MIC RBC Task Force Report

1. MIC RBC Task Force Report Raj Hundal Feb 1, 2013

2. MIC RBC Task Force Report • The MIC RBC Task Force (MIC RBC TF) is tasked with studying the commercial impacts of RBC and unscheduled flows and report back with a whitepaper. • Task Force started its work in Jan 2013, and has met 2 – 3 times a week over the last 3 weeks to draft the whitepaper • The Task Force decided due to its limited time to produce a whitepaper that it would be best to develop a methodology to determine the commercial impacts of unscheduled flow based on eTag curtailments, and then leverage the work of PWG and UFAS to determine the RBC contribution levels. • The Task Force members have studied the impacts of the unscheduled flow on their commercial operations and estimated the monetized impacts. • Task Force members have also listed out non-monetized impacts that are a result of unscheduled flows and would require a more detailed analysis to determine cost impacts.

3. Preliminary Results of MIC RBC TF • The following estimates were provided by Task Force member for the commercial operation impacts due to unscheduled flow in 2012 • Powerex - $2.33 Million • Tri-state – $307K* (this is a initial estimate – to be finalized) • WAPA - $666K • Portland GE - $127K • Tri-State estimates in 2011 the commercial impacts to be $1.9 Million • Based on the analysis performed by each entity for 2012, the average cost was over $20 per MWh. • The Task Force will use the avg cost per MWh value to estimate the overall impacts of unscheduled flow and RBC. • WECC obtained information from webSAS that provided an estimate of Off-Path accommodation to be approx 138K MWh. It is estimated that this volume results in a commercial impact of approx$2.76 Million • WECC is in the process of obtaining On-Path accommodation volume

4. Estimate using WECC WSM results • PWG and WECC staff performed analysis on 30 events based on a snapshot in time and using the WECC Wide System model to determine effects of RBC on system flow by limiting BAs to L10. • PWG Study Results showed that in 25/30 events (83.3 %) when BAs were within L10 the system flow was reduced by a total of 2034.8 MWh • PWG Study Results showed that in 5/30 events (16.7 %) when BAs were within L10 the system flow increased by a total of 209.1 MWh • PWG Study Results showed that Overall system flow was reduced by 1825.7 MWh if BAs operated within L10 during the 30 events. • On average system flow was reduced in each USF event by 60.86 MW • If you assume the average reduction is applied over the 1300 events in 2012 and using the avg cost of $20 per MW, you can estimate a possible RBC impact of $1.58 Million($20*60.86*1300) to commercial operations • This is only one method to determine a possible RBC component.

5. Non-Monetized Impacts • Many entities have changed their trading and transaction habits to avoid the potential unscheduled flow curtailments. • The identified commercial market impacts include: • Underutilized and stranded OATT rights, • higher costs to sellers as a result of negotiated settlements or liquidated damages, • higher costs for re-supply of energy from various sources • avoid certain bilateral transactions or trading hubs altogether because of the risk of USF curtailments and impacts. • unable to offer supply to markets • Additional cost to re-supply customers through purchase of additional transmission rights • Significant time and effort has been required of back office staff to manage the volume of curtailments, and to engage in the subsequent negotiation with customers over liquidated damages • Reputation damage • and lost market opportunity.

6. Next Steps for MIC RBC TF • Complete draft of whitepaper by first week of Feb 2013 • Post for public comment • Address public comments • Provide a whitepaper for WECC Board and Standing Committee discussion for Mid-March