Quarterly Stakeholder Report
Q1 2015
 Initiative Updates
 Financial Highlights
Public
Quarterly Stakeholder Report – First Quarter (January to March) 2015
The purpose of this section of the quarterly report is to provide stakeholders with an update on the Alberta
Electric System Operator (AESO)’s progress on the initiatives outlined in the AESO’s 2015 Business Plan and
Budget Proposal (Business Plan). The reader of this report should reference the Business Plan published on the
AESO’s website for additional information to fully understand the various progress updates provided.
I.
Reporting on Business Plan Initiatives by Activity Group
Electric System Operations
Business Initiative
Current Status
Next Milestone
Target
High Voltage Direct
Current (HVDC)
Operations
Construction of Eastern and
Western Alberta Transmission
Line (EATL and WATL)
facilities ongoing
Final commissioning studies,
training and operating
procedures are expected to
be completed by the end of
Q2 2015, prior to
Transmission Facility
Operators (TFOs)
commencement of
commissioning activities
The targeted ISD for WATL
and EATL is the second half
of 2015
Alberta Reliability
Standards (ARS)
Implementation
Initiated development of 6 new
ARS
Continue development of
new ARS
Finalize drafting of 4 out of 6
standards and receive
management approval to
consult by year end
Received AUC approval for 4
Reliability Coordinator (RC)related ARS
Receive AUC approval for 1
pending RC-related ARS
Receive AUC approval for 5
RC-related ARS
Preparing for consultation on 6
ARS (3 RC-related)
Begin ARS consultation
Complete consultation on all
6 ARS by year end
Finished consultation on BAL002-WECC-AB1-2; Preparing
response to stakeholder
comments
Forward BAL-002-WECCAB1-2 standard to AUC for
approval
Receive AUC approval by
Q3 2015
EMS Upgrade Project work
(Phase I – Definition) is
underway
Phase I activities are
expected to be completed by
Q3 2015
Receive AESO Board
decision consistent with
management’s
recommendation regarding
Phase II Implementation
requirements in September
2015
AIES Enhancements
(Reliability and
Integration)
Business case development
for the next phase (Phase II
– Implementation) is
expected to be completed by
July 2015
Page 2 of 13
Electric System Development
Business Initiative
Current Status
Next Milestone
Target
Update and file the
Long Term Plan
(LTP) with the AUC
AESO is currently working on
engineering studies related to
the LTP
Planning studies are
expected to be completed by
mid 2015
AESO expects to file the
2015 LTP plan late 2015 or
early 2016
Advance system and
regional
transmission
projects identified in
the LTP
3 customer connection Need
Identifciation Document
(NID)s filed to March 31,
2015
Support Transmission
Facility Owners (TFOs) in
completion of system
projects facilitating the inservice date (ISD)
Ongoing support of TFOs
with facility applications (FA),
certifications and FA hearings
NID development and filings
as per schedule
Ongoing
The conclusion of the
competition for the East
Project, including the
announcement of the
successful Proponent, will be
determined once the AESO
sets the competition opening
date
COM pilot to run until June
2015
Competitive process
On December 18, 2014,
Alberta PowerLine Limited
Partnership, became the
successful proponent of the
Fort McMurray West 500 kV
Transmission Project
The AESO expects to advise
the market of the opening
date for the Fort McMurray
East 500 kV Transmission
Project (East Project)
competition mid-2015
Cost reporting &
monitoring
Cost Oversight Management
(COM) pilot nearing
completion
AESO to complete its
response to COM pilot
information requests in early
May
ISO Rule 504.5 – Cost
Estimating has been drafted
Commence consultation on
ISO Rule 504.5; Notice to
stakeholders expected to be
issued in early May
Expect to file the new rule
with the AUC in Q3 2015
New revised cost estimating
template has been made
available on the AESO’s
website
None
None
Recommendation paper sent
to the Rule 9.1 (Procurement)
Working Group requesting
comments
AESO to complete its
response to comments on
the recommendation paper
in Q2 2015
Pending comments and
revisions to the procurement
recommendation paper, the
AESO will begin drafting
revisions to the ISO Rule
9.1.5 – Project Procurement
in Q3
AESO expects to begin
working on developments
with regards to Project
Reporting (ISO Rule 9.1.3)
Recommendation paper on
Project Reporting to be sent
to Rule 9.1 Working Group for
comment by year end
Page 3 of 13
Electric System Development - continued
Business Initiative
Transmission rate
and impact
information
Current Status
Next Milestone
Target
The main compliance filing
proceeding (2014 ISO tariff)
was completed in March; A
separate module for AUC
Directions 5-8 related to
advancement costs is
underway
The AUC is expected to
issue a decision on the main
compliance filing by early
June 2015; The Directions
5-8 module is scheduled to
complete in May 2015
2014 ISO tariff is expected to
become effective in Q3 2015
The 2013 and 2014 deferral
account reconciliations are
currently being combined for
filing as a single application
AESO plans to file its 20132014 deferral account
reconciliation application by
Q3 2015
Interim settlement of 20132014 deferral account
amounts expected in Q4
2015
Page 4 of 13
Customer Access Services
Business Initiative
Advance customer
connection projects
within the
connection queue
System and
customer connection
(continued Process
enhancement)
Reduce customer
connection cycle
time by
implementing
initiatives including
Abbreviated Needs
Approval process
(ANAP)
Current Status
Next Milestone
Target
AESO facilitating the
advancement of approved
System Access Service
Requests for customer
connection projects
See connection project
queue on the AESO website
for a complete list of projects
and status
Ongoing
16 customer energizations
(including Connection,
Contract and Behind-theFence projects) completed as
of March 31, 2015
Ongoing
Ongoing
Connection Process Working
Group held its final session in
April; Four main
recommendations have been
identified
AESO expects to develop an
implementation plan and
initiate roll out of the
identified recommendations
in Q2 2015
AESO remains committed to
continuous process
improvement and expects
recommendations to continue
to evolve and mature the
process after this
implementation
AESO has published updates
to the Connection Process
web-tool supporting the
recommendations
The AESO plans to host an
annual education session in
summer 2015
None
AESO initiated consultation
on the new ISO Rule 501.3 –
ANAP and has received
comments from stakeholders
Publish AESO’s response to
stakeholder comments –
May 2015
The AESO expects to file the
new rule with the AUC in
June; Effective target date Q3 2015
Page 5 of 13
Market Development
Business Initiative
Next Milestone
Target
Transmission
constraint
management (TCM)
Compliance filing approved
by AUC
Information technology and
other operating procedure
changes supporting the new
Rule are expected to be
completed by end 2015
Implementation of revised
constraints management rule
Development,
integration and
restoration of
interties
AESO suspended
consultation on required ISO
Rule changes for
dispatchable interties in order
to further explore the issues
identified by stakeholders
AESO to explore the issues
identified; Stakeholder
consultation to resume when
the issues identified are
clearly defined
Dispatchable import /export
rule changes are not
expected to be implemented
in 2015
Revised Load Shed Service
for Imports (LSSi) arming
volumes and Winter 2014-15
operating limits implemented
Implementation of revised
summer 2015 operating
limits by Q2 2015
Intertie system operating
limits updated to reflect
current operating conditions
for summer 2015 and winter
2015-16
LSSi RFP closed
New LSSi contracts are
expected to be in place July
1, 2015
None
AESO published its energy
storage integration
discussion paper in May
Recommendation paper
expected to be published in
Q2 2015
Begin implementation of
recommendations
Drafting battery storage
technical and operating rules
Initiate stakeholder
consultaion regarding the
draft rule language
Review of 2011 OR market
changes published
Implementation of review
recommendations
Battery storage technical and
operating rules are expected
to be filed with AUC in Q2-Q3
2015
Continue to monitor OR
market changes
OR Rules came into effect as
of December 2014
None
None
Management verified the
understanding of the
requirements, product vendor
recommendations and stated
assumptions in the statement
of work with the Systems
Integrator
Complete required design
deliverables by Q3 2013
Successful completion MSR
Phase III - Iteration 1 Design
that includes a more detailed
plan and accurate estimates
for MSR Phase III - Iteration 1
Build in Q2-Q3 2015
Finalized the detailed project
plan for Phase III Iteration 1
–Design
Complete market participant
workshops (tentatively
scheduled May 26 and June
22, 2015)
Energy storage
technologies
Operating Reserve
(OR) Review Implementation
Market System
Replacement and
Reengineering (MSR)
Phase II
Current Status
Page 6 of 13
II. Financial Update – As of March 31, 2015
Transmission Operating Costs ($ million) – by accounting month
Wires Costs
Operating Reserves
Transmission Line Losses
Transmission Must-Run
Other Ancillary Service Costs
Transmission Operating Costs
YTD 2015
Actual
369.9
22.7
17.9
1.6
6.6
418.6
YTD 2015
Forecast
343.4
39.0
31.4
7.2
421.1
YTD 2014
Actual
314.6
50.5
34.5
1.8
8.9
410.4
Numbers may not add due to rounding
Wires Costs – Wires costs represent the amounts paid primarily to owners of transmission facilities (TFOs) in
accordance with their Alberta Utilities Commission (AUC)-approved tariffs and are not controllable costs of the
AESO.
Year-to-date 2015 wires costs are higher than forecast as a result of AUC-decisions that are higher than
forecast.
Operating Reserves – Operating reserves are generating capacity or load that is held in reserve and made
available to the System Controller to manage the transmission system supply-demand balance in real time.
Operating reserves are procured through an on-line exchange where offer prices are indexed to the pool price.
Year-to-date 2015 operating reserve costs are lower than forecast mainly due to a lower average hourly pool
price. The year-to-date March 2015 average pool price is $29 per megawatt hour (MWh) compared to a forecast
of $41 per MWh.
Transmission Line Losses – Transmission line losses represent the amount of energy that is ‘lost’ as a result
of electrical resistance on the transmission lines. Volumes associated with line losses are determined through
the energy market settlement as the difference between generation and import volumes less consumption and
export volumes. The hourly volumes of line losses vary based on load and export levels, the distance between
generation and load, and changes in the transmission topology. Transmission and generation outage schedules,
unplanned transmission and generation outages, and market dispatches also affect the volume of losses. The
value of line losses is calculated based on the hourly pool price.
Year-to-date 2015 transmission line loss costs are lower than forecast mainly due to the impact of a lower
average actual pool price.
Transmission Must-Run – Transmission must-run (TMR) is generation required to be on-line and operating to
ensure reliability in specific areas of the Alberta AIES with insufficient transmission capacity. This service is
typically procured through commercial contracts between the AESO and suppliers. A market participant may be
directed to provide unforeseeable TMR service when the supplier does not have an existing contract for the
service. In these circumstances, the Independent System Operator (ISO) transmission tariff specifies how to
calculate the amount to be paid to suppliers. Unforeseeable TMR reinforces transmission in areas where the
transmission deficiency is not foreseen with sufficient time to negotiate a contract competitively. These
conditions arise for a number of reasons including unplanned transmission line outages, system conditions in
real-time or unexpected loss of generation.
Page 7 of 13
Year-to-date 2015 TMR costs are due to payments for unforeseeable events that have occurred that were not
included in the 2015 forecast.
Other Ancillary Services Costs – Other ancillary services that the AESO procures for the secure and reliable
operation of the Alberta Interconnected Electrical System (AIES) include load shed service for imports (LSSi),
black start and services provided by the Poplar Hill generator. These services are procured through bilateral
contracts with suppliers.
Other Industry Costs ($ million)
Alberta Utilities Commission (AUC) Fees – Transmission
AUC Fees – Energy Market
Regulatory Process Costs
WECC/NWPP Costs
Other Industry Costs
YTD 2015
Actual
2.9
1.5
0.3
0.5
5.1
YTD 2015
Forecast
3.5
1.8
0.5
0.3
6.1
YTD 2014
Actual
2.9
1.6
0.3
0.3
5.0
Numbers may not add due to rounding
Other industry costs represent fees or costs paid based on regulatory requirements and membership fees for
industry organizations; the amounts and requirements for these costs are not under the direct control of the
AESO. These costs relate to the annual administration fees for the AUC, the AESO’s share of Western
Electricity Coordinating Council (WECC) and Northwest Power Pool (NWPP) membership fees and regulatory
process costs.
Page 8 of 13
General and Administrative Costs ($ million)
Staff Costs
Contract Services and Consultants
Administration
Facilities
Computer Services and Maintenance
Telecommunications
General and Administrative Costs
YTD 2015
Actual
17.0
1.0
1.2
1.9
2.8
0.3
24.2
YTD 2015
Budget
15.4
2.4
1.2
2.0
2.2
0.3
23.5
YTD 2014
Actual
16.2
2.7
1.4
1.5
2.5
0.4
24.7
Numbers may not add due to rounding
Excludes Market Systems Replacement G&A costs
Staff Costs – Year-to-date staff costs are higher than budget due primarily to the payroll taxes associated with
the 2014 incentive paid in February. It is expected that the variance will be reduced later in the year as a
significant portion of the variance is due to timing differences.
Contract Services and Consultants – Year-to-date contract services and consultants costs are lower than
budget due to the timing of when initiatives are planned; it is expected that the variance will be reduced later in
the year.
Computer Services and Maintenance – Year-to-date computer services and maintenance costs are higher
than budget due to timing differences; it is expected that the variance will be reduced later in the year.
Page 9 of 13
Interest and Amortization ($ million)
Interest
Amortization
YTD 2015
Actual
0.1
6.8
YTD 2015
Budget
0.1
6.7
YTD 2014
Actual
0.0
6.5
Page 10 of 13
III. Capital Expenditure Update – As of March 31, 2015
Capital Program ($ million)
Total
Project
Approved
Prior
Year(s)
Actual
Spent
in
2015
ETC
in
2015
ETC
Future
Yr.(s)
Total
Cost
Est.
Variance
Approved
to Total
Cost Est.
Reliability – EMS*
7.4
1.0
2.3
3.9
0.0
7.3
(0.1)
Reliability – HVDC** & Other
3.2
2.6
0.0
0.4
0.0
3.0
(0.2)
Critical Infrastructure Protection
0.6
0.3
0.1
0.3
0.0
0.7
0.1
IT/Cyber Security
0.2
0.0
0.1
0.1
0.0
0.2
0.0
Market Evolution (includes TCM***)
2.0
0.2
0.4
1.4
0.0
1.9
(0.1)
Intertie Framework
0.5
0.1
0.2
0.2
0.0
0.4
(0.1)
Transmission Cost Accountability
0.3
0.1
0.1
0.0
0.1
0.3
0.0
Other Capital Initiatives
5.1
2.0
0.3
2.4
0.0
4.7
(0.4)
Life Cycle Funding
2.6
0.1
1.0
1.4
0.0
2.5
(0.1)
21.9
6.4
4.5
10.0
0.0
21.0
(0.9)
4.9
0.0
1.1
3.7
0.0
4.8
(0.0)
26.8
6.4
5.7
13.8
0.0
25.9
(0.9)
Key Capital Initiatives 1
Subtotal Capital
Major Project Capital - MSR
Total Capital
Note: Differences may exist due to rounding
* Energy Management System
** High Voltage Direct Current
*** Transmission Constraints Management
Capital Program ($ million)
Spent to March 31, 2015
1
5.7
Estimate to Complete (ETC) in 2015
13.8
Subtotal
19.4
AESO Board Decision Document – capital
approved
General Capital - 16.0
Major Project Capital - 4.9
20.9
Variance (under-spent)
(1.5)
Section Appendix I - Notes which provide a summary of financial variances or changes to the (key) capital initiatives
Page 11 of 13
Appendix I - Notes
The following appendix provides further detail on major project progress for the key capital programs (e.g.,
approved business case or change-orders).
Key Capital Initiatives
Description
Reliability
Program –
EMS (Energy
Management
System)
Components
The EMS is used by System Controllers to monitor, control and optimize
the performance of the power system. The EMS is comprised of two
major components: the Application suite; and Infrastructure. Both
components have reached end of life; and will no longer be supported by
their respective vendors.
In order to ensure reliable grid operations, be Critical Infrastructure
Protection (CIP) compliant and have supported hardware and software it
was deemed prudent to proceed with an upgrade to the AESO EMS.
The upgrade is a multi-year project expected to conclude in 2017.
2015 Progress
The key deliverable for 2015 is the completion of EMS Phase II, the
definition phase. This phase will define the detailed business and design
requirements and help to provide a higher degree of certainty regarding
the timing, costs and approach of the subsequent implementation phase.
Management approved an amended business case for Phase II
requirements which identified a capital cost estimate of $7.4 million and
a target completion date of Q2 2015.
Depending on the recommendation from Phase II, the AESO currently
plans to begin Phase III the implementation phase in the second half of
2015. The implementation phase is currently envisioned to be a multiyear initiative requiring separate AESO Board-approval.
Reliability
Program –
Other
Components
Critical
Infrastructure
Protection
(CIP)
Description
Grid management projects that are intended to enhance the efficiency
and improve the ability to reliably run the Alberta Interconnected
Electrical System (AIES).
2015 Progress
A number of system development projects have been identified to
enhance the reliability of the AIES in support of HVDC commissioning
activities and ongoing operations.
Four of these projects (i.e. EMS integration, PhasorPoint Application
implementation, Phasor Measurement Unit Display enhancement and
Loss Optimization enhancement) have been advanced substantially but
are currently on hold awaiting HVDC line availability. The target date for
line availability is the second half of 2015. The related project resources
have been reassigned in the interim.
Description
Implementation of facility upgrades and/or changes to AESO sites that
are required to support CIP implementation and compliance
requirements.
2015 Progress
Management approved a business case supporting the implementation
of various security system upgrades at the System Coordination Centre.
The cost estimate for the identified upgrades is $0.7M and the target
completion date Q3 2015.
Page 12 of 13
Description
Upgrade systems and processes to reduce the risk of cyber security
breaches and facilitate AESO compliance to CIP requirements.
2015 Progress
AESO has continued to advance its cyber security maturity level. This
includes analysis activities to enhance intrusion detection and intrusion
prevention systems and processes; improved identity and access
management systems and processes; network firewall reinforcement;
and continuous vulnerability assessment implementation.
IT / Cyber
Security
Management approved a business case recommending upgrades to the
AESO’s Intrusion Detection System (IDS). The cost estimate for the
upgrades is $0.2M and the target completion Q2 2015.
Market
Evolution Transmission
Constraints
Management
(TCM)
Description
The identification, development and implementation of tools in support of
market optimization and/or performance improvements. This includes
the ongoing review (assessment and consultation) of the market design
and its structural elements in consideration with the potential Market
Systems Replacement and Reengineering (MSR) Project.
2015 Progress
Management approved a business case recommendation to implement
system changes to support theTCM Dispatch Up Service and Settlement
requirements identified. The cost estimate for the project is $1.5 million
and target completion date Q4 2015.
Description
Develop and implement a framework and tools that support increased
transfer capacity with neighbouring jurisdictions. This includes but is not
limited to restoring existing intertie capacity, support for merchant
transmission additions and implementation of dynamic scheduling
solutions.
2015 Progress
Management approved a business case identifying the requirement to
implement system changes supporting the Load Shed Service for
Imports (LSSi) product review recommendations. The cost estimate for
the changes is $0.4 million and target completion Q2 2015.
Intertie
Development
Description
Transmission
Cost
Accountability
2015 Progress
Develop transmission cost benchmarking competency and a database to
assist in the assessment of reasonableness of the costs. The AESO
would use the benchmarking data to test cost estimates proposed by
transmission facility owners in the need identification document phase
and proposal to provide services stages.
The second phase of the transmission cost benchmarking application
enhancement project is nearing completion. The cost estimate for the
work is $0.2 million and target completion Q2 2015.
Page 13 of 13