IJT Transaction Timelines and Scheduling – NISL and CMSC

1. IJT Transaction Timelines and Scheduling – NISL and CMSC

2. Pre-dispatch Scheduling Real-time Scheduling The Dispatch Algorithm Pre-dispatch Constrained Pre-dispatch Unconstrained Real-time Constrained Real-Time Unconstrained The Dispatch Algorithm is run in two time frames

3. IJT Schedule • Interchange Schedule is created based on the hour ahead pre-dispatch algorithm • Participants pick up their schedule from IMO system • IMO co-ordinates with neighbouring jurisdiction

4. Timing and Prices

5. Energy Energy Energy Operating Reserve (10 min non-synch) Operating Reserve (30 min) Energy Operating Reserve (10 min non-synch) Operating Reserve (10 min non-synch) Operating Reserve (10 min non-synch) Operating Reserve (10 min non-synch) Operating Reserve (10 min non-synch) Energy Energy Operating Reserve (30 min) Operating Reserve (30 min) OperatingReserve (30 min) Operating Reserve (30 min) Operating Reserve (30 min) Projected Prices Ontario Quebec (8) Operating Reserve (10 min synch) Manitoba Minnesota New York Michigan

6. Energy MCP = $22 Energy MCP = $25 Intertie Congestion Price (ICP) = Manitoba Intertie Zone MCP - Ontario MCP = $25 - $22 = $3 Determined in the hour ahead pre-dispatch, it will be used in real-time to determine Manitoba MCP Projected Prices Ontario Manitoba

7. Settlement Price for Withdrawals and Injections - Pre-dispatch Projected Intertie Zone Price Projected Market Clearing Price in Ontario ICP (Intertie Congestion Price) Real-time ICP + MCP Intertie Energy Price* *  MMCP

8. Congestions Management Settlement Credits

9. OP (MQSI) - OP (DQSI) Where MQSI = Market Quantity Scheduled for Injection DQSI = Dispatch Quantity Scheduled for Injection Congestion Management Settlement Credits • CMSC payments are based on the difference between the Operating Profit that would result from the Market Schedule and Operating Profit resulting from the Dispatch Instruction

10. Transaction Limitations: Net Interchange Schedule Limits

11. Net Interchange Schedule Limit

12. Inter-Hour Schedule Change Limit • Maximum net schedule change for a given hour on all interties must be  700 MW • Both constrained and unconstrained algorithm include 700 MW hour-to-hour limit • Bids and offers will only be accepted which will not violate the 700 MW limit • If necessary, IMO will proactively reduce transactions in pre-dispatch to achieve this (manually)

13. Automatic Process • Previous hour schedule 500 MW import • Next Hour MCP is $38, no congestion Transbord Import 1300 MW @ $30 Pinepower Import 300 MW @ $35 Expbord Export 100 MW @ $50 Genbord Export 300 MW @ $34 Total Potential Net Interchange Scheduled 1500 MW Change From Previous Hour 1000 MW

14. Automatic Process • Algorithm will maximize gain from trade while respecting limits • Two choices: drop an import or add an export Add Export ($34 - $38) x 300 MW = -$1200 Drop Import -($38 - $35) x 300 MW = -$900

15. Automatic Process

16.  = 700  = 700 Inter-hour Schedule Change Limit:Manual Processes Net Tieline Schedule (MW) 2100 C 1400 B B 700 A A A A Hour 1 Hour 2 Hour 3 Hour 4  = 1400

17.  = 0  = 700 Inter-hour Schedule Change Limit:Manual Processes Net Tieline Schedule (MW) 2100 1400 B C B 700 A A A A Hour 1 Hour 2 Hour 3 Hour 4  = 700

18. Inter-hour Schedule Change Limit and CMSC • Both the constrained and unconstrained algorithms are bound by the 700 MW limit • Constrained and unconstrained may have different starting points, typically because of transmission congestion within Ontario • If starting points differ, outcomes will differ • This could result in CMSC payments

19. Hour 1 Hour 2 Hour 1 Hour 2 E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 1 Constrained Algorithm Unconstrained Algorithm Net Tieline Schedule (MW) 700 200 MW does not flow TransbordOffer:700 MW @ $10/MWMCP=$50 TransbordOffer:700 MW @ $10/MWMCP=$50 500 Net Importof 700 MW Net Importof 500 MW Allowed range = 1200 to -200 MW Allowed range = 1400 to 0 MW

20. CMSC Payments: Hour 1 • Transbord constrained off • Offer price: $10/MW • MCP: $50/MW • Lost operating profit: $40 per megawatt CMSC = $40 x 200CMSC = $8000

21. Hour 1 Hour 2 Hour 1 Hour 2 E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 2 Constrained Algorithm Unconstrained Algorithm Hour 1: Net Import of 500 MW Hour 1: Net Import of 700 MW No Import OffersBorgpower bidsto export 200 MW @ $75/MWMCP=$50 No Import OffersBorgpower bidsto export 200 MW @ $75/MWMCP=$50 Net Exportof -200 MW Net Exportof -200 MW Allowed range = 1200 to -200 MW Allowed range = 1400 to 0 MW

22. CMSC Payments: Hour 2 • Unconstrained: Borgpower scheduled to export 0 MW • Constrained: Borgpower scheduled to export 200 MW • Borgpower achieves higher operating profit based on constrained schedule than on unconstrained schedule

23. CMSC Payments: Hour 2 • CMSC payments  return participant to the operating profit from the unconstrained schedule • In this case, there will be a negative CMSC: CMSC = ($75 - $50) x (0 - 200) CMSC = - $5000

24. CMSC Payments: Hour 2 Actual cost to Borgpower is equivalent to Borgpower’s original bid price of $75/MW: Cost of export: 200 MW @ $50/MW = $10,000 Cost of Negative CMSC: = $ 5,000 Total Cost: = $15,000 Bid Price: 200 MW @ $75/MW = $15,000

25. Hour 1 Hour 2 Hour 1 Hour 2 E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 1 Constrained Algorithm Unconstrained Algorithm Net Tieline Schedule (MW) 700 200 MW does not flow TransbordOffer:700 MW @ $10/MWMCP=$50 Exborg Bids 700 MW @ $100/MWMCP=$50 500 Net Exportof 700 MW Net Exportsof 500 MW Allowed range = 200 to -500 Allowed range = 0 to -1400

26. Hour 1 Hour 2 Hour 1 Hour 2 E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 2 Constrained Algorithm Unconstrained Algorithm Hour 1: Net Exportof 500 MW Hour 1: Net Exportof 500 MW No Export OffersBorgpower offers to import 200 MW @ $75/MWMCP=$150 No Export BidsBorgpower offersto import 200 MW @ $75/MWMCP=$150 Net Import of 200 MW Net Importof 200 MW Allowed range = 200 to – 500 Allowed range = 0 to - 700

27. CMSC Payments: Hour 2 • CMSC payments  return participant to the operating profit from the unconstrained schedule • In this case, there will be a negative CMSC: CMSC = ($150 - 75) x (0 - 200) CMSC = - $3000

28. IOG in Hour Two • What will be the IOG Payment in hour two? The Market Quantity is Zero (MQSI) so the IOG is Zero!