1. Implications of Engineering Analysis Assumptions Organization of MISO States: CARP XII December 14-15, 2009 Nick Bowden: nbowden@icc.illinois.gov 1

2. Assumptions and Mechanics with Implications for the Beneficiary Pays Principle A.Geographic Exclusion upon Branch Selection B.Weighted Average Pricing Zone and SubRegion Shift Factor Calculations C.Regional Branch Assumption D.Minimum of Demand or Generation E.Aggregate Shift Factors and Flow Calculations F.Local Flow Assumption G.The use of Total Net Flow in the Calculation of Regional Flow 2

3. Definitions Applicable Buses – Those buses whose shift factors are needed for the calculation of an applicable geographies “usage” of the selected branch. Applicable Geographies – Those geographic territories which are assumed to derive benefits from a selected branch. They become single entities which assume the average character of the buses which lie within them. Geographies include Prizing Zones, SubRegions, and the MISO Region. 3

4. Basic Steps in the Engineering Analysis 1.Select a Branch and a Reference Bus 2.Use a power flow model to obtain Generation and Load Shift Factors for Applicable Buses on the selected branch. 3.Calculate both a Weighted Average Generation and Load Shift Factor for Applicable Geographies on the selected branch. 4.Calculate Flows for Applicable Geographies on the selected branch. 5.Calculate Usage for Applicable Geographies on the selected branch. 6.Calculates System Use for Applicable Geographies over the entire set of branches. 4

5. 1. Select a Branch and a Reference Bus Three Sets of Branches are Assumed to Exist – Local – Both Terminals within a single Pricing Zone – SubRegional – Terminals in two different Pricing Zones within the same SubRegion – Regional – Terminals in two different SubRegions The Reference Bus is needed to balance incremental changes to generation output or load at applicable buses and to maintain consistency in the individual shift factors to be used for aggregate calculations of applicable geographies shift factors. It is important to understand that steps 2-5 are done for each Branch independently. 5

6. Branch Selection and Applicable Buses Assumptions Applicable Buses are dependent on the location of the selected branch’s terminals. In the simplest model we have three sets of branches. – Local Branch – All generation and load buses within the Pricing and SubRegion. – SubRegional Branch – All generation and load buses within the Subregion. – Regional Branch – No buses. 6

7. Branch Selection and Applicable Geographies Assumptions Applicable Geographies are dependent on the location of the selected branch’s terminals. – Local branches – The Prizing Zone, SubRegional, and Regional geographies in which the branch terminates are allocated a percentage of flows on local branches. – SubRegional branches – The SubRegional and Regional Geographies in which the branch terminates are allocated a percentage of flows on subregional branches. – Regional branches – The Regional geography is allocated 100% of the flow on regional branches. 7

8. A. What is the implication of the assumptions concerning the exclusion of one or more geographies when a selected branch has terminals outside of a single geography? 8

9. Simplified Model of Pricing Zone Buses within a SubRegion 9 G1 L1 L2 L3 L4 G2 L5 G3 L7G5 L6 G4 PZ1 PZ3PZ4 PZ2

10. 2. Obtain Generation and Load Shift Factors for Applicable Buses Induce an incremental (1 MW) increase in the generation output or load at each Applicable Bus and balance at the reference bus. This is done for each Applicable Bus independently. This returns a generation shift factor or load shift factor for each Applicable Bus on the branch selected in Step 1. Shift factors range from -1 to 1 for each bus. 10

11. 3. Calculate both a Weighted Average Generation and Load Shift Factor for Applicable Geographies Calculating weighted average shift factors will result in a simplified abstraction of the electric grid compared to the power flow model used to derive individual shift factors. Averaging distinct load and then generation bus shift factors results in an single load and single generation bus for the Applicable Geography. 11 Applicable Geography Generation Applicable Geography Load Selected Branch

12. Next we will illustrate through generalized examples of the implications of the assumptions of different sets of branches. 12

13. Local Branches and Applicable Geographies Shift Factors Pricing Zone Geography: A subset of the Applicable buses’ generation and load shift factors is used to calculate aggregate Pricing Zone generation and load shift factors on a local branch. That subset is the set of buses located within the pricing zone in which both branch terminals exist. SubRegional Geography: The full set of the Applicable Buses’ generation and load shift factors is used to calculate the SubRegional generation and load shift factors on a local branch. 13

14. The Pricing Zone and SubRegion are Applicable Geographies for which aggregate shift factors are calculated directly from individual bus shift factors when the branch considered is local. 14

15. Conceptual Picture of Buses and a Local Branch 15 Selected Branch Pricing Zone Generation Pricing Zone Load SubRegional Generation Regional Generation SubRegional Load Regional Load

16. SubRegional Branches and Applicable Geographies Shift Factors The full set of the Applicable Buses’ generation and load shift factors is used to calculate the SubRegional generation and load shift factors on a subregional branch. 16

17. B. What is the implication of the calculation of PZLSF, PZGSF, SRLSF, and SRGSF for a selected branch? 17

18. Regional Branches and Applicable Geographies Shift Factors No generation or load shift factors are used when considering the flows on a regional line. What are the implications of this assumption? 18

19. Simplified Model of SubRegional Buses within the Region 19 G1 L4 G2 L1 L2 G3 L3 G5 G4 SR2SR1SR3

20. Regional Branches and Applicable Geographies Shift Factors No generation or load shift factors are used when considering the flows on a regional line. C. What are the implications of this assumption? 20

21. 4. Calculate Flows for Applicable Geographies for a selected branch. 21 D. What is the implication of the use of the minimum function in the first argument of these products?

22. Logic for Minimum Assumption The idea is that if the generation within a pricing zone exceeds the demand in the pricing zone, the excess generation cannot be supplying local load and thus is not inducing local flow. On the other hand if the demand within a pricing zone exceeds the generation in the pricing zone, the demand cannot be supplied by local generation and thus is not inducing local flow. 22

23. E. Implications of the Flow Calculations What is the implication of the aggregate Pricing Zone generation and load shift factors used in the calculation of Local Flows? What is the implication of the aggregate SubRegional generation and load shift factors used in the calculation of SubRegional Flows? 23

24. 4. Calculate Flows for Applicable Geographies for a selected branch. 24 F. What is true of the Local Flow variable when the selected branch terminates in two different pricing zones within the same SubRegion? G. Question: Would you expect…

25. 5. Calculate Usage attributed to Applicable Geographies of a selected branch. 25

26. Question? Are there any implications for the use of the sum of absolute values in the calculation of Use, when negatives and positives were allowed to cancel in the aggregation of generation and load shift factors independently and then again when aggregate load and generation shift factors are added? 26

27. 6. Calculates System Use for Applicable Geographies over the entire set of branches. 27

28. Questions? What is true of the values of Local, SubRegional and Regional System Use? What is the implication of weighting Use by Mileage? What is the control we have to influence the Use and System Use calculations under the I/W model? Theoretically, what have we accomplished thus far? 28

29. Allocation of the Allocations How do we allocate the Cost of specific projects to specific pricing zones if the project is (a) local (b) subregional? If a project is local does it matter if we calculate the rate based on MW or MWh? What is the implication of calculating SubRegional or Regional rates (or allocating costs) based on (a) MW (b) MWh? 29