FERC Order No. 890 The Next Generation of OATT Transmission Service

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1 FERC Order No. 890 The Next Generation of OATT Transmission Service

2 Agenda 9:30 9:45 Welcome Cliff Sikora, Co-Chair of the Troutman Sanders Energy Practice 9:45-10:00 Opening Remarks Daniel Larcamp 10:00 11:00 The New Transmission Planning Paradigm Chris Jones, Troutman Sanders 11:00 11:15 Break 11:15-12:00 Calculating ATC Andrea Chambers, Troutman Sanders 12:00-1:15 Lunch and Presentation David Cook, Vice President and General Counsel, NERC 1:15-2:00 Transmission Pricing Issues Anne Dailey and Rebecca Roback, Troutman Sanders 2:00-2:45 Changes Relating to Non-Rate Terms and Conditions David Rubin, Troutman Sanders 2:45-3:00 Break 3:00-3:30 OASIS Transparency, Performance Metrics and Penalties Amie Colby, Troutman Sanders 3:30-3:45 Summary of Compliance Dates 3:45 4:00 Closing Remarks

3 Transmission Planning Chris Jones

4 Basic Premise for Planning Reform Order No. 888 basic principle Build the system to meet the needs of open access customers. Order No. 888-A encouraged joint planning but did not require that transmission providers coordinate with either their network or PTP customers in transmission planning or otherwise publish the criteria, assumptions, or data underlying their transmission plans. Order No. 890 finds that the existing OATT lacks the specific planning criteria to counter the incentives of a transmission owner to plan its system in a discriminatory manner. The lack of coordination, openness, and transparency results in opportunities for undue discrimination in transmission planning.

5 Basic Planning Requirements of Order 890 Order No. 890 requires a more open, transparent, inclusive planning process than FERC feels is not occurring under the current OATT regime. Order requires all transmission providers to file a new attachment to their OATT containing their transmission planning process. The transmission planning process to be memorialized in the OATT must follow 9 Transmission Planning Principles

6 Planning Principles 1. Coordination The transmission provider must meet with all of its transmission customers and interconnected neighbors to develop a transmission plan. FERC responded to comments and decided not to dictate the form of coordination (e.g. the number and structure of meetings) Suggests formation of a permanent planning committee made up of TP, neighboring transmission providers, affected state authorities, customers, and other stakeholders. FERC more concerned with substance over form in complying with this requirement.

7 Planning Principles 2. Openness Transmission planning meetings must be open to all affected parties. Some commenters expressed concerns that meetings must be open to the public. FERC did not order that requirement. Planning meetings must be open to all affected parties including, but not limited to, all transmission and interconnection customers, state commissions and other stakeholders. Smaller groups OK on specific issues.

8 Planning Principles 3. Transparency The transmission provider is required to disclose to all customers and other stakeholders the basic criteria, assumptions, and data that underlie its planning. This means: The basic criteria and data used for transmission planning must be reduced to writing and posted. Outside parties should be able to replicate the results. FERC expects non-jurisdictionals to comply as well. FERC deems Forms 714 and 715 to be insufficient, primarily because TP s have discretion in what they report. Encourages simultaneous disclosure to alleviate Standards of Conduct concerns but pledges to address those issues in the SoC NOPR.

9 Planning Principles 4 Information Exchange Transmission customers are required to submit information on their projected loads and resources, and the transmission provider must allow market participants the opportunity to review and comment on draft transmission plans. Network customers will need to submit information on their projected loads and resources on a comparable basis (e.g., planning horizon and format) as used by transmission providers in planning for their native load PTP customers will be required to submit any projections they have of a need for service over that planning horizon and at what receipt and delivery points. TPs must develop a format and schedule for these submittals.

10 Planning Principles 5. Comparability The transmission system plan should meet the specific service requests of transmission customers and otherwise treat similarly situated customers comparably. Restatement of existing OATT rule? FERC included this principle to address comments that transmission providers continue to plan their transmission systems such that their own interests are addressed without regard to, or ahead of, the interests of their customers. Does not require all customers to be treated the same only similarly-situated customers.

11 Planning Principles 6. Dispute Resolution FERC adopts the NOPR s proposal to require transmission providers to develop a dispute resolution process. Opens the door to prove up existing dispute resolution process as sufficient, but such a showing is required. Dispute resolution process should be available to address both substantive and procedural planning disputes. Will not cover any issues over which the Commission does not have jurisdiction (e.g. state siting issues).

12 Planning Principles 7. Regional Participation The transmission provider is required to coordinate with interconnected systems to share system plans and ensure that they are simultaneously feasible and identify system enhancements that could relieve significant and recurring transmission congestion. Proper venue? RTOs, NERC sub-regions, something new? FERC encourages projects with regional benefits. FERC declines to dictate the vehicle for regional planning and further does not dictate the appropriate geographic scope. Compliance filings must explain each TP s choice.

13 Planning Principles 8. Economic Planning Studies The transmission provider is required to annually prepare studies identifying significant and recurring congestion and to post such studies on OASIS. FERC disagrees that economic upgrades should be considered only in the context of individual requests for service under the OATT. Planning it s not just reliability any more. FERC clarifies no obligation to build. Does this concept apply easily outside of RTO markets? If it s not reliability-driven, and its not related to requested service, WHO PAYS FOR IT?

14 Planning Principles 9. Cost Allocation for New Projects For a planning process to comply with the Rule, it must address cost allocation for new projects. Rather than imposing a particular allocation method, FERC permits transmission providers and stakeholders to determine their own criteria. FERC provides several cost allocation principles: (1) costs should be fairly assigned among participants, including those who cause them to be incurred and those who otherwise benefit from them; (2) cost allocation proposals should provide adequate incentives to construct new transmission; and (3) the allocation proposal should be generally supported by state authorities and participants across the region.

15 Other Planning Issues Independent Third Party Coordinator State Commission Participation Flexibility in Implementation Recovery of Planning Costs Open Season for Joint Ownership Specific Study Processes Beyond Reliability and Congestion Level of Detail in the OATT

16 Jurisdictional Issues Comments on the NOPR contained several challenges to FERC s jurisdiction over transmission planning and warnings not to extend into realm of traditional state regulation. FERC relies on new Section 217 of the FPA. Congress further directed the Commission to exercise its authority under EPAct 2005 in a manner that facilitates the planning and expansion of transmission facilities to meet the reasonable needs of load-serving entities. Contends this jurisdiction enhances authority it already had over planning.

17 Compliance Requirements Each transmission provider is required to submit in a compliance filing 210 days after publication of the Rule: (1) A proposal for a coordinated and regional planning process that complies with the planning principles and other requirements in the Final Rule. OR (2) a compliance filing describing how its existing planning process is consistent with or superior to the requirements of the Final Rule. Under either of these approaches, the process must be documented as an attachment to the transmission provider s OATT.

18 Compliance Requirements Each transmission provider is also required to construct and post on OASIS a strawman proposal for its compliance with the Rule within 75 days of publication the rule FERC strongly encourages consulting with stakeholders in developing the strawman. Strawman should include designation of planning region FERC plans on scheduling several regional Technical Conferences in the period from 90 to 120 days after the publication of the Rule.

19 Calculating and Posting Available Transfer Capability - ATC Andrea Chambers

20 Basic Premise for ATC Reform Under Order Nos. 888 and 889, FERC did not prescribe a specific methodology for calculating ATC, but encouraged the industry to develop a consistent, industry-wide approach. Order No. 890 finds that this process has been unsuccessful and that inconsistencies are apparent across the industry.

21 CONSISTENCY AND TRANSPARENCY FOR ATC Order 890 does not provide a formula for ATC. Enter NERC INDUSTY STANDARDS PROCESS: Public utilities, working through NERC and NAESB processes must improve the consistency and transparency of ATC calculation methods (including, components, data inputs, modeling assumptions, and data exchange). NERC to modify its ATC-related reliability standards within 270 days. Utilities and NAESB develop business practices within 360 days. NERC/NAESB file a workplan within 90 days.

22 OATT AND OASIS REQUIREMENTS FERC also increases transparency of ATC calculations by requiring each transmission provider s OATT to include its specific ATC calculation methodology, and to post relevant data and models on each transmission provider s OASIS.

23 OATT Attachment C- Minimum Requirements Specify NERC-approved ATC methodology (e.g. contract path, network ATC, or network AFC) Provide Detailed Description of the Algorithm for firm and non-firm ATC for scheduling (same day and real-time), operating (day ahead and preschedule), and planning (beyond operating day). Provide Flow Diagram of ATC calculation

24 OATT Attachment C- Minimum Requirements Define each ATC component (i.e. TTC, ETC, TRM and CBM) and provide detailed explanation of derivation for both operating and planning horizons. Update 60 days after NERC/NAESB process to include any revised/standards regarding ATC. May protect confidential or CEII material, but may not merely refer to NERC/NAESB/WECC business practices. Requires annual CBM studies and narrative of CBM practices.

25 ATC COMPONENTS STANDARDIZATION Total Transfer Capacity /Total Flowgate Capacity ( TTC/TFC ) Set by NERC Reliability Standards- any requests for regional differences to be resolved through NERC processes

26 ATC Components Existing Transmission Commitments ( ETC ) (1) Native Load (including Network) (2) Grandfathered Transmission Agreements (3) Appropriate Point to Point (4) Rollover rights with Long-Term Firm (5) Other uses identified by NERC NOT FOR PLANNING OR CONTINGENCY RESERVES (use TRM or CBM) All Reserved, but Unused Capacity (nonscheduled) to be released as Non-Firm ATC

27 ATC COMPONENTS ETC (cont.) POR/POD - May not model a firm reservation with a single generator source (point of receipt) and multiple load sinks (points of delivery) if the combined reservations exceed the generator s nameplate rating. Utilities to work through NERC to develop requirements in MOD-001 regarding these reservations; work through NAESB for business practices to implement MOD-001.

28 ATC Components Capacity Benefit Margin ( CBM ) Despite concerns that Transmission Provider s have preferential access to interface capacity, Commission decides that Load Serving Entities are allowed to set aside transfer capability to maintain their generation reliability requirement as CBM; But..the Transmission Provider must remove the costs of CBM from Point to Point Rates (limited 205 due within 120 days, no cost of service data required, no change to revenue)

29 ATC Components Capacity Benefit Margin ( CBM ) Implementation Issues How does removing the costs of CBM work? Is there a CBM rate? Is CBM still path-specific? If so, how will it be pulled out of transmission rates?

30 ATC Components CBM (cont.) (1) Utilities/NERC/NAESB- to develop standards regarding (a) how CBM value to be determined; (b) how CBM should be allocated across paths, and (c) how CBM to be used. (2) Utilities/NERC- to specify standard for generation deficiency conditions when LSE allowed to use CBM (3) Transmission set aside as CBM to be zero in non-firm ATC (4) Utilities/NAESB- to develop OASIS mechanism to Audit CBM usage

31 ATC Components Transmission Reliability Margin ( TRM ) Utilities/NERC to modify standards in MOD-008 and MOD-009 using guidance below: TP can set aside TRM for: (i) load forecast and load distribution error, (ii) facility loading variation, (iii) uncertain transmission system topology, (iv) loop flow impact, (v) variations in generator dispatch, (vi) automatic reserve sharing, (vii) NERC identified uncertainties. Unused TRM is not required to be sold non-firm.

32 ATC Components TRM (cont.) Utilities/NERC- to establish MAXIMUM TRM Each Transmission Provider to calculate, and allocate on each path/flowgate the aggregate TRM for all LSEs in the area Upon request by any Transmission Customer or LSE within its Control Area, Transmission Provider must make available all underlying data, including load flow base cases, used to determine TRM (subject to confidentiality if needed).

33 Posting on OASIS ATC/TTC POSTINGS/DATA/STUDIES - FERC continues to require ATC/TTC posting on OASIS including all data used to calculate ATC and TTC for any constrained paths and any system planning studies or specific network impact studies, and a list of studies. CBM-Requires posting of CBM data per path. TRM - Requires posting of TRM data for paths for which ATC, TTC, and CBM are already posted.

34 Posting on OASIS CHANGES IN ATC/TTC -Requires posting of narrative explanation of changes in ATC on constrained paths monthly or annually if TTC changes more than 10% or if ATC remains unchanged at a value of zero for more than 6 month. Can each change in ATC be explained in narrative? What if loop flows from two systems over cause the change? What are the liability implications of these statements?

35 OASIS Metrics - for processing TSRs Posting of Unused Transfer Capacity- Transfer Capacity associated with reservations not scheduled in real time are to be made available as non-firm on OASIS

36 Posting on OASIS Denials of Service - Extends from 3 to 5 years the data retention requirement for denials of service and expands access to this information. Affiliate Requests - Requires posting the number of affiliate & nonaffiliate requests for transmission service that have been made and how many have been rejected. Forecast Data - Post all underlying load forecasts, including load forecasts and actual daily peak load for both system-wide load (including native load) and native load. (Orders NAESB to standardize.) CEII - Requires standard disclosure process for CEII. Network Resource designation requests/terminations must be requested over OASIS posted on OASIS for 90 days and available for audit for 5 years.

37 Models, Assumptions, Input Data Periodic Update of Models-Utilities/NERC must modify reliability standards MOD-10 thru MOD-25 to incorporate period review of models (e.g., load flow base cases with contingency, short circuit data, transient and dynamic stability simulation data) ATC Models Consistent with Planning Models includes load levels, gen. dispatch, maintenance schedules, etc. Consistent Models of Base Generation Dispatch Utilities/NERC to develop standards regarding which generators to mode (Base generation will model DNRs and others that have legal obligation to run, uncommitted resources that can be delivered to the control area, economically dispatched, as needed, for balancing. Models of Transmission Reservations Utilities and NERC to develop reliability standards regarding reflecting approaches for simulating reservations

38 Transmission Pricing Rebecca Roback and Anne Dailey

39 Energy Imbalance Definition: Energy Imbalance Service is provided when the transmission provider makes up for any difference that occurs over a single hour between the scheduled and actual delivery of energy to a load located within its control area.

40 Energy Imbalance In Order No. 888, the Commission included energy imbalance as one of the six ancillary services that must be provided in the OATT. The Commission s rationale an energy deviation band would be appropriate for load variations and a price for exceeding that deviation band would be appropriate for excessive load variations. It also encourages good scheduling practices.

41 Energy Imbalance Application since Order No Commission only required inclusion of imbalance penalties in an OATT for excessive load variations, but has allowed in certain cases the inclusion of generator imbalance provisions in an OATT or individual interconnection agreement.

42 Energy Imbalance Changes in Order No. 890: New Schedule 9, adding standardized charges for generator imbalance Standardized three tiered pricing methodology for both energy imbalance and generator imbalance charges Exemption from certain penalties for intermittent resources

43 Energy Imbalance Order No. 890 criteria for imbalance charges: (1) The charges must be based on incremental cost or some multiple thereof; (2) The charges must provide an incentive for accurate scheduling; (3) The provisions must account for the special circumstances of intermittent generators

44 Energy Imbalance Three-tiered approach to imbalance charges: Tier 1 Imbalances of less than or equal to 1.5% of the scheduled energy (or 2 MW, whichever is larger) are netted monthly and settled at 100% of the incremental or decremental cost Only tier where netting is allowed Tier 2 Imbalances between 1.5% and 7.5% of the scheduled energy (or between 2-10 MW, whichever is larger) are settled at 90% of the decremental cost for overscheduling or 110% of the incremental cost for underscheduling;

45 Energy Imbalance Tier 3 Imbalances greater than 7.5% (or 10MW, whichever is larger) are settled at 75% of the decremental cost for overscheduling or 125% of the incremental cost for underscheduling.

46 Energy Imbalance Incremental and Decremental Costs are defined in the Schedules as the Transmission Provider s actual average hourly cost of the last 10 MW dispatched to supply the Transmission Provider s native load, based on the replacement cost of fuel, unit heat rates, start-up costs, incremental operation and maintenance costs, and purchased and interchange power costs and taxes, as applicable.

47 Energy Imbalance Intermittent Resources get exemption from third tier charges and will pay second tier charges for all deviations greater than the larger of 1.5% or 2 MW. Exemption because intermittent resources cannot always follow schedules accurately. Intermittent Resource defined as electric generator that is not dispatchable and cannot store its fuel source and therefore cannot respond to changes in system demand or respond to transmission security constraints

48 Energy Imbalance Tiered approach applies to: (1) Schedule 4 Energy Imbalance Service; and (2) Schedule 9 Generator Imbalance Service A transmission customer can be assessed penalties for one or the other, but not both

49 Energy Imbalance To the extent a transmission provider wants to deviate from the Schedule 4 and Schedule 9 provisions, it may file an FPA Section 205 filing to show its provisions are consistent with or superior to the pro forma OATT. The Commission will not abrogate existing generator imbalance agreements between transmission providers and their customers

50 Energy Imbalance Intentional Deviations FERC has not adopted intentional schedule deviations, but believes the three-tiered approach should be sufficient to discourage intentional power dumps or leans on other generation.

51 Energy Imbalance Inadvertent Energy, which is the difference between a control area s net actual interchange and the net scheduled interchange, will be treated differently from imbalances. Currently, under NAESB standards, inadvertent energy is handled adequately through a return-in-kind approach. The Commission notes that if such an approach is no longer sufficient to maintain reliability, FERC may adopt new standard.

52 Energy Imbalance Treatment of revenues received above incremental costs For revenues received above incremental costs, transmission providers must develop and file in a compliance filing mechanisms to credit penalty revenues above incremental costs to all nonoffending transmission customers, including affiliated transmission customers.

53 Transmission Credits for Network Customers Under Order No. 888, new transmission facilities constructed by a network customer were eligible for transmission credits if they were jointly planned with the transmission provider. In Order No. 890, the link between joint planning and credits has been severed. A network customer shall receive credits if its facilities are integrated into the operations of the transmission provider s facilities. Only applies to facilities added after the effective date of the final rule. Costs are not automatically recovered in the transmission provider s cost of service.

54 Capacity Reassignment The Commission determined that the capacity reassignment market has failed to develop into a robust secondary market. In order to facilitate market development, the Commission removed the price cap on capacity reassignment.

55 Capacity Reassignment FERC will monitor the capacity reassignment market to ensure that it is developing properly. This includes: All sales or assignments of capacity are to be posted on OASIS before the reassigned service commences; Assignees of transmission capacity must execute a service agreement before the reassigned service commences; Transmission providers are required to provide quarterly reports summarizing the service agreements; and FERC staff will monitor the reassignment data to identify any problems, including market power.

56 Operational Penalties If a transmission customer uses transmission service in excess of the capacity it has reserved, or uses unreserved transmission service, it will incur transmission use penalties. No class of customer is exempt from such penalties. Applies to transmission provider when taking service under the OATT. Network customers incur penalties if they use network service to support off system sales.

57 Operational Penalties Transmission Providers have discretion in setting penalty rates, as long as the penalty rates are based on the period of unreserved use. Rates must meet the following criteria: The penalty for a single hour of unreserved use is based on the rate for daily firm point-to-point service. More than one penalty assessment for a given duration will lead to an increase in the penalty assessment to the next given duration; i.e., more than one daily penalty will lead to the incurrance of a weekly penalty. The penalty rates must be stated explicitly in the OATT. Transmission Providers are required to distribute all collected unreserved use penalties, and provide an annual report detailing the penalties received and distributed.

58 Other Ancillary Services Reactive Supply and Voltage Control, Regulation and Frequency Response, Energy Imbalance, Spinning Reserves, Supplemental Reserves, and Generator Imbalance may be provided by generating units or non-generating resources.

59 Changes to Non-Rate Terms and Conditions of Service David Rubin

60 RECIPROCITY The Commission retains the reciprocity language in the Order No. 888 pro forma OATT, but updates it to include references to ISOs and RTOs. If an ISO or RTO is the transmission provider, the reciprocity obligation is owed to all members of that ISO or RTO. Retain Order No. 888 s three alternative provisions for satisfying the reciprocity condition, (1) a bilateral agreement, (2) waiver from the public utility, or (3) file a safe harbor tariff with the Commission. The safe harbor tariff, its provisions must be substantially conforming or superior to the revised pro forma OATT in this Final Rule. Will not adopt a generic rule to implement the new FPA section 211A. Existing waivers of the obligation to file an OATT or otherwise offer open access transmission service remain in place.

61 PLANNING REDISPATCH AND CONDITIONAL FIRM SERVICE Under the current OATT - Planning (or economic) Redispatch - Reliability Redispatch

62 Planning Redispatch Provider must expand or upgrade system or, if it is more economical, plan to redispatch its resources to provide requested firm point-to-point service, provided redispatch does not: Degrade or impair the reliability of service to native load customers, network customers and other transmission customers taking firm point-to-point service or Interfere with the transmission provider s ability to meet prior firm contractual commitments to others.

63 Reliability Redispatch Required, when feasible, to relieve system constraints that would otherwise cause curtailment of the network customer or transmission provider loads. To provide reliability redispatch, the transmission provider redispatches all network resources and transmission provider resources on a least-cost basis. The transmission provider and network customers each pay a load ratio share of these redispatch costs.

64 Order No. 890 Changes Modifies the current planning redispatch requirement. Creates a new conditional firm service option.

65 Eligibility Planning redispatch and conditional firm options need only be made available to customers who request firm point-to-point service of more than a year in duration and the requested service is not available.

66 Process As part of the System Impact Study, customers will have the choice of whether to request a study of the planning redispatch option, the conditional firm option or both. Transmission providers may recover the costs of studying these options through the system impact study agreement.

67 Limitations Providers do not have to offer planning redispatch or conditional firm service if doing so: (1) would degrade or impair the reliability of service to native load customers, network customers, and other customers taking firm point-to-point service or (2) interfere with the transmission provider s ability to meet prior firm contractual commitments to others. No excuse due to the need to manage multiple planning redispatch or conditional curtailment obligations.

68 Planning Redispatch Studies The System Impact Study must identify: (1) the system constraints, identified by transmission facility or flowgate, causing the need for the System Impact Study; (2) additional direct assignment facilities or network upgrades required to provide the requested service; and (3) redispatch options, including a non-binding estimate of the incremental costs of redispatch and the relevant congested transmission facilities for which redispatch will be provided. Transmission providers will not be required to estimate the number of hours of redispatch that may be required to accommodate the requested service as proposed in the NOPR.

69 Conditional Firm Studies Study must specify: (1) the number of conditional curtailment hours and (2) the specific system conditions during which conditional curtailment may occur. FERC does not propose a standardized method of modeling the conditional curtailment hours and will allow transmission providers to add a risk factor to their calculation of annual curtailment hours to account for forecasting risks. FERC requires annual caps on the number of hours and encourages the provider to offer monthly or seasonal caps.

70 Service Agreement Specify the relevant congested transmission facilities and whether the transmission provider will provide planning redispatch, a mix of planning redispatch and conditional firm, or conditional firm in order to provide the point-to-point transmission service. For conditional firm option, customers must choose either (1) specific system condition(s) during which conditional curtailment may occur or (2) annual number of conditional curtailment hours during which conditional curtailment may occur. Service agreements are considered to be non-conforming agreements and must be filed.

71 Modifications to Service Agreement If the service is for more than two years, but the customer does not commit to a facilities study or the payment of network upgrade costs, the transmission provider has a periodic right to reassess the service every two years. The transmission provider may not implement reassessments during intervening periods nor may it reassess the conditions in order to amend the service agreement in an intervening year should it forego any biennial reassessment. If the customer commits to paying the costs associated with upgrades, the conditions or hours identified by the transmission provider shall remain in effect until such time as the upgrades have been completed.

72 Redispatch, Conditional Firm and RTOs and ISOs FERC does not require RTOs and ISOs with real-time energy markets to adopt the provisions for conditional firm point-to-point service. RTOs and ISOs need not amend their tariffs if the Commission has previously found that these tariffs were just and reasonable without the inclusion of pro forma section 13.5 planning redispatch provisions. However, RTOs and ISOs that already provide planning redispatch pursuant to section 13.5 of the pro forma OATT must modify the relevant provisions of their tariffs consistent with the directives in the Final Rule, including the obligation to post monthly redispatch costs for each transmission facility over which planning and reliability redispatch are provided.

73 Redispatch from Third Party Resources Transmission providers must identify: (1) generation resources located within the control area, including its own resources, that can relieve the congested transmission facility at issue, and (2) the impact of each identified resource on the congested facilities, e.g., the generator shift factor. In addition to identifying generation resources within the control area, the provider must identify resources outside the control area that may be able to relieve congested transmission facilities. No obligation to solicit third party resources in order to provide planning redispatch. No requirement to use network customer resources or other third party resources in the provision of planning redispatch. Must work with customers to facilitate the use of third party generation, where available. This entails review of redispatch plans.

74 OASIS REQUIREMENTS FOR REDISPATCH Post monthly average cost of redispatch for each internal congested transmission facility or interface over which it provides redispatch service using planning redispatch or reliability redispatch under the pro forma OATT. Also post a high and low redispatch cost for the month for these same constraints. Calculate the monthly average cost in $/MWh for each congested transmission facility by dividing monthly total redispatch costs (at the facility) by the total MWhs that would otherwise be curtailed (at the facility) in the month absent the redispatch. Must post regardless of whether customer is required to pay these exact costs. Post at the end of each month - no later than when invoices are sent. Direct transmission providers to work in conjunction with NAESB to develop this new OASIS functionality and any necessary business practice standards.

75 OASIS Requirements for Redispatch FERC directs transmission providers to modify their OASIS sites to allow for posting of third party offers. Work with NAESB to develop this functionality and need not implement this new OASIS functionality and any related business practices until NAESB develops appropriate standards.

76 Pricing of Planning Redispatch No longer cap redispatch costs over the term of the service at the costs of expansion. Customers will have the option of paying (1) the higher of (a) actual incremental costs of redispatch or (b) the applicable embedded cost transmission rate on file with the Commission or (2) a fixed rate for redispatch to be negotiated by the transmission provider and customer and subject to a cap representing the total fixed and variable costs of the resources expected to provide the service. If the customer selects the higher of incremental cost or the embedded-cost rate, the transmission provider shall calculate the costs of redispatch monthly and charge the higher of redispatch or the embedded cost rate each month. For purposes of calculating planning redispatch charges, incremental costs shall include fuel or purchase power costs caused by ramping up generator(s) at the point of delivery and ramping down generator(s) at the point of receipt. Additionally, where applicable, transmission providers may specify in customer service agreements other incremental costs for inclusion in the monthly actual incremental costs, including opportunity costs.

77 Curtailment Priority for Conditional Firm Service Conditional firm service, when the conditions are in operation, will share the same priority as secondary network service. (Since the customer is paying the long-term firm point-to-point rate, it receives the highest non-firm curtailment priority during the conditional curtailment hours). Short-term firm service reserved prior to the reservation of conditional firm service should maintain priority over conditional firm service in the periods when conditional firm service is conditional. During non-conditional periods, conditional firm service is subject to pro rata curtailment consistent with curtailment of other long-term firm service.

78 Hourly Firm Service Proposed in the NOPR Not included in the Final Rule Can be included in a 205 Filing as equal or superior to

79 ROLLOVER RIGHTS Section 2.2 of the current pro forma OATT allows existing customers with contracts of one year or more, the right to continue to take transmission service from the transmission provider when the customer s contract expires. A transmission customer must give notice of whether it will exercise its right of first refusal 60 days before the expiration of its service agreement. The transmission provider may restrict a right of first refusal based on projections of load growth or pre-existing contracts that commence in the future if the transmission provider knows at the time of the execution of the original service agreement that ATC used to serve a customer will be available for only a particular time period.

80 Changes to Rollover Rights Under Order No. 890 Adopts a five-year minimum contract term to be eligible for a rollover right. At the end of its initial five-year contract term, a transmission customer must, within the one-year notice period agree to another five-year contract term or match any longer-term competing request as to term and rate. No change to rollover restrictions based on reasonable forecasts of native load growth or preexisting contracts that commence in the future to be included in the initial transmission service agreement. Rollover reform is to be effective at the time of acceptance by the Commission of a transmission provider s coordinated and regional planning process.

81 PROCESSING OF REQUESTS FOR SERVICE - CLUSTERING FERC does not require transmission providers to study transmission requests in a cluster, unless the customers involved request the cluster and the transmission provider can reasonably accommodate the request. FERC does require each transmission provider to include tariff language in its compliance filing that describes how it will process a request to cluster and how it will structure the transmission customers obligations when they have joined a cluster.

82 PROCESSING OF SERVICE REQUESTS MULTIPLE SYSTEMS FERC requires transmission providers working through NAESB to develop business practice standards related to coordination of requests across multiple transmission systems and to allow a transmission customer to rebid a counteroffer of partial service so the transmission customer is allowed to take the same quantity of service across all linked transmission service requests.

83 RESERVATION PRIORITY Gives priority to pre-confirmed non-firm point-to-point transmission service requests and short-term firm point-to-point transmission service requests. A pre-confirmed request for transmission service will not pre-empt an equal duration request that has already been confirmed. Longer duration requests for transmission service will continue to have priority over shorter duration requests for transmission service, with pre-confirmation serving as a tie-breaker for requests of equal duration. Prohibit transmission customers from withdrawing pre-confirmed non-firm and short-term firm point-to-point transmission service requests prior to when the transmission customer is offered service or a system impact study. Price will be a tie-breaker when the transmission provider is willing to discount transmission service.

84 Window for Submission FERC allows but not mandate that transmission providers can propose a window within which all transmission service requests the transmission provider receives will be deemed to have been submitted simultaneously. Such a policy is particularly appropriate in circumstances when a tariff or business practice calls for requests to be submitted no earlier than a specific deadline. Requests submitted within the window should not be publicly available until the window has closed. Require transmission providers to propose a method for allocating transmission capacity if sufficient capacity is not available to meet all requests submitted within the specified time period.

85 DESIGNATION OF NETWORK RESOURCES QUALIFICATION AS A NETWORK RESOURCE Supply provided under the new Conditional Firm Transmission Service can qualify as a network resource.

86 LD Contracts FERC finds that a make whole LD provision, such as that found in the EEI Firm LD Product and in the WSPP Schedule C agreement, can qualify for network designation. Any contract which contains an unacceptable LD provision, but otherwise qualifies for designation as a network resource and has been properly designated as a network resource prior to the effective date of this Final Rule, will be grandfathered only until the earlier of: (1) the expiration of the current term of the power purchase agreement or (2) an indefinite termination of the power purchase agreement as a designated network resource pursuant to section 30.3 of the pro forma OATT. FERC notes that the WSPP Schedule C agreement allows interruptions to meet [the] Seller s obligations to its customers and thus, appears to allow interruptions for reasons other than reliability. This needs to be revised.

87 Documentation of Network Resources Transmission providers continue to be responsible for verifying that third-party transmission arrangements for external network generation are firm. Transmission providers are not responsible for verifying that the generating units and power purchase agreements network customers designate as network resources satisfy the requirements in sections 30.1 and 30.7 of the pro forma OATT. FERC adopts the requirement for both the transmission provider s merchant function and network customers to include a statement with each application for network service or to designate a new network resource that attests: (1) the customer owns or has committed to purchase the designated resource and (2) the network resource comports with the requirements for designated network resources. The network customer should include this attestation in the customer s comment section of the request when it confirms the request on OASIS.

88 Undesignation of Network Resources Network customers and the transmission provider s merchant function may only enter into a third-party power sale from a designated network resource if the purchase agreement allows the seller to interrupt power sales in order to serve network load. Alternatively, they may submit a request to undesignate a resource. FERC clarifies that requests to undesignate network resources that are submitted concurrently with a request to redesignate those network resources at a specific point in time shall be considered temporary terminations. Direct transmission providers working through NAESB, to modify OASIS allow network customers to provide all required information for such terminations. Prior to implementation of this functionality, requests for temporary or indefinite terminations of network resources may be submitted by telefax or providing the information by telephone over the transmission provider s time recorded telephone line.

89 PROVISIONS NOT MODIFIED BY ORDER 890 Stranded Cost Recovery Behind the Meter Generation Force Majeure Indemnification and Liability

90 OASIS Transparency, Performance Metrics and Penalties Amie Colby

91 OASIS Transparency POST IT!

92 OASIS Performance Metrics Parameters Post performance metrics for each calendar quarter within 15 days of the end of the quarter Begin tracking upon the effective date of the Final Rule Keep the performance metrics on OASIS site for three years Calculate performance metrics separately for affiliates and non-affiliates

93 OASIS Performance Metrics Quarterly Postings Processing time from initial service request to offer of a system impact study agreement System impact study processing time Service requests withdrawn from system impact study queue Process time from completed system impact study to offer of facilities study Facilities study processing time Service requests withdrawn from the facilities study queue

94 OASIS Performance Metrics Notification Filings Must notify Commission if process more than 20% of non-affiliates studies outside of the 60 day due diligence deadline for two consecutive quarters Once the notification filing occurs, the transmission provider must post (1) the average of the employee hours expended per completed system impact study; (2) the average of the employee hours expended per completed facilities study; (3) the number of employees dedicated to processing studies

95 OASIS Performance Metrics Non-Compliance If the transmission provider cannot meet the prescribed 60-day due diligence deadlines, FERC will subject the transmission provider to penalties if it continues to be out of compliance for each of the two quarters following the notification filing A transmission provider will be out of compliance if it completes 10 percent or more of non-affiliates studies outside the 60-day period

96 OASIS Performance Metrics Penalties The penalty for failure to comply with the performance metrics is $500 a day The penalty will be assessed on a quarterly basis, starting with the quarter following the notification filing and continuing until the transmision provider completes at least 90 percent of all studies within 60 days after the study agreement has been executed

97 Enforcement Strong Audit Program Compliance officer No safe harbors Attorney-client privilege Market-Based Rates FERC will revoke an entity s market-based rate authority in response to an OATT violation only upon a finding of specific factual nexus between the violation and the entity s market-based rate authority It is FERC s burden to show the factual nexus