1. White Paper on the Future of Congestion Management IDC Granularity Task Force Standing Committee Meetings July 20-22, 2004

2. 2 Special Thanks to… Pat Shanahan – ATC Alan Mok – Cinergy Ryan Prejean – EES Dave Robitaille – IMO Julie Novacek – MISO Dave Mabry – PJM Paul Graves – Progress Energy Florida Lanny Nickell – SPP Rick Stegehuis – WE Energies Bob Cummings – NERC

3. 3 Background June 2000 - IDCGTF formed by the SCS (now ORS) to investigate and propose technical solutions to existing inaccuracies in the IDC June 2002 - ORS endorsed moving toward full granularity in the IDC October 2002 - ORS provided further direction on combination of every generator to load and electrically cohesive zone methods February 3, 2004 - RCWG requested white paper on congestion management be prepared

4. 4 How the IDC Works Today IDC calculates CA to CA Transaction Distribution Factors (TDFs) A CA to CA TDF represents the impact of increasing generation in one control area and decreasing generation in another TDFs are calculated using on-line generation Impact of a tagged transaction on a flowgate is determined by the TDF associated with the Source CA and Sink CA IDC CO 114 incorporate more TDF granularity for the MISO/PJM footprints

5. 5 Problem Statement IDC does not correctly recognize ultimate source/sink impacts of tagged transactions IDC does not adequately address market dispatch of evolving balancing areas TLR takes at least 30 mins to implement Industry needs consistent and global application of granularity

6. 6 Options Developed IDCGTF developed three options for consideration Options vary in complexity, paradigm shift, difficulty and timeliness of implementation May implement all three in phases or any one or more on a standalone basis

7. 7 Options Developed - Summary Option 1 increases impact calculation granularity by incorporating TP zones relief responsibilities assigned per existing methods relief achieved per existing methods Option 2 relief responsibilities assigned to BAs based on distributed impacts of a BAs net interchange relief achieved through transaction curtailment and/or redispatch, uses increased impact calculation granularity of Option 1

8. 8 Options Developed - Summary Option 3 relief responsibilities assigned to BAs based on distributed impacts of a BAs net interchange relief achieved through most effective/efficient re-dispatch, uses ultimate granularity

9. 9 Option 1 - Zones Modeled in IDC Used by TPs in their service evaluation Must be properly linked to tagged source/sinks Generation zones must contain one or more generators Load zones must contain meter-able load pockets Zone participation factors and generation block loading order must be provided CAs may contain one or more zones Zones may not cross CA boundaries

10. 10 Option 1 - Zones Modeled in IDC FERC to provide regulatory review of TP zones NERC to provide reliability review of TP zones Verify that sources/sinks on the schedule match those identified on the reservation Verify that sources/sinks on the schedule can be dispatched as scheduled Ensure that source/sink generators associated with curtailed schedules will be re-dispatched CA modeling remains for purposes of NNL calcs Will use block loading order data submitted to determine a more accurate NNL dispatch

11. 11 Option 1 - Tagging Changes TPs required to register OASIS sources/sinks OASIS sources/sinks will be mapped to IDC zones and tagging sources/sinks TP responsible for those sources/sinks within their transmission footprint

12. 12 Option 1 - Pros Doesnt require extensive IDC changes Improves impact calculation granularity Can be implemented quickly FERC ensures comparability Granularity used for estimating schedule impacts same as that used for provision of transmission service Process is manageable

13. 13 Option 1 - Cons May not be uniform for all TP ATC/AFC methodologies Perpetuates the myth of contract path flow-ability Doesnt incorporate counter-flows

14. 14 Option 1 - Data Requirements Block loading merit order and participation factors for all generation zones OASIS sources/sinks registered by TPs IDC model changes as necessary IDC software changes Eventual incorporation of real-time data

15. 15 External / Internal Relief Responsibility Applicable to both Options 2 and 3

16. 16 IRR/ERR Calculations IRR = Internal Relief Responsibility IRR – calculated like NNL is calculated today GLDFs down to zero percent used Specific generators supporting transactions removed Contribution based on real-time and projected data (generators and area load)

17. 17 IRR/ERR Calculations ERR = External Relief Responsibility ERR – captures transactional impacts of a balancing authoritys net interchange distributed across interconnection For exporters: ERR ~ (GSF wba minus LSF w ) * Net Interchange For importers: ERR ~ (GSF w minus LSF wba ) * Net Interchange Will need to deal with over-counting ERRs

18. 18 Example ERR Calculation CA A Load = 1000 MW Gen = 1100 MW Export = 100 MW GSF = 9% LSF = -9% CA B Load = 600 MW Gen = 200 MW Import = 400 MW GSF = -8% LSF = 10% Flowgate Limit 150 MVA 186 MVA CA C Load = 400 MW Gen = 700 MW Export = 300 MW GSF = 10% LSF = -6% CA A ERR = (GSF A – LSF WTAVG ) * Export A ERR = (.09 +.10) * 100 = 19 MWs CA B ERR = (GSF WTAVG – LSF B ) * Import B ERR = (.098 +.10) * 400 = 79 MWs CA C ERR = (GSF C – LSF WTAVG ) * Export C ERR = (.10 +.10) * 300 = 60 MWs

19. 19 Option 2 Uses zonal impact calculation granularity introduced in Option 1 Uses External/Internal relief responsibility (ERR/IRR) methodology to assign responsibilities to balancing authorities Fulfillment of relief responsibilities accomplished through curtailment of tagged transactions and/or redispatch

20. 20 Option 2 First determines ERR for each area based on untagged net interchange BAs with untagged ERR must curtail If sufficient relief is obtained, no further action Uses tagged interchange to determine ERR at each priority level IRRs determined at appropriate level BAs may fulfill ERRs through curtailment of tagged transactions and/or redispatch

21. 21 Option 2 - Pros IDC curtailment algorithm stays the same Introduces improved granularity both in determination of relief responsibility and through usage of TP zones in transaction impact calculation Adds the option of generation re-dispatch to meet the ERR based on tariff requirements Complements CO 114 impact calculation methodology

22. 22 Option 2 - Cons ERRs for remote BAs could result May be differences between ERRs assigned and relief obtained through transaction curtailments Perpetuates the myth of contract path flow- ability May increase complexity of coordination due to lack of curtailment prescription May result in untimely results

23. 23 Option 2 - Data Requirements Block loading merit order and participation factors for all generation zones OASIS sources/sinks registered by TPs IDC model changes as necessary IDC software changes Real-time and projected output for all generators Real-time and projected demand for each BA

24. 24 Option 3 Uses ERR/IRR methodology for assigning relief responsibilities Relief achieved through re-dispatch prescribed by RCs Provider of re-dispatch compensated through a settlement process that would charge BAs based on their relief responsibilities

25. 25 Option 3 Each BA will determine and document how it allocates re-dispatch costs to PtP and NITS customers Resource availability and bid prices will be made available to RCs Re-dispatch could take many forms Unit pairs within same BA Unit sales/purchases across BAs Multiple units across multiple flowgates Voluntary load curtailments

26. 26 Option 3 - Issues Re-dispatch would take place regardless of priority of transactions impacting constraint Regulatory requirements Responsibility for relief is transferred from PSEs to net importing/exporting BAs

27. 27 Option 3 - Pros Reduces amount of transactions curtailed Improves effectiveness of relief Relief is obtained quickly More cost effective relief solutions More likely to minimize potential impact on other flowgates Can provide useful market signals

28. 28 Option 3 - Cons Major paradigm shift Requires NERC commitment to address policy and regulatory issues Requires sophisticated tools BAs need to agree on settlement process

29. 29 Option 3 - Data Requirements IDC software changes Real-time and projected output for all generators Bid information for generators Real-time and projected demand for each BA Real-time telemetry, or state-estimated values, of all flowgates and OTDF flows SDX data to include quick-start, min run times, min and max generator output, etc.

30. 30 Recommendations to RCWG / ORS Adopt and implement Option 1 immediately Adopt and implement Option 3 as the long-term strategy for the IDC Form appropriate team(s) to develop business case for implementation of these options

31. 31 RCWG / ORS Resolution Accept Option 1 Implement by June 1, 2005 Coordinate with NAESB For Option 3 long-term solution further workAsk the MC and IDCWG to develop by September 2005: Functional design specification Business case for congestion management tools Coordinate with NAESB