MAY 1 2013

1. MAY 1 2013 Laurie Corcoran SENIOR ANALYST, Demand Resource Strategy Proposed Transition Period Solution To Address Accuracy Of Demand Response Baselines During Facility Outages

2. Background • The Demand Response Baseline (“baseline”) is an estimate of a demand response asset’s expected or normal load for each interval of the day absent demand reductions from participating in the capacity and/or energy markets. • Interval meter data from previous days is used in determining an asset’s baseline. • To measure demand reductions resulting from market participation, the asset’s actual load is compared to the baseline in each dispatch interval.

3. Problem • Currently, the market rules require meter data from days on which an asset is on a scheduled reduction (e.g., scheduled maintenance of energy consuming equipment) or forced reduction (e.g., distribution or transmission outage) to be used in the baseline computation. • Demand response providers cannot notify the ISO of scheduled or forced reductions. • As a result, meter data from days when the asset has no or substantially lower load due to a scheduled or forced reduction may be included in the baseline calculation, which impacts the accuracy of the baseline once the asset’s load returns to normal.

4. History • ISO-NE has been working on a solution for the transition period that addresses baseline accuracy during outages. • Implementing a solution for the transition period is difficult : • IT support is very limited • Must account for multiple assets behind the same meter which may be interacting with one another • Under full-integration the requirement for an asset to be measured at the Retail Delivery Point solves the most difficult issue. • April 10, 2013 Markets Committee meeting • Markets Committee referred the issue of Demand Response Baseline accuracy during and following scheduled or forced reductions to the Demand Resources Working Group (DRWG).

5. Assessment Of Current Issues With Baseline Accuracy During Outages • The ISO assessed whether changes were needed to preserve baseline accuracy during and following three types of outages: • Planned outages • Scheduled reductions • Forced reductions • The following slide shows a table summarizing the assessment of the current impact on baseline accuracy of each of the three types of outages. • As shown in the table it was determined that no change is necessary to maintain baseline accuracy during planned outages. • The proposed approach for the transition period addresses baseline accuracy issues during forced reductions and scheduled reductions.

6. Summary Of Current Issues With Baseline Accuracy Of Load Reducing Assets During Outages

7. Proposed Approach For The Transition Period • As part of the assessment of the issue, ISO-NE determined that minimal or no IT resources would be available to work on this project. The proposed solutions have been developed in recognition of this constraint. • Separate solutions have been developed to address baseline accuracy issues during scheduled or forced reductions for: • Load reducing assets • Incremental DG assets • During periods with scheduled or forced reductions, when demand will be reduced regardless of price, participants should not submit Demand Reduction Offers.

8. Proposed solutions for load reducing assets DURING SCHEDULED OR FORCED REDUCTIONS

9. Scheduled Reductions • During a scheduled reduction, the load at the facility is substantially reduced or zero. • If meter data from scheduled reduction days is included in the baseline calculation, the baseline will decline. • Performance calculations based on the degraded baseline will not accurately reflect the reduced demand on the grid. • A symmetric baseline adjustment applied during a scheduled reduction will further degrade the baseline and performance calculated using this degraded baseline will not accurately reflect the reductions delivered during OP-4 events or capacity audits.  

10. Scheduled Reductions (cont.) • Proposed Solution: To preserve the accuracy of the baseline and performance calculations, the recommendation is to: • submit the values from the last unadjusted baseline calculated prior to the day of the scheduled reduction for intervals without OP-4 events or capacity audits, and, • submit actual meter data for intervals with OP-4 events or capacity audits. On days with OP-4 events or capacity audits, performance will be determined by taking the difference between that day’s unadjusted baseline and actual meter data. • Proposed Notification: Notification of a scheduled reduction must be submitted to the ISO at least 15 days ahead of the start of the reduction. Scheduled reductions must be a minimum of a single calendar day, and shall not exceed a total of 14 calendar days per Capacity Commitment Period.

11. Forced Reductions • During a forced reduction there is no electrical service to the facility and the load is zero. • If meter data from forced reduction days is included in the baseline calculation the baseline will decline. • Performance calculations based on the degraded baseline will not accurately reflect the reduced demand on the grid. • A symmetric baseline adjustment applied during a forced reduction will further degrade the baseline and performance calculated using this degraded baseline will not accurately reflect the reductions delivered during OP-4 events or capacity audits.  

12. Forced Reductions (cont.) • Proposed Solution: To preserve the accuracy of the baseline and performance calculations, the recommendation is to: • submit the values from the last unadjusted baseline calculated prior to the day of the forced reduction for intervals without OP-4 events or capacity audits, and, • submit actual meter data for intervals with OP-4 events or capacity audits. On days with OP-4 events or capacity audits, performance will be determined by taking the difference between that day’s unadjusted baseline and actual meter data. • Proposed Notification: Notification of a forced reduction should be submitted to the ISO for any reductions in demand that occur as a result of actions outside the control of the asset (where there is no electrical service to the facility). The forced reduction notification may be submitted or revised during the resettlement process.

13. Impact Of Proposed Approach To Preserving Baseline Accuracy Of Load Reducing Assets During Scheduled Or Forced Reductions

14. Proposed solution for incremental dg assets

15. Baseline Accuracy Issues For Incremental Distributed Generation (DG) Assets During Outages • Developing an approach to address baseline accuracy issues for incremental Distributed Generation (DG) assets during outages, in which performance is based on incremental output, is more complex than developing an approach for load reducing assets. • Incremental DG assets: • produce output all the time • produce incrementally more output than the normal (baseline) amount when dispatched • do not have a baseline adjustment applied on event days • on outage will incur a negative deviation equal to the expected increment that is not delivered plus the amount of the baseline

16. Baseline Accuracy Issues For Incremental Distributed Generation (DG) Assets During Outages (cont.) • Stakeholders have suggested the following approaches: • cap the negative deviation, • develop a baseline adjustment for incremental DG assets, or, • develop another approach to appropriately address the specific issues of incremental DG baselines. • The approaches suggested by stakeholders would require significant IT resources. Further, capping of negative deviations is not justified because failure of the DG asset requires the wholesale power system to dispatch, all other things equal, other energy resources to supply both the incremental and baseline output of the failed DG asset.

17. Incremental DG Asset Scenarios • Assume two assets located at the same facility, an incremental DG asset and a load reducing asset. Both assets are associated with the same resource. • Terms used: • UBL = Unadjusted Baseline • Normal operations = no event occurs in the interval • RDP = Retail Delivery Point • TFL = Total Facility Load, the sum of the load at the RDP and all output behind the RDP (the total electricity used at a facility inclusive of that purchased from the grid and that produced on-site) • LR = load reducing asset metered at RDP • LR UBL= UBL for LR based on TFL data • LR Reduction = reduction in consumption by LR • LR Actual = TFL in real-time • Load at RDP = meter reading at RDP in real-time • DG = an incremental DG asset located behind the RDP • DG UBL = UBL for DG based on output data

18. Incremental DG Asset Scenarios (cont.) • The scenarios show a single interval • During normal operations LR UBL is 11 MW • During normal operations DG UBL is 7 MW • During normal operations demand at the facility (LR UBL) is served by: • 7 MW of DG • 4 MW from the grid • The associated resource has a 4 MW obligation • Historically DG has provided 3 MW of additional output (10 MW total) when dispatched • Historically LR has provided 1 MW of reduction when dispatched • The negative deviation for the DG is capped at -3 MWs

19. Incremental DG Asset Scenarios (cont.) • Scenario 1 – normal operations • Scenario 2 – the associated resource is dispatched for an audit • LR delivers1 MW • DG delivers 3 MW • Scenario 3 – the associated resource is dispatched for an audit, DG is on outage • LR delivers1 MW • DG has zero output and incurs a negative deviation during the audit

20. Incremental DG Asset Scenarios (cont.) The difference between scenarios 2 & 3 is the DG in scenario 3 is on an outage and has zero output. The failure of the DG asset in scenario 3 requires the wholesale power system to dispatch other energy resources to supply the 10 MW load at the RDP. Capping the negative deviation at -3 MWs does not account for the full impact on the wholesale power system of the failure of the DG asset.

21. Incremental DG Asset Scenarios (cont.)

22. Approach To Baseline Inaccuracy Issues For Incremental DGs • Proposed Solution: Provide the opportunity for participants to retire the incremental DG assets behind the RDP and register a single asset with a baseline based on load at the RDP. • The baseline associated with the existing metering configuration “Load Reduction - DG Used to Reduce Load at another on-site Asset” is based on Total Facility Load (the total electricity used at a facility inclusive of that purchased from the grid and that produced on-site). If this metering configuration is associated with a baseline based on Facility Metered Load (the electricity purchased from the grid) for a single asset at the RDP, a comparable result to metering a Demand Response Asset at the RDP, (which is required in full integration) is achieved.

23. Next Steps

24. Process • DRWG feedback on proposed solutions