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

2. 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.

3. LBA 1 LBA 2 BA G1G2 L1 L2 L3 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 Flowgate Market Flow = GTL Impact LBA 1 + GTL Impact LBA 2 + Transfer Impact

4. LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 1500 LBA 2 500 250 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 Step 1: GTL Impacts

5. LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 1 LBA 2500 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 Step 1: GTL Impacts

6. LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10 LBA 2500 250 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 250 Step 2: Transfer Impacts

7. Step 3: Calculate GLDFs LBA1 GTL GLDF =.15 - (.1 +.3)/2 = -.05 LBA2 GTL GLDF =.4 -.2 =.2 LBA2 Transfer GLDF =.4 - (.1 +.3)/2 =.2 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2

8. LBA 1 LBA 2 BA G1G2 L1 L2 L3 Flowgate GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 15000-.05n/a-250 LBA 2500.2 100 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 x = Step 4: Calculate Impact

9. Market Flow Impact Forward Flow = 100 + 100 = 200 Reverse Flow = 25 Net Flow = 200 - 25 = 175 GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 15000-.05n/a-250 LBA 2500.2 100

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

11. GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a LBA 25001000 LBA 1 LBA 2 BA G1 G2 L1 L2 L3 Flowgate MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 Step 1/2: GTL/Transfer Impacts

12. Step 3: Calculate GLDFs LBA1 GTL GLDF = n/a. There is no gen in LBA1 now LBA2 GTL GLDF = ((.15*500 +.4 * 1000)/1500) -.2 =.116667 LBA2 Transfer GLDF = ((.15*500 +.4 * 1000)/1500) – (.1 +.3)/2 = =.116667 MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2

13. GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a 00 LBA 25001000.116667 58.3333116.667 LBA 1 LBA 2 BA G1 G2 L1 L2 L3 Flowgate MWDfax G1500.15 G21000.4 L1500.1 L2500.3 L3500.2 x = Step 4: Calculate Impact

14. Market Flow Impact Forward Flow = 58.333333 + 116.66666 = 175 Reverse Flow = 0 Net Flow = 175 – 0 = 175 GTLTransferGTL GLDF Transfer GLDF GTL Impact Transfer Impact LBA 10n/a 00 LBA 25001000.116667 58.3333116.667

15. 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 Forward200175 Reverse250 Net175 Therefore, internal BA pseudo ties can potentially cause the markets to misreport their forward and reverse market flows.