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Western’s OATT Revision

Western’s OATT Revision. Open Access Transmission Service Tariff Public Meeting Nov 8, 2004 Darrick Moe, Project Manager. Motivation for Revision. Western’s OATT not revised since its adoption in 1998 Making needed adjustments at this time

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Western’s OATT Revision

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  1. Western’s OATT Revision Open Access Transmission Service Tariff Public Meeting Nov 8, 2004 Darrick Moe, Project Manager

  2. Motivation for Revision • Western’s OATT not revised since its adoption in 1998 Making needed adjustments at this time • FERC issued Large Generator Interconnection (LGI) Order 2003 in July of 2003 Affects all jurisdictional entities with OATT

  3. OATT Revision Process • Western wide Team (Team) formed April 2004 • Membership • All Western Regions • Various Functional Areas • Sub-Team focused on LGI Issues • Informal Public Process now ongoing • See http://www.wapa.gov/oatt.htm • E-mail comments to tariffcomments@wapa.gov • Targeting early 2005 for FERC filing

  4. Large Generator Interconnections FERC Order 2003 • Standardizes process for interconnecting generators larger than 20 MW • Makes LGI Procedures and Agreements (LGIP/IA) part of OATT • LGI filing required to retain safe-harbor status • Western indicated to FERC we would comply with Order 2003 provisions to the extent possible Gave notice that filing would be forthcoming

  5. Deviations from LGI Pro Forma • Eliminate provisions subjecting Western to FERC’s jurisdiction or State authority • Eliminate non-applicable provisions related to taxes and indemnification • Assure compliance with environmental laws • Clarify that all permits responsibility of Interconnection Customer • Eliminate provisions that could result in Western liability for liquidated damages • Require contract reassignments receive prior approval from Western

  6. Best Effort to Meet Timelines • Numerous rigid timelines are defined • Western has limited ability to increase staff • Western is subject to Regional Reliability review • Western will use best efforts to comply with timelines

  7. LGI Construction Cost Estimates • Western will use best efforts to estimate construction costs for network upgrades • Actual costs for construction of network facilities will be recovered by Western, regardless of deviation from initial estimates • Up front payments will always be required, not other forms of security • Anti-Deficiency rules require funds on deposit before work begins

  8. Construction Cost Allocation Issues • Provisions remain allowing transmission provider or interconnection customer to build • If customer builds network upgrade facilities • Western policy requires inspectors during construction • Costs to be borne by Interconnection Customer • Drawings and documents provided must comply with Western’s standards • Clarified these costs to be at interconnection customer’s expense: • All voice communications equipment • All costs associated with negotiating LGIA • Clarified all invoices to be paid within 30 days

  9. Limitation on Term • Pro Forma provisions have no definitive term limit • Western is limited to 40 year power sale contract term for power sales • Similar contract term for generator interconnection mirrors Reclamation Law • Will allow for renegotiation at end of term • If generation facility ceases operation for 3 consecutive years, may terminate after 90-day- notice

  10. Meter Testing • Meters at point of interconnection become Western’s property • Pro Forma provisions would require Western testing every 2 years • This deviates from some Western Regional testing practices • Provision altered to provide Western-owned meters tested in accordance with regional meter testing policies Retain option for Customer to request inspection and reimburse Western for costs

  11. Payments for Network Upgrades • Network upgrade costs paid up-front by interconnection customer • Western will repay interconnection customer for network upgrades using bill crediting on transmission service • Includes payment of interest, capped at Federal interest rate • Credits will not be limited to 5 years; will extend as long as required to repay investment • Credits will not exceed transmission customer’s bill • Prevents Anti-Deficiency and cash flow issues

  12. Generation Output Scheduling • Generator output deviations from scheduled values cause energy imbalances in host control area • Such deviations will be subject to Western’s energy imbalance provisions in project rates

  13. LGIP Study Provisions • Change in location of point of interconnection • Results in a new queue position under Pro Forma provisions • Western would allow such a change by mutual consent Consent granted in circumstances for which the study assumptions/conditions are not impacted • Off-Peak transmission loading to be studied • Instead of just on-peak • When required for reliability

  14. Participant Funding • FERC allows RTOs to explore participant funding options • Western reserves the right to explore participant funding as appropriate • May be appropriate in some circumstances for Western’s transmission • Western has history of open use of transmission and collaborative approach to construction

  15. Modified OATT Provisions • Western’s mailing address for transmission service information replaced with updated web address information • References to Regional Reliability Councils updated to current names • Energy Imbalance Schedule modified to clarify that Western has option to use in-kind or financial repayment and to increase EI bandwidth

  16. Network Operating Agreements and Committees • Network Operating Agreements and Committees made optional for each Network Integration Transmission Service (NITS) contract • Instead of a NOC, Western meets separately and jointly with NITS customers, as needed • More effective than Pro Forma Network Operating Committee • Simplicity of some NITS contracts makes NOA unnecessary

  17. Deposit Methodology Altered For entry into queue for Firm Point to Point service exceeding one year and new NITS contracts • Application fee updated to $3,500 across Western • Pro Forma deposit of first month’s service to be required • Capped at a max of $100,000 • To be repaid with a credit on first month’s service • Western to continue policy of not paying interest on deposits or study advances, due to rate impacts and Federal financial operating restrictions • However, customer may opt to establish interest-bearing escrow account for queue deposit

  18. Advance Collection of Funds To prevent potential anti-deficiency or cash-flow problems, Western has discretion to require for these conditions: • For Western acquiring ancillary services from a 3rd party • As requested by the transmission customer • When the services are not available from Western • Due to creditworthiness concerns associated with a new application for service

  19. Late Payments for OATT Service • Western has experienced some difficulty in receiving timely payments for transmission service • Late fees assessed on firm power deliveries result in higher interest charges than under OATT • OATT late payment interest provisions have been conformed to those used for firm power customers • May also require advance payment for customers chronically late in submitting payments • Required to prevent cash-flow or Anti-Deficiency concerns for Western

  20. Transmission System Peak Calculation • Pro Forma OATT specifies all firm to be included in monthly transmission system peak • Western’s detailed transmission rate formula • Filed with FERC in conjunction with OATT • Specifies that only firm lasting one year or more included in transmission system peak • Short-term firm revenue from previous year used to reduce revenue requirement Including in peak calculation could skew outcome, resulting in costs not being recovered from appropriate customers • Does not significantly impact rate calculation • Therefore, adjusting OATT to conform with rate filings

  21. Longer Term Non-Firm Service • Pro Forma Non-firm Point to Point service limited to one month in duration • Some transmission customers expressed interest in longer terms • Regions provided flexibility to offer longer term non-firm service • Regional business practice postings would define specific provisions • Will not conflict with existing tariff provisions

  22. OATT Attachments J & K • Clarify that Sierra Nevada Region’s Path 15 investments will be marketed by the California ISO • Provisions made contingent upon Authorized funding levels • Western’s change of rates provisions removed; not applicable to formula-based rates • Study and deposit costs for Bureau of Reclamation and Corps of Engineers LGI can be waived

  23. The Panel • Ron Klinefelter • Corporate Service Office • Office of General Counsel Team Member • Bob Kennedy • Rocky Mountain Region, Operations • Lead the LGI Sub-Team efforts • Steve Sanders • Upper Great Plains Region, Operations • Substantial contributions to OATT Modification

  24. Submitting Comments • All comments must be received by Nov. 22 • Options for submission • E-mail to tariffcomments@wapa.gov • Use form at http://www.wapa.gov/oatt.htm • Fax to (720) 962–7059 (Attn: OATT Comm) • Write: Western Area Power Admin Attn: Corporate Communications P.O. Box 281213 Lakewood, CO 80228–8213 • Comments and responses to be posted to web

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