Acceptable Operational Reason (AOR) RECOMMENDATION PAPER Date:

Acceptable Operational Reason (AOR)
RECOMMENDATION PAPER
Date:
June 20, 2013
Prepared by:
William Chow
Market Implementation Analyst, Market Operations
Public
Table of Contents
1
2
3
4
5
Executive Summary ............................................................................................................................. 3
Purpose ................................................................................................................................................. 3
Introduction / Background ................................................................................................................... 3
Coherence with Policy and ISO Rules ................................................................................................ 4
Stakeholder Comments and AESO Recommendations ................................................................... 4
5.1
5.2
5.3
5.4
5.5
6
7
Comments and AESO Response on the Scope ........................................................................................... 4
5.1.1
Comments on Scope ..................................................................................................................... 4
5.1.2
AESO Recommendation and Rationale ......................................................................................... 5
Comments and Recommendations on the Existing Clauses ........................................................................ 5
5.2.1
Clause i) of the AOR Definition ...................................................................................................... 5
5.2.1.1 Stakeholder Feedback ................................................................................................................... 6
5.2.1.2 AESO Recommendation and Rationale ......................................................................................... 6
5.2.2
Clause ii) of the AOR Definition ..................................................................................................... 6
5.2.2.1 Stakeholder Feedback ................................................................................................................... 6
5.2.2.2 AESO Recommendation and Rationale ......................................................................................... 6
5.2.3
Clause iii) of the AOR Definition ..................................................................................................... 7
5.2.3.1 Stakeholder Feedback ................................................................................................................... 7
5.2.3.2 AESO Recommendation and Rationale ......................................................................................... 7
5.2.4
Clause iv) of the AOR Definition .................................................................................................... 7
5.2.4.1 Stakeholder Feedback ................................................................................................................... 7
5.2.4.2 AESO Recommendation and Rationale ......................................................................................... 9
5.2.5
Clause v) of the AOR Definition ..................................................................................................... 9
5.2.5.1 Stakeholder Feedback ................................................................................................................... 9
5.2.5.2 AESO Recommendation and Rationale ....................................................................................... 10
5.2.6
Clause vi) of the AOR Definition .................................................................................................. 10
5.2.6.1 Stakeholder Feedback ................................................................................................................. 10
5.2.6.2 AESO Recommendation and Rationale ....................................................................................... 10
Issues Related to ID Language .................................................................................................................. 11
5.3.1
Issues Related to Generating Units Capable of Utilizing Dual or Secondary Fuels ..................... 11
5.3.1.1 Stakeholder Feedback ................................................................................................................. 11
5.3.1.2 AESO Recommendation and Rationale ....................................................................................... 11
5.3.2
Issues Related to Minimum On / Off Times.................................................................................. 12
5.3.2.1 Stakeholder Feedback ................................................................................................................. 12
5.3.2.2 AESO Recommendation and Rationale ....................................................................................... 12
5.3.3
Wording in the AOR Information Document ................................................................................. 12
5.3.3.1 Stakeholder Feedback ................................................................................................................. 12
5.3.3.2 AESO Recommendation and Rationale ....................................................................................... 13
Other Issues ............................................................................................................................................... 13
5.4.1
Testing as it Relates to AOR ........................................................................................................ 13
5.4.1.1 Stakeholder Feedback ................................................................................................................. 13
5.4.1.2 AESO Recommendation and Rationale ....................................................................................... 13
Comments on the ISO Rule-driven Approach ............................................................................................ 13
5.5.1
Stakeholder Comments ............................................................................................................... 13
5.5.2
AESO Recommendation and Rationale ....................................................................................... 14
Identifying Content for New / Existing ISO Rules ........................................................................... 14
Summary and Next Steps .................................................................................................................. 15
1 Executive Summary
This recommendation paper is the AESO’s follow-up to the Acceptable Operational Reason (AOR)
Discussion Paper (discussion paper) and is the next step in the AOR review. The AESO recommends
specific changes to authoritative and information documents that will be included in the AOR review.
Market participant comments that the AESO received in response to the AOR discussion paper are also
addressed throughout the paper.
This recommendation paper addresses issues related to:
(a)
(b)
(c)
(d)
The scope of the AOR review as laid out in the discussion paper
The six clauses of the AOR definition
Wording in the AOR information document
The rule-driven approach to changes in the AOR authoritative document framework
The recommendations included below and consideration of stakeholder comments that the AESO
expects to receive from market participants will form the basis for the new section of the ISO rules and
information document drafting that is the next step in the AOR review.
2 Purpose
The AESO initiated a review of the AOR definition beginning with a discussion paper issued on
December 20, 2012. The purpose of this recommendation paper is to continue development of the AOR
review by addressing issues raised through market participants’ comments on the discussion paper and
to issue recommendations accordingly. The recommendations in this paper will form the basis for any
potential ISO rule development or amendments to any other related AESO documents.
3 Introduction / Background
The AESO released a discussion paper on December 20, 2012 in order to initiate a project to review the
AOR definition. The discussion paper set out a scope for the project that emphasized that AOR are
related to the physical operation of pool assets.
The discussion paper highlighted those areas of the electricity market and dispatch down service market
that are affected by AOR. It also explored the language in the definition and the associated AOR
information document. The AESO sought stakeholder comment on the existing AOR definition and AOR
information document. The discussion paper also proposed creating a new section of the ISO rules to
replace the AOR definition. The purpose of this transition would be to align the use of the current
definition more closely with the practice of the AESO in its implementation of authoritative documents.
The AESO sought comment from stakeholders regarding this new approach. Comments were received
from:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
AltaGas Ltd. (AltaGas)
ATCO Power
Capital Power Corporation (Capital Power)
ENMAX Energy Corporation (EEC)
Powerex Corp. (Powerex)
TransAlta Corporation (TransAlta)
TransCanada Energy Corp. (TCE or TransCanada)
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The AESO hosted a stakeholder session on January 24, 2013 to address key points of the discussion
paper and address any immediate questions from stakeholders.
Only stakeholder comments on the discussion paper that apply to the recommendations have been
included within this recommendation paper. For all stakeholder comments on the discussion paper and
associated AESO comment-responses, please refer to the AESO website.
4 Coherence with Policy and ISO Rules
As highlighted in the discussion paper, providing an AOR to justifiably excuse not offering maximum
generating capability was implemented as a part of the Quick Hits package of ISO rules. Quick Hits was a
direct response to the short-term adequacy recommendations provided by Alberta’s Electricity Policy
Framework.
The AESO has a duty to facilitate a fair, efficient and openly competitive electricity market and has the
authority to implement rules with respect to participation in the electricity market in accordance with
section 20 of the Electric Utilities Act, and the AOR definition was introduced through this process. The
definition supports a fair, efficient, and openly competitive electricity market as laid out in the Fair,
Efficient and Open Competition Regulation (FEOC Regulation). The definition is also an integral part of
the existing must offer, must comply framework, which not only supports a fair, efficient and openly
competitive electricity market, but also serves to ensure short-term adequacy as highlighted in the
discussion paper.
5 Stakeholder Comments and AESO Recommendations
5.1
5.1.1
Comments and AESO Response on the Scope
Comments on Scope
TransCanada recommends that the scope of this project be expanded to consider whether any changes
to the definition are required in conjunction with the dispatchable interties and wind integration initiatives.
TransCanada also noted that the definition referred to in the discussion paper has since been modified
(effective January 8, 2013) where acceptable operational reason means any one (1) or more of the
following:
i)
a circumstance related to the operation of a generating source asset which if it operated could
reasonably be expected to affect the safety of the source asset, the environment, personnel
working at the source asset or the public;
ii)
re-positioning a generating source asset within the energy market due to the need to meet a
dispatch given to that source asset from the ISO to serve the stand-by operating reserves
market;
iii)
re-positioning a generating source asset within the energy market to manage physical or
operational constraints associated with the source asset;
iv)
re-positioning a pool asset that is an import asset or an export asset within the energy market to
manage physical or operational constraints associated with an interconnection or a neighbouring
balancing authority;
v)
a circumstance directly resulting in the generating source asset not being capable of operation,
which circumstance was solely caused by an occurrence of force majeure; or
vi)
re-positioning a generating source asset for electric energy that is:
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a. produced on the property of which a person is the owner or a tenant; and
b. consumed solely by that person and solely on that property.
TransCanada raised a concern that the new reference to “source asset” is incorrect and should be
removed because “source asset” is a “subcategory of pool asset and means one (1) or more aggregated
1
generating facilities, generating units, or import assets.”
Concerns were raised by stakeholders that the responsibilities set out in subsection 2(f) of the Regulation
—Fair, Efficient and Open Competition Regulation —would overlap with responsibilities set out in a new
section of the ISO rules for AOR.
A concern was raised by AltaGas that, as the ISO rules become further intertwined with each other, it will
become difficult to amend them. Furthermore, AltaGas believes that ISO rule association and
dependency has resulted in packages of ISO rules being filed on an expedited basis.
5.1.2
AESO Recommendation and Rationale
The AESO understands that market design changes to dispatchable interties and wind integration
initiatives will affect the AOR review. The AESO is working on many ISO rules simultaneously and will
take these changes into account as appropriate in modifying the AOR section of the ISO rules.
The AESO agrees with TransCanada’s comments regarding the reference to “source asset” and agrees
that the change was not meant to include import assets in all of the definition’s clauses. The AESO
recommends that wording be changed to reflect this. Because market participants commented on the
version of the definition in the discussion paper preceding this change, the following sections will refer to
the prior version of the definition, taking into account the new wording where applicable.
The AESO reiterates from the discussion paper that the AOR definition in its current form is authoritative
with respect to its obligations and conditions related to the use of an AOR and an overlap does not create
new obligations or contradictory ones, but are simply complementary. The proposed structure of a new
section of the ISO rules would not change this. The purpose of this transition would be to align the use of
the current definition more closely with the AESO’s practice in its implementation of authoritative
documents.
ISO rule content is an elaboration on the objectives expressed in legislation. The AESO strives to ensure
that ISO rules are consistent and ISO rule obligations do not conflict with one another. The purpose of
this review is to provide clarity. Clear ISO rules support a fair, efficient and openly competitive electricity
market. The ISO rules are often intertwined to create a framework that supports legislation. However, the
ISO rules will never be so intertwined that individual sections cannot undergo reviews and amendments.
The AESO notes that the AOR review is not yet at the stage of considering whether or not changes made
to ISO authoritative documents (including ISO rules) will be expedited.
5.2
Comments and Recommendations on the Existing Clauses
The AESO sought comment from market participants regarding the six (6) existing clauses of the
definition:
5.2.1
1
Clause i) of the AOR Definition
http://www.aeso.ca/downloads/Consolidated_Authoritative_Document_Glossary.pdf
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i)
a circumstance related to the operation of the generating asset which if it operated could reasonably
be expected to affect the safety of the generating asset, the environment, personnel working at the
generating asset or the public
5.2.1.1
Stakeholder Feedback
Market participants were in agreement with the AESO in considering clause i) to be clear and well
understood.
5.2.1.2
AESO Recommendation and Rationale
The AESO recommends that clause i) of the definition remain unchanged with the exception of the
changes recommended for all clauses of the definition as explained in section 5.1.1 of this paper.
5.2.2
ii)
5.2.2.1
Clause ii) of the AOR Definition
re-positioning an asset within the energy market due to the need to meet a dispatch given to that
asset from the system controller to serve the stand-by ancillary services market
Stakeholder Feedback
Capital Power believes that the use of the word “re-positioning” is not entirely clear within clause ii), and
could potentially be problematic as non-compliance within this context is subject to the interpretation of
the AESO or Market Surveillance Administrator or both. Capital Power has no concerns with incorporating
language from the information document related to clause ii) into the definition, but suggests replacing
“repositioning” with “restatements within T-2.”
ATCO Power suggests that clause ii) defines a reason only indirectly, and instead focuses on an action
from an operator. ATCO suggests changing clause ii) to something similar to: a circumstance arising from
the need to comply with an unforeseeable ancillary service dispatch. ATCO Power believes that this
definition would alleviate the need for a clarifying section in an information document.
ENMAX notes that there are circumstances where a generating unit supplying active operating reserves
must restate due to an AOR. When these circumstances arise, a substitute generating unit may supply
the active operating reserve deficiency caused by the original restatement. This may happen within T-2.
ENMAX seeks confirmation that, in these circumstances, the substitute generating unit qualifies for an
AOR. Clarification within the updated information document is requested.
5.2.2.2
AESO Recommendation and Rationale
The AESO agrees that changing “re-positioning” to “restating” aligns the language in section 203.3 of the
ISO rules, Energy Restatements. The AESO recommends that the wording be changed in all clauses of
the definition to reflect this.
The AESO agrees that the ATCO Power suggestion to move away from emphasis on the operator action
to wording more in line with their suggestions removes the confusion around the wording “re-positioning”.
However, the AESO is recommending (as explained in section 5.5 of this paper) that the clauses be
moved to an applicable section of the ISO rules. The AESO will consider the proposed wording provided
by ATCO, or something that similarly reflects a literal reason, when drafting a simplified AOR definition
that will remain in the AESO’s Consolidated Authoritative Document Glossary.
ATCO Power also suggests removing the information document language referring to clause ii). The
AESO agrees that clause ii) is clear on its own and does not need the information document language.
The AESO recommends removing the existing information document language referencing clause ii).
The AESO confirms that a generating unit restating in the energy market for the purpose of substituting
an existing supplier of active operating reserves (the existing supplier having restated due to an AOR)
qualifies as an AOR. The AESO recommends that language be incorporated into the information
document to this effect.
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5.2.3
iii)
5.2.3.1
Clause iii) of the AOR Definition
re-positioning a generating asset within the energy market to manage physical or operational
constraints associated with the asset
Stakeholder Feedback
ATCO Power suggests that clause iii), as in the case with other clauses of the definition, focus on an
operator action rather than a strict reason. ATCO Power suggests new wording similar to: a circumstance
arising from unforeseeable physical or operational constraints associated with an asset. ATCO Power
would consider this clear enough to not require further clarification in an information document.
TransAlta disagrees with the AESO’s information document clarification: “The purpose of this subsection
is to allow the legal owner of a generating unit to restate the generating unit’s energy when there is a
problem (constraint) with the generating unit. It is expected that these problems are unanticipated or
could not have been avoided by the exercise of reasonable diligence otherwise they would have been
reflected in the legal owner’s offers before the T-2 timeframe”.
TransAlta further suggests that the legal owner may only restate or reflect the available capability in the
offers with an AOR as per section 203.3 of the ISO rules, Energy Restatements. Operational or physical
constraints may or may not be anticipated before the T-2 timeframe. By including the underlined
statement above, the information document conflicts with the restatement section of the ISO rules and
does not allow the legal owner to restate the available capability outside of T-2 for any operational or
physical constraints (AOR iii). TransAlta suggests that the AESO remove the underlined section from the
information document. Physical or operational constraints are AOR regardless of whether the constraints
are within or before the T-2 timeframe.
5.2.3.2
AESO Recommendation and Rationale
The AESO agrees with TransAlta insofar that clause iii) is meant to apply to all types of restatements
requiring an AOR. However, it is expected that restatements of any type will be submitted in a timely
manner. Upon review of the AOR information document, the AESO recommends removing the entirety of
the section of the information document relating to clause iii).
5.2.4
iv)
5.2.4.1
Clause iv) of the AOR Definition
re-positioning an importer’s or exporter’s asset within the energy market to manage physical or
operational constraints associated with an interconnection or a neighbouring balancing authority
Stakeholder Feedback
The AESO received feedback from several market participants regarding clause iv) highlighted below:
Powerex:
In general, Powerex agrees that the intent of the proposed available transfer capability section of the ISO
rules is captured in clause (iv) provided the former similarly limits the scope to an Alberta interconnection
or a neighbouring balancing authority. Powerex notes that the section of the proposed available transfer
capability section of the ISO rules is quite specific and limits the reason to the availability of transmission
whereas clause (iv) appears to be more general referring to “physical or operational constraints”.
Powerex requests clarification as to whether the proposed available transfer capability section of the ISO
rules and clause (iv) are intended to be synonymous or if the proposed available transfer capability
section of the ISO rules is intended to be a subset of clause (iv). If the former, which Powerex supports,
we suggest that clause (iv) be rewritten to be more specific. If the latter, Powerex requests that the AESO
provide further detail and rationale to clarify what sort of constraints other than transmission constraints
would qualify as “physical or operational constraints” toward the determination of an AOR. For example,
would wind tail-off events qualify as an AOR?
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Powerex is concerned that there is insufficient detail in the ISO rules for the AESO to determine whether
“reasonable efforts” were used to procure transmission. This may allow participants to receive an AOR
determination as a result of an economic decision. A basic requirement of providing a denied
transmission service request is insufficient. For example, a participant could, at T-61, demonstrate that
there is no non-firm transmission service posted and have its transmission service request denied by BC
Hydro even though transmission may have been available since firm transmission is not released as nonfirm until T-60. Powerex recommends that the AESO work with the neighbouring balancing authorities to
develop a rigorous mechanism for determining AOR for intertie transactions. In addition, and as indicated
above, Powerex recommends that AOR determinations be released and posted to the AESO website.
TransCanada:
Regarding clause (iv) and whether the intent of section 203.6 of the ISO rules is captured in the definition
of AOR, TransCanada considers the detail included in section 203.6 to consist of two (2) types of subject
matter. Subsection 5(2) of section 203.6 outlines the process the AESO expects a market participant to
demonstrate it followed if an AOR is submitted. Subsection 5(3) of section 203.6 however, appears to
provide further clarity on what is an acceptable AOR for an interchange transaction. Therefore,
TransCanada recommends that subsection 5(3) section 203.6 either be merged with clause (iv) of the
AOR definition or included in the AOR information document and should not remain in section 203.6.
For example, the AOR definition could be amended as follows:
iv) re-positioning an importer’s or exporter’s asset within the energy market to manage physical or
operational constraints associated with an interconnection, a neighboring balancing authority
reflecting the inability to procure all or a portion of requested transmission service for an energy
interchange transaction, or the transmission service for an energy interchange transaction is
curtailed after procurement.
ENMAX:
Section 203.6 of the ISO rules makes special provisions for market participants attempting to purchase
transmission. It states that if pool participants “use all reasonable efforts to procure transmission” and
they were unsuccessful, the pool participant can restate the generating unit’s available capability under
an AOR. ENMAX requests that the section of the ISO rule should also include the ability to submit an
available capability restatement with an AOR where pool participants used all reasonable efforts to
procure energy but were unable to do so. Alberta’s T-2 market constraints make it difficult to source
energy and occasionally a pool participant will use all reasonable efforts but will still be unsuccessful.
ENMAX believes that the AOR definition and the ISO Rules should allow for an available capability
restatement under these circumstances.
ATCO Power:
ATCO Power believes that (iv) is not meeting the intent of an AOR by allowing commercial reasons to
come into effect. ATCO Power suggests the following revision: a circumstance where an importer or
exporter is unable to acquire the transmission on the intertie (SK-Tie, BC-Tie, or MATL) that corresponds
to its submitted bid or offer for non-commercial reasons.
Capital Power:
In addition to physical and operational constraints, Capital Power suggests the constraints identified
within clause (iv) should also reflect and incorporate market based constraints in regards to imports and
exports. More specifically, such market based constraints could relate to counter-party issues in either
Mid-C or BC, as these jurisdictions have shorter transaction windows that do not require participants to
finalize their trades as early as Alberta market participants. It is difficult to adhere to T-2 offers and
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restatement requirements if market participants are attempting to proceed without commitments from
parties from other jurisdictions. This scenario has the potential to negatively impact the level playing field
in Alberta. The clause should not focus solely on physical or operational constraints if other factors are
beyond the control of an importer/exporter. Capital Power would appreciate exploring this topic in more
detail with the AESO.
Summary of Clause iv) Comments:
(a)
(b)
(c)
(d)
A question was raised by market participants regarding the definition of a neighbouring balancing
authority
The reference to “reasonable efforts” in the section 203.6 of the ISO rules is unclear and open to
interpretation.
The ISO rules and definition should allow for available capability restatements due to an inability to
procure energy in other jurisdictions; similar to how the ISO rules and definition allow for available
capability restatements because of an inability to procure transmission in other jurisdictions
How does section 203.6 of the ISO rules correspond with the definition of AOR? (Do subsections
5(2) and 5(3) apply and work in conjunction with clause iv) of the definition?)
5.2.4.2
AESO Recommendation and Rationale
Section 203.6 of the ISO rules sets out the requirements for pool participants regarding which situations
qualify as an AOR for pool participants conducting transactions outside of Alberta. The AESO considers
subsections 5(2) and 5(3) of section 203.6 to apply to any pool participant managing the exchange of
electricity over an intertie (i.e., a transmission system facility, including its associated components, that
links one or more electric systems outside Alberta to one or more points on the interconnected electric
system).
Subsections 5(2) and 5(3) of section 203.6 of the ISO rules describes the process that a pool participant
is expected to follow regarding acquisition of transmission in jurisdictions outside of Alberta. The onus
falls on the pool participant to understand the differences between markets and take them into
consideration in determining what is considered to be all reasonable efforts to procure transmission. The
AESO considers the inability of pool participants to secure transmission despite all reasonable efforts, as
described in subsections 5(2) and 5(3) of section 203.6, to be a valid reason for restatement for import
assets. The AESO also considers a restatement due to the unexpected availability of transmission that
had previously been curtailed within T-2 to be valid. Inability to procure sufficient energy in another
jurisdiction is not an AOR for import assets.
The intent of clause iv) of the definition is to allow for a restatement from import or export source assets
due to a curtailment directive from a balancing authority along the path of transmission outside of Alberta.
This curtailment could be the result of any number of circumstances that the balancing authority deems
necessary to reliably operate their electrical systems. The AESO recommends amending the wording of
clause iv) to clarify the intent.
The AESO recognizes that clause iv) may apply to pool participants submitting transactions that originate
in jurisdictions other than those directly connected to Alberta. The AESO recommends removing the
reference to the word neighbouring and replacing it with a reference to a jurisdiction along the path of
transmission.
5.2.5
v)
5.2.5.1
Clause v) of the AOR Definition
a circumstance directly resulting in the generating asset not being capable of operation, which
circumstance was solely caused by an occurrence of force majeure
Stakeholder Feedback
ATCO believes that a force majeure provides a physical and/or operational constraint on a pool asset and
considers this clause redundant in light of iii).
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5.2.5.2
AESO Recommendation and Rationale
The AESO notes that “force majeure” is a defined term in the Consolidated Authoritative Document
Glossary. It is defined as follows:
means any occurrence which is beyond the reasonable control of the market
participant, which could not have been avoided by the exercise of reasonable diligence
and which prevents a market participant from performing its obligations under the ISO
rules; provided that the foregoing force majeure shall not include a lack of finances or
any occurrence which can be overcome by incurring reasonable additional expenses.
The AESO notes that the definition of force majeure refers to an occurrence which is beyond “reasonable
control” and “could not have been avoided”. The AESO further notes that TransAlta, in its comments
regarding clause iii) suggests that the “physical or operational constraints” referred to in clause iii) are not
solely unanticipated constraints. The AESO agrees with TransAlta in this instance and recommends that
the relevant information document language referencing clause iii) be removed. Given this, there is a
significant difference between clause iii) and clause v) of the definition and the AESO recommends that
the two (2) clauses remain separate and distinct.
5.2.6 Clause vi) of the AOR Definition
vi) re-positioning a generating asset for electric energy that is:
a) produced on the property of which a person is the owner or a tenant; and
b) consumed solely by that person and solely on that property.
5.2.6.1
Stakeholder Feedback
Capital Power submits that it would be beneficial for the AESO to elaborate further on the intent and
applicability of clause vi). Particularly, the AESO could identify which types of generating units linked to
specified industrial processes are able to restate their available capability due to the generating unit’s own
processes, and what types of specific processes they may be. For example, Capital Power submits that,
clause vi) would be applicable to a coal generating unit that uses a portion of its own generation in order
to extract coal from an on-site mine. It would be helpful if the AESO could verify Capital Power’s
understanding of clause vi) and possibly provide any additional examples that they AESO believes are
relevant to clause vi).
ATCO Power considers vi) to not meet the intent of an AOR since it is based on commercial, not
operational considerations. While ATCO Power believes it to be appropriate that an industrial site cannot
be forced into an import position, it believes that this should be clarified in section 203.3 of the ISO rules
or other affected sections.
5.2.6.2
AESO Recommendation and Rationale
The AESO agrees with Capital Power and recommends amending clause vi) to better reflect current
practices. The language in clause vi) reflects subsection 2(b) of the Electric Utilities Act which is meant to
exempt persons that consume the entirety of their self-produced electrical energy on their own site. The
wording from the Electric Utilities Act is strict in the application of the exemption and does not fit well for
industrial sites for which electrical energy is produced for their own industrial process or which electrical
energy is produced as a by-product of their industrial process. The AESO recommends clarifying this
clause given the AESO practice of allowing restatements for industrial sites (such as co-generation units
on oil/gas production sites) due to their fluctuating electrical energy needs from industrial processes.
The AESO considers industrial sites to meet the definition of AOR under clause vi) if they are making
restatements that are driven by their industrial processes. It is expected that, if a pool participant
qualifying for AOR under clause vi) chooses to make their generating capability available for economic
reason (i.e., offered because of a high pool price), then they are required to reflect that additional
capability in their available capability from that point forward.
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5.3
Issues Related to ID Language
5.3.1
Issues Related to Generating Units Capable of Utilizing Dual or Secondary Fuels
5.3.1.1
Stakeholder Feedback
TransAlta believes that the AESO should make the definition of a “generating unit capable of dual or
secondary fuel” a defined term. TransAlta suggests that dual fuel should be defined as fuels that are
alternate sources of fuel for one another, for a generator operating within its normal limits. This includes
bringing the unit to minimum stable generation with only one of the two fuels within all the furnace design
criteria including maximum tube metal temperatures. Fuels used for supplemental purposes only are not
dual fuel generating units. TransAlta submits that coal facilities are not dual fuel and thus cannot run
continuously on secondary fuel such as gas. Therefore, there is no reason for the legal owner of a coal
facility to contract for gas for all fuel purpose for continuous use at the generating units.
TransAlta would like the AESO to confirm its understanding of the AESO information document and AOR
as they relate to secondary fuel usage:
(a)
(b)
Does this require the legal owner of a generating unit that is capable of operating with secondary
fuel to declare the available capability of the generating unit to reflect the use of the secondary fuel
up to the operational limit as determined by good operating practice, as dictated by generating unit
design, original equipment manufacturer specifications and site specific experience?
Does this require the legal owner of a generating unit that is capable of operating with secondary
fuel to contract firm secondary fuel up to the operational limit as determined by good operating
practices as dictated by generating unit design, original equipment manufacturer specifications and
site specific experience?
ENMAX contends that a decision made by a pool participant to not utilize a secondary fuel’s ability to
restore capacity for commercial reasons is not an AOR. ENMAX submits that the issue of availability of
dual fuel capacity is not resolved within the AOR definition that has been working effectively. It is
recommended that clarifying language could be included in a section of the ISO rules reflecting “Must
Offer, Must Comply” principles and quite likely could be addressed in the definition of available capacity,
which are not the subject of this request for comment. In summary, the less favorable economics of
generating with a secondary fuel source is not an AOR. Any limitations on a generating unit’s available
capacity should be based on physical conditions, and not economics.
5.3.1.2
AESO Recommendation and Rationale
The AOR information document categorizes dual fuel generating units into two categories: generating
units that can operate on a limited basis in back-up fuel mode (type 1) and generating units that can
reliably operate utilizing more than one fuel type (type 2). The AESO considers the generating units that
TransAlta refers to as “generating unit capable of dual or secondary fuel” to fall within the type 2 category
as referred to in the AOR information document. In such instances, the AESO expects that the pool
participant will reflect the capability of both fuels in its available capability. Furthermore, the AESO
expects that the pool participant will contract fuel for type 2 generating units to meet its obligation under
the must offer/must comply framework.
The AESO agrees with TransAlta regarding its example of a coal facility that cannot run continuously on
secondary fuel such as gas. In this instance, the coal facility is considered a type 1 generating unit and
the AESO does not generally consider it to be a dual fuel/secondary fuel generating unit. The AESO also
notes that a type 1 generating unit is one that utilizes its secondary fuel for back-up operational reasons.
It is expected that if any pool participant ever chooses to make generation from a secondary fuel available
for economic reasons (i.e., high price), then the pool participant must always reflect the additional
capability from the secondary fuel source in their available capability. For further clarity, the AESO
considers any generating unit that reflects its generating capability from a secondary fuel in the
generating unit’s available capability to be a type 2 dual fuel generating unit.
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5.3.2
5.3.2.1
Issues Related to Minimum On / Off Times
Stakeholder Feedback
ENMAX does not think the information document material concerning minimum on/off times needs to be
moved into the AOR definition. ENMAX believes that this AOR definition appropriately states the criteria
for an AOR and the information document provides helpful explanations of how certain events meet or do
not meet that criteria. For example, a generating unit which has a minimum run and offline requirement is
an operational constraint and fits with the AOR definition’s criteria. The AOR information document
provides additionally clarity as to why that constraint fits within the definition. ENMAX believes the
section of the ISO rules related to AOR and the information document are both serving their purpose, and
increasing the volume of ISO rules is not necessary, or helpful.
TransCanada is concerned with the wording around minimum run times. Specifically:
Whenever the generating unit is dispatched on, sufficient MW should be moved from a
non-zero price block down to the zero dollar price block through a restatement (type b) to
ensure the generating unit remains dispatched on for the minimum thirty (30) minutes.
After the thirty (30) minutes has expired, the offer should be restated back to its original
structure using a second restatement (type b). Similarly, whenever the generating unit is
dispatched off, the available capability should be restated to zero (0) for the required
thirty (30) minute off time. After the thirty (30) minutes has expired, the available
capability would be restated back to the available capability of the generating unit.
The issue that TransCanada raised is that by requiring a generating unit subjected to minimum run times
to restate at the moment that they are dispatched on, they are now moving their high marginal price
operating block into a zero-dollar operating block. This changes the system marginal price.
A further concern relates to those instances where a generating unit subjected to minimum run times is
sent a directive for transmission must-run. By restating their MW into the zero dollar price operating block,
they remove the need for a dispatch for transmission must-run.
5.3.2.2
AESO Recommendation and Rationale
The AESO proposes that, as a part of the AOR revision, the wording in the information document be
amended to the following (the proposed additions are underlined):
Whenever the generating unit with a minimum run time is dispatched on, the AESO expects the pool
participant to move sufficient MW from a non-zero price block down to the zero dollar price block through
a restatement (type b) only if the generating unit is dispatched off within its minimum run time. The
restatement should occur after receiving the dispatch off. After the minimum run time has expired the
AESO expects the pool participant to restate the offer back to its original structure using a second
restatement (type b). Similarly, whenever the generating unit is dispatched off, the AESO expects the
pool participant to restate available capability to zero (0) for the required minimum off time. After the
minimum off time has expired, the AESO expects the pool participant to restate the available capability
back to the available capability of the generating unit.
This proposed new wording should address the issues raised by TransCanada. The AESO notes that the
process for the minimum off time hasn’t changed because there is no issue with restating the available
capability to zero for those instances.
5.3.3
5.3.3.1
Wording in the AOR Information Document
Stakeholder Feedback
TransCanada notes that the information document refers to the legal owner of a generating unit as the
party that submits offers and accepts dispatches. TransCanada notes that this is not always the case and
therefore submits that the term pool participant is more suitable.
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5.3.3.2
AESO Recommendation and Rationale
The AESO agrees with TransCanada. The references to legal owner in the AOR information document
will be changed to pool participant.
5.4
Other Issues
5.4.1
Testing as it Relates to AOR
5.4.1.1
Stakeholder Feedback
TransAlta requests further clarification regarding when commissioning and testing is considered an AOR.
TransAlta believes that commissioning and testing should be an AOR if the market participant has
submitted the commissioning and testing plan as required under sections 505.3 and 505.4 of the ISO
rules. If available capability can be restated to reflect the output during commissioning and testing as per
section 203.3 of the ISO rules, then the minimum stable generation should also be restated for the same
reason. Tests have different operational constraints associated with them and thus available capability
and minimum stable generation may need to be restated to reflect the operational constraints of the
generating unit while under testing.
5.4.1.2
AESO Recommendation and Rationale
The AESO agrees with TransAlta that testing is a valid reason to restate available capability to indicate
the upper limit of generating capability during the duration of the test. However, as ISO rule section 203.3,
Energy Restatements indicates, testing is not the basis for an AOR. The AESO expects that pool
participants will follow the procedure laid out in section 203.3 of the ISO rules.
The AESO notes that the established procedure (set out in the information document) for restatements
due to testing is for market participants to use the zero-dollar offer operating block to indicate the lower
bound limits of their generating unit during testing. It is the AESO’s view that this approach allows for
adequate restatement flexibility to accommodate commissioning and testing.
The purpose of minimum stable generation is to indicate the lowest level of operation for a generating unit
before the generating unit begins to approach operational instability. Testing and commissioning do not
fall within the definition of minimum stable generation.
5.5
Comments on the ISO Rule-driven Approach
The AESO introduced the concept of a new section of the ISO rules for AOR in the discussion paper. The
purpose of this transition would be to align the use of the current definition more closely with the AESO’s
practice in its implementation of authoritative documents. Typically, a definition is a self-explanatory
statement. However, the definition of AOR goes beyond this and the AESO proposes that it would be
more beneficial to move the AOR definition into a new section of the ISO rules.
The proposed new section of the ISO rules would accomplish three (3) things:
(a)
(b)
(c)
5.5.1
Documenting of existing and suggested processes as exemplified by stakeholder comments and
highlighted in this paper
Moving process requirements that exist in the current AOR information document to an authoritative
document as they are beyond the scope of the definition as it currently stands
Utilizing a format better suited to adapting to an evolving Alberta market affected by advancements
in technology and changes in the mix of generation
Stakeholder Comments
Comments from market participants were in support of the transition with the exception of two (2) that the
AESO will address below.
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AltaGas submits that AESO definitions are also subject to a formal consultation and are more easily
changed in an adapting and evolving market. As a general consideration, AltaGas requests that the
AESO keep in mind that certainty of obligations is important to a functional market. Duplicative and
changing requirements create uncertainty and reduce the sustainability of markets.
TransAlta believes that AOR should stay as definitions as turning AOR into a new section of the ISO rules
may create a double jeopardy for market participants. One compliance event may now be a
contravention of the AOR section of the ISO rules and any other sections that reference AOR, whereas
currently, a market participant cannot be out of compliance with a definition.
TransAlta believes that definition changes follow the same established consultative process as other ISO
rule changes and thus there is no need to move AOR into a new section of the ISO rules in order to take
advantage of the consultative process as suggested by the AESO.
TransAlta agrees with the AESO that there are authoritative requirements in the information document
that should be moved into the ISO rules. However, these requirements should be moved into the relevant
sections already contained in the ISO rules and thus there is no need to create a new section of the ISO
rules for AOR. TransAlta requests that the AESO identify the sections from the information document that
they will be moving into the new section of the ISO rules in order to better understand the obligations that
will be placed on market participants.
5.5.2
AESO Recommendation and Rationale
The function of a definition is to provide a simple and precise statement of the meaning of a term. While
the AESO glossary definitions are also subject to a formal consultative process, the intent of definitions is
not to perform the role of placing process-oriented requirements on pool participants. This function is
better suited to ISO rules.
The AESO understands that stability relating to obligations is important to a functional market. Ensuring
that all AESO authoritative documents are drafted with long-term implications and that those implications
are well understood is the primary function of reviews such as this AOR review. The AESO assures
market participants that ISO rule obligations will not contradict one another.
The AOR definition as it is currently written and where it currently resides is considered to be authoritative
with respect to its obligations and conditions related to the use of an AOR. The proposed structure would
not change this. The AESO proposes that the definition be simplified and the amended clauses be moved
into a new section of the ISO rules as highlighted below.
6 Identifying Content for New / Existing ISO Rules
The discussion paper explained that the AESO is considering moving some or all of the wording in the
definition of AOR into the ISO rules. This could be done by either creating a new section of the ISO rules
for AOR under Part 200 Markets or finding a place in the existing sections of the ISO rules. After
evaluating the comments from stakeholders, the AESO recommends that:
(a)
the information document language be changed in accordance with the recommendations in this
paper;
(b) no further language from the information document needs to be incorporated into the clauses of the
definition;
(c) the wording of the clauses be changed in accordance with the recommendation paper;
(d) the clauses be moved into the appropriate sections of the 200 series of the ISO rules. These may
include:
- section 203.3;
- section 203.6; and
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(e)
- a new section of the ISO rules in Part 200 of the ISO rules (Markets); and
a simplified statement remain as the definition of AOR in the AESO Consolidated Authoritative
Document Glossary.
7 Summary and Next Steps
This recommendation paper is a direct follow-up to the AOR discussion paper. The AESO addresses
suggestions and comments made by market participants and seeks further comment on the
recommendations laid out in this paper.
The anticipated next steps in the AOR review consultation are:
(a)
(b)
Stakeholder responses to the Recommendation Paper posted to the AESO website
Implementation of the final recommendations (e.g., ISO rules development and filings, as applicable)
The AOR review will continue to follow a stakeholder consultation process and the AESO looks forward to
receiving stakeholder input on this paper and the recommendations that it provides. The AESO requests
that comments are provided to [email protected] using the stakeholder comment matrix provided by
July 22, 2013. Should you have any questions on this paper, please contact William Chow by email or by
phone at 403-539-2785.
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