Parallel Flow Visualization and Flowgate Allocations

1. Parallel Flow Visualization andFlowgate Allocations Equity Concerns of Non-Market Transmission Owners

2. Parallel Flow Visualization – For reliability • Objectives • Meet needs of Reliability Coordinator, RC • Observe impacts on congested flowgates • Provide IDC with current information • Increase accuracy of Gen to Load impacts(timely updates) • Observe magnitude and source of all impacts

3. Parallel Flow Visualization – Non-Market priorities • Objectives • Accurately prioritize certain non-market GtL flows in real time that today may be inappropriately treated as firm, due to shortcomings in the IDC (e.g. Non-designated network resources)

4. Parallel Flow Visualization – Centralized calculations • Objectives • Perform impact calculation at a central location for both the market flows as well as the non-market GtL flows • Presently, the non-market BA GtL impact calculation is performed at a central location (IDC), whereas the market flow impact on flowgates is calculated by each market entity, then uploaded to the IDC.

5. Parallel Flow Visualization - Equity Concerns • This desire to have a centralized calculation seems to have been interpreted by some as a REQUIREMENT that the impact calculation and prioritization for the market flow and the non-market GtL flow must be the SAME. • This has significant equity implications, and NAESB should consider this change carefully.

6. Concept being proposed • DNR designation is being proposed as the basis for determination of firm usage. • Under this concept, what is designated as firm usage by the non-market BAs doesn’t conceptually change. Therefore, may be reasonable for non-market BAs. • This would be a significant change from what is presently being done for prioritization of market flow. Is the DNR designation an equitable basis of firm usage for the market?

7. How we got to where we are today..(our view of history, and why it is relevant)

8. Network Integration Transmission Service (NITS) • Section 28.3 Language obligates the Transmission Provider to;…provide Firm Transmission Service over the Transmission System to the Network Customer for the delivery of Capacity and Energy from its designated Network Resourcesto service its Network Loads…[emphasis added]

9. Example: Historical “Tariff” Area Network Load Section 28.3 (NITS) Firm Transmission Network Resource

10. RTO / Market Areas

11. Historic Control (Tariff) Areas MH MP MDU OTP NSP GRE WPL MECS WEP SMP PSI MEC IES PSI DQE IPL DPL IP CGE UE

12. Example: Historical “Tariff” Area Network Load Section 28.3 (NITS) Firm Transmission Network Resource

13. RTO / Market Areas MH MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

14. RTO / Market Areas MH • Historically, the system was not planned nor built for firm deliveries between historic Control Areas MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

15. RTO / Market Areas MH If System Constraints - Can all of this market dispatch from DNRs be firm? MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

16. RTO/Market Areas Constraints – Internal & External MH Issue not just internal to the market footprint MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

17. Market Start-up Constraints – Internal & External MH • Central dispatch across the entire market footprint (internal to and across historic CAs) without tagging. • There wasn’t enough firm transmission to justify that “all market generation” was firm to “all market load”. (For example, generation in Indiana couldn’t service XCEL loads in Minnesota due to constraints) MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

18. Equitable Prioritization – On Market Start-up?? Constraints – Internal & External MH • It was recognized that the non-markets would be adversely and in-equitably impacted if markets didn’t constrain the centralized dispatch • Some approach was needed to properly set the priority of the broader market footprint dispatch, while recognizing the transmission rights within the market MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

19. Allocation Process Constraints – Internal & External MH • The “Markets” documented firm rights on the system based on: • Firm GtL delivery internal to historic CAs • Existing historic Firm PtP between historic CAs. • An “Allocation” process was developed based on these historic firm rights to define limits for a firm centralized market dispatch MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

20. Allocation Process (cont.) Constraints – Internal & External MH • Markets were allowed to dispatch centrally (without tagging between historic CAs), but the market flow impact on flowgates was prioritized based on the historic firm usage • The allocation process divides the market flow on a flowgate into three priorities (Firm-7, ED-6/NN-6, and ED-2/NH-2) • Updating allocations for system changes/additions is necessary MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

21. Since then .. Constraints – Internal & External MH • MISO has consolidated historic CAs/BAs into one BA • No significant transmission additions have occurred to span the historic CAs • The non-markets believe that there is still NOT sufficient firm transmission available for any market gen to be delivered to any market load MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

22. Since then .. (cont.) Constraints – Internal & External MH • The need for “Allocations” has not been eliminated • The “desire to have the same GtL calculation” and “complexity in updating the allocations” are not sufficient justification to disregard the recognition that there was and still is limited firm transmission to transfer between the historic market CAs • Use of DNR status only doesn’t properly reflect delivery capability across a broad market MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

23. NAESB / Need to ensure Equity Constraints – Internal & External MH • Before the “DNR designation” be allowed as the basis of firm usage of the market, the market needs to demonstrate to NAESB that they have sufficient firm transmission to deliver from their market gen to their market load across their entire footprint on a comparable basis to the non-markets. • This wasn’t the case on market start-up • What has changed that would allow this use of footprint-wide DNR designation in markets? • There is a Significant equity issue on all market impacted flowgates, if market flow is prioritized as firm solely based upon DNR status, if firm transmission really doesn’t exist. MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

24. Allocations – Impact to non-markets Constraints – Internal & External MH • Assuming the allocations are maintained, MISO has argued that the non-market GtL flow should be prioritized based on allocations during congestion, just like the market flow… However; • For the non-market, transmission service priority (for GtL and PtP) is set based on the service that has been demonstrated and granted. Priority should be based upon that TP designation. • For the non-market, the allocations are considered during the granting of such firm service. MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

25. Allocations – Impact to non-markets Constraints – Internal & External MH Also; other equity concerns.. • Markets have documented to NERC that they do not currently achieve their assigned curtailment obligations – that transfers the impact to the non-market uses (equity concern as well as reliability) • The non-markets are required to meet their curtailment obligations, or they are found non-compliant. The non-markets cannot avoid a curtailment due to it being too large. • Non-markets have not disagreed that non-firm resources should be prioritized as non-firm during congestion, and presumed that those uses of the system will be prioritized correctly during congestion based upon IDC improvements. MP MDU Network Load OTP NSP GRE WPL MECS WEP SMP PSI CONSTRAINTS..!! MEC IES PSI DQE Network Resource IPL DPL IP CGE UE

26. Non-market requests to NAESB • NAESB ensure that any change to the prioritization of the market flow consider whether it is equitable to both market/non-market to make such change. • Use of DNRs in the market to set market flow priority would adversely and in-equitably impact the non-markets. • NAESB not recommend or endorse elimination of allocations to set the market flow priorities until such time as the markets have clearly demonstrated that allocations are no longer needed. • NAESB consider the parallel operation/test mode (existing IDC versus Parallel Visualization effort) before implementing changes that impact equity