Market Services Stakeholder Session

1. Market Services Stakeholder Session Thursday, January 7, 2010 Metropolitan Centre, Calgary

2. Wind Technical Rule John Kehler Senior Technical Specialist

3. Agenda • Purpose of Session • Why a Wind Technical Rule • Summary of Key Points • Authoritative Documents • Inputs to the Wind Technical Rule • Overview and Discussion of the Wind Technical Rule • Next Steps

4. BackgroundMarket and Operational Framework • Market and Operational Framework: effective September 26, 2007 • Premise of framework - If the System Operator receives a reasonable forecast of wind power generation, then they can establish an operating plan to accommodate the forecast wind energy by using the following resources/tools: • Forecasting • The Energy Market Merit Order • Regulating Reserves • Wind Following Services • Wind Power Management • Market and Operational Framework: effective September 26, 2007 • Premise of framework - If the System Operator receives a reasonable forecast of wind power generation, then they can establish an operating plan to accommodate the forecast wind energy by using the following resources/tools: • Forecasting • The Energy Market Merit Order • Regulating Reserves • Wind Following Services • Wind Power Management • AESO Final Recommendations for the implementation of the MOF - June 18, 2009

5. Purpose • Review and discuss the Wind Technical Rule with stakeholders prior to submission of comments (deadline for comment is Jan 22) • Encourage stakeholders and suppliers of wind facility equipment to comment on the Wind Technical Rule

6. Key Points • The Wind Technical Rule is: • For all wind power facilities, any considerations for existing and new facilities will be addressed in the Rule • In most cases the technical intent remains the same as in the predecessor standard • Primarily to add requirements for physical infrastructure at wind power facilities for wind power forecasting capability, power limiting, ramp rate limiting and over-frequency control • Proposing effective date of 180 days post AUC approval to provide existing facilities a reasonable period of time to add or modify equipment at wind generating facilities

7. Transition of Wind Technical Requirements New ISO Rules Framework http://www.aeso.ca/rulesprocedures/17885.html AESO Tariff Article 4 Customer Interconnection Requirements Transition Authority for Technical Requirements will transition to Part 500 of ISO Rules Authority for the Technical Requirements currently under the Tariff

8. Transition of Wind Technical Requirements Existing Requirements • Use and consistency of definitions • Clarify the language and incorporate new or updated definitions • Clarify the requirements based on last 5 years experience New Requirements • Add grandfathering • Add Over Frequency Control requirements • Add Ramp and Power Limiting requirements • Add forecasting and meteorological data requirements New Rule and Requirements Existing Requirements Example of an Information Document New Information Document Existing Guide Future

9. Considerations in Developing Wind Technical Rule • Current Wind Power Facility Technical Requirements - November 2004 • Wind Power Forecasting Pilot Project Work Group recommendations • Wind Power Management Protocol Work Group recommendations • Wind Power Management Technical Requirements Work Group • Transition Of Authoritative Documents (TOAD) policies, template, framework, standards and principles • Any applicable provisions of Alberta Reliability Standards • AESO final recommendations to implement the Market and Operational Framework for Wind Integration - June 2009

10. Specific Policy Considerations • All forms of generation in Alberta have certain basic obligations • Wind Technical Rules are specifically for wind power facilities that connect to the transmission system • Wind Power Facility Technical Requirements included “policy place holders” for future technical requirements • In a separate and future consultation on wind power integration, the AESO will consult on how and when wind power or ramp rate limiting, and wind forecasting, will be used

11. Technical Considerations • Development of technical requirements in Wind Technical Rule is based on either: • NERC/WECC requirements, or • AESO requirements • Fairness amongst generating facilities, • Technical capability of existing wind facility technology

13. Performance Points • Point of Connection • Voltage Ride Through • Off Nominal Frequency • Power and Ramp Rate Limiting • Monitoring • Collector Bus • Maximum Authorized MW • Gross MW • Reactive Power requirements • Voltage Regulation • Voltage Operating Range • Over Frequency Control • Monitoring • Facility • Meteorological data

14. Definitions(Apply to all participants) These definitions will move out of Wind Technical Rule and into Part 100: General of the ISO Rules http://www.aeso.ca/rulesprocedures/17885.html General Definitions • “generating facilities” • “maximum authorized MW” • “operator” • “person” • “wind turbine generator” • “transmission system” • “voltage regulating system” • “owner” • “gross MW” • “point of connection”

15. Applicability Section 1 Applies to all wind generating facilities • New facilities must comply • Existing facilities connected under 2004 technical requirements must comply • Grandfathering considerations to those facilities connected under 1999 technical requirement • All wind generating facilities participate in wind power forecasting requirements including meteorological data requirements

16. Example of Grandfathering Rule 18 MW grandfathered to the 1999 technical requirements Two 3 MW turbines are upgraded over any period of time. The upgraded 6 MW must fully comply with the Wind Technical Rule. The older 12 MW remain under the 1999 requirements until such time they are upgraded.

17. Example of Grandfathering Rule Upgraded portion will be required to comply with voltage ride through, voltage regulation, reactive power, over frequency control, power limiting, ramp rate limiting and any other requirements that are deficient to the new Wind Technical Rule Grandfathered portion is not likely to comply with the voltage ride through and is not required to comply with the over frequency control, power limiting and ramp rate limiting requirements of the new Wind Technical Rule

18. Over Frequency ControlSection 15 • Frequency control requires fast measurement and good resolution of system frequency • 30 samples per second at 0.004 Hz resolution in the standard • Consistent with conventional generators • 0.036 Hz allowable deadband • Equivalent to 5% speed drop • Response rate equivalent to gas and hydro • Coordinates with the off nominal frequency requirements • Facilities can disconnect from the grid at 61.7 Hz

19. Over Frequency Control Example • Example of actual over frequency event in 2009 • Wind MW is illustrative only • When system frequency exceeds the allowable dead-band • Controls will reduce MW output of the wind generating facility

20. Power Limiting and Ramp Rate Limiting Section 17 • Power limiting and ramp rate limiting manage the MWs produced at the Point of Connection • These are the MWs supplied to the market • These are the MWs that will be forecasted • Power limiting will be manually put in control with a Directive • The control system must be fast and precise to maintain the MWs within reasonable tolerance of the Power Limit during variable and gusting wind conditions • Prevent MW from exceeding the power limit by 2% for normal wind conditions and by 5% during gusts • Ramp rate limiting is required with a default rate of 10% per minute

21. Power Limiting Control Example The instantaneous MW cannot exceed Power Limit + 5% of the maximum authorized MW Instantaneous MW 1 minute average MW cannot exceed Power Limit + 2% of the maximum authorized MW Power Limit for the WPF 1 Min Average MW

22. Illustrative Example of How Power Limiting and Ramp Rate Limiting Could Coordinate

23. SCADA Requirements Section 31 • New SCADA signals from the facility to the AESO • Potential MW capability signal • Power limit signal • On/off status of the power limiting controls

24. Description of potential MW capability Measured wind speed and direction Local computer calculates potential MW from the turbine Utility SCADA system sends data to the AESO WPF SCADA system collects and sums the potential MW from all turbines at the WPF

25. Wind Power Forecasting Data Collection Section 32 • Met tower with 2 weather measurement devices • measurement at the wind turbine generator hub height and another taking measurements at a height specified by the ISO • Measurements are 10 minute average values • wind speed, wind direction, barometric pressure and ambient temperature • AESO is currently working on details for data transfer

26. Wind Power Forecasting Data Collection Section 36 • Historical data and facility information necessary for wind power forecasting • Historical 10 minute averaged meteorological data, containing details on wind speed, wind direction, temperature and barometric pressure • Historical data and records referenced in subsection for up to 2 calendar years prior to the commissioning period of wind generating facilities • Provide wind turbine generator data and records, including hub height, turbine land coordinates, turbine power curves, high wind speed cut-out, and any applicable temperature cut-outs

27. Other Changes • Transfer trip or anti-islanding schemes are proposed additions where the facility is not required to voltage ride through • Monitoring requirements were a “may require” - we are now proposing a “must require” • Harmonic and Flicker measurements/tests were a “must require” - we are proposing a “may require” • Figures and tables moved into appendixes

28. Next Steps • January 22, 2010 • Stakeholder comments back to the AESO • February, 2010 • Post Stakeholder comments • Post AESO response to stakeholder comments • March 2010** • File Wind Technical Rule with AUC **Date may change depending on any material changes as a result of consultation

29. Questions ?

30. Contact Information John Kehler Ph: 403-539-2622 John.kehler@aeso.ca Kevin Wiens Ph: 403-539-2672 Kevin.wiens@aeso.ca

31. Wind Power Forecasting Update Rob Baker Manager Forecasting Rob Baker Forecasting

32. Agenda – Wind Power Forecasting • Pilot Study • Wind Power Forecast RFP • Purpose and Benefits of Wind Power Forecasts • Wind Forecast Service Cost Recovery • Next Steps • Questions

33. Wind Power Forecasting Pilot Project • AESO conducted a wind forecasting pilot project in 2006 to • Trial different methods and providers • Identify the most effective forecasting methods in Alberta • Identify the most effective providers of wind power forecasts • Educate industry on the capabilities of wind power forecasting in Alberta • Project funded by Dept of Energy, Alberta Energy Research Institute, AESO with expertise provided by CanWEA • Wind forecasters were AWS Truewind, energy & meteo, and WEPROG • Industry working group monitored results from pilot project and provided recommendations to AESO used to develop Forecasting Service RFP

34. Wind Power Forecasting RFP • AESO issued a request for proposals in June 2009 • The objective of the RFP is to solicit proposals to deliver accurate wind power forecasts for the AIES with these outcomes: • Availability of a production Wind Power Forecasting Service for the AESO • Accuracy and reduced uncertainty of wind power forecasts • A high quality Wind Power Forecasting Service and ongoing performance improvements • AESO involved industry stakeholders (ENMAX, Canadian Hydro, Shell, Suncor, TransAlta, and CanWEA) to provide input and advice to the AESO regarding the selection and RFP review process • Negotiations with a vendor are underway

35. Purpose and Benefits of Wind Power Forecasts AESO • Reliable operation of the power system • Ancillary service forecasting and procurement • Supply adequacy Wind Developers • Each individual wind generating facility will have access to the forecast for its facility Industry / Market Participants • Aggregate forecasts provided on the AESO website • Transparency of aggregate wind forecasts to market participants

36. Wind forecast service cost recovery • External wind power forecasting service cost will be allocated amongst wind power facility owners as a $/MWh charge • Cost recovery will begin in Q4 2010 and will be levelized over Q4 2010 and the subsequent 3 years • An escalation factor of 10% to the $/MWh rate will be applied • Variances from forecast costs and revenues will be reconciled on an annual basis

37. Next Steps • Finalize contract and announce successful vendor • AESO expects to start receiving wind forecast data in January 2010 • Phased implementation of IT infrastructure for data management and integration into AESO system operator tools • Establish a Wind Power Forecasting Working Group for continuous improvement on forecasting performance

38. Questions ?

39. Contact Information Rob Baker Ph: 403-539-2614 rob.baker@aeso.ca

40. Transmission Constraints Management (TCM) Gordon Nadeau Market Design Specialist

41. Agenda • TCM Rule 9.4 AUC Re-Filing Proposal Discussion Paper • AUC Decision 2009-042: • Review AESO views on Commission findings • Review AESO proposals on Commission directions • Remedial Action Scheme (RAS) in the planning domain • Review AESO approach in RAS comment response matrix

42. Proposed TCM Rule 9.4 Protocol Steps to Manage Constraints • Determine effective generation and load • Directives to generate above MC are canceled • Dispatch off downstream Dispatch Down Service (DDS) providers • Curtail imports/exports as appropriate • Curtail downstream Demand Opportunity Service (DOS) • Dispatch effective TMR (use DDS to reconstitute price) • Curtail upstream energy in reverse merit order (RMO) based on energy offer price followed by pro rata, if congestion is sustained beyond T-2 period, use pro rata only • Dispatch downstream energy using the merit order up to replace the curtailed upstream energy • Curtail downstream load • When curtailing effective upstream assets, curtail ancillary services before energy

43. Review of Findings in AUC Decision 2009-042 on TCM Rule 9.4 • Economic Dispatch: The use of the merit order for dispatch instructions is aligned with regulation. • Price Impact: Price impact of the TCM rule will be reasonable under current and anticipated market conditions. • Compensation: Constrained down payments are not contemplated under regulation.

44. Review of Findings in AUC Decision 2009-042 on TCM Rule 9.4 • Transmission “rights”: Regulation provides for reasonable system access which does not equate to a “right”. The AESO is allowed to assign a RAS under regulation where appropriate. • Use of TMR/DDS: The use of TMR/DDS may be applicable in certain situations but that it is not appropriate in all constraint situations.

45. Directions: Scope of Rule Use of TMR Pay as bid protocol Define fundamental terms Clarify TCM process steps Proposal: 9.4 is real time rule only TMR for reliability only and not price management Pay as Bid not recommended Definitions provided for load pocket and other terms Explain use of TMR/DDS within steps AESO Proposals regarding Commission Directions on TCM Rule 9.4

46. Pay as Bid Discussion Cons • Does not promote price fidelity under current market design • Not the best price signal and may not be effective in managing constraints • Not a generic, in-market solution that applies to all constraint cases • Operationally and administratively complex to implement Pros • Price impact of constraint removed • Creates separate side payments for constraints • Congestion costs may be lower than proposed TCM protocol

47. Pay as Bid Discussion AESO Conclusions • Price signal is the appropriate method of encouraging FEOC behaviour not out of market solutions • The Rule 9.4 protocol: • Is effective and practical • works within current market framework • Is a single protocol that deals with all constraints • Promotes price fidelity by minimizing the price impact and level of market distortion • The AESO does not recommend using any pay as bid protocol within the TCM Rule • Severe market distortions are not constraint management issues and will be dealt with appropriately through other means

48. Remedial Action Scheme (RAS) in the Planning Domain

49. RAS in the Planning Domain • Stakeholder comments on the RAS discussion paper and the AESO response to those comments were published in December 2009 • A review of the AESO approach is provided to facilitate ongoing stakeholder consultation on RAS

50. RAS Discussion Transmission Regulation gives the AESO the authority to use RAS • RAS is permitted under the Transmission Regulation section 15(1), however, RAS is not an alternative to major system upgrades or key transmission paths • RAS can be temporary or permanent under section 15(1) • Specific temporary RAS exceptions are allowed under sections 15(2) and 15(3)