Parallel Flow Visualization Project NERC ORS Meeting May 4, 2011

2 PFV Motion Approved by ORS  A comprehensive parallel flow motion was approved at the May 6, 2009 ORS meeting. It provided direction to the IDC Working Group (IDCWG) to develop a final set of requirements, to seek revised vendor estimates and to prepare a recommendation that would be reviewed at the November 18, 2009 ORS meeting.  The ORS addressed a number of issues on the approach to be taken:  A single vendor will make the GTL calculation for all RCs in the EI.  The three RTOs (Midwest ISO, PJM and SPP) that currently report their market flows to the IDC will replace their own calculation with the vendor calculation.  A staged implementation of the new software where it would run in parallel test mode with the existing IDC for months. There will be a set of reliability metrics that demonstrate an improvement over the NNL calculation before changing to the new software.

3 NAESB BPS to Determine GTL Priorities  The NAESB Business Practices Subcommittee (BPS) was assigned responsibility for the development of a mechanism that assigns priorities to GTL.  NAESB BPS has been meeting regularly since October 2009 and has worked closely with the IDCWG to make sure the assignment of priorities mechanism will be compatible with the data reporting requirements of the IDC.  NERC Staff on July 2, 2010 requested that an interim solution be in-place by November 1, 2010 to address the subordinate treatment of firm service issue raised in the FERC NOI if a permanent solution could not be developed by that time.  The NAESB BPS approved an interim solution with a November 1, 2011 sunset date on July 23,  NAESB EC took action on the interim solution at its October 26, 2010 meeting and removed the November 1, 2011 sunset date. During the notational ballot period, the recommendation was modified to remove the reference that the interim solution would not be filed at FERC.  NAESB BPS continues to work on the two permanent solution options (the combined generator prioritization/tag non-firm hybrid option and the flowgate allocation option). The NAESB BPS will address key concepts for these two options at its April meetings and will select an option as the PFV permanent solution at its May meeting.

4 Hybrid Option  Tag All Non-Firm Intra-BA Transactions  This option requires the tagging of all intra-BA non-firm transactions. Will then have tags for non-firm intra-BA secondary network, non-firm intra-BA PTP and all inter-BA transactions that can be subtracted from the outputs of generators identified as source generation on a tag.  The remaining generator output will be deemed firm service within the IDC. This deemed firm service includes both intra-BA firm network and intra-BA firm PTP transactions. However, this is not a limitation of the methodology since both of these transaction types receive the same treatment in the TLR process.  Generator Prioritization  Each TSP shall identify firm/non-firm usage for all units on their system and submit Priority Schedules to the SDX for all generators serving load in their BA, market or transmission footprint.  Each TSP will post on a public website their minimum requirements for considering firm use of transmission on their system.  Cannot use a combination of both within a single BA.

5 Flowgate Allocation Option  This option allocates the total capacity of the flowgate based on two day-ahead, day-ahead and hour-ahead predicted firm usage.  Predicted firm usage includes GTL impacts from generators with firm transmission service and firm PTP impacts.  Two day-ahead impacts and day-ahead impacts based on firm reservations. Hour-ahead impacts based on firm schedules.  Need to have the set of generators with firm transmission service and the set of firm PTP reservations/schedules for the period under review.  Use the higher-of the three allocations to set firm GTL impacts. The allocations are reduced by real-time firm PTP impacts from tags to determine firm GTL flow limits.

6 Key Hybrid Option Concepts to be Resolved  Seams Agreements vs. Business Practices vs. Two-Tier Firm Curtailment  BPS generally agrees that incentives are needed to encourage TSPs to honor external constraints when providing transmission service.  There is a question on how this would be accomplished:  Include language in NAESB Business Practices Standards that mandates seams agreements and identifies the minimum requirements to be included in seams agreements.  Instead of mandating seam agreements in NAESB Business Practices Standards, write standards that mandate honoring external constraints when providing transmission service. These standards would be proscriptive including the same minimum requirements that would appear in seams agreements.  Instead of mandating seams agreements or being proscriptive in NAESB Business Practice Standards, provide an incentive for seams agreements through use of two-tier firm curtailments.  Where seams agreements to honor external entity flowgates exist, the curtailment priority of parallel flows will be at the same level as the owner of the flowgate (last- to-curtail).  Where seams agreements do not exist, the curtailment priority will be at the lowest level of firm (first-to-curtail).  All impacts with a first-to-curtail firm priority will be curtailed proportionally before any impacts with a last-to-curtail priority are curtailed.  First-to-curtail categories will apply to GTL parallel flows and PTP parallel flows where no seams agreements exist.

7 Key Hybrid Option Concepts to be Resolved  Credit for Redispatch  Allows the most cost effective generation be used to meet relief obligations. Lacking a credit for redispatch, the hybrid option is not viable for the markets.  There are a number of issues that will need to be resolved if the hybrid option is selected and it includes a credit for redispatch.  Because the flowgate allocation option uses allocations to set priorities, it already allows the most cost effective generation be used to meet relief obligations and does not require a credit for redispatch.

8 Key Flowgate Allocation Option Concepts to be Resolved  Pro-Rata Curtailments Between Firm GTL and Firm PTP  A situation may occur where the allocation is less than the hour-ahead firm impacts from generators with firm transmission service and from firm PTP tags.  OATI has proposed that when such a shortfall occurs, a first-to-curtail/last-to- curtail process could be used in the IDC where the assignment of curtailment priority are based on the normal allocation (last-to-curtail) and the shortfall allocation (first-to-curtail).  The alternative is to not have a shortfall allocation. This would result in firm PTP always appearing in the last-to-curtail category and firm GTL assigned the highest level of non-firm to make up for the shortfall. This would effectively have firm generators treated subordinate to firm PTP for curtailment purposes.  What Happens in Allocation Process If Run-Out of Firm Generation to Serve Load?  Because the allocation process only uses firm generators to serve expected load and it takes into account outages, a situation may occur where there is not sufficient firm generation to serve load. When this happen, can either over-generate firm generators, reduce load or bring-on non-firm generators.  When this situation occurs in the historic allocation process (for those parties with seams agreement), the third choice is used to make-up the shortfall. This will be less of a problem with the flowgate allocation option because it does not limit the use of firm DNRs as of an April 1, 2004 freeze date.

9 Next Steps  Key concepts are addressed during the April meeting.  A PFV permanent solution is selected during the May meeting.  NAESB Business Practices Standards will be developed once a PFV permanent solution option is selected.  The BPS will work with the IDCWG on the development of an IDC CO to implement the selected option. The IDC CO will require ORS approval.  A set of reliability and commercial metrics will be developed to evaluate the PFV permanent solution process during the month field test.  The commercial metrics will be used by the BPS “to assess the appropriateness of the approach (used to assign curtailment priorities). Failing to meet acceptance criteria could result in creation of a new approach.”  The reliability metrics will be used by the ORS to “determine an improvement over the NNL calculation before changing to the new software.”

10 Parallel Flow Visualization Project  Questions?

11 Parallel Flow Visualization Project Attachment

12 Parallel Flow Visualization Motion Approved on May 6, 2009 ... moved that the ORS agrees that the future use of GTL impacts, as identified in the MISO, PJM, and SPP “Generation-to-Load Reporting Requirements” white paper, will improve visibility and as such will enhance reliability of the Eastern Interconnection. The ORS believes the IDC should be modified to accept GTL calculations. The GTL impact calculation should be consistent for all EI RCs and, as such, a single vendor should be selected to implement the methodology and to perform the actual calculations for all EI RCs.  These changes are intended to provide information only at this point (i.e. providing the calculated GTL impacts without changing the functionality of the tools) until the ORS agrees that it is appropriate to utilize the additional data to enhance tool processes or possible changes to TLR procedures. It is recognized that any changes to the TLR process to utilize the additional data made available as a result of this initiative will be determined preferably by the existing joint NAESB/NERC TLR SDT. Industry support will be critical to the success of this initiative and will be best achieved by ensuring appropriate industry input and transparency in the decisions taken.

13 Parallel Flow Visualization Motion Approved on May 6, 2009  The ORS directs the IDCWG to take the following actions:  Identify the minimum data set required to achieve the required calculations by the September 2009 ORS meeting.  Identify the required changes to the IDC to identify the GTL impacts  Recommend a vendor to perform the GTL calculations for all EI RCs  Determine, in cooperation with the vendor, the GTL calculation methodology.  Identify to the ORS any additional items that are required to incorporate GTL impacts.  The IDCWG should target having proposed recommendations to the ORS for the November 2009 meeting.  The GTL impacts should be archived in the IDC for an initial period of 12 to 18 months to allow analysis to be performed to assess the potential impact of any proposed changes to the TLR process including the possible use of near real time data for NNL calculations and possible use of near real time data for other TLR calculations as determined by NAESB. Process changes may be incorporated before the completion of the analysis period if the ORS determines it is appropriate.

14 Parallel Flow Visualization Motion Approved on May 6, 2009  In addition, the NERC ORS will develop reliability metrics to confirm that the Generation-to-Load calculation is an improvement in accuracy over the static NNL calculation which must be met before changing to using the Generation-to-Load calculated impacts for TLR.