Intra-BA Pseudo Ties Errors to Market Flow Calculations Nate Schweighart Tennessee Valley Authority 02/11/2014

Premise Pseudo ties internal to a market can cause the forward and reverse market flow calculations to be incorrect. This causes errors in the determination of relief requirements for markets in the IDC, because the IDC uses the forward flow impacts when determining relief obligations.

LBA 1 LBA 2 BA G1G2 L1 L2 L3 MWDfax G G L L L Flowgate Market Flow = GTL Impact LBA 1 + GTL Impact LBA 2 + Transfer Impact

LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 1500 LBA MWDfax G G L L L Step 1: GTL Impacts

LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 1 LBA 2500 MWDfax G G L L L Step 1: GTL Impacts

LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10 LBA MWDfax G G L L L Step 2: Transfer Impacts

Step 3: Calculate GLDFs LBA1 GTL GLDF =.15 - (.1 +.3)/2 = -.05 LBA2 GTL GLDF = =.2 LBA2 Transfer GLDF =.4 - (.1 +.3)/2 =.2 MWDfax G G L L L3500.2

LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA n/a-250 LBA MWDfax G G L L L x = Step 4: Calculate Impact

Market Flow Impact Forward Flow = = 200 Reverse Flow = 25 Net Flow = = 175 GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA n/a-250 LBA

Now Let’s Pseudo Tie the Generator in LBA 1 to LBA 2 LBA 1 LBA 2 BA G1 G2 L1 L2 L3 Flowgate

GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a LBA LBA 1 LBA 2 BA G1 G2 L1 L2 L3 Flowgate MWDfax G G L L L Step 1/2: GTL/Transfer Impacts

Step 3: Calculate GLDFs LBA1 GTL GLDF = n/a. There is no gen in LBA1 now LBA2 GTL GLDF = ((.15* * 1000)/1500) -.2 = LBA2 Transfer GLDF = ((.15* * 1000)/1500) – (.1 +.3)/2 = = MWDfax G G L L L3500.2

GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a 00 LBA LBA 1 LBA 2 BA G1 G2 L1 L2 L3 Flowgate MWDfax G G L L L x = Step 4: Calculate Impact

Market Flow Impact Forward Flow = = 175 Reverse Flow = 0 Net Flow = 175 – 0 = 175 GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a 00 LBA

Summary The intra-BA pseudo tie did not change the net market flow value but did change the forward and reverse market flow values Market FlowNormalIntra-BA Pseudo Tie Forward Reverse250 Net175 Therefore, internal BA pseudo ties can potentially cause the markets to misreport their forward and reverse market flows.