AESO Responses to Commission Directions AUC Decision 2009-007
Objections to ISO Rule 6.3.5, 6.3.6 and Appendix 7 Long Lead Time Energy Dispatches and Directives
Item 1
AUC Decision
“54. The Commission expects the AESO to clarify the measures it will use to determine that the
adequacy assessment indicates insufficient supply to meet AIES demand. The Commission
further expects these measures will be reflected in the updates to OPP 705 and OPP 801 as
contemplated in its Supplemental Filing. The Commission directs the AESO to provide an
update as to the status of OPP 705 and OPP 801 at the time it re-files the LLTD Rule.”
AESO Response
The supply adequacy levels that will be used to initiate Long Lead Time Energy Directives are
clearly set out in OPP 705 - Supply Adequacy Assessment. The actions to be taken when such
an event occurs are described in OPPs 705, 801 and 101, which have been submitted
concurrently with the revised LLTD rules, but in a separate filing.
The adequacy assessment reflected in OPP 705 is currently displayed on the AESO’s website
on the Supply Adequacy Report.
Item 2
AUC Decision
“69. The Commission is of the view that there is no requirement for the LLTD Rule to include the
actual language in subsection 18(1) of the Transmission Regulation. However, the Commission
expects the AESO, pursuant to its authority under subsection 20(1) of the EUA, to clarify that
the circumstances in which the AESO would issue a long lead time directive are reasonably
limited to situations as contemplated in subsection 18(1) of the Transmission Regulation.”
AESO Response
ISO rule 6.3.5e) has been revised to include “Subject to subsections 18(1) and 18(2) of the TReg, and…”
The addition of this phrase clarifies that the issuance of a Long Lead Time Energy Directive is
subject to the specified sections of the Transmission Regulation.
Item 3
AUC Decision
“95. The Commission notes the use of the words “incremental generation costs” within
subsection 32(b) in the EUA. In its decision to extensively revise the compensation aspects of
the LLTD Rule, the AESO appears to have given little or no consideration to what constitutes an
incremental generation cost. The Commission directs the AESO to define “incremental” and
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AESO Responses to Commission Directions AUC Decision 2009-007
Objections to ISO Rule 6.3.5, 6.3.6 and Appendix 7 Long Lead Time Energy Dispatches and Directives
describe “generation costs” that it considers the term “incremental generation costs” to
encompass in the LLTD Rule.”
AESO Response
The AESO has included the term in the rule and has provided a definition of “incremental
generation costs” in Appendix 7. “Incremental” refers to costs “which may reasonably be
determined to have been avoided but for a long lead time energy directive” and “generation
costs” are those described in Appendix 7, Section 1.1 (i) through (iv).
Item 4
AUC Decision
“97. The Commission considers that payments of incremental generation costs pursuant to
subsection 32(b) of the EUA are also subject to the prudency duty under subsection 30(2) of the
EUA. Further, the Commission also notes that EUA subsection 32(b) requires the ISO to “make
prudent arrangements to manage the financial risk associated with those costs”. As such, the
Commission finds that the AESO must take this prudency obligation into account when
balancing its FEOC promotion and system reliability obligations under the LLTD Rule.”
AESO Response
To take into account the prudency obligation set out in subsection 32(b) of the EUA, the AESO
has limited costs that can be recovered due to a Long Lead Time Energy Directive to variable
costs and other related reasonable costs. Additionally, costs are net of pool revenue for the
energy produced while complying with the directive and there are requirements imbedded in the
rule that must be met before there will be payment for incremental generation costs.
Item 5
AUC Decision
“107. The Commission finds that the LLTD Rule, as written, does not state when compensation
can be awarded. Although the AESO sufficiently clarified its intent in the hearing and in Reply
argument, the LLTD Rule itself is not clear. In this regard, the LLTD Rule should be revised to
reflect the AESO’s stated intent that a generator that opts out of the directive at any point prior
to being directed off forfeits rights to compensation for costs it would not have incurred absent
the directive.”
AESO Response
Rule 6.3.5.2 f) has been revised to clarify when a pool participant is eligible to receive payment
for incremental generation costs for a Long Lead Time Energy Directive and rule 6.3.5.2 g) has
been revised to clarify when a pool participant is not eligible to receive such payment.
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AESO Responses to Commission Directions AUC Decision 2009-007
Objections to ISO Rule 6.3.5, 6.3.6 and Appendix 7 Long Lead Time Energy Dispatches and Directives
Additionally, section 1.2 of appendix 7 has been revised to provide further clarity with respect to
payments for incremental generation costs.
Item 6
AUC Decision
“111. The Commission notes that ENMAX raised a technical issue with the compensation in
instances where generators opt out of a directive part way through the event. The Commission
notes that in certain circumstances a possibility exists that there is a disincentive to opt out of a
directive if the generator incurred costs larger than pool revenues while under the directive. A
rule that inadvertently inhibits voluntary participation in the market should be adjusted if
possible. It is not clear to the Commission that the LLTD Rule, as drafted, adequately takes into
account ENMAX’s concern. The AESO, in developing a definition of “incremental generation
costs” should consider the principle that a rule should not inhibit voluntary participation in the
market, subject to practical implementation of the rule.”
AESO Response
The rule [as written] consciously avoids providing generators with any perverse incentive to not
voluntarily participate in the market. The rule allows generators to opt into the energy market at
any time during a Long Lead Time Energy Directive in exchange for forfeiting incremental
generation cost recovery from the AESO. Generators may offer their energy so that they are
dispatched before receiving a Long Lead Time Energy Directive and are also able to opt into the
energy market after the Long Lead Time Energy Directive is cancelled but before complying
with the directive, again foregoing incremental generation cost recovery from the AESO. In all
cases where the signals to a generator indicate that participating in the energy market may be
appropriate, the generator has the option to do so.
Item 7
AUC Decision
“153. The Commission finds that the LLTD Rule should be revised in a manner that allows for
compensation to be directed to the impacted party if a long lead time directive is issued.”
AESO Response
The AESO has revised the term “owner” to “pool participant”. The pool participant is the entity
that receives the Long Lead Time Energy Directive, and in the case of a PPA unit, the PPA
buyer, who is the pool participant, assumes the risks associated with complying with the
directive. Any cost incurred by the PPA owner would be passed onto the PPA buyer. Likewise
any pool payments regarding a PPA unit are paid by the AESO to the PPA buyer. Using the
term pool participant therefore ensures that impacted parties are compensated.
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AESO Responses to Commission Directions AUC Decision 2009-007
Objections to ISO Rule 6.3.5, 6.3.6 and Appendix 7 Long Lead Time Energy Dispatches and Directives
Item 8
AUC Decision
“159. Given that the Commission has found that the LLTD Rule should be changed for other
reasons, it is desirable to draft a rule that requires reporting. The revision of the reporting
requirements under the amended LLTD Rule submitted in the AESO’s Argument appears to be
an acceptable solution to the concerns raised by ENMAX and IPPSA. The revision more clearly
sets out expectations for the report, and thereby better supports a FEOC market.”
AESO Response
Appendix 7 has been revised to include proposals submitted in the AESO’s Argument regarding
reporting. These revisions provide a reporting mechanism that includes mandatory items that
describe the circumstances that caused and are related to a Long Lead Time Energy Directive.
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