Parking Lot Item 19. BPS Bert Bressers 10/31/2011 Firm rights of resources that have a Firm priority to what load (Sink area granularity)

Parking Lot Item 19. BPS Flowgate Allocation option and Hybrid option: Is there an expectation that the Firm GTL impacts of Non-Markets and Firm Market impacts of Markets as calculated by IDC Software applying new BPS rules, will match (within acceptable range) the Firm GTL impacts of non-markets and Firm impacts of markets as calculated, “granted” and used by Tariff calculations. If not why not. If there is an expectation, how do we accomplish that? Status: Open “Impact of NITS on Parallel Flow Visualization – If a resource has firm rights does it automatically have firm rights for the entire/whole load of TSP Load?” In the meeting the issue was framed as “The granularity of transmission service granted under the OATT will be at the same granularity in the parallel flow visualization calculation in the IDC.” In the April 28-29, 2011, meeting, the subcommittee was asked if anyone wanted to make a motion to include this concept into the Options under consideration. There was no motion to include the concept in the Options. See the April 28-29, 2011 Meeting Minutes, Item 4. “Impact of NITS on Parallel Flow Visualization – If a resource has firm rights does it automatically have firm rights for the entire/whole load of TSP Load?”April 28-29, 2011 Meeting Minutes The subcommittee decided to discuss this issue in the FTC/LTC Subgroup. The co-chairs have the expectation that this issue will be developed and some proposal will be brought to the full subcommittee at the next BPS meeting. If no proposal is presented/developed, the issue may be dropped from consideration under the Parallel Flow project scope. (9/13/11) This item was discussed during the April 11-13, 2011, meeting under the discussion topic

Overview of the current practices how we calculate Firm priority of GTL impacts of Markets and Non-Markets for curtailment purposes Bert Bressers 10/31/2011

Explanation Slide 6 Slide 6 shows 3 Entities: – Entity A Market A existing of multiple BA Areas – Entity B Market B existing of a single BA Area, (note: historical BA Areas are still modeled separate in the IDC Model and Market Flow Calculator models) – Entity C Non Market C, single BA On left lower corner the impact of Entity A on the flow gate is indicated, split up by priority Firm (= Red) and Non Firm (=purple). The arrows within Entity A indicate the flows on the system that cause the Firm impacts (Red: Firm GTL and Firm transfer flows) and the flows that cause the Non Firm impacts (Purple: Non Firm transfer flows)

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) Current situation Markets How Firm impacts of Markets are established LSE Flow gate Firm Non Firm Flow gate impact in MW by resource A of Market A resource A Firm (Limit set by JOA/CMP for all the impact of the Market A) Non-Firm (part of the transfer flow between BA’s of Market is Non-Firm ) A Transfer F Transfer NF GTL F

Current situation Markets Note: The current CMP/JOA process that MISO, PJM, SPP have in place, calculates a Firm flow (impact) entitlement and an NN6 flow entitlement for all RCF flow gates for the SPP Market, MISO Market and PJM Market. Markets calculate their total market impact on flow gates and use the Firm flow entitlement and NN6 flow entitlement to assign Firm, NN6 and NH2 priority to the Market impacts on flow gates for the purpose of reporting the market impacts by priority to NERC IDC for curtailment purposes. In slide 6 it is presented as if part of the transfer flow between BA’s of the Market is Firm and part of the transfer flow is Non Firm and the GTL is all Firm. This assumes that the GTL within BA’s of Market is Firm and part of the transfer flow between BA’s of Market is Firm up to the level of the Firm flow entitlement. (impact GTL Firm + impact transfer flow Firm = Firm flow entitlement) The remainder of the impact of the transfer flow between BA’s of Market in excess of the Firm flow entitlement is Non Firm. The Non Firm transfer flow represents the Market flow impact that has a priority NN6 and NH2.

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) Current situation Markets How Firm impacts of Markets are established. LSE Flow gate Firm Non Firm Flow gate impact in MW by resource A of Market B resource A Firm (Limit set by JOA/CMP for all the impact of the Market B) Non-Firm (Part of the transfer flow Between historical BA’s is Non Firm) B GTL F Transfer F Transfer NF

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) Current situation Non-Markets How Firm impacts of Non-Markets are established LSE Flow gate Firm Flow gate impact in MW by resource A of Non-Market C resource A All impact of resource A serving load of Non Market BA C considered Firm by IDC C GTL F LSE GTL F

Parking Lot Item 19. BPS Bert Bressers 10/31/2011 Review of 3 possible options of the BPS giving direction to the NERC IDC WG.

Summary of the possible Options to address Parking Lot issue No specification in the BPS practices to what load (sink area) a resource that has a Firm priority will get Firm rights on a flow gate. 2.Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights were evaluated and granted by Tariff studies. Applying same granularity as the Tariff study for the Source and Sink. 3. Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights were evaluated and granted by Tariff studies and/or how Firm rights were established by FERC filed Seams agreements preference

No specification in the BPS practices to what load (sink area) a resource that has a Firm priority will get Firm rights on a flow gate. 1 Option 1.

Impact Option 1. IDC WG has no business practice and no direction how to design the PFV with respect to calculating the impact of the resources that have Firm priority. It is to the discretion of IDCWG to choose from following options: – Firm priority is to the load of the Market. – Firm priority is to the load of the historical BA of the Market. (and not to all of the Market load) – Firm priority is to the load of the BA only. – Firm priority is to the load of the LSE only. IDC WG (without guidelines or business practices) has to make a decision how to design the PFV logic and that decision has a major impact on the ultimate results of the flow gate impacts that have Firm priority. IDC WG will most likely ask ORS for direction and ORS will most likely ask BPS to give direction. If IDCWG doesn’t ask for direction and design the PFV logic assuming Firm priority of market resources is Firm to all of the market load, part of Industry might not support this option, which will most likely result in a possible delay of implementation of the PFV. Option 1.: No specification in the BPS practices to what load (sink area) a resource that has a Firm priority will get Firm rights on a flow gate

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 1. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Market A Resource A Firm priority Firm (resource A: All GTL to the BA and the impact of transfer flow to other BA’s of the Market from resource A is Firm) Non-Firm (resource B) Resource B Non-Firm priority A A B C Transfer NF Transfer F GTL F GTL NF All transfer flow from Firm resource is Firm

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 1. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Market B Resource A Firm priority Firm (resource A) All GTL to the historical BA and the impact of transfer flow to other historical BA’s of the Market from resource A is Firm) Non-Firm (resource B) Resource B Non-Firm priority B Transfer NF Transfer F GTL F All transfer flow from Firm resource is Firm

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Non-Markets Option 1. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Non-Market C Resource A Firm priority Resource B Non-Firm priority Firm (resource A) Non-Firm (resource B) C GTL NF LSE GTL F

Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights were evaluated and granted by Tariff studies.. 2 Option 2.

Impact Option 2. IDC WG will have a business practice and a direction how to design the PFV with respect to how to calculate the impact of the resource that has Firm priority. IDCWG will most likely implement following options, for entities to choose from on a resource by resource basis, based on the supporting Tariff study: – Firm priority is to the load of the Market. – Firm priority is to the load of the historical BA of the Market. – Firm priority is to the Load of the BA. – Firm priority is to the load of the LSE only. Markets that had the Firm priority of resources set through DNR process, prior to consolidation to a single BA and/or implementation of the Market, might get Firm rights to a historical BA of the Market only without getting Firm rights for transfer flow from that Firm resource between historical BA’s of the Market. This is assuming that the reference to the Tariff studies will be interpreted as a DNR has only Firm rights to the BA it originally was located in when the study was performed. Energy imbalance markets that include Firm scheduled flow (based on Firm PtP) between BA’s of the Market in their Market flow, will not get Firm rights for that transfer between the BA’s of the Market. This assuming that the reference to the Tariff studies will be interpreted as a DNR has only Firm rights to the BA it originally was located in when the study was performed Option 2.: Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights of the resources were evaluated and granted by Tariff studies..

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 2. (all transfer flow Non Firm) LSE Flow gate Firm Non Firm Flow gate impact in MW by resource A and B of Market A Resource A Firm priority Firm (resource A) Only the GTL of the BA’s of the market will get Firm rights, not the transfer to other BA’s) Non-Firm (resource B and A) Resource B Non-Firm priority A Transfer NF GTL NF GTL F

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 2. (all transfer flow Non Firm) LSE Flow gate Firm Non Firm Flow gate impact in MW by resource A and B of Market B Resource A Firm priority Firm (resource A) Only the GTL of the historical BA’s of the market will get Firm rights, not the transfer to other historical BA’s) Non-Firm (resource B and A) Resource B Non-Firm priority B Transfer NF GTL F

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Non-Markets Option 2. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Non-Market C Resource A Firm priority Resource B Non-Firm priority Firm (resource A) Non-Firm (resource B) C GTL NF LSE GTL F GTL NF

Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights were evaluated and granted by Tariff studies and/or how Firm rights were established by FERC filed Seams agreements 3 Option 3.

Impact Option 3. IDC WG will have a business practice and a direction how to design the PFV with respect to how to calculate the impact of the resource that has Firm priority. IDCWG will most likely implement following options, for entities to choose from on a resource by resource basis, based on the supporting Tariff study or a FERC filed Seams agreement: – Firm priority is to the load of the Market – Firm priority is to load of the historical BA. – Firm priority is to the load of the BA. – Firm priority is to the load of the Market however only part of the transfer flow across boundaries of the historical BA or across boundaries of the BA’s of the Market will be Firm limited by Seams agreements. – Firm priority is to the load of the LSE only. Firm impacts of Markets on flow gates will stay pretty much same if the current JOA/CMP Seams agreements will continue to exist.. Option 3.: Include specification in the BPS practices that the Firm rights of a resource that has a Firm priority will be calculated by IDC consistent with how the Firm rights were evaluated and granted by Tariff studies and/or how Firm rights were established by FERC filed Seams agreements

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 3. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Market A Resource A Firm priority Firm (resource A) All GTL to the BA and part of the impact of transfer flow to other BA’s of the Market from resource A is Firm. Non-Firm (resource B and part of Transfer of resource A) Resource B Non-Firm priority A Transfer NF Transfer F (part of the transfer flow from Firm resource is Firm)

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Markets Option 3. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Market B Resource A Firm priority Firm (resource A) All GTL to the historical BA and part of the impact of transfer flow to other historical BA’s of the Market from resource A is Firm) Non-Firm (resource B and part of the Transfer flow of resource A) Resource B Non-Firm priority B Transfer NF Transfer F GTL F (part of the transfer flow from Firm resource is Firm)

BA Historical BA BA Historical BA Market footprint multiple BA’s (A) Market footprint single BA (B) Non Market single BA (C) New situation Non-Markets Option 3. LSE Flow gate Firm Flow gate impact in MW by resource A and B of Non-Market C Resource A Firm priority Resource B Non-Firm priority Firm (resource A) Gen-to-Load from A to BA C Non-Firm (resource B) C GTL NF LSE GTL F GTL NF

Parking Lot Item 19. BPS Bert Bressers 10/31/2011 Recommendation

Recommendation to address Parking Lot Item 19.  NAESB PFV Practices will include guidelines and requirements for NERC IDC WG for the design of PFV that will:  Allow for continuation of existing Seams agreements  Allow for establishing new Seams agreements  Allow for implementing calculation of Firm priority in accordance with existing Tariff Studies.

Some details of what the recommendation should accomplish NAESB PFV Practices will include sufficient guidelines and requirements for NERC IDC WG specifying how to design the PFV logic that calculates the Firm impact on flow gates of resources that have a Firm priority. The guidelines will specify different options that need to be implemented by NERC IDC WG that allow entities to choose how PFV logic will calculate the Firm impact of resources that have Firm priority in their specific situation. The options will include: – Defining the Sink granularity for a resource that has Firm priority. Options to choose from: LSE area, historical BA Area, BA Area, TSP Area or Market Area. The resource that has Firm priority will only have Firm impact calculated on a flow gate for the transfer flow from the resource to the specified sink area. – Limiting the amount of Firm impacts on a flow gate for an Entity to a specified agreed upon value. This will allow for continuation of existing Seams agreements and implementation of new Seams agreements that limit the Firm rights of Entities on flow gates. The PFV Practices will include guidelines and practices for Entities how to determine which option they are entitled to use and select. The guidelines and practices will be based on complying with Tariffs and Seams agreements filed with FERC.