, Gifford
(PWXSC), LOUIS, Sandra (HQP), McGIVNEY, Rick (NBPM), MONGEON, Daniel (HQD), O'DONNELL, Kirby (NBPM), PAQUIN,
Sonia (HQP), PLANTE, Pierre (NLH), ST-ONGE, Daniel (BEMI), GAGNON, Denis (HQT), GECA, Delija (HQT), GUIMONT,
Chantal (HQT), LAROCHELLE, Claire (HQT).
Attendees:
Agenda Item
1.
Approval of the
agenda
2.
Approval of the
minutes from the
June 15, and
July 13, 2006
meetings
Action Items / Decisions to be Taken
Responsible Party
Deadline
At the request of NBPM representatives who must leave earlier, item 4 will be
addressed before item 3. Since only one participant completed the assessment
matrix, Daniel St-Onge requests a brainstorming session on the criteria used in the
assessment matrix under item 4. He also mentions that under item 5, it would be
wise to discuss the possibility of asking for an extension for filing the task force’s
report with the Régie.
With these amendments, the agenda is accepted unanimously.
Daniel St-Onge moves that the proposals in the minutes for the first two meetings be
amended as given below. In the June 15, 2006 minutes (Appendix 1), he asks that
item 5 on page 3 be corrected by adding that HQT’s proposed discounting policy
“would apply, as do HQT rates, to actual reservations on the power system,
including reservations related to swaps (financial transactions) carried out by the
customer on other grids.”
In the July 13, 2006 minutes (Appendix 2), he would add two details under item 6.
The first is to list participating customers who have indicated that they have no
proposal to present at the moment concerning ancillary services. The second
mentions the limited capacity of BEMI to provide ancillary services while meeting
transmission system requirements.
All members approve the amendments. The minutes thus amended will be posted on HQT
OASIS as final.
End of
September
2006
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
3.
Study of the
assessment matrices
for proposed
discount policies as
commented upon
and completed by
members
Chantal Guimont reminds members that the assessment matrix is a perfectible tool.
The rows correspond to the various criteria discussed during the July 13 meeting, of
which several come from earlier Régie decisions on the matter. Each participant was
to comment upon and complete in August 2006 one matrix for each of the three
proposals presented during the first two meetings. These matrices appear in
Appendix 1. Only HQD commented upon and completed them.
Pierre Plante (NLH) asks for details to clarify his understanding of the concept of
free-ridership. Chantal Guimont mentions that, the Régie being very sensitive to any
impact on native load rates, the proposed discount policy should be accompanied by
mitigation measures to minimize discounts on reservations by customers who would
have made them even without such discounts.
She reminds members of the example given during the task force’s first meeting (see
page 11 of the document Discount Policy, HQT – June 15, 2006, appearing as
Appendix 2 of the minutes for that meeting. That example showed that to keep
forecast annual revenue constant while offering a 52% discount on 25% of the
volume of forecast reservations in TWh, HQT would have to have a 102% increase
in reservations with the discount.
After reading the past Régie de l'énergie decisions on the discount policy annexed to
the minutes of the second meeting, the task force unanimously agrees that in its
various decisions, the Régie has stressed the objectives sought through the discount
policy: optimizing use of the power system and optimizing revenue streams.
Chantal Guimont points out that any assessment by the task force of the discount
policy’s impact must be based on forecast revenue from HQT point-to-point services
in 2007 at the $8.33 rate approved by the Régie for hourly point-to-point service.
She also mentions that HQT must be able to demonstrate that by discounting rates,
its total annual revenue will equal or exceed that now forecast. Ideally, the task force
report should include customer commitments to or forecasts of making more
reservations. Members indicate that it is impossible for them to make specific
commitments. Other considerations, like their own business strategy and market
prices have a greater determining effect on the future volume of their transactions
than simply HQT discounts at certain hours.
Page 2 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Daniel St-Onge (BEMI) mentions that as for HQP, the water level is a major factor
for some customers. He also says that HQT’s proposed discount policy lowers the
risk for a customer making a reservation on the HQT system but that alone is not
enough: an effective discount policy must increase the net revenue of a customer
making such a reservation.
Gifford Jung (PWXSC) states that for Powerex, a net difference of $10 per MW-h is
the only trigger for making a transaction and that HQT’s proposed discount policy is
thus of no use to that effect.
Daniel St-Onge (BEMI) confirms that his company’s annual volume of reservations
is physically limited by the maximum capacity of their generating sites. He adds,
however, that they may also carry out some volume of financial transactions on other
power systems for which having a reservation on the HQT system may be necessary.
Kirby O'Donnell (NBPM) asks what percentage of total HQT point-to-point revenue
is generated strictly by wheel-through reservations. Denis Gagnon answers about
5%. Kirby O'Donnell (NBPM) replies that such a low volume favours discounting
wheel-through only, to increase the number of such reservations and reduce
transmission costs borne by the native load.
In response to a request for details, Denis Gagnon reminds members that discounting
wheel-through only is contrary to the very essence of the general concepts forming
the basis of HQT’s rate structure, which is in turn based on the principles of FERC’s
OATT. Furthermore, discounting wheel-through only is contrary to the very
principle of point-to-point service under FERC’s OATT where all point-to-point
transactions are identified by a point of origin and a destination point, and are treated
on the same basis depending on service characteristics (e.g., firm vs. non-firm and
duration) with no distinction under the OATT as to where the origin and destination
are located, and whether the transaction is directed into or out of the power system.
Sandra Louis (HQP) is agree with this. If the discount policy is not applied to all
point-to-point service, it would be discriminatory.
HQT
Denis Gagnon mentions that there have been delays in processing the 2005 data for
the three target interconnections (OTTO-HQT, HQT-NE and HQT-MASS), but that
End of
September
2006
Page 3 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
the data will be sent to task force members no later than one week before the next
meeting.
Lunch
3. (continuation)
To help discuss the advantages and drawbacks of each of the three proposed discount
policies submitted to the task force, HQT prepared the summary matrix in
Appendix 3. The three members who proposed a discount policy in turn make a
presentation on their proposal.
Denis Gagnon briefly goes over once more the HQT proposal, using the examples on
page 13 of the presentation he gave on the subject on June 15, 2006. The chief
comments by participating customers are to the effect that the proposal should
protect HQT revenue very well but does little to induce them to make more
transactions. HQT states that it remains open to any comment that could improve its
proposal, the main drawback of which, according to some customers, being that the
amount of any discount to which they are entitled is only know a posteriori. Some
customers propose using forward or day-ahead market (DAM) prices instead of a
posteriori market prices in the formula. Since this data does not exist for all paths
during off-peak periods, the proposal is rejected.
Barry Green (OPG) and Gifford Jung (PWXSC) then present improved versions of
their respective proposals (see Appendix 5 and 6). Gifford Jung (PWXSC) points out
that, to minimize free-ridership, a proposal like OPG’s would only apply to
wheel-through or, if that was not an option, would apply to all reservations except
during the neighboring systems’ summer peak period. Denis Gagnon states that it
would be difficult to justify before the Régie this kind of discount, which is not in
line with OATT principles. Discounting wheel-through only would discriminate
against independent power producers in Québec and involve setting up a two-tiered
rate structure: one for wheel-through and the other for wheel-out. Applying the
Powerex proposal to all reservations except during the summer peak would require a
more thorough analysis of off-peak periods to estimate whether there would be a
high number of free-rider transactions.
Pierre Plante (NLH) and Donald Jessome (EMERA) point out that some
organizations already offer different rates for the same hourly service on the same
path. Benchmarking to identify such practices will be carried out in part by HQT and
Page 4 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
submitted to the task force at the next meeting.
In addition to the three proposals described, HQT gives its appreciation of the pro
forma discount policy in FERC Order 888 and 889. HQT applied that discount
policy for a period of time after its system was opened to wholesale power flows but
the Régie rejected the policy in April 2002 on the grounds that it was contrary to the
principle of uniform rates stipulated in the Act respecting the Régie de l'énergie and
that such a policy should be transparent for all present and potential customers. Had
that proposal been chosen, Denis Gagnon points out that HQT would have posted in
advance on OASIS the level of discounts offered for predetermined periods and that
the discount could have been revised regularly at the request of customers.
Chantal Guimont brings up the fact that any of these proposals will entail substantial
computer system development costs. Albert Chéhadé mentions that the Distributor
(HQD) is not interested in bearing such costs and that HQT must thus demonstrate
that the discount policy would have no impact on rates for the Distributor.
Daniel St-Onge (BEMI) formulates a fifth proposal based on the take-or-pay
approach. Each year, or possibly more frequently, HQT would auction off X GWh
of hourly reservations. The customer would then have to commit to purchasing part
or all of the X GWh of transactions on a take-or-pay basis, which it could then apply
to any path. Discounted reservations offered by HQT would be sold to customers
with the highest bids. Discounted reservations would only apply to firm hourly
wheel-through service. HQT would set a starting bid to cover its development costs.
Pre-emption between customers would only be possible for wheel-through.
Chantal Guimont asks members which of the five proposals the task force should
recommend in the final report it submits to the Régie, for subsequent pilot project
testing by HQT over a set period.
After analyzing the five proposals, members from BEMI, EMERA, NBPM, OPG
and PWXSC, felt that to minimize free-ridership, only a discounting policy for
wheel-through is apt to be cost effective. According to Joanna Harris (NLH), if the
goals of minimizing free-ridership and remaining non-discriminatory are
incompatible, we should take that into account. Sandra Louis (HQP) opposes all
Page 5 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
discrimination based on the point of origin of reservations; so, she prefers the first
HQT proposal. After some discussion, Daniel St-Onge (BEMI) indicates that it will
be hard to reach a consensus. Members will continue to reflect on the proposals until
the next meeting.
Until then, they will use the 2005 monthly utilization rates and their 2007 transaction
forecasts to try to define management rules or methods specific to each of the
proposals, so they can ultimately give a qualitative assessment of potential impacts.
4.
Ancillary services
and Decision
D-2006-126
(August 18, 2006)
Denis Gagnon presents the highlights of the Régie de l'énergie’s procedural decision
D-2006-126 related to filing R-3605-2006 for changes to Hydro-Québec’s
transmission tariff as of January 1, 2007 (see Appendix 7).
The Régie excluded from the matters to debate under R-3605-2006 the discount
policy, rate structure and the applicability to all point-to-point services of frequency
control, spinning reserve and non-spinning reserve ancillary services. These issues
will be dealt with by the task force and the Régie will agree to discuss them in any
later HQT rate case after the task force report is submitted to the Régie.
Denis Gagnon states that at the next task force meeting, HQT will give a
presentation on the nature and purpose of ancillary services, emphasizing
specificities of the HQT system. Gifford Jung (PWXC) would like HQT to explain
when and how much customers like Powerex pay for such services (benchmarking).
He requests that HQT send a softcopy of the presentation to members, if possible at
least one week before it is given, so that they can adequately prepare discussion on
the matter during the fourth meeting.
5.
Next steps:
HQT is to draft the minutes of this meeting and send them to all task force
participants for comments before the next meeting.
HQT
End of
September
2006
HQT
Week of
September 25,
2006
The task force is to cover the following matters during its fourth meeting:
¾ Approval of the minutes of the third meeting
¾ HQT presentation on ancillary services
¾ Continued discussion on the choice of a proposed discount policy with the
Page 6 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
analysis of 2004 monthly data for the three interconnections selected during
the second meeting
¾ HQT proposal for the table of contents of the final report to be submitted to
the Régie, and the timetable implied
Members express their satisfaction with the way things are proceeding and with
discussions during the task force’s third meeting. Note that at the request of several
members, the fourth meeting will begin at 8:30 a.m.
Legend:
BEMI: Brookfield Energy Marketing Inc.
EMERA: Emera Energy
HQD: Hydro-Québec Distribution
HQP: Hydro-Québec Production
HQT: Hydro-Québec TransÉnergie
NBPM: New Brunswick Power Marketing
NLH: Newfoundland and Labrador Hydro
OPG: Ontario Power Generation Inc.
PWXSC: Powerex Corp.
FERC: Federal Energy Regulatory Commission
OATT: Open Access Transmission Tariff
Page 7 of 8
Meeting Minutes – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
List of Appendices
¾ Appendix 1:
o
o
Compte rendu final de la 1ère rencontre du Groupe de travail sur la politique de rabais et les services complémentaires (Suivi de la décision
D-2006-66 de la Régie de l'énergie)
Minutes of the First Meeting of the Task Force on Discount Policy and Ancillary Services (Follow-Up to Decision D-2006-66 of the Régie
de l'énergie)
¾ Appendix 2 :
o
o
Compte rendu final de la 2ième rencontre du Groupe de travail sur la politique de rabais et les services complémentaires (Suivi de la
décision D-2006-66 de la Régie de l'énergie)
Final Minutes of the Second Meeting of the Task Force on Discount Policy and Ancillary Services (Follow-Up to Decision D-2006-66 of the
Régie de l'énergie)
¾ Appendix 3 :
o Propositions de politique de rabais – Grille d'évaluation – Sommaire pour discussion, HQT-DCAR, 3ième rencontre, 30 août 2006.
o Discount policy proposal – Assessment matrix – Resumé for discussion, HQT, Third meeting, August 30, 2006.
¾ Appendix 4 : HQ TransÉnergie Discount Proposal for ST PTP Service, Powerex, August 30, 2006.
¾ Appendix 5 : OPG Proposal, August 30, 2006.
¾ Appendix 6 :
Passages from Régie de l'énergie Decision D-2006-126, August 18, 2006, page 8 (in French).
Référence : http://www.regie-energie.qc.ca/audiences/decisions/D-2006-126.pdf
Page 8 of 8
HQ TransEnergie
Discounting Proposal
for ST PTP Service
August 30th, 2006
Objectives
•
•
•
•
Increase utilization for wheel-through service
Protect existing PTP revenue
Increase PTP revenue sources
Increase number of active market participants
August 30th, 2006
-2-
Background
• HQT transmission system has minimal use for wheelthrough service except when there is congestion on
neighbouring control areas
• Market participants may wheel-through HQT but the
have option to wheel-through other transmission
service provider networks
• HQT PTP rates are generally higher than neighbouring
control areas
• Transmission is a perishable commodity and any
incremental revenue provides benefits to other users of
the system
August 30th, 2006
-3-
Competing Wheel-Through Paths
Source/Sink
HQT System
as Alternative Path to
Existing Options
Sink/Source
Maritimes
ISO-NE
New York
Ontario
NYISO
New England
Maritimes
ISO-NE & NYISO
Ontario
August 30th, 2006
-4-
Auction Proposal
Description:
• Provide discounting of ST PTP for all wheel-through transactions
on a one-year Pilot basis
Pros:
• Protects all of existing PTP revenue from in-province generators
• Attracts new incremental business for HQT service
• Provides HQT as option to other grids for wheeling service
• Incremental revenue will reduce rates to HQD and in-province
generators for wheel-out service
• Provides additional opportunities for HQP and other marketers
Cons:
• During the one-year Pilot, in-province generators are not unduly
discriminated against and the incremental revenues will reduce
future rates for generators
August 30th, 2006
-5-
Auction Proposal
• For wheel-through service, the ST PTP tariff has a
minimum rate of $1/MW and a maximum rate of
$8.33/MW
• Customer transmission service requests are granted
subject to availability
• If there is congestion, requests for transmission will be
granted based on the following priority: duration, price
(e.g. one week requests for service will be granted
ahead of daily or hourly requests; the weekly requests
ranked on price)
• Customers with approved requests that are subject to
bumping will have ROFR to match terms
• Auction will close one period before use (e.g. hourly
service will close one hour before service starts; weekly
service will close one week before service starts)
August 30th, 2006
-6-
Benefits of Auction Proposal
• Protects most of existing PTP revenue
• Provides cost effective option for wheel-through
service compared to adjacent control areas
• Provides new options for market participants to
hedge transactions, increase participation in
markets, and/or offer new services
• Incents increased utilization of HQT system
• Attracts new market participants
• Increases PTP revenue sources
August 30th, 2006
-7-
Post Meeting Slide
• An alternative option to an auction on wheel
through transmission is to provide an auction
process for low use periods
• Currently, the HQT system has significant use
during the peak hours during the summer
months. For all other periods (e.g. off peak
period for summer months and all other hours
in the other months), the auction process would
apply to all ST PTP service.
August 30th, 2006
-8-
Annexe 6
OPG Proposal
Increasing Discount Model
• Proposal is to offer steadily increasing quantities
of interface capability at steadily increasing
discounts as real time approaches.
• The quantities available and associated
discounts would be published in advance
• Customers, in addition to making transmission
service requests could “bid” an amount greater
than the published discount.
• A limited auction, based on these bids would be
used to resolve congestion.
OPG Proposal
Increasing Discount Model
Pros and Cons
• Pros
– HQT would have flexibility to withhold
transmission capability for any particular
product to further reduce risk of revenue loss
– Customers would be able to obtain certainty
with respect to transmission service earlier
• Cons
– Establishment of the initial transition points
could be difficult in the absence of data.
Sales of Daily Available Transmission Capacity by
Interface (for this product)
100%
80% discount or
highest bid--n/a
80%
0%
discount
70% discount
or highest bid
0%
discount
60%
50% discount
or highest bid
0% discount
Target Sales
25%
20% discount
or highest bid
t-1 months
Actual Sales
t-1 week
t-1 day
t-12 hours
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
4th meeting
•
Minutes of 4th meeting on October 5, 2006
•
Role of Ancillary Services in Point-to-Point Transmission
Services (Transmission Provider presentation)
•
Summary of Discussion on Ancillary Services
•
TransEnergie Discount Policy Task Force Take or Pay
Option Concept, Brookfield Power
•
Proposed Table of Contents for the Report to be
Submitted to the Régie de l’énergie
Original : 2007-03-19
Bundled
Meeting MinutesFinal version
th
Task Force on Discount Policy and Ancillary Services – 4 Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Date:
2006-10-05
Location:
No.
(Filing code)
Salle du Président, 12th Floor, East Tower, Complexe Desjardins, Montréal
Prepared by:
Transmisison Provider (HQT)
Attendees :
GREEN, Barry (OPG), HARRIS, Joanna (NLH), JUNG, Gifford (PWXSC), LAMOTHE, Normand (HQP), MONGEON, Daniel (HQD),
PAQUIN, Sonia (HQP), PLANTE, Pierre (NLH), ST-ONGE, Daniel (BEMI), GAGNON, Denis (HQT), GECA, Delija (HQT), GUIMONT,
Chantal (HQT), LAROCHELLE, Claire (HQT)
Guests:
BEAULIEU, Danielle (HQT), BOUCHER, Mario (HQT), AUBUT, Noël (HQT)
Agenda Item
Action Items / Decisions to be Taken
1) Approval of the agenda
Daniel St-Onge (BEMI) will give a presentation on his proposed discount policy as
agenda item 4b). Item 4b) thus becomes 4c).
Responsible Party
Deadline
With these amendments, the agenda is accepted unanimously.
2) Approval of the minutes Two members make comments to clarify points in the draft minutes for the third
of the August 30, 2006 meeting. Firstly, Joanna Harris (NLH) points out that her input at the end of item 3
meeting
was a question, not an affirmation. Secondly, Sonia Paquin (HQP) clarifies that in
HQP’s view, the HQT proposal does not result in discrimination between customers.
3) Ancillary services:
a) HQT presentation
The changes are unanimously accepted and the minutes for the third meeting will be HQT
revised accordingly and posted on OASIS as final.
Chantal Guimont informs the task force of a letter dated October 3, 2006 sent by the
Régie de l'énergie in regards to the ongoing HQT rate case (R-3605-2006). In it, the
Régie states that the rate case hearings will only cover new pricing for existing
ancillary services and that all discussion regarding how ancillary services are applied
is instead referred to this task force.
October 2006
Daniel St-Onge (BEMI) asks whether the task force is to discuss ancillary services to
which the discount policy does not apply. Denis Gagnon reads Decision D-2006-66,
which makes it clear that this is the case.
Page 1 of 5
Meeting Minutes
Task Force on Discounting Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
HQT engineers Mario Boucher, Danielle Beaulieu and Noël Aubut are guests invited
to the task force meeting. Danielle Beaulieu gives a presentation entitled Role of
Ancillary Services in Point-to-Point Transmission Services (Appendix 1). The
presentation explains how the inherent features of such services relate to the specific
characteristics of the Hydro-Québec grid. She first defines the role of the seven
ancillary services that HQT offers for point-to-point services: six through generating
equipment connected to the grid and the seventh, system control, provided by HQT.
These services, which are already approved by the Régie de l'énergie, meet NERC
and NPCC design criteria.
In conclusion to the presentation, since ancillary services help ensure that
transmission system control is reliable, secure and adequate, every customer making
a transaction on the system, be it to supply native load or for a point-to-point
transmission service, benefits from such services and thus should shoulder the costs.
b) Discussion
Guests are asked several questions regarding technical details but the discussion
hinges more on the commercial applicability of rates for such ancillary services in
point-to-point transmission services. Appendix 2 summarizes the discussions.
Lunch
4) Discount policy
proposals:
a) HQT data –
Monthly utilization
rates in 2005
As agreed, HQT sent task force members a document giving monthly utilization
rates in 2005 for paths HQT-MASS, HQT-NE and OTTO-HQT (Appendix 3).
Chantal Guimont and Denis Gagnon point out that HQP generally accounts for over
90% of transactions, for the most part hourly non-firm service, and that there were
no contracts in 2005 for long-term point-to-point transmission service over these
paths. In the view of several members, ample capacity on these paths remains for
further transactions. Denis Gagnon points out, however, that available capacity is at
times of lower customer demand (off-peak) and that available on-peak capacity on
neighbouring systems is much more limited.
Page 2 of 5
Meeting Minutes
Task Force on Discounting Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
b) BEMI presentation
Daniel St-Onge (BEMI) gives a presentation on his proposed “take-or-pay option
concept”, included as Appendix 4. He stresses certain features of the proposal: it sets
a minimum revenue threshold per kilowatt to cover discount policy design and
development costs, and to minimize any rate impact on native load. Furthermore,
under the take-or-pay formula, any customer not making reservations for which it
has bid must, at the end of the exercise period, pay HQT the difference between the
projected sum and the amount used for reservations made.
c) Discussion
Some questions are discussed regarding how this discount policy works. OPG and
PWXSC's representatives supports this BEMI's proposal. However, HQD, HQP and
HQT found that proposal discriminatory because it would apply only to a small
proportion of transmission reservations. Denis Gagnon points out a major
shortcoming: by excluding HQT as a point of receipt for reservations eligible under
the discount policy, it excludes any power producer on the HQT system using pointto-point transmission services. Such discrimination results in a new class of point-topoint transmission service that is found neither in the Hydro-Québec Open Access
HQT
Transmission Tariff nor in the FERC Order 888 OATT. Normand Lamothe (HQP)
mentions that should a rebate policy be adopted, price paid for reservations must be a
factor governing priority between reservations of similar characteristics. Denis
Gagnon mentions that this a standard disposition in articles 14.2 and 14.7 of FERC's
OATT.
Week of
October 16,
2006
HQT next makes a sixth proposal, Proposal F. That proposal extends the take-or-pay
approach proposed by BEMI to all short-term point-to-point transmission services,
including exports by HQP or any other customer with a source on the HQT system,
while including guaranteed minimum revenue for HQT as required by task group
criteria.
The proposal involves a periodic auction allowing HQT to set a revenue target to be
reached during the period covered. If the cash value of all bids during the auction
falls short of the target, the auction is declared invalid and transactions are made at
existing rates. The proposal would be non-discriminatory, would tend to optimize
both the use of interconnections and revenues from such use, and would help
Page 3 of 5
Meeting Minutes
Task Force on Discounting Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
manage risk to avoid cross-subsidization by the native load.
All task force
members
All members in attendance have a positive initial reaction to this latest HQT
proposal. Members ask HQT to further develop the proposal and add it to the
assessment matrix (Appendix 5) so that it can be discussed during a teleconference
to be held during the week of October 23, 2006. Each task force member, whether
participating in the teleconference or not, must then submit in writing by October 31,
2006 its opinion regarding this latest proposal.
Chantal Guimont submits for comments the proposed table of contents (Appendix 6)
5) Proposed table of
contents for the report to sent to task force members. All agree that it is good first draft and that writing the
report can start. If the task force fails to achieve unanimity, whether regarding the
be submitted to the
discount policy or ancillary services, the report will mention points of consensus and HQT
Régie de l’énergie
of disagreement.
At the request of all members, the Régie de l’énergie will be asked to push back the
6) Next steps:
date at which the task force must file its final report. HQT will submit to members a
a. Timetable for
draft letter to that effect during the week of October 16, 2006 in order to send it as
the report
HQT
quickly as possible to the Régie.
On or before
October 31,
2006
End of October
2006
Week of
October 16,
2006
A first draft of the preliminary report will be sent to members in early
December 2006. HQT will collect comments during the task force’s fifth meeting,
which should be held during the first half of December 2006. A near-final version of
the report will then be sent to members in early January 2007 for final comments.
All agree to the end of January 2007 as the new date for filing the final report with
the Régie.
b. Assessment of
the meeting
Members express their satisfaction with the way things are proceeding and with
discussions during the task force’s fourth meeting.
Page 4 of 5
Meeting Minutes
Task Force on Discounting Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Legend:
BEMI: Brookfield Energy Marketing Inc.
HQD: Hydro-Québec Distribution
HQP: Hydro-Québec Production
HQT: Hydro-Québec TransÉnergie
NERC: North American Electric Reliability Council
NLH: Newfoundland and Labrador Hydro
NPCC: Northeast Power Coordinating Council
OPG: Ontario Power Generation Inc.
PWXSC: Powerex Corp.
List of Appendices
¾
Appendix 1: Role of Ancillary Services in Point-to-Point Transmission Services, HQT, October 5, 2006.
¾
Appendix 2: Summary of Discussion on Ancillary Services.
¾
Appendix 3: Utilization Rate for HQT-MASS, HQT-NE and OTTO-HQT in 2005, HQT, September 25, 2006.
¾
Appendix 4: TransÉnergie Discount Policy Task Force Take or Pay Option Concept, Brookfield Power, October 5, 2006.
¾
Appendix 5: Proposed Discount Policies – Assessment Matrix – Summary for Discussion, HQT, October 18, 2006.
¾
Appendix 6: Proposed Table of Contents for the Report to be Submitted to the Régie de l’énergie.
Page 5 of 5
HI
A Division of Hydro-Québec
Role of Ancillary Services
in Point-to-Point
Transmission Services
Thursday, October 5, 2006
Role of Services
„
Services provided by generating and
transmission facilities are essential to ensure
transmission system control that is
z Reliable – Maintaining system integrity
z Secure
– Keeping equipment secure
&
and people safe
z Suitable – Maintaining power quality
(voltage and frequency)
and thus offering effective support to the
electricity market.
2
HQ TransÉnergie's Role
„
„
„
„
„
„
Reliability Coordinator
Balancing Authority
Interchange Authority
Transmission Operator
System planner
Operation planner
3
HQ TransÉnergie as Reliability Coordinator
„
Ensures power system reliability, a major
challenge given:
z
z
z
The very high level of reliability required
(NERC and NPCC standards)
Very far-flung transmission facilities
exposed to extreme climatic conditions
Unique characteristics of the HQ grid
making stability a major issue
4
Characteristics of the HQ Grid
„
„
„
„
„
Two major axes
Long distance between
generation and load
centers
Few 735-kV lines
85% of generation at three
remote hydroelectric
complexes
Load located in south
(Montréal & Québec City)
ÆTransmission limited by
transient, dynamic, voltage
and frequency stability
5
Characteristics of the HQ Grid (cont.)
„
„
„
„
No synchronous ties with
neighboring systems outside
Quebec's control area.
HQ system relies only on
its own inertia and governers for
frequency control
Peak load: 37,000 MW
Light load: 13,000 MW
(summer nights)
6
Effect of Inertia on Frequency
Trip of interconnection – 1300 MW
7
Voltage and Frequency
Loss of 955 MW of generation
8
Voltage and Frequency
Loss of 955 MW of generation (cont.)
9
Example : Loss of 1000 MW of generation
Frequency
„
„
60 Hz
„
58,5 Hz
„
Light load
13,000 MW
Generation and
reserve 14,000 MW
Synchronized (inertia)
15,000 MVA
UFLS – 1st threshold
58.5 Hz
10
System Planning
„
„
HQ TransÉnergie is responsible for ensuring
transmission system security and reliability
To do so, HQ TransÉnergie has defined :
z
z
z
Design criteria
(in conformity with NERC and NPCC standards)
Technical requirements for connecting generating
stations to its grid
Technical requirements for connecting load
customers to its grid
to achieve the desired level of reliability
11
System Planning (cont.)
„
„
HQ TransÉnergie not only determines what
transmission equipment is installed on the
grid, it also requires power producers to equip
their generating stations with automatic
systems
Those systems enable the grid to respond
adequately to contingencies in order to ensure
quality and continuity of supply
12
Ancillary Services
Service
Why?
What
transactions?
All
1) System
control
Adequate
control of grid
and
management of
schedules
2) Voltage
control
To provide
voltage support
All
3) Frequency
control
To keep
frequency at 60
Hz
All
4) Spinning
reserve
Frequency
response
Contingency
reserve
All
Who provides
it?
Same role as
in U.S.?
TransÉnergie
Yes
All generating
stations
connected to
the HQ grid
All HQ
generating
stations subject
to RFP (AGC)
All HQ
generating
stations of 50
MW or higher
capacity
Yes
RFP doesn’t
manage
interchanges
TÉ needs
larger
spinning
reserve
capacity
13
Ancillary Services (cont.)
Service
Why?
5) Nonspinning
reserve
To restore
spinning
reserves
6)Delivery
Imbalance
Contingency
reserve
Interchange
schedules
7) Supply
Imbalance
Interchange
schedules
What trans- Who
actions?
provides it?
All
Specific
generating
stations,
interruptible
deliveries
and loads
Same role as
in U.S.?
Main role in
TÉ : restoring
spinning
reserves
Load in the Generating
stations
control
subject to
area
RFP (AGC)
Generation Generating
stations
in the
subject to
control
RFP (AGC)
area
yes
yes
14
1. System Control
„
Role of System Control
z
z
z
z
Manage supply/demand balancing on grid
z Adjust generation schedules in real time
Keep voltage, frequency and power flows
within set limits
Maintain adequate reserves
Coordinate operations with neighboring
systems
15
1. System Control (cont.)
„
„
„
As system operator, HQ TransÉnergie must
constantly monitor changes on the grid to
restore the balance promptly
Every transaction modifies operating
conditions
Two variables to manage:
z Voltage
z Frequency
16
1. System Control (cont.)
„
„
The transmission operator must constantly
provide voltage and frequency support
z so sensitive equipment works properly and
is not damaged by normal fluctuations of
those variables
z if a disturbance occur, to avoid cascaded
tripping of equipments and system
instability with loss of supply to customers
inevitably resulting
Generating facilities provide services
shouldering the transmission operator’s
efforts
17
2. Voltage Control
„
„
„
„
The Transmission Provider requires that all
generating stations connected to its grid provide
voltage control service
Unlike frequency control, which can be provided
by a limited number of generating stations,
voltage control must be provided by all generating
stations since, reactive power not being
transferable, voltage must be controlled locally
Only the Transmission Provider, using its own
facilities and those of power producers connected
to its grid, provides grid-wide voltage control
All users benefit from this service
18
3. Frequency Control (Regulation)
„
„
„
The Automatic Generation Control (AGC)
implemented by Hydro-Québec is intended to
keep frequency at 60 Hz under steady-state
conditions or after a disturbance, once speed
governors have kicked in
HQ AGC is not intended to balance
interchanges between different control areas,
such interchanges in HQ are done over
asynchronous ties under the operator’s
control
All users benefit from this service
19
4. Spinning Reserve
„
„
„
This is Hydro-Québec’s stability reserve. It
ensures reliability when disturbances result in
wide frequency swings
With enough stability reserve, the operator
doesn’t have to limit capacity on
interconnections
All users benefit from this service
20
5. Non-Spinning Reserve
„
„
„
HQ TransÉnergie uses such reserves to
restore spinning reserves after an event
If reserve capacity is too low, the grid is
vulnerable and the operator must take action
so it does not remain so
In such instances, the operator resorts to
various management measures, including load
shedding and curtailment of firm deliveries,
both given equal priority
21
Conclusions
„
„
„
„
All transactions change conditions on the
grid, meaning they lead to voltage and
frequency variations of some extent
Some services provided make it possible to
keep these variables within the normal range
of steady-state operating conditions
Others make it possible to avert system
instability during an event
All point-to-point service reservations benefit
from the services mentioned in this
presentation
22
HI
4th meeting – Summary of discussion on ancillary services for point to
point transmission services
Point-to-point
services
System control
Voltage control
Agreement
To clarify /explore
Participants agree on everything in technical
and commercial aspects. The actual application
of these services must be maintained as it is.
Delivery imbalance
Frequency control
Spinning reserve
Non-spinning
reserve
Receipt imbalance
October 5, 2006
Participants agree that these ancillary services
are a prerequisite to participate in an
interconnected grid and that they apply to
HQT's system as described in the presentation.
However, BEMI maintained that as there seem
to be no incremental cost to provide these
services, they should get the services free of
charge. HQT must justify why it's different in
Québec than OATT 888.
Except BEMI, all participants agree that this
service should apply to all point to point
services.
Incremental cost for
wheel-through.
Not paid elsewhere.
What is the practice in
ERCOT.
BEMI does not agree
that wheel-through
benefits from these
services.
BEMI should be treated
like a generation lead
system and not a
marketer.
October 5th, 2006
TransÉnergie Discount Policy Task Force
Take or Pay Option Concept
Structure
• Once a year (or more frequently), TE would hold an electronic auction
for option rights on Firm PTP wheel-through service within a prescribed
period valid for all interconnections (subject to availability).
• A predetermined quantity of MWh (X TWh/yr or % ATC) to be reserved
for that purpose, as available.
• TE to publicize auction through its web site, emails to current and
potential customers, as well as specialized publications (i.e. Platts, etc.).
• Auction process to be held up to a month prior to the eligibility period.
• Registered Clients would submits their bids during electronic open
season timeframe (Descending Clock, Seal Bid, Clearing Price - industry
standard based on demand/offer equilibrium and).
• Floor price: TE’s marginal cost ($1/MWh?) / Ceiling price: up to full tariff.
1
Terms
• Winning bidders to submit reservation requests in the same fashion as
any other customers with services agreement in place with TE.
• Need to submit POE and POR at reservation time (HQT excluded) with
right to redirect on a non-firm basis.
• Winning bidders assume availability risk at reservation time.
• No priority right over any other customers (HQP on same playing field).
• No further restriction within exercise period.
• Unused option rights to expire at the end of the exercise period.
• Payment when reservation is made with remaining amount to be paid at
the end of exercise period.
• Unsold quantities to be made available via OASIS regular process.
2
Pros & Cons
• Pros: Increase wheel-through usage factor.
• Non-discriminatory.
• Provide sufficient incentive to attract new customers.
• Should attract financial players since similar to FTR auction.
• True reflection of market value of transmission service.
• Protect current PTP revenues.
• Cost effective and simple to manage.
• Provide additional revenues to reduce native load rate.
• Cons: Perception of discrimination toward HQP.
3
Report by the Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Table of Contents
(draft for discussion purposes)
1. Mandate of the task force
2. Task force membership and description of work
3. Background and context of discount policies on the HQT grid
a. Past discounts on point-to-point services
b. HQT monthly peak and off-peak reservation patterns
c. Benchmarking of present practices
4. Discount policy proposals submitted and discussed
a. Summary of the proceedings (4 meetings) – work covered
b. Conclusions
5. Ancillary Services
a. Nature of ancillary services
b. Present and proposed applicability
c. Benchmarking of present practices
d. Conclusions
6. Conclusion and recommendations
Appendices
– Minutes of task force meetings, including appendices
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
5th meeting
•
Minutes of 5th meeting on October 26, 2006
•
HQT Proposal F
Original : 2007-03-19
Bundled
A
Draft Minutes Meeting
– for comments
Task Force on Discount Policy and Ancillary Services – Fifth Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
2006-10-26
Date :
Attendees :
Location
Conference call.
(Filing code)
Prepared by :
The Transmission Provider (HQT)
CELLUCCI, Sandro (HQP), CHÉHADÉ, Albert (HQD), GREEN, Barry (OPG), HARRIS, Joanna (NLH), JUNG, Gifford (PWXSC),
LAMOTHE, Normand (HQP), MONGEON, Daniel (HQD), PAQUIN, Sonia (HQP), PLANTE, Pierre (NLH), SOUCY, Michel (BEMI),
ST-ONGE, Daniel (BEMI), GAGNON, Denis (HQT), GECA, Delija (HQT), GUIMONT, Chantal (HQT), LAROCHELLE, Claire
(HQT).
Comments on Proposal F from HQT
1
2
3
4
5
Characteristics of Proposal F
Semi-annual pilot auction,
Twice a year.
Offered to all customers
(including HQP).
Vouchers for hourly non-firm
services only.
Total value of vouchers due at the
beginning of the semester.
Off-peak period to be determined by
HQT (larger than the NERC
definition)
HQD
HQP
Ok
Ok
Ok
Ok
Ok
Ok
Ok
Ok
BEMI
Annual auction.
One year Pilot period before
2009.
NLH
PWXSC
OPG
Ok
Idem BEMI.
No comment.
Only Wheel-through.
Being a Daily Firm right,
convertible Hourly Non-Firm or
Weekly/Monthly Firm one by
aggregating the released
vouchers, subject to the other
auction terms.
Ok
Idem BEMI.
Idem BEM.
Idem BEMI.
Idem BEMI, and
also, supply firm
daily services.
Idem BEMI.
Ok
Payment on an as used basis.
Idem BEMI.
Idem BEMI.
Ok
Ok
Idem BEMI.
Should apply to peak
and off-peak
periods.
Ok
No comment.
Page 1 de 2
A
6
7
8
9
10
Characteristic Proposal F
Historical threshold value for
reservations (the average for all
customers over the past three
years).
First round is valid, if bids total more
than the revenue threshold specified
by TE.
All round 1 bidders are invited to
participate, to better their price to
match the highest price bid in the
round 1.
All reservation and/or interruption
priorities are applied as usual.
Other aspects
Development
and management
costs and delay.
Draft Minutes Meeting
– for comments
HQD
HQP
BEMI
Ok
Ok
Ok, but only for wheel-through
services revenues only.
Ok
Ok
Ok, but only for wheel-through
services only.
Ok
Ok
Idem NLH.
Ok
Ok
Ok
To be
evaluated
before to
propose it to
the Régie.
NLH
To be approved by
the Régie, should a
threshold be
required.
Ok, if the Régie
approved a
threshold.
Only one round and
all participants are
committed to their
bid quantity, with the
average weighted
bid price applying to
all if the auction is
valid.
Ok
A minimum bid could
be put into effect to
ensure HQT's costs
are recovered.
PWXSC
OPG
Idem BEMI.
No comment.
Ok, a Threshold
Revenue Target is
necessary.
A second round
only if the
threshold is not
met in the first
round, but the
participants pay as
bid proposal.
Ok
Should be one
round only with
pay as bid.
Idem BEMI.
Ok
No comment.
Legend:
BEMI: Brookfield Energy Marketing Inc.
HQD: Hydro-Québec Distribution
HQP: Hydro-Québec Production
HQT: Hydro-Québec TransÉnergie
NLH : NewFoundland and Labrador Hydro
OPG: Ontario Power Generation Inc.
PWXSC: Powerex Corp.
List of Appendice :
• Appendix 1 : Proposal F from HQT
Page 2 de 2
Proposal F – Semi-annual auction of vouchers
(November 1rst, 2006 version, following Task Force discussions)
The Task Force will propose in its final report to the Régie de l’énergie that the discount
policy described below be applied for a one-year trial period to adequately measure
impacts.
The Transmission Provider auctions off vouchers to be used over the next half-year to
pay for applicable point-to-point services that customers reserve on OASIS. To check
whether the semi-annual auction is valid, the Transmission Provider calculates the value
of winning bids and if they total more than a historical threshold value for reservations
(the average for all customers over the past three years), it issues vouchers redeemable
over the half-year. On the first billing date after the auction closes, the customer is billed
for the vouchers issued to it.
During round 1 of the auction, held on the first working day of the month preceding the
half-year, customers with a short-term point-to-point service agreement in effect may
submit bids in sealed envelopes to buy vouchers for quantities and at prices of their
choice for hourly non-firm service during off-peak periods (least busy hours, days or
months?) yet to be determined.
The Transmission Provider opens the envelopes and posts the bids received on OASIS,
indicating those at the highest price. If bids total more than the revenue threshold
specified by the Transmission Provider, all round 1 bidders are invited to participate in
round 2, where they have 48 hours to better their price to match the highest price for
identical quantities or to bid the same dollar value as in round 1 at the highest price bid
in that round.
The Transmission Provider accepts as winning all round 2 bids that match the highest
price for each service, provided the semi-annual auction is declared valid. However, if
the total above is less than the revenue threshold specified by the Transmission
Provider for the half-year, the auction is declared invalid and no vouchers are issued.
If the auction is valid, customers submit reservation requests on OASIS during the halfyear in question and all reservation and/or interruption priorities.
On each monthly billing date, the Transmission Provider applies each customer’s
vouchers to its reservations during the month. All reservations beyond those covered by
a customer’s vouchers are billed at applicable Transmission Provider rates. Billing for
applicable transmission losses and ancillary services is on top of this and applies
undiscounted to all of a customer’s monthly reservations whether covered by a voucher
or not. At the end of the half-year for which they were purchased, vouchers expire and
no credit is given for unused vouchers.
Using a three-year historical threshold ensures that any permanent increase in point-topoint reservations due to the discount policy benefits all customers, including native-load
Page 1 of 3
customers, under the Régie’s rate review process. Any occasional upward or downward
fluctuation in point-to-point revenue is incorporated into the Transmission Provider’s
business risk.
Example : Semi-annual auction of vouchers
Definition of the historical threshold value
Average for all customers over the past three years :
Customer A : (9 M$ + 9,5 M$ + 10 M$)/3 = 9,5 M$
Customer B : (0,3 M$ + 0,5 M$ + 0,4 M$)/3 = 0,4 M$
Customer C : (0,05 M$ + 0,1 M$ + 0,09 M$)/3 = 0,08 M$
Customer D : (0,05 M$ + 0,01 M$ + 0,03 M$)/3 = 0,03 M$
Other customers : 0 $ + 0 $ + 0 $ = 0 $
Average for all customers : 9,5 M$ + 0,4 M$ + 0,08 M$ + 0,03 M$ = 10,01 M$
Round 1 : threshold revenue = 10,01 M$
Bidder A : 2 000 GW / hour @ 4,00 $/MW-hour = 8 M$
Bidder B : 300 GW / hour @ 3,50 $/MW-hour = 1,05 M$
Bidder C : 250 GW / hour @ 3,00 $/MW-hour = 0,75 M$
Bidder D : 100 GW / hour @ 2,50 $/MW-hour = 0,25 M$
Bidder E : 100 GW / hour @ 2,00 $/MW-hour = 0,2 M$
Bidder F : 50 GW / hour @ 1,50 $/MW-hour = 0,075 M$
Total bids = 8,0 + 1,05 + 0,75 + 0,25 + 0,2 + 0,075 = 10,325 M$ = Round is valid !
Round 2 : threshold revenue = 10,01 M$
Bidder A : 2 200 GW / hour @ 4,00 $/MW-hour = 8,8 M$
Bidder B : 275 GW / hour @ 4,00 $/MW-hour = 1,1 M$
Bidder C : 250 GW / hour @ 4,00 $/MW-hour = 1,0 M$
Bidder D : 75 GW / hour @ 4,00 $/MW-hour = 0,3 M$
Bidder E : 25 GW /hour @ 4,00 $/MW-hour = 0,1 M$
Bidder F : 0 GW / hour @ 4,00 $/MW-hour = 0,0 M$
Total bids = 8,8 + 1,1 + 1,0 + 0,3 + 0,1 + 0,0 = 11,3 M$ = Auction is valid !
Page 2 of 3
Yours comments :
Signature :
Organization :
Date :
Page 3 of 3
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
6th meeting
•
Minutes of 6th meeting on December 13, 2006
•
Report by the Task Force on Discount Policy and Ancillary
Services for Point-to-Point Transmission Services – Draft
•
FERC Treatment of Auction Mechanisms under an Open
Access Transmission Tariff Model par Patton Boggs, LLP
pour Énergie Brookfield Marketing Inc.
Original : 2007-03-19
Bundled
A
Meeting Minutes
Final version
No.
(Filing code)
Task Force on Discount Policy and Ancillary Services – Sixth Meeting
(Follow-Up to Decision D-2006-66 of the Régie d’énergie)
Date:
2006-12-13
Attendees:
Location:
Room 910 South, 9th Floor, East Tower, Complexe
Desjardins, Montréal
Prepared by:
The Transmission Provider (HQT)
BELLAVANCE, Erik (HQP), CHÉHADÉ, Albert (HQD), GREEN, Barry (OPG), JUNG, Gifford (PWXSC), LAMOTHE, Normand
(HQP), McGIVNEY, Rick (NBPM), MONGEON, Daniel (HQD), O'DONNELL, Kirby (NBPM), PLANTE, Pierre (NLH), ST-ONGE,
Daniel (BEMI), GAGNON, Denis (HQT), GECA, Delija (HQT), GUIMONT, Chantal (HQT), LAROCHELLE, Claire (HQT).
Agenda Item
Action Items / Decisions to be Taken
1) Approval of the agenda
Daniel St-Onge (BEMI) tables a copy of a legal memo by Patton Boggs LLP,
mandated by BEMI to determine whether or not its proposed take-or-pay discount
policy (Proposal E studied by the task force) would comply with the FERC OATT.
He asks to sum up the document under agenda item 4 a) Discount policy.
Responsible Party
Deadline
HQT
December 2006
With this amendment, the agenda is accepted unanimously.
2) Approval of the minutes Comments are made regarding the draft minutes for the fourth meeting. Daniel Stof the October 5, 2006
Onge (BEMI) proposes adding at the start of item 4 b) that “OPG and PWXSC
meeting
representatives support the BEMI proposal” and that HQD, HQP and HQT consider
it discriminatory since it only applies to a small percentage of transmission
reservations.
Normand Lamothe (HQP) also proposes to add to the end of that paragraph his
comment to the effect that under any discount policy implemented, the price paid
must be a discriminating criterion in setting the priority of one reservation relative to
another with similar characteristics. Denis Gagnon points out that this complies with
sections 14.2 and 14.7 of the FERC OATT.
Daniel St-Onge (BEMI) also asks that the word “very” be stricken from the first
sentence of the closing paragraph of item 4 c).
The minutes amended to accommodate these comments will be considered as final.
Minutes for the Sixth Meeting – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
3) Approval of the
comments on HQT
Proposal F received
following the October 26,
2006 conference call – Fifth
meeting
The draft minutes give rise to several comments.
Albert Chéhadé and Daniel Mongeon (HQD) mention that they attended the
conference call but that their names were not on the list of attendees.
Daniel St-Onge (BEMI) asks that his comment for characteristic 8 be identical to the
one made by NLH. Pierre Plante for NLH makes the corrections below. Their
comments for the characteristics below should thus read as follows:
• characteristic 5: “Should apply to peak and off-peak periods”
• characteristic 6: “If a threshold is required, it should be approved by the
Régie”
• characteristic 8: “Only one round and all participants are committed to their
bid quantity, with the weighted average of bid prices applying to all if the
auction is valid”
Barry Green (OPG) amends proposed comments on characteristics 1, 2, 5, 6, 7, 8 and
10, so they better reflect his position with respect to HQT Proposal F rather than a
new version of his Proposal B.
In conclusion for Proposal F, BEMI, PWXSC and OPG would like it to apply to
wheel-through only. NLH finds it hard to believe that setting a revenue threshold is
pertinent. These four customers believe a single round of bidding is better for this
kind of auction since, in their view, it provides a greater incentive for bidders.
HQT will include the amendments and have them checked by their authors before
considering it as final.
HQT
December 2006
Page 2 of 6
Minutes for the Sixth Meeting – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
4. Comments on the main
parts of sections 4 and 5 of
the draft report for the
Régie:
a) Discount Policy
Participants view the draft for the main parts of Section 4 on the discount policy as
being of good quality (included as Appendix 1).
After discussion, Daniel St-Onge (BEMI) proposes that the report break down the
six proposed discount policies into two categories: those based on an auction (C, E
and F) and those based on a specific discount (A, B and D).
Chantal Guimont asks whether participants have further comments regarding each
proposal. Overall, participants reject HQT Proposal A. All participants would like
to jointly recommend a discount policy in the report to be filed with the Régie, but
reaching a consensus remains a challenge. Based on the analysis to be supplied by
the participants, task force participants will try to develop a rebate policy based on
Proposal D for the final report. OPG reserve its right to file a dissenting opinion in
the final report if it believes that other options applicable to wheel-through only are
more appropriate than a revised Proposal D, if any.
According to TE, only its proposals D and F remain. Following comments by Pierre
Plante (NLH), Denis Gagnon indicates that aspects of Proposal F could be improved,
for instance by eliminating insignificant bids (e.g., 1 MW at $8.33/MWh) or by
applying a weighted price based on first-round bids. Since the revenue threshold may
not be reached during the first round under Proposal F, most participants asked that
Proposal D be re-examined.
At the request of Kirby O'Donnell (NBPM), Chantal Guimont explains that HQT
Proposal D is the application of the FERC Order 888 pro forma OATT. Denis
Gagnon reminds participants that it was applied in Québec in the past but was
rejected in April 2002 by the Régie (D-2002-95), which pointed out that it was
contrary to the principle of uniform rates throughout the territory stipulated in the
Act respecting the Régie de l'énergie and that a discount policy should be transparent
to all present and potential customers.
Several participants believe that it may be possible to agree upon on a simple way of
applying Proposal D with proposed guiding principles, which the task force could
Page 3 of 6
Minutes for the Sixth Meeting – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
unanimously recommend to the Régie de l’énergie. Firstly, all customers present
agree that Proposal D meets all task force assessment criteria, while offering a
significant discount, e.g., $4/MWh. To minimize any impact on native load and
reduce costs to develop and manage a pilot project for such a discount policy, after
discussing the matter, participants recommend that a discount be offered to all
customers only on hourly service for both on- and off-peak periods during
historically less busy months (April, May and October) based on utilization rates for
the various OASIS paths.
As further support for this position, Chantal Guimont and Denis Gagnon ask
participants to provide HQT by December 22, 2006 not only their comments on the
draft report but also an analysis, based on market prices for those three specific
months in 2006, of the number of additional transactions they would have made had
a $4/MWh discount been in effect on non-firm hourly point-to-point service.
Daniel St-Onge present the conclusions of a legal memo he asked from a
Washington D.C. firm Patton Boggs, LLP (included as Appendix 2) as to whether:
1) a Canadian company with a transmission tariff complying with the pro forma
OATT in FERC Order 888 and 889, could offer an auction-based discount policy
applying only to wheel-through; and, 2) different customers could use the same type
of service at a said interconnection, while one paying a discounted rate and not the
other. According to the preliminary conclusions, it would not per se fail to meet
FERC Orders 888 & 889 applicable criteria. Moreover, the memo states that FERC
has been receptive to creative discount methodologies in recent decisions if key
criteria were met.
Lunch
4) (cont.):
b) Ancillary Services
NBPM, OPG and PWXSC representatives state that, while they understand the
specific features of the grid that technically justify the ancillary services provided,
they do not believe that charges for them should be applied to point-to-point wheelthrough services.
BEMI (Daniel StOnge)
December 2006
Page 4 of 6
Minutes for the Sixth Meeting – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
Normand Lamothe (HQP) reminds participants of the technical and design features
specific to the Hydro-Québec transmission system. Since the HQT 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. It is thus necessary to offer frequency control, spinning reserve and
non-spinning reserve services on the HQT system. He points out that offering such
services using generating facilities not included in the Transmission Provider’s rate
base is at the cost of lowering capacity that can be sold and 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. HQT must thus provide
the required ancillary services to meet NERC and NPCC reliability requirements.
BEMI responds that all transmission systems have ancillary services, with
characteristics specific to their respective grids configuration, to manage under
NERC and NPCC’s guidance and applicable industry standards, and question the
rational and timing of such change since the applied practices appeared to work fine
for the last 10 years.
After discussing the matter, Denis Gagnon proposes the following timetable:
5) Next steps:
a. Comments on
• No later than December 22, 2006, to better support the case for Proposal D,
the next version
participants shall send HQT their analysis regarding the additional
of the report:
transactions they would have made on the HQT system if a $4/MWh
Possible
discount on hourly non-firm service had been offered for all hours in April,
conference call
May and October 2006. They shall also send their written comments on the
sections of the draft report discussed during this sixth meeting.
• Thursday, January 11, 2007, HQT shall send participants a new draft report
integrating all comments and analyses.
• Monday, January 15, 2007, a conference call will be held to clarify specific
points in the new draft report.
• Wednesday, January 17, 2007, each participants shall send HQT its
comments and preferences regarding each of the six proposals in a letter,
which will be appended to the report to be filed with the Régie.
• No later than January 31, 2007, the final report will be filed with the Régie.
Participating
customers
December 22,
2006
HQT
January 11, 2007
All
January 15, 2007
Participating
customers
January 17, 2007
HQT
January 31, 2007
Page 5 of 6
Minutes for the Sixth Meeting – Final version
Task Force on Discount Policy and Ancillary Services
(Follow-Up to Decision D-2006-66 of the Régie de l'énergie)
b. Assessment of
the meeting
Participants express their satisfaction with the way things are proceeding and with
discussions during the task force’s sixth meeting.
Legend:
BEMI:
HQD:
HQP:
NBPM:
NLH:
OPG:
PWXSC:
HQT:
Brookfield Energy Marketing Inc.
Hydro-Québec Distribution
Hydro-Québec Production
New Brunswick Power Corporation
Newfoundland and Labrador Hydro
Ontario Power Generation Inc.
Powerex Corp.
Hydro-Québec TransÉnergie
FERC:
NERC:
NPCC:
OATT:
Federal Energy Regulatory Commission
North American Electric Reliability Council
Northeast Power Coordinating Council
Open Access Transmission Tariff
List of Appendices
¾
Appendix 1: Report by the Task Force on Discount Policy and Ancillary Services for Point-to-Point Transmission Services (Follow-up to
Decision D-2006-66 of the Régie de l’énergie) – Draft Report – December 13, 2006 – Main sections on the discount policy and on ancillary services.
¾
Appendix 2: FERC Treatment of Auction Mechanisms under an Open Access Transmission Tariff Model. Memorandum by Patton Boggs, LLP for
Brookfield Energy Marketing Inc.
Page 6 of 6
Report by the Task Force on
Discount Policy and Ancillary Services
for Point-to-Point Transmission Services
(Follow-up to Decision D-2006-66 of the Régie de l’énergie)
Participants
Brookfield Energy Marketing Inc. (BEMI)
EMERA
Green Mountain Power Corporation (GMPC)
Hydro-Québec Distribution (the Distributor)
Hydro-Québec Production (the Generator)
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 (the Transmission Provider)
Draft Report – December 13, 2006
1 of 15
Table of Contents
1) Context and Task Force Mandate
2) Task Force Membership and Description of Work
3) Background and Context of Discount Policies on the Transmission
Provider's Grid
a. Past discounts on point-to-point transmission services
b. Monthly utilization rates for point-to-point transmission service (onand off-peak)
c. Benchmarking of present practices
d. Conclusion
4) Discount Policy Proposals
a. Summary of the work process during the six meetings
b. Policy assessment criteria
c. Analysis of the six proposals tabled
d. Points of consensus and of disagreement
e. Conclusion
5) Ancillary Services
a. Nature of ancillary services
b. Present applicability
c. Benchmarking of present practices
d. Proposed applicability
e. Points of consensus and of disagreement
f. Conclusion
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 Appendice
3. Monthly Utilization Rates in 2005 on Three OASIS Paths
4. Proposed Discount Policies – Assessment Matrix – Summary for
Discussion
Draft Report – December 13, 2006
3 of 15
Section 4 – Proposed Discount Policies
a.
Summary of the work process during the six meetings
(to be completed)
b.
Policy assessment criteria
At the first meeting, the Transmission Provider proposed criteria to use for
guidance in studying and assessing the viability of proposed discount policies,
six of which emerged. In the course of discussions, the criteria below were
established.
a. Regulatory feasibility: Policies should comply with the Act respecting the
Régie de l'énergie and past Régie de l'énergie (« Régie ») decisions, allow
non-discriminatory access to the transmission system, and be transparent
and fair.
a. Optimization: Use of the transmission system and Transmission Provider
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 free-ridership, i.e., transactions that would have been
made even without a discount, and must also cover discount policy
development and management costs.
a. Feasibility: It must be feasible for the Transmission Provider to implement
and manage the policy, and for customers to operate under it.
The only criterion on which participants were not unanimous was one aspect
of regulatory feasibility: the criterion of uniform rates throughout the territory
served. Most third-party customers, particularly BEMI, PWXSC, NBPM and
OPG, favoured discounting specifically for wheel-through transactions. Since
the value of such transactions only accounts for about 5% of the Transmission
Draft Report – December 13, 2006
5 of 15
Provider’s annual short-term revenue, they believed that this would be the
best way to minimize free-ridership and in turn the impact on native load.
c.
Analysis of the six proposals tabled
A total of six discount policy proposals were tabled and discussed, three
proposed by the Transmission Provider, one by OPG, one by PWXSC and
one by BEMI. A presentation on each of these proposals was given to the task
force. Each proposed discount policy is described below, followed by a
summary of comments on how the policy meets, or fails to meet, the criteria
outlined above. Note that comments for the third criterion, feasibility of
implementing and operating, presently address qualitative aspects only. They
do not go into the technical details that implementing any of the policies may
involve.
Proposal A
The initial proposal by the Transmission Provider was presented at the first
meeting. This is the policy proposed to the Régie in the application
R-3549-2004 – Phase 2. 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.
Under this proposal, the discount is determined a posteriori based on the
difference in prices on neighboring markets for the hours when the transaction
took place and only for off-peak periods as defined by NERC.
Comments
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
Draft Report – December 13, 2006
6 of 15
discount, the transaction would not have been made. The Régie could,
however, question whether it upholds the principle of uniform rates throughout
the territory since different discounts could apply to different paths.
Other participants agree that the proposals protect anticipated Transmission
Provider’s revenue. Some 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. According to one participant, the
proposal is no major incentive for making more transactions, though it is an
insurance policy of sorts that limits a potential loss when there is little
anticipated difference between markets. Given the volume of information to
process, members anticipate that the proposal would entail significant
development and management costs.
Proposal B
OPG initially proposes a policy with discounts based on the moment the
customer made a reservation and on reaching pre-established reservation
thresholds on certain paths, and only applying to wheel-through. A revised
version of the proposal later made it applicable to all forms of wheeling. It
consists in offering a fixed-price discount with a predefined maximum (e.g., not
so much as to encroach on a $2/MW-hour minimum rate to cover development
and management costs). The discount would only be offered if the (historical)
revenue threshold determined by the Transmission Provider for each customer
was reached. Every day, one hour after the deadline for firm day-ahead
reservations, the Transmission Provider would thus post on OASIS what
blocks of power were available on what paths and for what hours. OPG
pointed out that the Transmission Provider could offer the discount when
utilization rates were low, in its view less than 50%.
Draft Report – December 13, 2006
7 of 15
Comments
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 real-time
environment. Furthermore, there is an administrative overhead, and hence
management cost, in establishing, posting and billing discounts daily. Under
this proposal, the Transmission Provider considers that it risks not achieving
its projected revenue. It 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 rate), for
each MW/h not sold at $8.33/MW-hour, the Transmission Provider would have
to sell 4 MW-hour with the discount to hope to achieve its annual revenue
threshold.
Comments to be collected from other participants
Proposal C
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
Draft Report – December 13, 2006
8 of 15
thus be held the day before the service would be used. Auctioning would only
exclude very high-use periods like summer peaks.
Comments
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 of optimized Transmission Provider revenue.
Some participants consider that the additional revenue generated by such a
discount policy would mitigate the discriminatory effect on local power
producers by tending to lower the rates the Transmission Provider charges
them the following year.
Proposal D
The second proposal by the Transmission Provider is the one set out in the
pro forma OATT of FERC Order 888. That discount policy was applied by the
Transmission Provider after open access to the bulk transmission system
began in 1997. In its April 2002 Decision D-2002-95, however, the Régie
struck down an amendment proposed by the Transmission Provider 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 and that a discount
policy must be transparent to its present and potential customers. If this
proposal is accepted, the Transmission Provider would post in advance on
OASIS the discounts offered for predetermined periods. The discounts could
be revised regularly on the basis of customer proposals or changes in market
conditions.
Draft Report – December 13, 2006
9 of 15
Comments
The Transmission Provider views the FERC OATT discount policy as nondiscriminatory and easy to manage. Furthermore, it helps minimize freeridership by giving the Transmission Provider 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 to able to maintain and
optimize its revenue.
Some participants consider that to be effective, management rules on how
discounts are set should first be approved by the Régie in order to limit the
latitude given to the Transmission Provider.
Proposal E
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 auction would only be open to
customers wishing to make wheel-through transactions. Bids accepted by the
Transmission Provider would be used by participating customers under the
usual 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.
Comments
The Transmission Provider views this 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.
Draft Report – December 13, 2006
10 of 15
Some participants consider that the additional revenue generated by such a
discount policy would mitigate the discriminatory effect on local power
producers by tending to lower the rates the Transmission Provider charges
them the following year.
Proposal F
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
bidding open to all customers. The Transmission Provider would determine in
advance low-use hours or periods on paths that are open to bidding and would
establish a threshold revenue to be obtained based on the mean revenue in
past years for those precise periods that was generated by hourly non-firm
point-to-point transmission service reservations. In round one, all customers
would be asked to bid for vouchers for the number of MWhs 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 highest price bid and accepted during round one. The auction
would again only be valid if the total value of bids equalled or exceeded the
pre-established revenue threshold.
Comments
The Transmission Provider views this policy 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.
Some participants, notably BEMI and PWXSC, pointed out a weakness in the
proposal: if just a single customer, the Generator, places a relatively high bid
for a large quantity of vouchers, the semi-annual auction would reach the
Draft Report – December 13, 2006
11 of 15
revenue threshold. They thus propose a more restrictive variant of the policy
where it would only apply to wheel-through. They also propose a single-round
auction where each bidder obtains vouchers at the price bid provided the
revenue threshold is met. They and NLH would like vouchers for non-firm
hourly reservations to be convertible to vouchers for firm daily, weekly or
monthly reservations. In the Transmission Provider’s view, this variant
contravenes regulatory feasibility criteria.
d.
Points of consensus and of disagreement
The points of consensus below emerged when all task force members studied
the six proposals.
•
The data submitted by the Transmission Provider on the monthly
utilization rates of three of its interconnections in 2005 suggests that
additional transactions are possible, especially during off-peak periods.
•
A pilot project lasting at least six months would be required to study the
impact of any discount policy and would best be 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 revenue threshold and/or floor rate would be needed to cover
development and management costs of such a pilot project to minimize
the potential impact on rates for native load.
•
All terms and conditions of a discount policy must be available to all on
OASIS with a reasonable time given to respond.
Draft Report – December 13, 2006
12 of 15
The points of divergence are primarily related to:
•
Customer eligibility for discounting and whether or not the policy
discriminates against power producers located in Québec
•
The possibility that for identical service over the same path, users pay
several different prices
•
The impact of the discount policy on optimizing Transmission Provider
revenue and the prevention of free-ridership
•
The degree of latitude the Transmission Provider can be given to
manage the discount policy
e.
Conclusion
No unanimous recommendation has come out of the task force’s work.
Regarding proposals discussed, the main points of divergence given above
remain. Furthermore, all proposed discount policies studied by the task force
could contravene the principle of uniform rates throughout the territory set out
in section 49, first paragraph, subparagraph 11, of the Act respecting the
Régie de l’énergie as interpreted by the Régie in its Decision D-2002-95.
Draft Report – December 13, 2006
13 of 15
Section 5 – Ancillary Services for Point-to-Point Transmission Services
a.
Nature of ancillary services (to be completed)
b.
Present application (to be completed)
c.
Benchmarking of present practices (to be completed)
d.
Proposed application (to be completed)
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 nature of ancillary services and their role in maintaining
power flows on the Transmission Provider’s grid. The points below were noted
during discussions following these presentations.
e.
Points of consensus and of disagreement
The points of consensus are as follows:
•
Participants
recognize
that
technical
and
commercial
aspects
concerning the present and proposed applicability of system and
voltage control services and energy balancing (delivery and receipt) are
well founded.
•
All agree that frequency control and operating reserve (spinning and
non-spinning) services are required to conduct their power flows over
the Transmission Provider's interconnected system.
Some points of divergence were raised by BEMI, who disagreed with other
task force members on two points regarding the specific services below.
Draft Report – December 13, 2006
14 of 15
•
Operating reserve – Spinning and non-spinning reserve services:
Though it recognizes that these two services are needed to maintain
power flows on the system, BEMI believes that the Transmission
Provider must demonstrate the incremental cost of services for wheelthrough since, in its opinion, these services should not be billed as they
are elsewhere. In BEMI’s view, the Transmission Provider, beyond
explanations it has already given, must demonstrate the need that the
customer benefiting from these services pay the applicable rates
proposed.
•
Energy balancing – Receipt: In BEMI’s view, even though the
Brookfield system is located in the Transmission Provider’s control
area, this service should not apply to it since it is primarily a generation
lead system.
f.
Conclusion
The task force reached a consensus on technical and commercial aspects of
tree ancillary services: system control, voltage control and delivery imbalance.
Regarding the four other services, i.e., frequency control, operating reserve –
spinning and non-spinning, and receipt imbalance –
members agree that
these services are a prerequisite to their participation on the Transmission
Provider’s interconnected system. BEMI disagrees, however, with the
applicability of those four services as presently proposed by the Transmission
Provider.
Draft Report – December 13, 2006
15 of 15
2550 M Street NW
Washington DC 20037
(202) 457-6000
(202) 457-5618
Facsimile (202) 457-6315
MEMORANDUM
To:
From:
Date:
Subject:
I.
Daniel St-Onge
Louis Philippe Denis
Amy Koch
Douglas Everette
December 12, 2006
FERC Treatment of Auction Mechanisms under an Open Access
Transmission Tariff Model
BACKGROUND
You have asked us to provide our views as to whether a Canadian transmission provider with
an Open Access Transmission Tariff (“OATT”) could establish an auction mechanism for
“wheel-through” service without running afoul of the Federal Energy Regulatory Commission’s
(“FERC” or “Commission”) Order Nos. 888 and 889 and their progeny.1
We understand that the Régie de l’énergie (“Régie”) has established a task force on discount
policies and ancillary services for Hydro-Québec TransÉnergie (“TransÉnergie”), which has
1
4846352
Promoting Wholesale Competition Through Open Access Non-Discriminatory
Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities
and Transmitting Utilities, Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996), order on
reh'g, Order No. 888-A, FERC Stats. & Regs., Regulation Preambles ¶ 31,048 (1997)
(“Order No. 888-A”), order on reh'g, Order No. 888-B, 81 FERC ¶ 61,248 (1997), order on
reh'g, Order No. 888-C, 82 FERC ¶ 61,046 (1998) (collectively “Order Nos. 888”), aff'd in
relevant part sub nom., Transmission Access Policy Study Group, et al. v. FERC, 225
F.3d 667 (D.C. Cir. 2000), aff'd sub nom., New York v. FERC, 535 U.S. 1 (2002). See
also Open Access Same-Time Information System (formerly Real-Time Information
Networks) and Standards of Conduct, Order No. 889, FERC Stats. & Regs., Regulations
Preambles, January 1991-June 1996 ¶ 31,035 (1996), order on reh'g, Order No. 889-A,
FERC Stats. & Regs., Regulations Preambles, July 1996-December 2000 ¶ 31,049
(1997), order on reh'g, Order No. 889-B, 81 FERC ¶ 61,253 (1997) (collectively “Order
Nos. 889”).
affiliates with market-based rate authorization (“MBR Authorization”) under Section 205 of the
Federal Power Act (“FPA”)2 in the United States.
Specifically, you ask whether FERC would accept under Order Nos. 888 and 889 a protocol
by which (i) a transmission customer would, by way of an auction, purchase a “voucher” for
wheel-through services ONLY (as opposed to other services) system and (ii) whether a
transmission customer having purchased a "voucher” could freely purchase wheel-through
service at the same time as another party (same service, same time) but benefiting from a
lower price as a result of its use of the voucher earlier purchased through the auction.
II.
ANALYSIS
A.
FERC’s Discount Policy for U.S. Entities
In Order No. 888-A, FERC established a discount policy for transmission services under an
OATT for a public utility whose transmission assets are not under the operational control of an
Independent System Operator (“ISO”) or Regional Transmission Organization (“RTO”), i.e., a
“Traditional OATT”. The key components are:
1.
A transmission provider should discount only if necessary to increase throughput
on its system.3
2.
If the transmission provider offers a discount on a particular path, i.e., from a
point of receipt to a point of delivery, the transmission provider must offer the
same discount for the same time period on all unconstrained paths that go to the
same point(s) of delivery on the transmission provider's system. In this regard, a
point of delivery includes an interconnection with another control area.4
3.
If a discount is offered to one transmission customer, it must be offered to all
customers using that delivery point at the same time.
4.
Discounts must be posted on a transmission provider’s OASIS site:
2
16 U.S.C. § 824d.
3
Order No. 888-A at 30,274.
4
Order No. 888-A at 30,275. FERC limited the scope of its discount requirement to
unconstrained paths that go to the same point of delivery because it recognized that a
discount rate which must be offered over all unconstrained paths was too broad, and
could provide disincentives for the efficient operation of the transmission grid: See also
Bangor Hydro-Electric Company, 94 FERC ¶ 61,208 at 61,782 (2001), clarified, 94 FERC
¶ 61,334, reh’g denied, 95 FERC ¶ 61,149. Also, if a power purchaser can take delivery
at more than one point of delivery (such as two substations serving a municipality), FERC
considers these to be the same point of delivery for discounting purposes. Order No.
888-A at 30,275.
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2
A.
Any offer of a discount for transmission services made by the
transmission provider must be announced to all potential customers
solely by posting on its OASIS. This requirement will ensure that all
potential transmission customers under the Traditional OATT will have
equal access to discount information, will guard against own use/affiliate
customers gaining an unfair timing advantage concerning the availability
of discounts. 5
B.
Any customer-initiated requests for discounts occur solely by posting on
the OASIS, regardless of whether the customer is an own use/affiliate or
a non-affiliate.6
C.
Once the transmission provider and customer agree to a discounted
transaction, the details (e.g., price, points of receipt and delivery, and
length of service) must be immediately posted on the transmission
provider’s OASIS regardless of whether the customer is an own
use/affiliate or non-affiliate.7
This discount policy is applied to transmission service provided under a Traditional OATT, not
under an RTO OATT because transmission service under the latter is structured differently.8
The relevant differences in transmission service under a Traditional OATT and a RTO OATT
concern the management of congestion, the recovery of congestion costs and the availability
of long-term service arrangements. Under a Traditional OATT, long-term service
arrangements are available, but there is no mechanism by which a firm point-to-point
transmission customer can participate directly in congestion management. However, in the
RTO/ISO markets that use Locational Marginal Pricing (“LMP”), the transmission organization
manages congestion through the use of locational prices that are determined by bids and
offers by market participants at given locations, giving the transmission customer the ability to
5
Order No. 888-A at 30,274.
6
Order No. 888-A at 30,274.
7
Order No. 888-A at 30,275.
8
The differences between a transmission service under a Traditional OATT and an RTO
regime are discussed in some detail in Long-Term Firm Transmission Rights in
Organized Electricity Markets; Long-Term Transmission Rights in Markets Operated by
Regional Transmission Organizations and Independent System Operators, Notice of
Proposed Rulemaking, 71 Fed. Reg. 6693 (February. 9, 2006), FERC Stats. & Regs. ¶
32,598 at PP 15-33 (2006) (“FTR NOPR”). See also Long-Term Firm Transmission
Rights in Organized Electricity Markets, Order No. 681, 71 Fed. Reg. 43,564 (August 1,
2006), FERC Stats. & Regs. ¶ 31,226 (2006), and Long-Term Firm Transmission Rights
in Organized Electricity Markets, Order No. 681-A, 117 FERC ¶ 61,201 (November 16,
2006).
.
4846352
3
manage its congestion costs, but no ability to make long-term service arrangements. As a
result, in RTO/ISO markets, financial transmission rights (“FTRs”) are used to hedge
congestion charges for using existing transmission capacity (as opposed to incremental
transmission expansions) and are generally available through some sort of auction
mechanism.
B.
FERC’s Flexibility with Respect to Traditional OATTs
The auction proposal does not fit strictly within a Traditional OATT approach to providing
transmission service, but there is no reason to believe that FERC would reject it. FERC has
shown flexibility with respect to the provision of transmission services under a Traditional
OATT context when necessary, after years of refusing to do so.9
Basically, the voucher proposal appears to be analogous to auctioning a form of FTRs for
wheel-through transactions in order to increase throughput on TransÉnergie’s system –
applying a RTO OATT concept to a Traditional OATT transmission provider.
Arguably, the voucher proposal is very similar to the open season for the sale of
transmission rights that FERC recently accepted for a merchant transmission line in
Montana Alberta Tie, Ltd.10 This case is unusual in that the developer, Montana Alberta Tie,
Ltd. (“MATL”),11 will administer its own OATT, unlike most other merchant transmission lines
in which operational control was turned over to an RTO or ISO. MATL proposed, however,
to sign coordinating agreements with both the Alberta ESO and NorthWestern Energy and
sign an operating agreement with one or more Montana-based transmission facility owners
for the U.S.-side of the project.
Initial minimum rates for long-term capacity were established through an open season
process that FERC approved.12 However, MATL proposed that excess, unsold capacity
remaining from the open season would be offered first to the long-term market through a
further open season process, but capacity that is unsold 120 days prior to the start of a
calendar year would then be offered to the short-term market. Under MATL’s proposal:
9
See e.g., American Electric Power Service Corporation, 90 FERC ¶ 61,040 (2000), where
FERC held that a new “Flexible Non-firm Service”, which would allow customers to make
general reservations from a group of receipt and delivery points at a single non-path
specific price, which violated the Order No. 888-A requirements that customers identify
specific receipt and delivery points for point-to-point service and that the delivery point for
a discounted rate be specified.
10
116 FERC ¶ 61,071 (July 20, 2006).
11
MATL proposes to sell transmission rights at market-based rates for the 190-mile 230 kV
AC line running from Lethbridge, Alberta, to Great Falls, Montana, containing
NorthWestern Energy’s transmission system with the Alberta Interconnection Electrical
System operated by the Alberta Electric System Operator (“Alberta ESO”).
12
Montana Alberta Tie, Ltd., 112 FERC ¶ 61,018 (2005) (“MATL Open Season Order”).
4846352
4
1.
Bids for transmission service having a term of a month would be accepted one
month prior to the start of each calendar month. Capacity unsold for the closest
month would then be offered up for weekly transmission service one week prior
to the commencement of the calendar week. The same open season process
would be followed for daily and hourly firm capacity. Each shorter-term
Transmission Scheduling Right (“TSR”) would be "cleared" from longest duration
to shortest duration. The capacity auctions would be ongoing constantly,
provided capacity has not already been taken up under longer duration
contracts.13
2.
Rates would be set by the marketplace via MATL’s OASIS and MATL would be a
price taker in all capacity auctions, with capacity sold to the highest bidders,
subject to the bidders meeting or exceeding certain minimum rates.
3.
The project’s customers would have the right to resell their “TSRs” on a bilateral
basis or via MATL’s OASIS auction process.
4.
Each auction would be run as a blind bid. All bids above the minimum prices
established by MATL would be accepted up to the limit of capacity available on
the MATL system for that term/product. MATL would only remove bids for
capacity posted on its OASIS when no qualifying bids are received within the
designated time frame. All sellers of capacity, including MATL, would receive a
price equal to the average of all the accepted bids for that term/product. Buyers
of capacity would pay their bid prices – which means some buyers would pay
more for service than other buyers.14
FERC noted that the ten criteria it adopted to evaluate merchant transmission projects have
generally been applied to proposals within organized RTO/ISO markets.15 In fact, the
13
116 FERC ¶ 61,071 at P 16.
14
116 FERC ¶ 61,071 at P 19.
15
116 FERC ¶ 61,071 at P 26. These ten criteria are: (1) the merchant transmission facility
must assume full market risk; (2) service should be provided under the OATT of the
Independent System Operator (ISO) or Regional Transmission Organization (RTO) that
operates the merchant transmission facility and that operational control be given to that
ISO or RTO; (3) the merchant transmission facility should create tradable firm secondary
transmission rights; (4) an open season process should be employed to initially allocate
transmission rights; (5) results of the open season should be posted on the OASIS and
filed in a report to the Commission; (6) affiliate concerns should be adequately
addressed; (7) the merchant transmission facility should not be able to preclude access
to essential facilities by competitors; (8) the merchant transmission facility should be
subject to market monitoring for market power abuse; (9) physical energy flows on
merchant transmission facilities should be coordinated with, and subject to, reliability
requirements of the relevant ISO or RTO; and (10) the merchant transmission facility
should not impair pre-existing property rights to use the transmission grids of interconnected RTOs or utilities, citing Northeast Utilities Services Co., 98 FERC ¶ 61,310 at
62,326-30 (2002) (“Northeast Utilities”).
4846352
5
second criteria is that service should be provided under the OATT of the ISO or RTO that
operates the merchant transmission facilities and that control of the facilities should be given
to that ISO or RTO. Consequently, FERC was required to recognize that some of the ten
criteria are irrelevant to merchant transmission proposals that will be located beyond
RTO/ISO markets, as it did in Sea Breeze Pacific Juan de Fuca Cable, LP.16 In MATL’s
case, there was no operational ISO or RTO in Montana or in the Pacific Northwest.
Because it was unclear to FERC whether MATL intended to hand over operational control to
NorthWestern Energy and/or the Alberta ESO, FERC assumed that operational control
would remain with MATL:
In Sea Breeze, we acknowledged that we are open to reconsidering the
ten criteria. We noted that the ten criteria have been applied to merchant
transmission facilities on a case-by-case basis, and that the Commission
authorized the transfer of control to an ISO or RTO in previous orders
based on the fact that the projects were located in a region with functional
ISOs and RTOs. In Sea Breeze, we waived this criterion because the
Commission found the proposed merchant transmission facility at issue
there unique in that it would interconnect two entities not subject to the
Commission's jurisdiction under sections 205 and 206 of the Federal
Power Act. In MATL's case, again there is no functional ISO or RTO to
which control may be transferred and no corresponding ISO or RTO
OATT under which service may be provided. Accordingly, as suggested
in Sea Breeze, we find that this criterion is not relevant in circumstances
such as here, where the merchant transmission facility is not being built
within or adjacent to an ISO or RTO. Nonetheless, we also find that
MATL's OATT must comply with Order No. 888, as discussed more fully
in the following section on MATL's OATT.17
16
116 FERC ¶ 61,071 at P 27. See Sea Breeze Pacific Juan de Fuca Cable, LP, 112
FERC ¶ 61,295 (2005) (“Sea Breeze”). The Sea Breeze line would interconnect
Bonneville Power Administration’s (“BPA”) system with the transmission system owned
by British Columbia Hydro and Power Authority and operated by British Columbia
Transmission Corporation. BPA is not a FERC-jurisdictional utility because it is a U.S.
federally-owned entity.
17
116 FERC ¶ 61,071 at P 32 (footnote omitted). FERC noted that the MATL Open
Season Order found that MATL’s initial open season employed procedures that appeared
to be transparent, fair and non-discriminatory, so FERC only addressed the open season
proposal for the remaining capacity in this order. FERC accepted many deletions from
the Order No. 888-A pro forma tariff that were irrelevant to MATL, such as the deletion of
the provisions for network service, ancillary services and local furnishing bonds. 116
FERC ¶ 61,071 at P 58. However, FERC found that that MATL has not justified certain
other proposed deviations as consistent with or superior to the pro forma OATT, such as
modifications to interest on unpaid balances requirements. MATL proposed that interest
would be calculated based on the Bank of Montreal's prime lending rate plus five percent,
rather than FERC’s required interest rate. MATL also proposed to modify the large
generator interconnection procedures without justification and FERC also rejected this
modification. 116 FERC ¶ 61,071 at P 59.
4846352
6
FERC found that the open season auction mechanism itself was acceptable -- noting
that its concern in evaluating an open season process is whether it provides
transparency in the bidding process:
As noted in Northeast Utilities, the Commission's concern in evaluating
the open season process is to provide transparency in the bidding
process and to enable unsuccessful bidders to determine if they were
treated in a fair manner. We find that MATL's use of the OASIS to
auction remaining long-term capacity, its commitment to publicly
announce any requests for additional service, and its bid evaluation
based on highest gross revenue present value satisfactorily address this
concern.18
C.
The Limits of FERC’s Jurisdiction
FERC’s lack of jurisdiction over and interest in Canadian transmission also are important
considerations to determining whether FERC might find the voucher proposal unacceptable
with respect to the MBR Authorizations of TransÉnergie’s affiliates doing business in the U.S.
FERC’s interest in the regulation of Canadian transmission systems owned and/or operated
by affiliates of U.S. public utilities is limited:
The Commission has clarified that its concerns are more limited for
foreign transmission-owning entities than for transmission-owning entities
in the United States. The Commission has further stated that its concern
is not transmission service to serve Canadian loads - it is transmission to
serve United States load. The Commission expanded its concern to
include access for United States competitors into Canadian markets on a
reciprocal basis. Thus, the Commission seeks to assure reciprocal
service into and out of Canada when Canadian entities seek access to
United States markets, but the Commission is not seeking to open intraCanada electric markets through the imposition of open access tariffs for
transactions wholly within Canada.
Therefore, the Commission requires an entity that seeks market-based
rate authority but has a Canadian affiliate owning transmission facilities to
demonstrate that its affiliate offers non-discriminatory access to those
transmission facilities that competitors of the Canadian seller can use to
reach United States markets. The Commission has previously found that
Hydro-Québec’s transmission tariff and TransÉnergie’s transmission
18
116 FERC ¶ 61,071 at P 37, citing Northeast Utilities, 98 FERC ¶ 61,310 at 62,329.
4846352
7
arrangements meet the standard that the Commission requires for open
access transmission services under our jurisdiction.19
Essentially, at its broadest interpretation, FERC is only interested in ensuring reciprocal and
comparable open access service into and out of Canada with respect to U.S. markets. Thus,
FERC’s traditional discount policy for its jurisdictional U.S. transmission providers may, in fact,
provide little guidance as to how FERC would view Régie-authorized transmission service
discount procedures with respect to ability of a Canadian MBR entity to retain its MBR
Authorization.
It is also worth noting that FERC has specifically recognized that TransÉnergie’s transmission
rates are beyond the scope of its jurisdiction. In response to claims that the Régie’s oversight
over TransÉnergie’s transmission rates was not comparable to FERC’s over U.S. utilities,
FERC stated:
In response to Au Courant's and Natural Resources' protests, the
Commission finds that these claims are outside the Commission's
jurisdiction and could better be addressed by the Canadian regulatory
agencies. The calculation of Hydro-Québec's transmission rates is
decided within Québec, in accordance with Quebec law, and any
challenge to the Régie's ratemaking methodology is outside the scope of
the Commission's jurisdiction. Moreover, H.Q. Energy stated that HydroQuébec charges itself the same transmission rates for wholesale
transactions for export to the United States as it charges United States
wheeling customers under its open access transmission tariff, and
otherwise complies with the separation of functions and other aspects of
its code of conduct. This comparable treatment is consistent with our pro
forma OATT.20
Consequently, FERC is likely to be very cautious about rejecting any regulatory approach to
transmission service in Canada as long as the regulatory regime provided reciprocal and
comparable open access transmission service into and out of Canada.
III.
CONCLUSION
FERC has accepted open season auction mechanisms for merchant transmission providers,
even those that rely on a loose version of a Traditional OATT because their transmission lines
are not under the control of an RTO or ISO.
While the Montana Alberta Tie, Ltd. open season process is not entirely analogous to the
proposed voucher system for wheel through transmission service over TransÉnergie’s system,
there are some significant similarities:
19
H.Q. Energy Services (U.S.) Inc., supra, 111 FERC at PP 23-24 (footnotes omitted); see
also Great Lakes Hydro America, LLC, 110 FERC ¶ 61,225 at P 8 (2005).
20
H.Q. Energy Services (U.S.) Inc., 111 FERC ¶ 61,255 at P 27 (2005).
4846352
8
1.
MATL would accept bids for TSRs to sell under-subscribed capacity. We
understand that the purpose of the proposed voucher auction is to optimize use
of TransÉnergie’s transmission system and to optimize its revenues.21
2.
MATL’s rates are to be set by auctions via MATL’s OASIS and MATL would be a
price taker in all capacity auctions, with capacity sold to the highest bidders,
subject to bidders meeting or exceeding certain minimum rates. We understand
that the proposed voucher auction would be run on the same principles.
3.
MATL’s auctions are to be run as blind bids. All bids above the minimum prices
established by MATL would be accepted up to the limit of capacity available on the
MATL system for that term/product. MATL would only remove bids for capacity posted
on its OASIS when no qualifying bids are received within the designated time frame. All
sellers of capacity, including MATL, would receive a price equal to the average of all the
accepted bids for that term/product. Buyers of TSRs would pay their bid prices – which
means some buyers would pay more for TSRs than other buyers. We understand that
the proposed voucher auction would be run in the same manner.
There is no reason to believe that FERC would simply terminate the MBR Authorization of any
TransÉnergie affiliate doing business in the U.S. simply because the Régie determined that the
proposed voucher system was appropriate for wheel-through transactions on TransÉnergie’s
system, as long as the voucher system procedures are transparent, fair and non-discriminatory.
These conditions should be adequately met because (i) the proposed voucher auctions would
be conducted on TransÉnergie’s OASIS to ensure transparency and (ii) U.S. sellers into
Canada and Canadian sellers into the U.S. would have the same participation access to the
voucher auctions as purely intra-Canadian market participants.
21
Report by the Task Force on Discount Policy and Ancillary Services for Point-to-Point
Transmission Services (Follow-up to Decision D-2006-66 of the Régie de l’énergie), Draft
Report of Hydro-Québec TransÉnergie, dated December 13, 2006 at p. 3.
4846352
9
Follow-up to decision D-2006-66
APPENDIX 2
Minutes of Task Force Meetings
and their Appendices
7th meeting
•
Minutes of 7th meeting on January 15, 2007
Original : 2007-03-19
Bundled
A
Draft Minutes Meeting
– Final version
Task Force on Discount Policy and Ancillary Services – Seventh Meeting
(Follow-Up to Decision D-2006-66 of the Régie de l’énergie)
Date :
2007-01-15
Attendees :
Location
Conference call.
(Filing code)
Prepared by :
The Transmission Provider (HQT)
BELLAVANCE, Erik (HQP), GREEN, Barry (OPG), HARRIS, Joanna (NLH), PLANTE, Pierre (NLH), GAGNON, Denis (HQT),
GECA, Delija (HQT), GUIMONT, Chantal (HQT), LAROCHELLE, Claire (HQT).
Agenda Item
Actions Items / Decisions to be taken
Responsible Party
Deadline
1) Approval of the agenda
Chantal Guimont reminds the objective of this conference call, HQT wants the main
comments about the Draft report – January 11, 2007. For the editorial comments on
this version, HQT wants to receive them by e-mail by January 17, 2007.
All
January 17,
2007
Third, HQT will integrate the analysis done by some participating customers on the
additional opportunities that would be done on April, May and October 2006, with a
such 4$/MW-hour discount.
HQT
January 18,
2007
After discussion, Chantal Guimont proposes the following timetable :
• Wednesday, January 17, 2007, each member shall send HQT editorial
comments about the Draft report – January 11, 2007.
Participating customers
January 17, 2007
2) General comments on
the draft report –
January 11, 2007
Members from NLH and OPG made the main following comments.
First, HQT have to enlarge the description of the proposal D (page 18), by moving
elements shown on pages 28 and 29, and add more details of the discount policy
included in the pro forma OATT of FERC Order 888. This proposal would be
recommended by the majority of the participants because it shows some promise and
can be subject to a pilot project.
Second, after discussion, HQT will propose to make a 3 months pilot project based
on proposal D, with a 4$ per MW-hour discount on non-firm hourly service on offpeak periods with less than 20% historic use of ATC.
3) Next steps
Page 1 de 2
A
Draft Minutes Meeting
– Final version
•
•
•
Thursday, January 18, 2007, the final draft report will be sent by HQT.
By Monday, January 22, 2007, each member would have sent to HQT a
letter (one pager) indicating if they agree with the final version or it is the
case, the extent to which they disagree they disagree with the report. Those
letters will be integrated to the appendix 5 of the final report.
No later than January 31, 2007, the final report final will be filed with the
Régie.
HQT
January 18,
2007
Participating customers
January 22,
2007
HQT
January 31, 2007
Legend :
HQP : Hydro-Québec Production
NLH : NewFoundland and Labrador Hydro
OPG : Ontario Power Generation Inc.
HQT : Hydro-Québec TransÉnergie
Page 2 de 2
Follow-up to decision D-2006-66
APPENDIX 3
Monthly Utilization Rates
on Three Transmission Provider Paths in 2005
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
Appendix 3: Monthly Utilization Rates on Three Transmission
Provider Paths in 2005
HQT-MASS
Monthly utilization rate
Off-peak
Total
Month
Peak
(2)
(3)
1
2
3
4
5
6
7
8
9
10
11
12
Year
2005
33%
47%
63%
63%
43%
47%
54%
54%
27%
27%
26%
30%
43%
11%
8%
24%
16%
1%
8%
13%
9%
1%
2%
6%
4%
8%
23%
30%
46%
43%
24%
31%
35%
35%
15%
16%
17%
18%
28%
Mean monthly TTC (1)
Peak
Off-peak
Total
(2)
(3)
1,247
1,317
1,475
1,261
1,496
1,494
1,497
1,489
1,458
1,109
1,487
1,494
1,402
1,274
1,347
1,498
1,323
1,499
1,491
1,500
1,499
1,488
1,144
1,495
1,499
1,421
1,260
1,330
1,485
1,287
1,498
1,492
1,498
1,494
1,471
1,124
1,490
1,496
1,410
(1) TTC ranges from 0 to 1,500 MW
(2) Peak: Monday to Saturday from 8 a.m. to 11 p.m. except holidays (total of 4,912 hours)
(3) Off-peak: Sunday from 1 a.m. to 7 a.m. and 12 p.m.; holidays from 1 a.m. to 12 p.m. (total of 3,848 hours)
Holidays: 2005-01-01, 2005-05-30, 2005-07-04, 2005-09-05, 2005-11-24, 2005-12-25
When a holiday falls on a Sunday, the following Monday is considered to be an off-peak day
Holidays based on NERC Operating Manual, Appendix 1F, page A1F-3, dated 2003-02-11
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
HQT-NE
Monthly utilization rate
Off-peak
Total
Month
Peak
(2)
(3)
1
2
3
4
5
6
7
8
9
10
11
12
Year
2005
29%
39%
48%
51%
29%
37%
47%
43%
17%
21%
30%
54%
38%
17%
8%
16%
8%
4%
8%
11%
8%
1%
5%
12%
20%
10%
24%
26%
34%
33%
17%
25%
30%
28%
10%
14%
22%
39%
25%
Mean monthly TTC (1)
Peak
Off-peak
Total
(2)
(3)
2,000
1,999
1,986
1,868
1,922
1,927
1,891
1,929
1,943
1,331
1,969
1,963
1,893
2,000
1,998
2,000
1,870
1,983
1,936
1,948
1,975
1,927
1,473
1,973
1,914
1,916
2,000
1,999
1,992
1,869
1,950
1,931
1,917
1,948
1,936
1,393
1,971
1,941
1,903
(1) TTC ranges from 0 to 2,000 MW
(2) Peak: Monday to Saturday from 8 a.m. to 11 p.m. except holidays (total of 4,912 hours)
(3) Off-peak: Sunday from 1 a.m. to 7 a.m. and 12 p.m.; holidays from 1 a.m. to 12 p.m. (total of 3,848 hours)
Holidays: 2005-01-01, 2005-05-30, 2005-07-04, 2005-09-05, 2005-11-24, 2005-12-25
When a holiday falls on a Sunday, the following Monday is considered to be an off-peak day
Holidays based on NERC Operating Manual, Appendix 1F, page A1F-3, dated 2003-02-11
OTTO-HQT
Monthly utilization rate
Total
Off-peak
Month
Peak
(2)
(3)
1
2
3
4
5
6
7
8
9
10
11
12
Year
2005
63%
72%
41%
38%
78%
72%
63%
69%
78%
74%
70%
73%
65%
72%
84%
61%
92%
90%
72%
62%
75%
82%
78%
69%
82%
77%
67%
77%
49%
60%
83%
72%
62%
72%
80%
75%
70%
77%
70%
Mean monthly TTC (1)
Peak
Total
Off-peak
(2)
(3)
102
95
88
81
82
72
33
73
80
67
90
71
78
94
90
85
78
81
72
35
73
77
64
84
63
74
98
93
87
80
81
72
34
73
79
66
87
67
76
(1) TTC ranges from 0 to 110 MW
(2) Peak: Monday to Saturday from 8 a.m. to 11 p.m. except holidays (total of 4,912 hours)
(3) Off-peak: Sunday from 1 a.m. to 7 a.m. and 12 p.m.; holidays from 1 a.m. to 12 p.m. (total of 3,848 hours)
Holidays: 2005-01-01, 2005-05-30, 2005-07-04, 2005-09-05, 2005-11-24, 2005-12-25
When a holiday falls on a Sunday, the following Monday is considered to be an off-peak day
Holidays based on NERC Operating Manual, Appendix 1F, page A1F-3, dated 2003-02-11
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
APPENDIX 4
Proposed Discount Policies – Assessment Matrix
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
Appendix 4: Proposed Discount Policies – Assessment Matrix
Proposal
Criterion
REGULATORY FEASIBILITY
(non-discriminatory access)
A – Transmission
Provider
(A posteriori difference
in market prices)
One price/hour/path
B – OPG
C – Powerex
(Revised version)
(“Auction”)
Potentially two
prices/hour/path
Potentially more than
one price/hour/path
Discount inversely
proportional to scarcity of
wheeling capacity
“Single price per hour for all
customers”
All customers
All customers
Principle of uniform rates
throughout the territory?
On all paths regardless
of utilization rate
Fixed discount on specific
paths with a utilization
rate below a set threshold
Wheel-out or wheel-through
OPTIMIZATION
All forms of wheeling
All forms of wheeling
Wheel-through only
Optimize revenue from pointto-point services while
minimizing free-ridership
(equity)
Only determined a
posteriori by comparing
actual purchase and sale
prices, designed to
minimize free-ridership
Proposed example
supposes discounts on
presently projected
(baseline) reservations,
hence free-ridership.
Manage risks to avoid crosssubsidization
Only for off-peak hourly
services
Cover fixed development
costs for offering a discount
policy (to be assessed for
each proposal)
FEASIBILITY OF
IMPLEMENTING AND
OPERATING
(transparency)
Significant development
costs for billing system
Original : 2007-03-19
Baseline markets must
be determined to specify
how data is to be
processed
Customers used to basing
transaction decisions on
factors known in advance
D – Transmission
Provider
(FERC OATT
888 & 889)
One price/hour/path
Bumping amongst all
customers (Dutch
auction)
E – BEMI
(“Take-or-Pay
Vouchers”)
Potentially more than
one price/hour/path
F – Transmission
Provider
(Variant of proposal E)
One price/hour/path
On all paths regardless
of utilization rate
For all customers, on all
paths as long as ATC
remains
All forms of wheeling
Wheel-through only
All forms of wheeling
Between $0 floor price
and $8.33/MW-hour
ceiling price, hence
average revenue below
$8.33/MW-hour
Lets Transmission
Provider manage freeridership
Customer annual
financial commitment
based on rates between
floor price (Transmission
Provider’s fixed costs)
and $8.33/MW-hour
ceiling price
Peak and off-peak hourly
service
Peak and off-peak hourly
service
Customers propose
discounts
Transmission Provider
chooses applicable
discounts
To avoid impact on
native load, discount
only valid if half-year
financial commitment of
all customers at least
equals mean
Transmission Provider
revenue over last
3 years for non-firm
off-peak hourly
service, off-peak period
to be specified by the
Transmission Provider
Easy for customers used to
knowing in advance all
parameters posted
OASIS not designed to support
this proposal (several levels of
discounts and sales to be
specified per hour per path)
Familiar to customers
used to making financial
transactions
Involves major changes
to OASIS
Familiar to customers
used to making energy
transactions
Transmission Provider
must define management
rules in advance to ensure
transparent process
On all paths regardless
of utilization rate
Peak and off-peak hourly
service
Familiar to customers
used to making energy
or financial transactions.
Management rules to
be specified.
Familiar to customers
used to making energy
or financial transactions.
Management rules to be
specified (e.g.,
Transmission Provider’s
off-peak hours)
Bundled
Follow-up to decision D-2006-66
APPENDIX 5
Compilation of Potential Gains/Losses
from Data Provided by Task Force Participants
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
Appendix 5: Compilation of Potential Gains/Losses from Data Provided by Task Force Participants
During the 6th meeting on December 13, 2006, participants were asked to provide their own analysis to evaluate the additional
reservations they would have made during the months of April, May and October 2006, under the assumption that a rebate of 4,00
$/MW-hour was applied on the hourly non-firm service. Estimations were provided on an indicative basis and subject to several
factors by OPG, NBPM, BEMI, PWXSC and HQP, covering peak and non peak periods. The Transmission Provider summarizes in
Table A the potential indicative gains/losses for these periods.
Table A – Discount of 4$/MW-h for all hours (peak and off-peak) in April, May and October 2006 *
OPG
NBPM
BEMI
PWXSC
HQP
Total
A
895
0
279 294
16 953
1 091 690
1 388 832
B=(A*8.33)
7 457 $
0$
2 326 519 $
141 218 $
9 093 777 $
11 568 973 $
Number of hours with increased reservations
C
878
423
559
0
0
1 860
Average number of MW during these periods
D
≥ 200
50
75
0
0
128
Additional MW-hour
E=C*D
175 625
21 150
41 894
0
0
238 669
Potential reservations MW-hour
F=A+E
176 520
21 150
321 188
16 953
1 091 690
1 627 501
G=(E/A)*100
19 623 %
-
15%
0%
0%
17 %
H=(F*4.33)
764 332 $
91 580 $
1 390 744 $
73 406 $
4 727 017 $
7 047 079 $
I=H-B
756 875 $
91 580 $
- 935 775 $
- 67 812 $
- 4 366 759 $
- 4 521 892 $
Actual reservations in 2006 (MW-hour)
(including transmission losses)
Actual revenue in 2006 ($)
Potential increase (%)
Potential revenue with a 4.00$/MW-h discount
Potential revenue variation ($)
* Data provided by customers are underlined
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
Furthermore, based on the same data provided by those customers, the Transmission Provider prepared an extrapolation for offpeak periods only. The results are summarized in Table B.
Table B – Discount of 4$/MW-h for off-peak hours only in April, May and October 2006 *
OPG
NBPM
BEMI
PWXSC
HQP
Total
A
90
-
125 682
1 695
109 169
236 636
B=(A*8.33)
746 $
0$
1 046 934 $
14 122 $
909 378 $
1 971 179 $
Number of hours with increased reservations
C
549
42
251
0
0
842
Average number of MW during these periods
D
≥ 200
50
75
0
0
155
Additional MW-hour
E=C*D
109 765
2 115
18 852
0
0
130 732
Potential reservations MW-hour
F=A+E
109 855
2 115
144 535
1 695
109 169
367 368
G=(E/A)*100
122 642 %
NA
15%
NA
NA
55 %
H=(F*4.33)
475 670 $
9 158 $
625 835 $
7 341 $
472 702 $
1 590 705 $
I=H-B
474 924 $
9 158 $
- 421 099 $
- 6 781 $
- 436 676 $
- 380 473 $
Actual reservations in 2006 (MW-hour)
(including transmission losses)
Actual revenue in 2006 ($)
Potential increase (%)
Potential revenue with a 4.00$/MW-h discount
Potential revenue variation ($)
* Data provided by customers are underlined
Original : 2007-03-19
Bundled
Follow-up to decision D-2006-66
APPENDIX 6
Letters of Comments
from Task Force Participants
Original : 2007-03-19
Bundled
NEWFOUNDLAND AND LABRADOR HYDRO
Lower Churchill Project
P.O.Box12400,St
.John’
s,NLA1B4K7
Telephone (709) 737-1805; Fax (709) 737-1829
March 14, 2007
Doc. No. 17657
Ms. Chantal Guimont
Marketing Director
Hydro-Québec TransÉnergie
2 Complexe Desjardins
Tour Est, 9e étage
Montréal, PQ H5B 1H7
Dear Ms. Guimont:
Newfoundland and Labrador Hydro (NLH) is pleased to have had the opportunity to participate in
the Task Force on Discount Policy and Ancillary Services for Point-to-Point Transmission
Services. NLH’
scomment
sar
ebasedont
heEngl
i
shv
er
si
onoft
heTas
kFor
ceRepor
t
, which is
the only version that NLH has reviewed.
The objectives established by the Régie del
’
Énergie for the discount policy are optimizing power
system use and Transmission Provider revenue in an open market perspective. In striving to
achieve these objectives the Transmission Provider identified three criteria –regulatory feasibility,
optimization and feasibility of implementation. Development of a discount policy that meets all
these assessment criteria certainly proved to be very challenging, as is evident in the assessment
of the various options presented in t
heTas
kFor
ce’
sr
epor
t
.
Throughout the discussions of the Task Force, addressing the issues of minimizing free-ridership,
as defined in the Task Force report - “
t
r
ansact
i
onst
hatwoul
dhav
ebeenmadeevenwi
t
houta
di
scount
”
,and at the same time avoiding discrimination in the availability of the discount became
a recurring challenge.Par
t
i
ci
pant
s’v
i
ewsdi
f
f
er
edon the issues surrounding potential exposure to
revenue reductions if increased transmission reservations did not materialize. In this context, a
pilot program was proposed as a means to test the feasibility of a discount policy on an interim
basis. Unfortunately the Task Force members were unable to reach a unanimous agreement to
recommend a pilot program.
NLH shares the views of other Task Force customer participants that the data presented in
appendix 5 of the Task Force report does not provide a reasonable rationale for not proceeding
with the pilot program. NLH firmly supports implementation of an interim discount pilot program to
provide valuable data on the price sensitivity of demand for transmission service on the
TransÉnergie system. Market response to a two-tiered discount policy over a minimum three
month trial period appears to be the most effective way to predict future customer reservations in
response to price discounts. Gathering data from a pilot program is the first step towards
designing an effective discount policy to optimize use of the transmission system and revenues
over the long-term.
NLH supports the comments and recommendation to proceed with a pilot program, as outlined in
t
hedocumentent
i
t
l
ed“
Recommendat
i
onf
r
om Tas
kFor
ceMember
sBr
ookf
i
el
dEner
gyMarketing
Inc., Emera Energy Inc., New Brunswick Power, Newfoundland and Labrador Hydro, Ontario
Power Generation Inc. and Powerex Corp. on the Final Report of the Task Force on Discount
Policy and Ancillary Services for Point-to-point Transmission Services”
.
Newfoundland and Labrador Hydro
March 14, 2007
-.. ..
n
~
- . ...
..- .. .-......
Hydra
Québec
Une division d'Hydro-Québec
TransÉnergie
Le 19 mars 2007
Aux
participantsdu groupede travailsur la politique
de rabais et les services complémentaires pour les
services de transport de point à point
Objet:
Chantal Guimont
Directrice
Commercialisation et affaires réglementaires
Hydro-Québec TransÉnergie
2, Complexe Desjardins, Tour Est, 9" étage
Montréal (Québec)
H5B 1H7
Tél.: 514-289-5883
Téléc.: 514-289-5417
C. élec.: guimont.chantal@hydro.qc.ca
Commentaires sur le Rapport final du groupe de travail
Mesdames, messieurs,
Le Rapport final refl~te de façon concise l'évolution et la nature des travaux qui ont été effectués
par le groupe de travail mis en place par le Transporteur tel que demandé par la Régie dans sa
décision D-2006-66. Le Rapport fmal, ainsi que les documents qui y sont annexés, résument bien
les analyses et les efforts des clients et des représentants du Transporteur, qui ont assidûment
contribué à ces travaux au cours des ne.uf derniers mois. D'ailleurs, beaucoup de discussions et
d'échange d'information portant sur l'opportunité et la rentabilité attendue d'un projet pilote de
politique de rabais se sont poursuivies plusieurs semaines après la 7e rencontre du groupe de
travail tenue le 15janvier 2007.
Dès la première rencontre tenue le 15 juin 2006, afin d'encadrer l'analyse et l'évaluation de la
viabilité des propositions de politique de rabais proposées au groupe de travail, les participants se
sont mis d'accord sur l'élaboration des critères que l'on retrouve à la section 3.2 du rapport, critères
qui devaient rencontrer les objectifs énoncés par la Régie dans sa décision D-2006-66. Seul le
critère de respect de l'uniformité territoriale n'a pas fait l'unanimité chez les participants. Ainsi,
certains d'entre eux appuieraient une politique de rabais ne s'appliquant qu'au transit de passage,
alors que le Transporteur recommande qu'il n'y ait aucune discriminat~ons'appliquant aux.services
de transport de point à point qui aurait pour effet de favoriser, par exemple, le transit de passage
au détriment du transit d'exportation. De. plus, pour le Transporteur, le critère concernant
l'optimisation du réseau et des revenus du Transporteur, exige de minimiser les transactions
opportunistes.
Page 1 sur 3
_.. .. .
_.u
_ _..
__ ..-
...-..........-
- .-.
De tous les types de politique de rabais examinés par le groupe de travail, seule la proposition D a
fait l'unanimité. Cependant, les propositions basées sur un mécanisme d'encan ont été considérées
non appropriées et inutilement complexes et coûteuses à administrer, par tous les participants, à
l'exception d'ÉBM, compte tenu de la nature du marché québécois de l'électricité. Quant à une
variante de la proposition D, elle a fait l'objet d'un examen plus approfondie du groupe de travail,
mais sa rentabilité à court et à long terme n'a pu être démontrée par les participants.
Ainsi, afin d'assurer qu'une politique de rabais n'ait aucun impact à la hausse sur le tarif de la
charge locale et les tarifs des services de transport de point à point, le Transporteur a demandé aux
participants au groupe de travail de fournir les données, basées sur leur propre expérience
d'affaires, concernant les volumes de transit additionnels découlant des rabais, afin d'optimiser
l'utilisation du réseau et les revenus des services de transport "Ciepoint à point du Transporteur.
Répondant à cette demande, lors de la sixième rencontre en décembre et la conférence
téléphonique en janvier, les participants ont élaboré un concept de projet pilote, basé sur des rabais
ponctuels, établis en fonction du taux d'utilisation historique d'une interconnexion (proposition D
révisée). Suite à la demande du Transporteur, certains participants ont fourni une estimation basée
sur leur expérience propre et leur analyse de marché, du volume de transactions additionnelles
qu'ils auraient réalisé avec un rabais de 4 $ par MW/h pour le service horaire non ferme pour les
mois d'avril, mai et octobre 2006. Tel qu'indiqué ci-dessus, les estimations reçues compilées par le
Transporteur montrent qu'un tel projet pilote aurait généré une perte nette de revenus pour le
Transporteur, compte tenu du volume additionnel insuffisant de réservations prévues. Certains
participants ont proposé un rabais de plus grande envergure, jusqu'à 6 $ par MW/h, mais aucune
donnée fournie par les participants ne permet de croire que les résultats seraient meilleurs en tenant
compte des clients actuels ou de clients futurs.
Plusieurs participants ont d'ailleurs indiqué qu'ils ne peuvent prendre aucun engagement précis sur
des volumes additionnels découlant d'un projet pilote. D'autres considérations, telles que leur
propre stratégie d'affaires et les prix de marché, sont plus déterminantes sur leur volume futur de
transactions que la seule application par le Transporteur de rabais à certaines heures. Selon les
participants, pour être efficace, la politique de rabais doit pouvoir accroître le revenu net des
clients lorsqu'ils effectuent une réservation sur le réseau du Transporteur. Toutefois, à partir des
données de transit accru fournies par les participants au groupe de travail, la rentabilité d'un tel
projet pilote n'a pu être démontrée et conséquemment, le Transporteur ne peut appuyer la mise en
œuvre d'un projet pilote de politique de rabais dont la rentabilité, tant à court terme, qu'à long
terme, n'a pu être démontrée. Le rapport du groupe de travail illustre bien d'ailleurs la diversité des
enjeux commerciaux et en conséquence, des comportements de chacun des clients face aux rabais.
Compte tenu qu'aucun des scénarios analysés par le groupe de travail ne permet de rencontrer les
critères et objectifs établis, le Transporteur recommande qu'aucune politique de rabais ne soit
appliquée sur ses tarifs des services de transport de point à point et ce, même en projet pilote de
courte durée.
Page 2 sur 3
Concernant l'applicabilité des services complémentaires à toutes les réservations des services de
transport de point à point, le Transporteur a exposé au groupe de travail les caractéristiques
techniques et commerciales particulières du réseau du Québec, qui n'est pas synchronisé avec les
autres réseaux de transport nord-américains, afm de ,préciser la nécessité d'appliquer les services
complémentaires à toutes les réservations des services de transport de point à point. Cependant, le
groupe de travail n'a pas réussi à s'entendre sur une recommandation unanime à ce sujet. Ainsi, audelà des services complémentaires actuellement requis sur le réseau pour lesquels le Transporteur
croit que chaque utilisateur devrait supporter sa part des coûts, lorsque des services
complémentaires additionnels seront requis par suite de la croissance des transits sur le réseau
provenant de la charge locale ou de tiers, chaque utilisateur, charge locale ou client des services de
transport de point à point, devra assumer sa part des coûts, permettant au Transporteur d'offrir les
services additionnels qui seraient requis.
En conclusion, le Transporteur tient à remercier les entreprises et leur représentants qui ont
participé aux travaux du groupe de travail. Le Transporteur est d'avis que les travaux à réaliser ont
été tous complétés de façon rigoureuse, en fonction des objectifs établis par la Régie de l'énergie et
permettant de bien cerner les enjeux soulevés spécifiques aux particularités du réseau et du marché
québécois.
~~
Chantal Guimont
Directrice - Commercialisation et affaires réglementaires
Page 3 sur 3