20 years of enabling competitive power markets …
WSPP Inc.
wspp.org
Federal Energy Regulatory Commission
December 18, 2006
Mission Statement
To provide a catalyst for an efficient and robust
wholesale electric power market that allows WSPP
members to effectively manage their power
deliverability and price risk
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WSPP 20 years of enabling competitive power markets …
Who are we?
The most widely used wholesale electric power sales contract in the country …
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An organization made up members from all walks of the power industry
An organization with a diverse membership
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Buyers and sellers
Private, public and governmental entities
Financial institutions and aggregators
Regional, national and international
Wholesale and retail
Just to name a few …
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WSPP 20 years of enabling competitive power markets …
What are we?
A 20 year old organization that has facilitated market evolution …
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Established by FERC in 1987 as a multi-state bulk power marketing
experiment. The experiment was meant to test whether broader
pricing flexibility for coordination and transmission services would
promote increased efficiency, competition, and closer coordination
of economy sales
Accepted by FERC on a non-experimental basis in 1991
Governed by a board of directors of all members comprising the
Executive Committee (EC)
Executive
Committee
(Board of Directors)
Administrative
Committee
Operating
Agent
Operating
Committee
Legal
Counsel
Contracting
Sub-Committee (OC)
WSPP 20 years of enabling competitive power markets …
Audit
Committee
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Membership composition
Over 300 members from diverse market sectors …
Retail Providers
1%
Independent
Power Producers
3%
Marketers &
Financial
Instituations
44%
Public Owned
Utilities
32%
Investor Owned
Utilities
20%
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WSPP 20 years of enabling competitive power markets …
Membership changes with the market
Over 300 members and growing …
16 New Members in 2006 (so far…)
325
300
Mirant Energy Trading, LLC
Clark County Public Utilities (Clark County
PUD #1)
Cinergy Marketing & Trading, LLP
Old Lane Commodities, LP
Alcoa Power Marketing, Inc.
Safeway, Inc.
Midwest Energy, Inc.
Credit Suisse Energy, LLC
City of Alma, KS
City of Iola, KS
City of Scranton, KS
City of Wathena, KS
Klickitat PUD (Klickitat County PUD #1)
Central Arizona Water Conservation District
City of Moreno Valley, CA
Power and Water Resources
275
250
225
200
175
150
125
100
75
50
25
06
20
04
20
02
20
00
20
98
19
96
19
93
19
19
87
0
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WSPP 20 years of enabling competitive power markets …
Geographical reach changes with membership
We cut across almost all NERC Regions …
MD=2
WA > 15
OR > 10
9
14
CA > 45
9
5
CT = 6
DE = 1
DC = 2
MA = 6
NJ = 1
9
7
10
> 35
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WSPP 20 years of enabling competitive power markets …
WSPP promotes open membership
Membership requirements create ease of market entry …
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All market participants are eligible
Designate a member to the Executive and Operating committees
Be a signatory to the WSPP Power Sales Agreement
Obtain FERC approval if jurisdictional
Maintain or contract for 24 hour scheduling coverage
Minimal membership fee
Organizational requirements are minimal …
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The organization conducts at least three meetings annually of all
members and more frequently to address contractual matters
One member equals one vote regardless of size
A 90% approval vote of the Executive Committee is required to
amend the contract
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WSPP 20 years of enabling competitive power markets …
WSPP adds value …
A proven industry standard ….
To the member:
• Access to over 300 contractual parties and growing
• Reduced transactional costs and improved risk management
• Standardized and widely accepted throughout the western markets
• Used in all active mediums – brokers, bilateral, electronic exchanges
• Not entity or geographically limited
• Body of case law supporting the contract
• Comfort – developed by members for members
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WSPP 20 years of enabling competitive power markets …
WSPP adds value …
A proven industry standard ….
To the market:
• Facilitates market liquidity
• Price discovery
– Multiple buyers and sellers
– Daily published indices
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Contributes to market efficiencies
Increases system reliability through greater availability of generation
Reduces end-user costs
Can be used by centralized market participants to transact in the
forward markets which enables greater risk management
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WSPP 20 years of enabling competitive power markets …
Elements of the agreement
The product descriptions and contract provisions have already been agreed to...
Major components of the agreement:
• Products
– Schedule A – Economy Energy Service
– Schedule B – Unit Commitment Service
– Schedule C – Firm Sales or Exchange Service
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Pricing
– Market based
– Cost based
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Credit worthiness and assurances
Forced majeure
Non performance/damages
Dispute resolution process
Default/termination
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WSPP 20 years of enabling competitive power markets …
Agreement usage
Transacting with simplicity …
Executing a transaction is streamlined down to agreement on:
• Number of megawatts
• Point of delivery
• Delivery hours (on-peak or off-peak)
• Delivery timeframe (e.g. “July – September 2007”)
• Schedule (e.g. “WSPP Schedule C”)
• Price
Used to transact in various delivery periods:
• Real-time
• Pre-schedule
• Balance of month
• Prompt month
• Term
WSPP 20 years of enabling competitive power markets …
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Strategic efforts
Meeting the needs of its members …
Improving communications with members:
• Website redevelopment
• www.wspp.org
Positioning the organization for broader membership:
• Changing the organizational name from: Western System Power
Pool, Inc., to WSPP Inc. to reflect national market presence and
increase the appeal to eastern markets
• Holding committee meetings in non-western locations
Maintaining the usability of the contract for its members:
• Continue to evolve the contract to keep pace with changes in the
energy marketplace
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WSPP 20 years of enabling competitive power markets …
WSPP looking forward to the next 20 years of enabling
wholesale power markets …
Risk
Management
Market
Liquidity
WSPP
Power
Sales
Agreement
Price
Discovery
Standard
Terms
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WSPP 20 years of enabling competitive power markets …
Attendees
Jeff Atkinson (incoming Chairman)
Public Utility District of Grant County
(509) 754-5059
jatkins@gcpud.org
Jim Lobdell (Secretary/Treasurer)
VP Power Operations & Resource Strategy
Portland General Electric
(503) 464-2723
jim.lobdell@pgn.com
William Gaines (Vice Chairman)
Superintendent / COO
Tacoma Power
(253) 502-8203
Bgaines@cityoftacoma.org
Bobby Campo (Operating Committee Chairman)
Operating Agent
WSPP
(707) 643-7346
b.campo@sbcglobal.netl
Duane Farmer (current Chairman)
Director of Fuels and Wholesale Market Policy
Public Service Company of New Mexico
(505) 855-6200
dfarmer@pnm.com
Arnie Podgorsky
WSPP Counsel
Wright & Talisman, P.C.
(202) 393-1200
podgorsky@wrightlaw.com
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WSPP 20 years of enabling competitive power markets …