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COMMITTEE OF REGIONAL ELECTRIC POWER COOPERATION

COMMITTEE OF REGIONAL ELECTRIC POWER COOPERATION. November 1, 2001 Seattle Congestion Management Presentation Joel Spitzkoff - Arizona Public Service Company on behalf of WestConnect. Congestion Management. 1.What is the status of the congestion management model development in each RTO?.

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COMMITTEE OF REGIONAL ELECTRIC POWER COOPERATION

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  1. COMMITTEE OF REGIONAL ELECTRIC POWER COOPERATION November 1, 2001 Seattle Congestion Management Presentation Joel Spitzkoff - Arizona Public Service Company on behalf of WestConnect

  2. Congestion Management 1.What is the status of the congestion management model development in each RTO? • WestConnect’s finalized congestion management model is set forth in Appendix A of the WestConnect Tariff. WestConnect - Joel Spitzkoff 1

  3. Congestion Management 2. What is the FERC filing status of the RTO’s congestion management model? • On October 16, 2001 WestConnect filed a Petition for a Declaratory Order, Docket #s RTO2-1-000/EL02-9-000 • Filing contained the WestConnect Tariff in its entirety, and all related agreements 2 WestConnect - Joel Spitzkoff

  4. Congestion Management 3. If the congestion management models have not been fully developed, how are the RTOs addressing the resolution of congestion management seams issues? • There have been meetings addressing this issue as part of the Western Markets Interface Committee (“WMIC”) 3 WestConnect - Joel Spitzkoff

  5. Congestion Management 4. Are the three RTOs developing a single congestion management model for the West or three individual models? • At this time there is no concerted effort to develop a single congestion management model for the three Western RTOs • WMIC meetings to address congestion management seams issues Are the RTOs leaning towards a physical rights, a financial rights, or a hybrid type of model? • WestConnect’s congestion management protocol is a physical transmission rights model. WestConnect - Joel Spitzkoff 4

  6. Congestion Management What are the relative weights in your decision-making of 1) intra-RTO stakeholder agreement and 2) west-side seamlessness? • As yet the there has been no meaningful discussions within WestConnect concerning discussions related to the importance of 1) an intra-RTO stakeholder agreement versus 2) west-wide seamlessness 5 WestConnect - Joel Spitzkoff

  7. Congestion Management What is the nature of the congestion management model(s) being proposed by each RTO? WestConnect Congestion Management Model • Physical rights model • Periodic auction of FTRs (Annual, Monthly, Daily) • SCs must bid on FTRs SCs serving native load customers will be given priority • An FTR allows a SC to schedule 1MW of power, in a specific direction, for 1 hour • FTR = OTC - NCR • FTRs can be sold in a secondary market • WestConnect must be notified of such transactions 6 WestConnect - Joel Spitzkoff

  8. Congestion Management WestConnect Congestion Management Model (cont) • Model has provision for • Recallable Transmission Rights (“RTRs”), and • Non-Firm Transmission Rights (“NTRs”) WestConnect - Joel Spitzkoff 7

  9. Congestion Management 5.Are FTRs [firm transmission rights] required to be able to schedule with the RTO? How is congestion proposed to be managed at the seams? • Under the WestConnect congestion management model FTRs are required to schedule over congested interfaces and scheduling points • Presently, FTRs will be needed by SC exporting power out of the WestConnect System or importing power into the WestConnect System utilizing any WestConnect scheduling points. WestConnect - Joel Spitzkoff 8

  10. Congestion Management 6. If there are three individual RTO models, from the standpoint of the transmission customer, will there be seamless interaction at the RTO boundaries? • As presently structured, until seams issues related to price reciprocity and congestion management differences are resolved, there will not be “seamless interaction” at the RTO boundaries 9 WestConnect - Joel Spitzkoff

  11. Congestion Management What is your definition of “seamless interaction”? • A Utopian Definition of a “Seamless Interaction” • Submit schedule to only one RTO • No export fees • No ‘pancaked’ FTRs needed at point of export nor point of import 10 WestConnect - Joel Spitzkoff

  12. Congestion Management Where does your goal lie on the scale between 1) no fatal inconsistencies and 2) one-stop shopping? • WestConnect hasn’t addressed priority issues pertaining to 1) no fatal inconsistencies and 2) one-stop shopping 11 WestConnect - Joel Spitzkoff

  13. Congestion Management 7. What incentives will be provided to relieve congestion? What incentives will be applicable to new transmission construction? What incentives will be applicable to non-transmission alternatives? • WestConnect is hopeful that FERC will continue its present policy of granting rate of return incentives on new transmission facilities • Bids will be solicited on a day ahead basis from LGRs whenever load pocket (congestion) conditions are expected. 12a WestConnect - Joel Spitzkoff

  14. Congestion Management • Purchases made by WestConnect from Load Generation Resources (‘Must Run Units’) would be paid the greater of • the Balancing Energy Clearing price in the Congestion Zone adjacent to the load pocket in which the LGR service was provided; or • the lesser of the generating unit’s demonstrable cost (including a return), or the generating unit’s bid price WestConnect - Joel Spitzkoff 12b

  15. Congestion Management 8. How are existing rights and obligation handled in each RTO? • Existing rights & obligations under non-converted existing agreements (‘NCR’) between Participating TOs and non-TOs will not be abrogated • The parties to a NCR will honor all contractual and statutory rights and obligations under the existing contract • To the extent there are mismatches in losses, regulation, and other ancillary services between the existing contract and the WestConnect Tariff, the cost of such mismatches will be included as part of the WestConnect GMC 13a WestConnect - Joel Spitzkoff

  16. Congestion Management • Existing Contracts between Participating TOs for transmission service only must be converted to WestConnect transmission service WestConnect - Joel Spitzkoff 13b

  17. Congestion Management • The participating TOs shall negotiate transfer payments to be made by the Participating TO rights holder to the Participating TO providing the service, 1. Transfer payment obligations continue for the term of the existing contract 2. The participating TO receiving such transfer payments shall treat them as a credit to the ATRR 13c WestConnect - Joel Spitzkoff

  18. Congestion Management 9. Does the congestion management approach eliminate rate pancaking? • No WestConnect - Joel Spitzkoff 14

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