– Meeting Budget Review Process Ancillary Services and Transmission Line Losses Costs

Budget Review Process – Meeting
Ancillary Services and Transmission Line Losses Costs
Forecasts for 2013
John Esaiw, Director, Forecasting
Biju Gopi, Manager, Commercial
Greg Spence, Director, Business Planning
October 3, 2012
Agenda
• Purpose
– Provide stakeholders with an overview of the AESO’s draft Ancillary
Services and Transmission Line Losses costs forecasts for 2013
and obtain preliminary feedback.
• Review Agenda and meeting notes
• 2012 Timeline Budget Review Process – Update
• 2013 Budget Information
– Price Forecast
– Ancillary Services Forecast
– Transmission Line Losses Forecast
• Next Steps
2012 Timeline - Budget Review Process
Step
Activity
1.0 Notice to Stakeholders
Initiate annual consultation process
2.0 AESO Strategies and
Business Initiatives
Present strategies and draft business initiatives and solicit
stakeholder feedback
3.0 Develop Own, Ancillary
Service and Line Loss
Forecasts
Develop Own Costs (G&A/Capital/Other Industry) budget,
Ancillary Services and Line Loss Cost forecasts
4.0 Technical Review Meetings Present and solicit feedback on Own Costs budget, Ancillary
Services and Transmission Line Losses Costs forecasts
5.0 AESO Board Decision
Draft AESO Board Decision Document AESO Board meets
with stakeholders to discuss issues AESO Board issues final
decision
6.0 Dispute Process
Available for instances where stakeholder disagrees with the
AESO Board Decision
3
2012 Timeline - Budget Review Process
Calendar (revised)
1.0 Invitation to Stakeholders
2.0 Updated Business initiatives
3.0 Develop AESO Own Costs,
Ancillary Service and Line Loss
Forecasts (internal) June - Sept
5.0 AESO Board Decision
November 15 Stakeholder
Presentations
AESO Board
Decision
5.0 AESO Board Decision
(continued) - finalize
4.0 Technical Review Meetings with Stakeholders
•
September 14 - Business Initiatives
•
October 3 - Ancillary Services and Line Losses Forecasts
•
October TBC – Own Costs (G&A, Capital, Interest and
Amortization)
* TBC – To be confirmed. The AESO is proposing a separate technical meeting to discuss its proposed Own Costs (e.g. general and administrative, capital, interest and
amortization costs) budget for 2013. The proposed meeting date is October 17, 2012.
2013 Own Costs (Forecasts)
October 2012
The information contained in this document represents, in the AESO’s view,
a reasonable forecast of predicted ancillary service costs and projected pool
price. Readers are cautioned not to rely upon, or base trades on, any
forward-looking statements which may be included in this document as
there can be no assurance that the expectations or assumptions upon
which the forward-looking statements are based will occur.
6
Purpose of AESO Price Forecast
• Hourly price forecast is required for the Budget Review
Process
– Forecast feeds cost calculations for Ancillary Services and
Transmission Losses
• Previous years used EDC Associates annual forecast
• AESO internal forecast is supported by EUB Decision 200596
– Board would like to see more accurate forecasts
– AESO has knowledge of external information
– AESO has knowledge of operations
7
Forecast Methodology
• AESO developed an in house hourly pool price forecast
using AURORA model
• Model reflects Alberta market fundamentals based on 2012
Long-term Outlook published July 2012
• 1001 simulations of hourly pool price forecast ran with
random variables:
– Forced outages
– Natural gas prices
– Demand
8
BRP load forecast
9
Supply additions used in BRP
1,000
Actual
Forecast
800
MW
600
400
200
0
-200
-400
2009
Coal Gas
2010
2011
Cogen Peaker Hydro
2012
2013
Wind Retirements Other
10
Price Forecast Results
Results from 1001 Price Simulations
7x16 Peak
On-Peak
Off-Peak
Flat
Mean
$63.27
$27.06
$51.20
Min
$43.62
$21.36
$36.83
Pool Price ($/MWh)
P5
P25
Median
$52.70
$58.12
$62.63
$23.94
$25.78
$27.00
$43.42
$47.39
$50.73
P75
$67.57
$28.30
$54.39
P95
Max
$75.85 $96.86
$30.35 $33.86
$60.47 $75.20
Results from the Median Simulation and Comparables
AESO Median
Forecast
2013 Forward Market
(Chase Report Sept 27)
On-Peak
$62.63
n/a
Off-Peak
$27.00
n/a
Flat
$50.73
$55.50
Period
11
Annual Actual/Forecast Price Comparison
$120
30
$100
25
$89.95
$80.79
$80
20
$76.22
$/MWh
$62.99
$66.95
$60
15
$58.04
$54.59
$43.93
$47.81
$50.73
$50.88
$40
10
$8.27
$20
$6.30
$6.19
$7.73
$6.17
5
$6.10
$3.84
$0
$3.76
$3.79
11.58
10.08
8.79
8.23
13.99
11.45
12.16
13.15
13.63
$3.44
22.39
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Heat Rate (GJ/MWh)
As of Sep. 20, 2012
$/GJ, GJ/MWh
$70.36
Pool Price ($/MWh)
$2.00
28.49
$3.06
16.58
2012
ytd.
2013
fcst.
0
Gas Price ($/GJ)
Note: 2013 fcst. is the Median flat expected pool price referred to in slide 6
12
2013 Ancillary Services Cost Forecast
October 2012
Annual Comparison
2011
2012
2013
Forecast
Actual
Forecast 1
Projection 2
Forecast 3
OR Cost
$174.5M
$324.9M
$274.3M
$315.9M
$181.2M
TMR Cost*
$27.5M
$30.6M
$20.8M
$12.1M
$4.3M
Blackstart Cost
$1.9M
$1.7M
$1.7M
$1.5M
$5.0M
LSS/LSSi Cost
$3.8M
$5.6M
$58.0M
$35M
$68.7M
Total AS Cost
$207.6M
$362.8M
$354.8M
$364.7M
$259.2M
Average Pool Price
($/MWh)
$63.58
$76.22
$83.32
$56.54
(end of Aug)
$60.47
(95th
percentile)
Average Gas Price
($/GJ)
$4.60
$3.44
$3.84
$2.15
$3.03
1
2012 Budget Review Process – Technical Meeting
2
Projection as of September 30, 2012
3
2013 Budget Review Process – Technical Meeting
* 2011 Actuals includes $1.2M paid for conscripted TMR
14
Forecast Methodology – Operating Reserves
• Annual OR costs are equal to the forecast annual OR
volumes (governed by WECC requirements) multiplied by
forecast pool price +/- an estimated premium/discount for
each hour.
– Using the AURORA model input, the OR forecast was run
using 1001 pool price simulations to create a projected cost
curve.
2013 OR Forecast
P95
Min
Max
$181.2M
$69.1M
$271.1M
15
Forecast Methodology - TMR
• Current TMR contracts expire at the end of 2012.
• 2013 annual TMR costs based on submissions received for
the NW region TMR EOI and forecast volume requirements.
– Forecast volume requirements dropped significantly in 2013
due to system upgrades in the northwest region.
2013 TMR Forecast
$4.3M
16
Forecast Methodology – Other AS
• Annual LSSi costs forecast based on current contract terms,
and expected additional contract capacity in 2013.
• Annual Blackstart cost forecast based on contract terms
governing compensation and expected new contracts in
2013.
2013 Other AS Forecast
Blackstart Cost
$5.0M
LSSi Cost
$68.7M
17
2013 Transmission Line Losses Cost
Forecast
Forecast Methodology – Line Losses
• Annual transmission line losses costs are equal to the
forecast annual line losses volumes multiplied by forecast
pool price.
Volume:
• Hourly forecasted loss volumes calculated based on:
– Historical actual loss volumes from the AESO settlement system,
incorporating post-final restated metering data
– A forecasting model using the historical data
19
2012 YTD Loss Comparison
Volume
(MWh)
• 2012 GTA loss volume was forecasted in July 2011
Note: Notice regarding forecast variance available on http://www.aeso.ca/downloads/2012_Recalculated_Loss_Factors.pdf
20
Forecast Methodology – Line Losses
2013 Forecast
• Using the AURORA model input, the transmission line loss
forecast was run using 1001 pool price simulations to create a
projected cost curve.
21
Methodology – Line Losses
Annual Comparison
2009
Actual
2010
Actual
2011
Actual
Total Losses Costs ($M)
121.6
131.2
186.2
220.8
136.9
Total Volumes (GWh)
2,497
2,681
2,411
2,553
2,216
Average Pool Price
($/MWh)
47.81
50.88
76.22
83.32
60.47
1
2012 Budget Review Process – Technical Meeting
2
2013 Budget Review Process – Technical Meeting
2012
2013
1
Forecast
Forecast 2
22
Next Steps
Next Steps Review
• Key dates
– Stakeholder comments on draft Business Initiatives
(September 14 meeting) – Overdue September 28
– Stakeholder comments on 2013 Ancillary Services and
Transmission Line Losses costs forecasts – today’s meeting
- Proposal to combine with Own Costs (budgets) (matrix
posting October 19)
– Draft 2013 AESO Business Plan and Budget document –
Proposal to post October 31
– Stakeholder written submissions to Board – To be received
November 9
• Content in accordance with the BRP Terms of Reference
– Oral presentations to AESO Board – November 15
• Content in accordance with the BRP Terms of Reference
24
Thank you