February 28, 2013 Jacques Duchesne Alberta Electric System Operator

February 28, 2013
Jacques Duchesne
Alberta Electric System Operator
2550, 330 – 5th Avenue SW
Calgary, AB T2P 0L4
Dear Jacques:
RE:
Comments on the Phase II Wind Integration Recommendation Paper
The MSA is writing to provide comments regarding the AESO’s Phase II Wind
Integration Recommendation paper. We understand that comments at this stage are
intended to provide feedback and extend the conversation about potential mechanisms
to increase the participation of wind generation in the market. The recommendations
lack some detail that would allow us to understand if they directly or indirectly impact
competition. As a result, our comments are limited to highlighting a few issues that we
believe require careful examination to ensure that the integration of wind leads to a
wholesale electricity market that operates in a fair, efficient and openly competitive
manner.
The MSA supports the principle of allowing wind to participate in the energy merit
order. The MSA continues to believe that with respect to integrating wind in the
wholesale market, one of the most effective solutions is to allow negative-price offers.
While maintaining reliability, the option of negative pricing allows market participants
to use their offer prices to effectively reflect their individual economic characteristics,
resulting in a more efficient outcome.
The AESO proposes a separate market for ramp-up and -down services. The MSA
requests that the AESO examines different proposals and assesses whether they would
have unintended effects on the price signal, price distribution, market power and the
impact on participation in other operating reserve markets.
The AESO proposes “exploring the addition of a pay for performance element to the pricing
mechanism for regulating reserves”. The MSA requests that the AESO bring to the
Market Surveillance Administrator | 403.705.3181 | #500, 400 – 5th Avenue S.W., Calgary AB T2P 0L6 | www.albertamsa.ca
attention of the MSA instances of where a particular generator’s performance in
providing regulating reserves is lacking since there is a compliance regime in place to
ensure the proper fee for service. The creation of additional payments may also
segment existing regulating reserve markets and the MSA requests the AESO ensure
that meaningful competition is likely to result. It also is unclear to the MSA ‘how pay
for performance’ in regulating reserves assists with the integration of wind into the
Alberta market.
We appreciate the efforts that you and the AESO have put forth in developing the
recommendations for improved wind integration into the Alberta electricity market and
believe that it is a worthwhile effort.
Regards,
/s/ Richard Penn
Senior Advisor
Market Surveillance Administrator | 403.705.3181 | #500, 400 – 5th Avenue S.W., Calgary AB T2P 0L6 | www.albertamsa.ca