1. BPA Formal Comments Overview to NAESB OS
API 2.a.i.1 – Short-term Preemption & ROFR
Aug 16, 2017

2. Agenda Background Proposal 1 Proposal 2 Proposal 3
Note: These proposals address different problems and thus should be considered independently of each other.
BPA Formal NAESB OS /16/2017

3. Background
The draft standards allow a scenario in which more Defenders with ROFR are identified than there is ATC to accommodate them all (x001-xx ). This can create ROFR “winners” and “losers”.
A ROFR “loser” is a customer who legitimately tried to exercise ROFR by submitting a valid ROFR request on-time, but for which the Matching profile could not be granted by the TP.
BPA believes a TP should only offer ROFR to a Defender when there is sufficient ATC to honor all such ROFRs.
However, BPA recognizes that FERC has envisioned that it may not be possible to honor all ROFR’s.
BPA is not challenging the standards that allow ROFR “losers” to exist. However, BPA is proposing remedies for two adverse outcomes related to ROFR “losers”.
The selection of ROFR “winners” and “losers”.
How capacity preempted from a ROFR “loser” is allocated in some cases.
BPA Formal NAESB OS /16/2017

4. Problem 1
Customers with less sophisticated systems and fewer financial resources can be at a disadvantage in having their ROFR request be awarded when there are multiple Defenders with ROFR and insufficient ATC to accommodate them all.
BPA Formal NAESB OS /16/2017

5. Sorting Criteria of ROFR Requests
Table xx-7 echoes FERC guidance on the sorting of multiple ROFR requests.
Duration
Price
Queue Time of the ROFR Request
In practice, however, Queue Time of the ROFR request can be the governing criteria in many cases.
Most Defenders will choose to match the duration of the Challenger. Price is not a factor for TP’s that use a tariff rate.
When Queue Time is the tie-breaking criteria, the advantage goes to the customer who can respond most quickly with a ROFR request. This advantages some customers over others.
FERC has already demonstrated a willingness to level such a playing field between customers when there is a race to respond.
BPA Formal NAESB OS /16/2017

6. FERC on Leveling the Playing Field
In Order 890, FERC provided guidance on how to level the playing field between customers with disparate levels of sophistication when there is a time-based “race” to acquire constrained capacity.
“1419. In order to ensure that transmission service is not awarded in an arbitrary fashion and to ensure that transmission customers who are less sophisticated and have fewer financial resources have equal access to transmission service, we will require transmission provider who set a “no earlier than” time for request submittal to treat all transmission service requests received within a specified period of time as having been received simultaneously.”
FERC introduced a “simultaneous submission window” concept to give everyone an equal chance at getting the limited ATC when a “starting gun” is used to initiate a “race to ATC”.
BPA believes that there is a similar “starting gun” situation and “race to ATC” for submission of ROFR requests when Queue Time of ROFR response becomes the governing criteria for sorting ROFR requests.
BPA Formal NAESB OS /16/2017

7. Leveling the Playing Field for ROFR Submission
Just as in the case of a “no earlier than” window, customers with sophisticated systems will be able to submit a ROFR request within seconds of being notified of the competition, while a customer with less resources may take an hour or more.
This can be mitigated by employing a similar simultaneous submission window for ROFR requests.
All ROFR requests received within the first “xx” minutes will have the same time of ROFR response.
Employ a new tie-breaker for ROFR requests received within the window.
SSW
(5 min)
ATC being requested starts 60 days in the future
60 Days Out
“No earlier than” for Monthly Firm PTP
Market Open
(xx min)
ROFR sorting and evaluation
24 hour ROFR Response Time
Remainder of ROFR Response Time
Competition Initiated
Starting Gun
BPA Formal NAESB OS /16/2017

8. Proposal 1: SSW for ROFR Requests
Add footnote * to Criteria 3 to indicate that all ROFR requests received in the first ‘xx’ minutes from initiation of the Preemption-ROFR Process will have the same Queue Time.
The period ‘xx’ will be indicated by the TP in their Business Practices.
TP can opt-out of using this simultaneous window by setting the value to zero.
Add a 4th criteria to serve as a tie-breaker for Criteria 3: the Queue Time of the original Defender ARef.
ROFR requests received after ‘xx’ min will be sorted by Criteria 3 as per current standards.
Table xx-7
Criteria Order
Attribute 1
Duration 2
Price 3
Queue Time (of ROFR Request) * 4
Queue Time (of Defender ARef)
BPA Formal NAESB OS /16/2017

9. Motion 1: SSW for ROFR Requests
Modify Table xx-7 to add a footnote to Criteria 3 to indicate that all ROFR requests received within ‘xx’ minutes of the initiation of the Preemption-ROFR Process will be deemed to have been queued at the same time. Add Criteria 4 to use the Queue Time of the Defender ARef as the tie-breaker for Criteria 3. The ‘xx’ time period will be determined by the TP in their Business Practices.
BPA Formal NAESB OS /16/2017

10. Problem 2
It is possible for capacity that is preempted from a Defender who legitimately tried to exercise ROFR to be reallocated and awarded to a lower priority Defender, even one that is still pending.
BPA Formal NAESB OS /16/2017

11. Current Order of Evaluation and Profiles
Evaluate Defenders with ROFR
Explicitly decline ROFR
Only submit invalid ROFR requests
Do not submit any ROFR request
Valid ROFR request that is granted
Valid ROFR request that is not granted
Evaluate Challenger
Evaluate Defenders without ROFR
Reservations
Requests
Remaining
Matching
Profile
Remaining
BPA Formal NAESB OS /16/2017

12. So what’s the problem? Evaluate Defenders with ROFR
Explicitly decline ROFR
Only submit invalid ROFR requests
Do not submit any ROFR request
Valid ROFR request that is granted
Valid ROFR request that is not granted
Evaluate Challenger
Evaluate Defenders without ROFR
Reservations
Requests
The Remaining profile is calculated by the TP based on the premise that preempted capacity is awarded to the Challenger, but…
Profile
Remaining
Remaining
Remaining
Preempted capacity
…if the Challenger does not take the preempted capacity, that ROFR capacity can be awarded to a Defender without ROFR. 
BPA Formal NAESB OS /16/2017

13. A New Principle… Evaluate Defenders with ROFR Evaluate Challenger
Defenders who submit valid ROFR requests that are not granted should be given the first opportunity at excess capacity remaining after the Challenger final state.
A New Principle…
Profile
Evaluate Defenders with ROFR
Explicitly decline ROFR
Only submit invalid ROFR requests
Do not submit any ROFR request
Valid ROFR request that is granted
Valid ROFR request that is not granted
Evaluate Challenger
Re-evaluate any ROFR “losers”
Evaluate Defenders without ROFR
Reservations
Requests
Remaining
Remaining
Remaining
Matching
Sounds easy enough, but there is another thing to consider…
BPA Formal NAESB OS /16/2017

14. What about the Remaining Profile?
A re-evaluation of a Defender with ROFR after the Challenger final state seems in conflict with the purpose of the Remaining profile.
The Remaining profile provides important benefits:
Serves as an affirmative agreement between the TP and TC on the capacity that will be granted if the Matching profile cannot be granted.
Provides the Defender a mechanism for lowering their remaining capacity.
Provides a guarantee of capacity to the TC (the Remaining profile is not re-evaluated for changing system conditions by the TP).
Some customers may prefer the certainty of the Remaining profile, while others may want the opportunity to get an improved offer over and above the Remaining profile through re-evaluation.
TP’s may require affirmation from TC’s before granting Defenders with ROFR capacity other than the Remaining profile.
BPA Formal NAESB OS /16/2017

15. Proposal 2: ‘Best Offer’ for Defenders with ROFR
Offer Defenders with ROFR the option to choose between the certainty of the Remaining profile or an opportunity to be re-evaluated for a better offer once the Challenger is in a final state.
Add a ‘Best Offer’ flag to the rofrrequest template:
Best Offer = “No” means Defenders who submit a valid ROFR for which there is insufficient ATC will get the Remaining profile without a re-evaluation.
Best Offer = “Yes” means the Defender is informing the TP of their desire to forego the certainty of the Remaining profile. Instead, the Defender will be re-evaluated after the Challenger final state, but prior to any evaluation of Defenders without ROFR.
This re-evaluation may result in final capacity that is higher or lower than the Remaining profile. Thus, the customer must explicitly opt-in by setting the ‘Best Offer’ flag in a valid rofrrequest submission.
This re-evaluation will only occur for Defenders who set the ‘Best Offer’ flag when the Matching profile cannot be granted in full (i.e., ROFR “losers”)
This option does not apply to Defenders who: explicitly decline ROFR; only submit invalid ROFR requests; or do not submit any ROFR request at all.
This adds a new Data Element to WEQ-003 and an update to the rofrrequest template in WEQ-002. There are also changes to WEQ-001 and WEQ-013 to explain the use of the flag and the re-evaluation process.
BPA Formal NAESB OS /16/2017

16. Motion 2: ‘Best Offer’ for Defenders with ROFR
Defenders with ROFR will be offered the option to have their final capacity award based on a re-evaluation that occurs after the Challenger is in a final state but before any re-evaluation of Defenders without ROFR. This proposal targets Defenders who legitimately try to exercise ROFR by submitting a valid ROFR request, but for which the Matching profile cannot be granted.
BPA Formal NAESB OS /16/2017

17. Problem 3
Customers who explicitly decline to exercise ROFR must still wait for the 24hr ROFR window to expire (or for all Defenders with ROFR to respond) before their participation in the Preemption-ROFR Process is completed. This delay seems unnecessary.
BPA Formal NAESB OS /16/2017

18. Timeline for Explicitly-declined ROFR
The ROFR response window is 24 hours or when all Defenders with ROFR have responded with a valid ROFR request.
Customers who explicitly choose to not exercise ROFR are subject to this same timing.
This unnecessarily delays such customers from doing other business (tagging, Resales, Redirects) with their remaining capacity (if any).
Evaluate ALL ROFR Defenders
Defender 1 Explicitly Declines
Start of ROFR Competition
24 Hour ROFR Response Time
Defender 2 Does Not Respond
End of ROFR Competition
BPA Formal NAESB OS /16/2017

19. Proposal 3: Early Conclusion for Declined ROFR
No changes to the ROFR requirements for a Defender who wishes to explicitly decline to exercise ROFR.
If the TP receives a valid ROFR request indicating the intent to explicitly decline ROFR, the TP shall immediately:
Apply the Remaining profile as applicable to the related Defender ARef.
Reset the competition flags for this Defender and all associated Dependents.
No change to the timing and processing of other ROFR requests.
Evaluate Remaining ROFR Defenders
Defender 1 Explicitly Declines
Start of ROFR Competition
Assign Remaining Profile and Turn off Flags
24 Hour ROFR Response Time
Defender 2 Does Not Respond
End of ROFR Competition
BPA Formal NAESB OS /16/2017

20. Motion 3: Early Conclusion for Declined ROFR
The Transmission Provider will immediately conclude a Defender’s participation in the Preemption-ROFR Process as soon as the TP receives a valid ROFR request indicating this customer’s intent to explicitly decline ROFR.
BPA Formal NAESB OS /16/2017

21. Questions?
BPA Formal NAESB OS /16/2017

22. Backup
BPA Formal NAESB OS /16/2017

23. Prior OS Discussions of SSW
March 2013 OS discussions on SSW were related to how Defenders who had been subject to the “no earlier than time” submission window would be treated as Defenders.
These discussions were NOT related to using a submission window concept for ROFR requests.
Motion 52: When multiple reservations that were granted as part of a given Simultaneous Submission Window (SSW) are subsequently identified as potential defenders, and all other differentiating criteria are equal (duration, price and queue time), these defenders shall be given a relative priority to one another based on the reverse order, last-in-first-out (LIFO), that each of these SSW defenders were granted in clearing the SSW. In the cases of pro-rata allocation methodology, the original queue time within the SSW shall be used to determine the relative priority of the defenders (LIFO). Motion 52 was withdrawn.
Motion 53: The business practice for preemption and competition shall be silent in the treatment of defenders granted in the Simultaneous Submission Window (SSW). Motion 53 was voted down.
BPA Formal NAESB OS /16/2017

24. Best Offer Example
Assume the below four-day scenario with ATC of 15 MW on Day 1, 0 on Day 2, 15 on Day 3, and 5 on Day 4. A Challenger wants 15 MW on Day 1 through Day 3. Defender 1 is still pending for 5 MW on Day 2. Defender 2 is a Conditional Reservation for 5 MW on Day 2. Defender 3 is a Conditional Reservation for 10 MW on Day 2.
The Challenger needs 15 MW on Day 2, 5 MW from all three defenders. The rofrrequest that is created is pictured below. Note that there is enough ATC in Day 4 for both of the ROFR Defenders to individually extend and get their match, but not enough ATC for both of them. Assume that Defender 2 gets their rofrrequest submitted before Defender 3. Thus, Defender 2 will be accepted and Defender 3 will be denied.
BPA Formal NAESB OS /16/2017

25. Best Offer Example (continued 2)
Defender 2 will get their matching profile while Defender 3 will get their remaining profile. Defender 1 (the pending request) will get 0 MW. The Challenger will get a partial offer of 15 MW, 5 MW, and 10 MW. ATC will be zero all four days.
Assume the Challenger can’t use the partial, so they either rebid down or, in this case, withdraw their Request. That will leave ATC of 15 MW on Day 1, 5 on Day 2, 10 on Day 3, and 0 on Day 4. The 5 MW in Day 2 came from what was taken from Defender 3.
BPA Formal NAESB OS /16/2017

26. Best Offer Example (continued 3)
Current: Standards say that once the Challenger is in a final state, that the non-ROFR Reservations and pending Requests are re-evaluated. What this means is that the 5 MW that came from Defender 3, and that Defender 3 wanted to save since they tried to match, goes to Defender 1 which has a lower priority than Defender 3.
Proposal: In this case Defender 3 could enable the “Best Offer” flag to indicate to the TP that they want to be re-evaluated following Challenger final action. Defender 3 gets it’s 5 MW on Day 2 back for their original 10 MW and the lower priority Defender 1 gets 0 MW.
BPA Formal NAESB OS /16/2017