IJT Transaction Timelines and Scheduling – NISL and CMSC

2 Real-time Scheduling Pre-dispatch Scheduling Real-TimeUnconstrained Real-timeConstrained Pre-dispatchUnconstrained Pre-dispatchConstrained The Dispatch Algorithm is run in two time frames The Dispatch Algorithm

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

Timing and Prices

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

6 Manitoba Ontario = $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

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

Congestions Management Settlement Credits

9 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 InstructionCMSC 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 OP (MQSI) - OP (DQSI) Where MQSI = Market Quantity Scheduled for Injection DQSI = Dispatch Quantity Scheduled for Injection OP (MQSI) - OP (DQSI) Where MQSI = Market Quantity Scheduled for Injection DQSI = Dispatch Quantity Scheduled for Injection Congestion Management Settlement Credits

Transaction Limitations: Net Interchange Schedule Limits

11 Net Interchange Schedule Limit

12 Maximum net schedule change for a given hour on all interties must be  700 MWMaximum 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 limitBoth 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 limitBids 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)If necessary, IMO will proactively reduce transactions in pre-dispatch to achieve this (manually) Maximum net schedule change for a given hour on all interties must be  700 MWMaximum 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 limitBoth 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 limitBids 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)If necessary, IMO will proactively reduce transactions in pre-dispatch to achieve this (manually) Inter-Hour Schedule Change Limit

13 Previous hour schedule 500 MW importPrevious hour schedule 500 MW import Next Hour MCP is $38, no congestionNext Hour MCP is $38, no congestion Previous hour schedule 500 MW importPrevious hour schedule 500 MW import Next Hour MCP is $38, no congestionNext Hour MCP is $38, no congestion TransbordImport 1300 $30 PinepowerImport 300 $35 ExpbordExport 100 $50 GenbordExport 300 $34 Total Potential Net Interchange Scheduled 1500 MW Change From Previous Hour1000 MW Automatic Process

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

15 Automatic Process

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

A Net Tieline Schedule (MW) Hour 2 Hour 1 BC Hour 4 Hour 3 AA B  = 700  = 0  = 700 A Inter-hour Schedule Change Limit: Manual Processes

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

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

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

21 Constrained Algorithm No Import Offers Borgpower bids to export 200 $75/MW MCP=$50 Net Export of -200 MW Hour 2 Hour 1 Hour 2 Hour 1 Unconstrained Algorithm No Import Offers Borgpower bids to export 200 $75/MW MCP=$50 Net Export of -200 MW Allowed range = 1400 to 0 MW Allowed range = 1200 to -200 MW Hour 1: Net Import of 700 MW Hour 1: Net Import of 500 MW E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 2

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

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

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

25 Constrained Algorithm ExborgBids 700 $100/MW MCP=$50 Net Tieline Schedule (MW) 500 Net Export of 700 MW Hour 2 Hour 1 Hour 2 Hour 1 Unconstrained Algorithm Transbord Offer: 700 $10/MW MCP=$50 Net Exports of 500 MW Allowed range = 0 to Allowed range = 200 to MW does not flow E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 1

26 Constrained Algorithm No Export Bids Borgpower offers to import 200 $75/MW MCP=$150 Net Import of 200 MW Hour 2 Hour 1 Hour 2 Hour 1 Unconstrained Algorithm No Export Offers Borgpower offers to import 200 $75/MW MCP=$150 Net Import of 200 MW Allowed range = 0 to Allowed range = 200 to – 500 Hour 1: Net Export of 500 MW E.g.: Inter-hour Schedule Change Limit & CMSC: Hour 2

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

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