June 20, 2012 Reliability committee meeting

1. June 20, 2012 Reliability committee meeting Steve Weaver System operations Assessment of Resource Performance & Operating Reserve Requirements

2. Background • As identified within the strategic plan, the ISO has been assessing the performance of resources in response to contingencies • NERC Balancing Standard Requirements for reserves are a performance based criteria requiring activation of an adequate level of reserves to cover at least the largest contingency • The ISO analyzedtheoverall performance of resources called upon after a contingency (i.e., resources providing 10-minute reserves)

3. Resource Performance Summary • Overall weighted system response was 71%; the weighted response for off line units with Claim 10 capability was 81% • Analysis based on the 36 NERC/NPCC reportable contingencies occurring over the period March 2009 to February 2011 • Non-performance was observed during every event. • Overall weighted system response increased 5% following implementation of OP-14 changes and generator operator training; the increase was 8% for off-line resources with Claim 10 capability * Weighted results weigh each unit’s response rate by the size of the unit’s requested change in DDP.

4. Problem Statement • The ISO maintains a ten minute operating reserve level that assumes 100% performance of resource offered capability; as noted, ISO analysis indicates consistently less than 100% performance when dispatching resources in response to a contingency • In scenarios where 10 minute reserves equal the largest contingency (i.e., 10-minute reserve requirement), there may not be sufficient generator response to meet the recovery criteria without additional system operator action.

5. Example: Problem Statement

6. Recommended Approach • The ISO is recommending an initial increase in the allocation of total ten-minute reserves to compensate for 20% resource non-performance based upon observation and analysis. The ISO is not recommending any changes to the amount of thirty minute operating reserves. • The amount of real-time reserves would be modified to increase the allocation of total ten-minute reserves and total operating reserves (total 10-minute + TMOR) • The amount of forward reserves would be modified to increase the TMNSR and the total operating reserves (TMNSR + TMOR) • The ISO is planning to make these changes effective for energy market operation as soon as practical and for the winter 2012/2013 Forward Reserve Market auction.

7. Recommended Approach • Why allocate for 20% non-performance? • Accounts for performance improvement resulting from OP14 enhancements and generator operator training • Accounts for real-time TMSR requirement variability between 25–50% • Consistent with off line Claim 10 minute unit performance.

8. Example: Recommended Approach

9. Required Reserves • System Real-Time Reserves • Total 10-minute Reserve = 1st Contingency / (100% - 20%) • TMNSR = 50% x Total 10-minute Reserves • TMSR = 50% x Total 10-minute Reserves • TMOR = 50% x 2nd Contingency • System Forward Reserves • TMNSR = 50% x 1st Contingency + 1st Contingency / (100% - 20%) - 1st Contingency • TMOR = 50% x 2nd Contingency

10. Example: Required Reserves • System Real-Time Reserves • Total 10-minute Reserve = 2000 = 1600 / 80% • TMNSR = 1000 = 50% x 2000 • TMSR= 1000 = 50% x 2000 • TMOR = 800 = 50% x 1600 • System Forward Reserves • TMNSR = 1200 = 50% x 1600 + 1600 / 80% – 1600 • TMOR = 800 = 50% x 1600

11. Ongoing Analysis • The ISO has proposed auditing changes that provide better accounting of the probability of performance of offline resources and help to ensure that online resources have response rates reflective of physical capability • The ISO will continue to assess resource performance during contingencies and will modify reserve requirements as necessary to ensure adequate resources are available to respond to the largest single source contingency