MAPP Generation Reserve Sharing Pool. Bill Head MAPPCOR Chief Operating Officer

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1 MAPP Generation Reserve Sharing Pool Bill Head MAPPCOR Chief Operating Officer

2 Each component is part of the MAPP Restated Agreement (1996) What happened to MAPP? MAPP s Evolution Reliability (1972) Generation Reserve Sharing (1972) Regional Transmission (Schedule F modified to comport with FERC Order 888 &_889) Power and Energy Market (added in 1996) Midwest Reliability Organization Remains in MAPP Remains in MAPP Mid-Continent Energy Marketers Association

3 MAPPCOR Shared Services Contractor /Service Provider to Midwest Reliability Organization MAPP Regional Transmission Group MAPP Generation Reserve Sharing Pool Not-for-profit corporation Organized as a coop Board is half MAPP and half MRO 28 employees in 2006

4 Introduction to Generation Reserve Sharing Pool Generation reserves required for reliable service to customers Generation must equal demand at all times Reserves must exceed single worst contingency Utilities share reserves to save customers money In the MAPP reserve sharing pool, the estimated savings are $300 million per year in avoided construction and operating costs of generation

5 Key Roles and Responsibilities of Generation Reserve Sharing Pool Objective To further the ability of load serving entities to comply with generation reserve adequacy requirements Reliability Each pool member must be a member of a regional reliability organization recognized by NERC.

6 MAPP Generation Reserve Sharing Map

7 History of MAPP GRSP 30+ years of reserve sharing Members obligated by contract MAPP Restated Agreement Membership includes IOU s, municipal agencies, cooperatives, public power districts, a federal power marketing agency, and a Canadian province MAPP GRSP is a reliability based resource adequacy program, characterized by years of cooperation among a diverse group of utilities

8 MAPP Statistics Peak Load = MW (Summer) Generator Capacity = (Summer) Certified Interruptible Demand = 357 MW (Summer) & 590 MW (Winter) Approximately 60% of pool load in MISO Virtually no retail choice within the pool

9 MAPP Capacity MAPP GRSP Surplus/Deficit Capacity Summers MW Seasonal Adjusted Net Demand Total Firm Capacity Obligation Net Adjusted Capability Year

10 How Are Reserves Shared? Operating Reserves Spinning Reserve (minimum of 40%) Non-Spinning (available in 10 minutes) Each Member provides load ratio share of largest single contingency Planning Reserves Reserve Capacity Obligation 15% reserve margin over peak demand in MAPP Generation Reserve Sharing Pool (GRSP)

11 Governance Pool Committee Committee of the whole One representative of each GRSP member Approval or adoption of any measure by the Pool Committee requires a 2/3rds vote of the GRSP Members Pool Administrative Committee Eight Representatives elected by Pool Committee 2 large pool members (peak load > 1200MW or RCO > 180 MW) 2 small pool members (peak load < 1200 MW or RCO < 180 MW) 4 at-large members Approval or adoption of any measure by the PAC requires a 2/3rds vote of the PAC Members

12 MAPP Operating Reserve Pool-wide contingency reserve obligation tied to largest single contingency usually the 500 kv line from Manitoba to Minnesota Annual allocation based on average monthly peak Automated Reserve Sharing Program (EM Program) Control Areas call for reserve deployment Program communicates obligations (Internet) Reserves deployed simultaneously

13 MAPP Operating Reserve After emergency call, 45 minutes to re-establish reserves Transmission use posted after-the-fact Regional scheduling MAPP and MISO tariffs Energy Settlements FERC approved tariff of $30/MWh or 110% of incremental cost (MAPP Schedule C) Program calculates energy delivered No central settlement system Current limit of 6 hours

14 MAPP Reserve Capacity Obligation Planning reserve Provide reliability of service, and provide a pool to re-establish operating reserve Currently a 15% reserve margin (capacity resources minus peak demand)/peak demand 10% for predominantly hydro WAPA and MHEB Based on peak demand for current month and previous 11 months, so it is a rolling 12 month period 15% reserve margin = 13.06% capacity margin LOLP benchmark of 1 day in 10 years

15 Accreditation Capacity Resources - Generation Generation monthly values based on annual test Minimum fuel requirements Hours of operation capability Firm natural gas in winter or dual-fuel capability Interruptible gas in summer as long as never curtailed Must be permitted to allow sufficient operating hours Procedures for accrediting variable capacity generation wind, solar, run-of-river hydro, etc.

16 Accreditation Capacity Resources - Generation Forced or scheduled maintenance outages do not cause loss of accreditation, as long as reporting requirements met and due diligence in repair Unit modifications covered as long as pool in total meets the minimum reserve capacity obligation Prior permission required

17 Accreditation Capacity Resources - Transactions Three basic capacity transaction types Firm Power To be as firm as native load, w/seller carrying the reserves Typically purchased from a MAPP participant System Participation Served of all of seller s resources Typically purchased from a MAPP participant Unit Participation Tied to unit or units Purchased from anyone

18 Accreditation Demand-side Resources Participants can use their load management as they see fit to control their peak Load management can be certified to allow service to the load at time of peak without impacting reserves as long as non-firm Schedule L can be purchased Load management programs can be targeted to distributed loads or bulk loads Load management can be used for non-spinning operating reserves if load can be dropped in 10 minutes

19 MAPP Reserve Capacity Obligation Compliance Audits performed after each season Summer is May October Winter is November April If a capacity deficiency is found, capacity is allocated after the fact under FERC approved MAPP Service Schedule B Capacity Deficiency Service Once a utility is deficient during a season, it is covered for that MW amount for the remainder of the season.

20 MAPP Service Schedule B Capacity Deficiency Service is an up-to cost-based tariff, not a penalty Schedule B maximum rate determined annually based on the installed costs of member owned generation Capacity is allocated from those members with surpluses Revenues flow to those providing the allocated capacity

21 MAPP Service Schedule B Rate The applied tariff rate begins at 50% of the maximum rate, and increases linearly until hitting the maximum rate at an 11% reserve margin. Approximate ceiling rate of $96,000 per MW- Season

22 2% 1% Service Schedule B Applied Rate % of Maximum Rate 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% Participant's Actual Reserve Margin

23 Future Larger operating reserve pool? Deliverability? Capacity market?