AESO Market Participant Choice Stakeholder Presentation

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Discussion of Market Participant Choice for Transmission Connections

Stakeholder Session

October 14, 2011

Agenda

Purpose

Overview - what and why?

Background

AESO Connection Process

Eligibility

Own model

TFO requirements and obligations

Legislative framework

Next steps

2

Purpose

AESO issued a discussion paper September 29, 2011

– Sets out concepts for discussion on market participant choice

• Purpose of today’s session

– Present the concepts

– Provide additional clarification

– Identify next steps

– Facilitate discussion

– Respond to questions

3

Overview

What?

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

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

Why?

– Some market participant concerns with cost & schedule for connections

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

Next Steps

– Requesting open discussion and written comments by October 31

4

Current Connection Example

Incumbent TFO assigned the transmission line connection

5

Proposed Connection Example

Participant owns transmission connection to the grid

TFO facilities connection

6

Background

Investigation

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

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

– Legal review

Considered several options

– Design, build, own and / or operate

Initial determination

– “Own” model

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

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

7

Current Process

Participant files application for service (Stage 0)

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

Project assigned to incumbent TFO (Stage 3)

8

Current Process - Authority

Section 35(1)(a) of the

EUA

:

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

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

AESO assigns all participant connections to the incumbent

TFO during Stage 3 of the Connection Process

Incumbent TFO prepares and files facility application

Joint NID and Facility applications filed for some projects

9

Proposed Process

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

Incumbent TFO assists with connection (Stages 1 & 2)

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

10

Proposed Process - Authority

Section 35(1)(b) of the

EUA

:

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

(b) request market participants to submit, for approval by the

Independent System Operator, a proposal to meet the need identified

AESO asks participant for proposal

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

Commission still approves NID and facility applications

11

Connection queue administration

Market participant may changes its election part way after

Stage 0

Connection project is cancelled and queue position revoked

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

Eligibility - Participants

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

– Generators

– Loads

– Dual use

– Industrial system designations (ISD)

– Distribution facility owners (DFO)

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

13

Eligibility

– Connections

The following are connection types that may be eligible:

– T-taps

– Switching stations

– In / Out arrangements

– Others?

The following are connection types that are non-eligible:

– System lines

– System upgrades

– Connections serving multiple customers

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Own Model

Market Participant would assume responsibility for entire transmission asset life cycle

– Legal ownership of transmission facilities

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

– File a tariff

– Operate asset

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

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

AESO can not initiate transfer of assets

15

TFO Requirements and Obligations

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

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

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

– Public Utilities Act

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

– Transmission Regulation

– Alberta Utilities Commission rules

– ISO Rules

– ISO Tariff

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

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

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

TFOs (new and incumbent) are treated the same

AESO may direct TFOs to undertake certain activities

16

Legislative Framework

Market Participant Choice is supported by legislation:

– Electric Utilities Act, s. 35(1)(b) the AESO may “request market participant(s) to submit, for approval by the Independent

System Operator, a proposal to meet the need identified”

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

Legislated obligations to make transmission facilities available include:

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

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

17

AESO Rules

Section 24(1) of the

Transmission Regulation

sets out assignment to incumbent TFOs based on service areas

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

Section 24(2) of the

Transmission Regulation

allows for alternate arrangements

– Market Participant Choice could be an alternate arrangement

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

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

Transmission Regulation

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Next Steps

Stakeholders provide written comments on the Discussion Paper

– Comments due October 28, 2011

AESO posts stakeholder comments received

– November / December 2011

AESO replies to stakeholder comments received

Stakeholder information session held (if required)

AESO prepares and posts a Recommendation Paper

Stakeholder information session held (if required)

Stakeholders provide written comments on the Recommendation Paper

Implementation

– May include items such as:

ISO rules changes, as required

Connection process changes, as required

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Thank you

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