Stakeholder Comment and AESO Replies Matrix – Market Participant Choice AESO Consultation

Stakeholder Comment and AESO Replies Matrix
AESO Consultation – Market Participant Choice
Discussion Paper
Date of Request for Comment:
2011-09-29
Period of Consultation:
2011-09-29
through
2011-10-28
Discussion Paper – Executive Summary and Purpose
Do stakeholders have any comments on the Executive Summary and Purpose sections?
Stakeholder
Stakeholder Comment
Alberta Wind Energy Corporation
As an overall comment, Participants building
their own transmission facilities should not be
treated as a TFO and be subject to all the
regulations pertaining to TFO’s. Rather, it
would be far easier to allow participants to build
their own transmission connections (either for
generation or load) to the existing TFO facilities
and then meter their power at the point of
connection and settle for it at that point rather
than having to do all the reporting for Tariffs
and Cost Recoveries. The Participant would
then be in control of all costs for the connection
and would build the capital costs into his costs
of the project to determine the feasibility of the
project. Therefore there would be no need for
AESO to be involved in determining the effects
on tariffs.
AESO Replies
Should another party want to tie into a line that
had been built by a Participant, that party would
reimburse the original owner for the original
costs on the basis of the % of capacity used
and the length of distance from connection
AESO Replies to Stakeholder Comments: 2011-09-27
Page 1 of 119
point to connection with TFO.
ATCO Power
I do not believe that for a connection to one
facility it is necessary to have all of these
existing regulations apply. If we are going to
change the procedures let’s simplify them as
much as possible.
ATCO Power suggests the term “transmission
facility” be replaced with the term “generator
connection facility” for the purposes of “market
participant choice.” An example of this is
displayed in following language changes
(changes are italicized) for the first paragraph of
Section 1:
The AESO is initiating discussion and
consultation on providing market participants
the opportunity to construct, own, operate and
maintain the generator connection facilities
required to connect their facilities to the
interconnected electric system; referred to as
“market participant choice” for purposes of this
discussion paper.
The term “transmission facility” as defined in the
Act specifically excludes a generating unit or an
electric distribution system. While some
connections may be “transmission facilities”
others may not, so to meet the anticipated
intent of the “market participant choice”
process, the language should reflect all
connection types. Additionally, the use of the
term “transmission facility” in the context of a
generator connection facility may introduce
undue confusion as to the definition of existing
load and generator connection facilities.
In the third paragraph of Section 1, the
discussion paper states:
AESO Replies to Stakeholder Comments: 2011-09-27
Page 2 of 119
Should a market participant choose to provide
its own connection project, the market
participant would assume all accountabilities of
TFO, including construction, ownership,
operations and maintenance, and all other
obligations stipulated in legislation and AESO
authoritative documents.
Capital Power Corporation
ATCO Power would like to request clarification
as to why the market participant would be
required to assume all accountabilities of a
TFO, even in cases when the connection is a
sole use facility for the purpose of generator
connection which cannot be anticipated to
become transmission in the future. Historically,
when a market participant has built their own
connection facility at their own cost, the market
participant was not obliged to be classified as a
TFO. ATCO suggests that the assumption of all
accountabilities of a TFO be considered on a
case-by-case basis.
Capital Power appreciates the opportunity to
comment on the AESO’s Market Participant
Choice (“MPC”) Discussion Paper (“discussion
paper”), published on September 29th, 2011.
The purpose section of the discussion paper
document should provide more insight into the
drivers of the MPC process and explain why the
AESO has undertaken this analysis and
consultation.
In Capital Power’s experience, the fundamental
flaw with the AESO connection process is that
the parties that bear all of the risks (connection
customer) of the inability to meet target inservice dates are unable to mitigate these risks.
Therefore, a process that allows the connection
customer to take control of specific connection
process activities in situations where they are
better equipped and willing to manage the
AESO Replies to Stakeholder Comments: 2011-09-27
Page 3 of 119
timing and regulatory risks is essential and the
MPC model must be developed with this goal in
mind.
Capital Power does not think that most market
participants that have requested the
development of this process would endeavor to
own their transmission facilities and therefore
become a transmission facility owner (TFOs)
under the EUA. The comments made at the
MPC stakeholder session on October 14th and
the ongoing generator owner/ transmission
owner discussions related to Alberta reliability
standards support this view. Therefore, it is
essential that the process is not so
cumbersome that it is not likely to be employed
by market participants that merely wish to take
responsibility for some of the TFO activities for
their own connection facilities but not become a
TFO themselves. The determination of which
party will be accountable for each activity can
be negotiated between the connection
customer and the incumbent TFO and the
AESO’s process should be flexible enough to
accommodate the agreed upon structure
provided the applicable technical requirements
are met.
It is essential that the process accommodates
arrangements where a generator can build the
radial connection for their facilities in
collaboration with the TFO and then transfer the
ownership and operating obligations to the TFO
upon energization. The process should not
require connection customers that proposing to
provide their own connection facilities to
become a TFO. The connection customer could
be treated like any subcontractor that the TFO
hires to undertake some TFO activities, such as
construction. There has been considerable
AESO Replies to Stakeholder Comments: 2011-09-27
Page 4 of 119
discussion between generators and the AESO
regarding the distinction between generators
who own the radial lines connecting their
generator to the Alberta grid and traditional
TFOs when determining applicability of Alberta
Reliability standards. Generators have resisted
being deemed TFOs under the reliability
standards due to the extremely burdensome
requirements placed on TFOs. As Alberta
reliability standards are just one area of
requirements applicable to TFOs, a process
that requires market participants wishing to
provide their own connection facilities to satisfy
all the obligations of a TFO is not likely to be
utilized.
In the Executive Summary section, the AESO
states that “should a market participant choose
to provide its own connection project, the
market participant would assume all
accountabilities of a TFO, including
construction, ownership, operations and
maintenance and all other obligations stipulated
in legislation and AESO authoritative
documents”. However, in the Introduction
section of the discussion paper, the AESO
highlights that the “end state should not result in
any kind of patchwork operation of the
interconnected electric system”. The two
statements appear contradictory as the first
implies that market participants that wish to
provide their own connection facilities would be
required to operate and maintain it, while the
second statement implies that the process
should not result in several new transmission
operators. The purpose of this process should
enable commercial arrangements to be
implemented so that connection customers
wishing to provide their own connection
facilities may do so.
AESO Replies to Stakeholder Comments: 2011-09-27
Page 5 of 119
FortisAlberta Inc.
Industrial Power Consumers Association of
Alberta
AESO Replies to Stakeholder Comments: 2011-09-27
Capital Power urges the AESO to develop a
flexible process that can accommodate
reasonable arrangements negotiated between
the incumbent TFOs and the connection
customer. Capital Power understands the need
to ensure that all transmission facilities are built
to a minimum set of requirements and operated
in a safe and reliable manner, but these
requirements are not likely to remain the
responsibility of the connection customer. The
design of the connection facilities and
subsequent operation and maintenance of them
will likely remain the responsibility of the
incumbent TFOs.
At the core of FortisAlberta’s business is the
provision of service to end use customers.
FortisAlberta would support initiatives which
assist such customers to receive prompt and
economic service, and would be prepared to
engage in such initiatives to that end. Our
detailed comments follow.
In the executive summary, the AESO points out
that the legislative framework permits it to
proceed with the discussed market participant
choice initiative “provided there are not adverse
impacts on the Alberta interconnected system
and market participants.” FortisAlberta is
generally supportive of initiatives that promote
the orderly and economic development, as well
as the safe and reliable operation of the Alberta
interconnected system. Cost and schedule
concerns can have an impact on orderly and
economic system development and
FortisAlberta is therefore interested in
improvements that can be made on that front.
IPCAA members have been concerned with the
costs and long schedules associated with the
current customer connection model. As such,
Page 6 of 119
IPPSA
we welcome this AESO initiative to examine
customer choice. However, industrial loads are
not interested in taking on the responsibilities of
becoming TFOs. As such, the AESO should
consider: (1) How can we enable customer
choice without placing unnecessary burdens on
the customers? And (2) Are there policy
changes (beyond the current structure) that
would enable market participant choice?
IPPSA greatly appreciates the AESO’s efforts in
undertaking the consultation related to
confirming market participants’ (“MPs”) ability to
construct, own, operate and maintain
transmission facilities connecting their
generation facilities (“Connection Facility(ies)”)
with the bulk Interconnected Electric System
(“AIES”) (Referred to hereinafter as the “MP
Choice Model”.)
We look forward to working with the AESO on
developing this model.
Joss Wind Power Inc.
Mainstream Renewable Power
MEG
AESO Replies to Stakeholder Comments: 2011-09-27
We agree with the AESO’s point that this
project is in response to participant concerns
with schedule and costs related to construction
of Connection Facilities. We are seeking an
AESO process that enables choice, which we
believe will improve schedule management,
cost control and project control.
However, we do express two concerns with the
AESO’s proposed approach: 1) with the
AESO’s suggestion that the MP Choice Model
requires assumption of all Transmission
Facilities Owner (“TFO”) duties, and 2) with the
notion that changing ownership within the
connection process necessitates a loss of
position in the queue.
We strongly support this initiative
No
MEG agrees with the AESO that market
Page 7 of 119
participant choice is permitted in legislation and
applauds the AESO’s initiative to implement
customer choice in transmission
interconnection to the grid.
As interconnection to the grid is critical for both
load and supply customers, MEG believes
providing the means by which customers can
better control both cost and schedule is
imperative.
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
AESO Replies to Stakeholder Comments: 2011-09-27
The simplest and most effective means for
control of cost and schedule is competition in
the traditional franchise owner utility
model. We would discourage a framework that
introduces options for competition in principle
but that in practice is unworkable due to
unnecessary, ineffective and non-value adding
administrative burdens.
Suncor applauds the AESO’s initiative to bring
broader choice to transmission connection.
Legislation does indeed permit transmission
facilities to be built and owned by parties other
than TFOs We would like to encourage a
framework that permits such ownership without
unnecessary burdens, and encourages the
maximum use of the option by Market
Participants as well as competition in the
market for such facilities.
The UCA notes AESO conclusion that the
desire for an alternative to the status quo
development of transmission projects by
incumbent TFO’s is based on the general
perception of “high cost” and “extensive
schedule”. The UCA supports initiatives aimed
at reducing overall transmission costs including
cost savings that result from the efficient
connection of load and generation facilities to
the Interconnected System. In addition to cost
Page 8 of 119
TransAlta Corporation
savings associated with construction and timely
service connections, the measure of overall
transmission costs must consider any
incremental administrative and technical costs
resulting from an increasingly complex
transmission system.
TransAlta has long advocated for restoration of
the right of customers to construct, own and
operate connection transmission lines which
was removed in the EUA revisions in 2003.
We are appreciative of the AESO initiating
consultation to advance the discussion on this
matter.
Discussion Paper – Introduction
Do stakeholders have any comments on the Introduction Section?
Stakeholder
Stakeholder Comment
ATCO Electric
The AESO’s proposal to introduce Market
Participant Choice represents a fundamental
shift in the way that transmission development
takes place within Alberta and has the potential
to have negative consequences for all
transmission customers.
AESO Replies
This proposal appears to be an attempt to meet
the needs of a particular segment of the
customer population – those with projects that
qualify and the capability to manage their own
connections - to the possible detriment of the
larger population of customers who pay for
transmission.
Project proponents seeking to connect their
project to the grid and who are clearly driven by
cost and schedule will not necessarily act in the
public interest. A multitude of players with a
different focus from that of incumbent TFOs
AESO Replies to Stakeholder Comments: 2011-09-27
Page 9 of 119
could have significant impacts on the broader
transmission industry including:
 Impacting the marketplace for
stakeholder consultation and landowner
compensation in ways that increases
costs, sets new precedents, presents
stakeholders with a fragmented view of
transmission development and
increases saturation of consultation
with stakeholders in busy areas.
 Introducing heightened competition for
construction resources at a time when
transmission development in Alberta is
at an all time high, thereby increasing
costs for transmission to all ratepayers.
 Increasing the cost to ratepayers of
monitoring TFO compliance to AESO
Rules and Reliability Standards;
 Increasing costs to ratepayers of
additional regulatory proceedings;
 Exposing ratepayers to additional costs
associated with duplicating the existing
infrastructure (sparing, for example),
systems and processes and other
activities of incumbent TFOs;
 The use of substandard materials and
designs to minimize project costs which
could impact reliability;
 Incremental operational and health and
safety risks associated with multiple
Transmission Facility Owners operating
within a particular geographic region.
While various standards may exist on paper,
concerns associated with the complexities and
additional costs of integrating the operations of
multiple TFOs cannot be overstated. The ability
to operate a seamless integrated system and
provide trained, experienced personnel that can
respond to emergency situations could be
AESO Replies to Stakeholder Comments: 2011-09-27
Page 10 of 119
compromised if matters are not handled
carefully. Interconnecting market participants,
who are not seeking to act in the best interests
of the public, do not bring the same perspective
as public utility TFOs whose mandate is to fulfill
applicable legislative requirements.
ATCO Electric acknowledges that the EUA
provides the AESO with discretion to request a
proposal from a market participant, other than
the incumbent TFO in whose service area the
project is located. In considering the exercise
of its discretion, the AESO must be cognizant of
the fact that there is a single legislative scheme
that would be applicable to all TFOs – new or
incumbents. The mandatory nature of the
legislation must be respected and applied
equally to all TFOs (see, for example, Sections
37 and 39 of the EUA). ATCO Electric is of the
view that the overall public interest will be best
served by ensuring that the AISE is constructed
in an efficient, safe and reliable manner.
The concept of market participant choice as set
out by the AESO in this discussion paper
clearly deviates from the direction set out in the
2003 Transmission Development Policy Paper
that underpins the current legislative
framework. Following are excerpts from that
paper:
“Transmission will continue to be regulated as a
natural monopoly by the EUB to ensure open,
non-discriminatory access and to protect the
public interest. Since transmission is
characterized by large economies of scale,
there are efficiencies in having an incumbent
Transmission Facility Owner (TFO) provide
operations and maintenance services to new
facilities that are required in a geographic area
AESO Replies to Stakeholder Comments: 2011-09-27
Page 11 of 119
they currently serve. This localized “critical
mass” of service infrastructure allows the
incumbent TFO to respond to apparatus failures
and other events that may jeopardize service to
customers. A “patchwork quilt” of ownership
does not have the same level of coordination or
economy of scale and so it would not operate
as reliably and efficiently. Contiguous
ownership of lines, substation facilities and the
associated operating infrastructure therefore
provides the greatest assurance of reliable and
safe operation of the transmission system for
customers (and employees) and is therefore in
the public interest. To accomplish this intent, all
new transmission facilities, including radial
interconnection facilities (emphasis added),
will be direct-assigned to the incumbent TFO’s.
Projects involving connections or upgrades to
existing transmission facilities or use of existing
right-of-ways will also be direct assigned to the
incumbent TFO to ensure safe and reliable
service.”
The 2003 policy paper was clearly the product
of exhaustive stakeholder consultation and
deep consideration as to the direction that
transmission development within the province
of Alberta should take. The conclusions
contained in this policy paper should not be
disregarded in the absence of a full scale
review at the policy level to ensure that
adjustments such as that contemplated within
the AESO’s discussion paper proceed in the
context of a thoroughly vetted and broader
framework for transmission development.
This proposal should not proceed any further
absent a comprehensive review that provides
the following:
AESO Replies to Stakeholder Comments: 2011-09-27
Page 12 of 119

Demonstrated benefits of the proposal
to all transmission customers,
particularly an examination of the
legitimacy of the claim that market
participants could improve cost and
schedule.
Many steps in the connection process
are mandated in legislation and involve
agencies like the AESO and the AUC.
It is difficult to imagine how significant
schedule improvements could be
achieved without either allowing market
participants to by-pass portions of the
process or by activities of market
participants that may have detrimental
effects on other transmission
customers.



AESO Replies to Stakeholder Comments: 2011-09-27
Additionally, TFOs are currently bound
through AESO Rules to adhere to strict
competitive practices in relation to
material and services that comprise the
majority of transmission project costs.
It is difficult to imagine where significant
cost savings could be achieved without
compromising quality of materials or
construction, particularly given the
purchasing power and readily available
standards that can be leveraged by
incumbent TFOs;
A thorough analysis of risks and
incremental costs associated with the
introduction of new TFOs;
A proposal to insulate other
transmission customers from the
additional costs caused by the few
customers who would be positioned to
take advantage of this proposal;
Eligibility criteria for both participants
Page 13 of 119



ATCO Power
AESO Replies to Stakeholder Comments: 2011-09-27
and projects that minimizes operational
risk;
A thorough examination of all the
possible consequences of proposal and
proposed mitigation where necessary
(adverse effects in the areas of
consultation, compensation,
competition for resources, etc.);
Consideration of how market
participants, who are often competitors,
will be compelled to coordinate their
project execution efforts where projects
have the ability to impact another
market participant’s connection. The
cancellation or delay of one market
participant’s connection could impact
another’s connection project scope
and/or schedule; and
Consideration as to how responsibilities
and obligations of new TFOs will be
assured during the project development
phase for new TFOs. Given the way
TFO is defined under the EUA,
obligations are only effective once a
transmission facility is energized.
In short, whether there are legislative barriers to
the Market Participant Choice proposal or not,
the AESO bears a burden of responsibility to
ensure that it is the right course of action and
clearly in the public interest. That burden of
responsibility has not been met based on the
discussion paper that the AESO has presented
to stakeholders.
ATCO Power would like to re-iterate the
suggestion that the term “transmission facility”
be replaced with “generator connection facility”
for the purpose of “market participation choice.”
A second example of language changes
(changes are italicized) are shown below for the
Page 14 of 119
first paragraph of Section 3:
Market participant choice refers to providing the
opportunity for a market participant to construct,
own, operate and maintain (“own”) the
generator connection facilities required to
connect a market participant’s facilities to the
interconnected electric system. For clarity,
market participant choice does not include bulk
transmission system projects.
In addition, Paragraph 6 of Section 3 states:
In addition, section 28(3) of the Transmission
Regulation states that an owner of a generating
unit interconnected to the transmission system
may not prohibit interconnection or access to
the interconnection facilities by other market
participants.
It is our interpretation that this section of the
Transmission Regulation clearly indicates that
there is a difference between a generator
connection facility and a transmission facility.
To insure consistency with the Regulation,
ATCO Power suggests that the language used
in the “market participant choice” process
reflect that in the Regulation; and include the
distinct differentiation between a generation
connection and transmission.
Capital Power Corporation
Enbridge Pipelines
AESO Replies to Stakeholder Comments: 2011-09-27
ATCO Power would like to request clarification
regarding the term “bulk transmission system.”
No comment
In general we support the idea of participant
choice to improve on cost and schedule and to
help TFO’s manage the current growth cycle.
However, we’ve two concerns:
Schedules: in our experience the long timelines
are due to the upfront TFO/AESO planning.
Page 15 of 119
FortisAlberta Inc.
Unless planning resources are beefed up what
is the solution to shorten planning duration?
Costs: If the AESO investment policy favors
utility build as it currently does on substations
with DTS & PSC then we’re not convinced there
would be substantial savings with lines. Would
the investment levels be same regardless who
builds? Would Rider-A apply to reduce
operating costs?
While “market participant ownership of
transmission facilities is not entirely new”, apart
from ISDs, a “patchwork” of ownership of
transmission facilities has the potential to create
issues and concerns that are not readily
addressed by the legislation. Under a
patchwork of ownership structure, the assets
and practices of the various owners need to be
interconnected, coordinated and aligned,
without restricting system access service and
electric distribution service to future customers.
Ultimately, ensuring the orderly and economic
development of the Alberta interconnected
electric system as a whole should continue to
be the primary mandate when considering such
an approach.
For example, the AESO has indicated that
gaining access to transmission facilities is not a
barrier, since all TFOs will follow the same
regulations. However, by failing to allow for
adequate and suitable available land for future
expansions, one market participant/TFO’s
practice could create barriers for system access
service and electric distribution service to other
or future customers.
As another example, FortisAlberta seeks to
provide timely connections for new customer
service requests in its service area. These
AESO Replies to Stakeholder Comments: 2011-09-27
Page 16 of 119
Industrial Power Consumers Association of
Alberta
IPPSA
customers’ project costs and schedules could
be impacted by the various new entrants’
practices regarding crossing agreements,
proximity to road allowance, and joint-use
solutions (transmission lines and distribution
lines sharing poles).
IPCAA views the requirements associated with
becoming a TFO as a serious barrier to market
participant choice. Industrial customers may be
interested in constructing connection facilities,
but are significantly less interested in owning,
operating and maintaining TFO facilities. If this
issue is not addressed, we may end up with a
MPC process and no market participants
interested in exercising their choice and
constructing their own connections.
To the point, even though it would be
reasonable to require operation of Connection
Facilities in compliance with the Hydro and
Electric Energy Act (“HEEA”) objective of
observing safe and efficient practices, it is
IPPSA’s view that reaching this objective does
not necessarily require compliance with all of
the extensive TFO duties under applicable
legislation.
For example, it does not make sense to require
a Connection Facility owner to submit with the
Commission a tariff for approval for rates
payable by the AESO for using a Connection
Facility, since no such rates will be payable by
the AESO. Based accordingly on the AESO’s
own distinction between Connection Facilities
versus bulk facilities, it follows that different
obligations for Connection Facilities owners vis
a vis bulk facility owners (or TFO’s) should
apply.
We are concerned that the imposing all TFO
obligations onto generators for their connection
AESO Replies to Stakeholder Comments: 2011-09-27
Page 17 of 119
facilities will deter participants from seeking to
exercise choice, thus resulting in a MP Choice
Model without a real choice.
Joss Wind Power Inc.
Mainstream Renewable Power
MEG
Going forward, we recommend that the AESO
define the minimum obligations it needs from
Connection Facility owners, as it relates to the
AESO’s responsibility to operate a reliable
system.
This initiative is an important step to improve
the competitiveness and the cost and timing for
new connections. At this stage in the process,
it makes sense to exclude bulk transmission
system projects.
No
MEG believes it would be helpful for the AESO
to clearly define “bulk transmission system
projects”.
MEG believes it would be helpful for the AESO
to identify specific transmission facilities, not
are not part of an ISD, that have been
designed/constructed/owned/operated by nonTFOs and to further clearly identify if any of
these facilities have posed reliability,
operational or planning concerns. This
information would advance industry’s common
knowledge on the extent of non-TFO ownership
of transmission facilities and if non-TFO
ownership poses higher reliability, operational
and planning risks and concerns in comparison
to TFO ownership.
MEG believes all transmission facilities should
meet technical and reliability standards but
strongly encourages the AESO not to institute
non-reliability requirements that are onerous,
add little value and by their burdensome nature
may discourage market participant customer
choice. One such example of an onerous, no
AESO Replies to Stakeholder Comments: 2011-09-27
Page 18 of 119
Suncor Energy Marketing Inc.
value and burdensome requirement would be
requiring a non-TFO market participant to file a
tariff if there is only one market participant using
the subject facilities. If there is more than one
user of the facility, and commercial
arrangements fail, a tariff may be required.
Suncor agrees that all owners of transmission
facilities should meet reliability standards.
However Suncor disagrees that owners of
transmission facilities related to market
participant choice should be burdened with tariff
filing.
In the future, should there be more than one
user of such a facility, then a tariff may be
necessary, but only in the event the additional
users are not able to connect under reasonable
commercial terms and conditions.
The Office of the Utilities Consumer Advocate
AESO Replies to Stakeholder Comments: 2011-09-27
While the non-duplication of facilities and the
right of adjacent market participants to access
service, needs to be addressed, these issues
should not necessarily cause an incumbent
market participant line owner to be compelled to
form a utility in order to provide service. Rather
the participants should be allowed to make a
commercial arrangement for access in a
reasonable timeframe. If this is unsuccessful,
the participant seeking service should be
afforded the opportunity to appeal to the AUC
for a ruling, and if necessary an order to provide
service. However under no circumstances
should the provision of such service cause
economic loss to the incumbent line owner.
The UCA would agree at this point that the
Alberta Reliability Standards, ISO Rules and
AUC Rules mitigate many of the concerns
related to “patchwork” operation of the
interconnected system associated with
additional TFOs. With the variety of
Page 19 of 119
TransAlta Corporation
connection projects however, there may be
operating complexities created where separate
TFO facilities become intermingled within a
specific substation. Presumably, Operating
Agreements could ensure safe and reliable
operation.
We agree that the legislation is permissive.
Discussion Paper – Eligible Market Participants
Do stakeholders agree with the suggested eligible market participants? If you disagree, please provide supporting rational for that position.
Stakeholder
Stakeholder Comment
ATCO Electric
Eligibility of market participants should only be
established after a more thorough examination
of this proposed concept. Eligibility may be one
way in which costs and risks are appropriately
managed. Limitations based on market
participants’ qualifications may be necessary
and appropriate to effectively manage cost and
operational risks.
ENMAX Corporation
EPCOR Utilities Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
AESO Replies
ATCO Electric understands that no change to
existing legislation is being considered as part
of this overall process. As such, the existing
rights of DFOs under s.101 of the EUA is not
the subject of comment. With respect to the
AESO's proposal, the wording of the legislation
would not appear to exclude any market
participant, including DFOs, from consideration
within s. 1(l)(ee) of the EUA. Notwithstanding,
that the legislation provides the AESO with
discretion to request a proposal from a market
participant, in reality, certain parties may not be
appropriate candidates for receiving such a
request (particularly if they are not the party
directly associated with the subject
interconnect).
Agreed
EPCOR believes further consultation and
Page 20 of 119
consideration needs to be given as to which
market participants should be eligible to
participate in this initiative.
FortisAlberta Inc.
EPCOR wishes to understand the intent of
including DFOs as eligible market participants
for this initiative. Is it the intention of the AESO
that a DFO could elect to own a new
transmission connection (POD) rather than the
incumbent TFO? If so, does the AESO
consider this as fundamentally changing the
concept of a TFO service area as it relates to
such connections?
If the AESO proceeds with the “market
participant choice” initiative suggested in the
discussion paper, FortisAlberta would submit
that any AESO customer (market participant)
who is an ISD or has received a EUA Section
101(2) release from the AESO and the
distribution company should be provided an
equal opportunity to be eligible for providing
their own transmission extensions.
Currently, FortisAlberta works with the
incumbent TFO and the AESO to ensure the
orderly, economic and efficient development of
the interconnected electric system for all
customers in a given area. FortisAlberta has
also been open to providing Section 101(2)
releases upon satisfying itself that a customer
becoming a direct connected customer of the
AESO does not impinge on that objective. The
AESO also has the opportunity to determine
who would be eligible, presumably based on
satisfying itself that the orderly, economic
development of the system and system access
service for future customers is not threatened
by doing so.
Should the AESO proceed with the initiative,
AESO Replies to Stakeholder Comments: 2011-09-27
Page 21 of 119
FortisAlberta agrees that DFOs be included in
the list of eligible market participants as they
are responsible for arranging system access
service for all customers in their service area,
as per the EUA. Further, the issues of cost and
schedule, as raised by the paper, are as
important to DFOs and their end-use
customers, as to other large direct customers of
the AESO. Accordingly, if market participant
choice is made available, it should be made
available as an option for DFOs as well.
A patchwork of transmission line ownership
introduces a number of concerns. A number of
new entrants will be entrusted with operating
transmission facilities for which operational
problems could reach far beyond the new TFOowned facilities and impact the reliability of
Alberta’s interconnected electric system
(transmission and distribution) as a whole.
Industrial Power Consumers Association of
Alberta
As stated in the discussion paper, these new
entrants may be typically more motivated by the
schedule and cost of their particular project and
the reliable operation of greater system may not
be of primary interest to them. Recognizing this
element of future entrants being more focused
on their projects rather than the greater system
may have some bearing on the AESO’s
eligibility requirements, if this initiative
proceeds.
IPCAA has no concerns with the list of eligible
market participants.
Concerns were raised at the stakeholder
session regarding the reluctance for DFOs to
provide waivers for direct connect loads under
section 101 of the EUA. IPCAA believes this is
an issue for Industrial System Designations
(ISDs) as well and suggests that the AESO
AESO Replies to Stakeholder Comments: 2011-09-27
Page 22 of 119
IPPSA
Joss Wind Power Inc.
Mainstream Renewable Power
MEG
SATL Inc.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
AESO Replies to Stakeholder Comments: 2011-09-27
request that the MSA to provide clarity on the
ability for DFOs to “frustrate” this process – and
the expected behaviour of all parties involved.
As a generators’ association, IPPSA supports
the inclusion of ‘direct connect generators’ and
‘dual use (generation and load)’ on the list of
parties identified and will let other stakeholders
speak for their inclusion.
We agree.
Yes. It is necessary however to clearly identify
the administrative and technical requirements
for becoming a TFO, as the time and costs
required may make the option prohibitive.
MEG agrees with the suggested list of eligible
market participants.
Similar to the types of Eligible Market
Participants listed in this section, merchant
transmission developers face the same issues
(risk of regulatory delays and interconnection
queue bottlenecks) and must comply with all
industry standards, rules and operating
procedures. For these reasons, merchant
transmission developers should be included as
Eligible Market Participants.
The UCA agrees with the assessment that
Distribution Facility Owners be considered
eligible Market Participants for the purpose of
this discussion. An opportunity may exist for a
DFO to produce cost savings by participation in
the construction, ownership or operation of
transmission facilities and should not be
precluded at this point.
With regard to DFOs the outcome as we
understand it is that the DFO, if not already a
TFO, becomes a TFO. It is important to
remember that the context of this is in regard to
a Customer Connection and a DFO is not as
such a customer. The choice being requested
is to have a customer construct, own and
operate connection transmission lines and not
Page 23 of 119
have a public utility do this. If a customer is to
have choice then it must be the decision of the
customer and not the DFO.
Discussion Paper – Eligible Connection Projects
Do stakeholders agree with the suggested eligible connection projects? If you disagree, please provide supporting rational for that position.
Stakeholder
Stakeholder Comment
Alberta Wind Energy Corporation
New process could still delay Participant’s
projects by having to work with an incumbent
TFO.
Project eligibility should only be established
after a more thorough examination of this
proposed concept. Eligibility may be one way in
which costs and risks are appropriately
managed. Limitations based on specific
facilities and the degree of risk they present to
costs, other market participants and / or system
may be necessary.
ATCO Electric
Replies
While the legislation is arguably broad enough
to cover a variety of projects, the overall public
interest should play a role in determining
whether certain complex projects, that pose
safety and reliability challenges if not
coordinated properly, are viable candidates for
market participant choice.
Cenovus Energy Inc.
Enbridge Pipelines
AESO Replies to Stakeholder Comments: 2011-09-27
If an incumbent TFO were put in a
position where the safety and reliability of its
system and/or employees could be put in
jeopardy, it may have no choice but to refuse to
complete the contemplated interconnect with its
main line. The AESO must be aware of such
concerns and factor them into the exercise of its
discretion. The AESO should seek to avoid
such circumstances from arising.
Agree that all projects should be eligible.
Opening up the more complex connections that
Page 24 of 119
ENMAX Corporation
EPCOR Utilities Inc.
involve In/Out and RAS schemes will add
further complexity of added coordination
between multiple TFOs to safely protect the
system, load shed and respond to emergencies.
Who would ensure assets are properly
maintained? Who will take responsibility when
things go wrong and risk bringing down the
grid?
Currently TFOs aggregate area customer load
(that only they know) to propose the best
planning solution. How would this central
planning take place when new TFOs would not
know the area load growth plans?
Who would decide on fair line sharing costs on
a line owned by a customer TFO. Who would
scrutinize the original construction costs are not
exaggerated to gain larger line share in future?
Who would do line upgrades if an existing line
owned by a customer TFO needs upgrading to
connect a new load?
Agreed
This is a rather broad statement. As discussed
in the response to question 3 above, EPCOR
would like to better understand the intention
behind choice for DFO connections.
EPCOR presumes that the AESO is referring to
connection for all “transmission” voltages.
EPCOR believes that the AESO must develop a
very clear and precise definition of what
constitutes a transmission connection, e.g.
where it would begin and end. EPCOR does
not believe that it should include “system”
infrastructure or refurbishments or extensions to
existing transmission connections. The AESO
must consider whether it would allow multiple
TFOs owning and operating different assets
within a substation. If such a scenario were to
take place, coordinating access, work and
AESO Replies to Stakeholder Comments: 2011-09-27
Page 25 of 119
approvals between differing entities would add
to time and cost and increase the risk of an
operational upset.
FortisAlberta Inc.
Industrial Power Consumers Association of
Alberta
IPPSA
AESO Replies to Stakeholder Comments: 2011-09-27
EPCOR is also concerned about the possibility
that customers which are currently serviced
adequately at distribution voltages would seek
to obtain service at transmission voltage. This
would create the risk of a non-economic
bypass, resulting in the duplication of assets
and the potential for stranded distribution
assets.
The discussion paper does not comment
specifically about the substations that will be
associated with each of the contemplated
transmission lines. Under the currently
approved AESO tariff, customers have the
option of owning and operating their own
transformation substation and garnering a
Primary Service Credit. FortisAlberta assumes
that under the AESO’s initiative, if it were to
proceed, new market participants who are
TFOs building their own transmission extension
could continue to choose the above option or
alternatively include the transformation
substation as a TFO cost.
Similar to the comments regarding eligible
market participants, with increasing complexity
of projects, FortisAlberta has increasing
concern regarding the market participants’
reliability programs, impacts of potential
failures, and stocking of spare equipment, etc.
IPCAA agrees that all transmission connection
projects should be eligible for market participant
choice.
We support the AESO’s view that all
Connection Facilities projects should be eligible
for MP choice.
Page 26 of 119
Joss Wind Power Inc.
Mainstream Renewable Power
MEG
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
We believe the proposal that MPs work with
TFOs to coordinate construction, connection
and operations of Connection Facilities appears
reasonable, but we’ll defer to our members
should they have any comments on this section
based on their experiences or expectations.
We agree.
Yes
MEG supports the proposal that market
participants work with TFOs to coordinate
construction, connection and operations of the
facilities in a cooperative and collaborative
manner. MEG would recommend exploration of
approaches that would encourage cooperation
and collaboration such that customer choice in
a timely and cost effective manner can be an
option.
Suncor agrees with the suggested eligible
connection projects but encourages greater
clarity on definitions.
The UCA suggests that eligible projects will be
self eliminating on the basis of timing, scale or
administrative complexity no matter what Model
is chosen to facilitate Market Participant Choice.
The challenge is to demonstrate improved costs
and efficiencies from whatever Choice is made
available.
Directionally we agree that all connection
projects should be eligible.
We are, however, concerned that connections
to the bulk system, which we would define as
240 kV or higher voltages, have higher
requirements (and obligations) for such
connections and that they may require as such
a higher degree of scrutiny. We make this
distinction in comparison to 138 kV and lower
voltage customer connections.
We also want to ensure connections are not
AESO Replies to Stakeholder Comments: 2011-09-27
Page 27 of 119
made more complex and costly and more
onerous than need be if the AESO or TFOs was
to over specify the technical requirements. For
example, insist on specification of a switching
station at the tap point. As long as alternatives
for connections are options consistent with
customer risk assessment and decision-making
then we believe the approach is workable.
Discussion Paper – Model
Do stakeholders agree with the suggested model? If you disagree, please provide an alternative model and the rational supporting that alternative
model.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
The process should consider two models: the
“Own” model and an alternative model where
the market participant transfers ownership of
the built transmission facility to the incumbent
TFO for operation going forward. This will likely
be a typical scenario pursued by many market
participants.
ATCO Electric agrees that the AESO does not
have the authority to approve, refuse or
mandate transfers. The AESO also does not
have the authority to compel TFOs to provide
maintenance or operations services in relation
to facilities that they don’t own, except insofar
as operational coordination to ensure the safe
and reliable operation of the transmission
system.
Transferring an asset, once built, to an
incumbent TFO may assist in achieving some of
the public interest objectives outlined in the
Transmission Development Policy Paper.
Provided that technical requirements of
incumbent TFOs are met and suitable
commercial terms reached, transfers may be
desirable. However, based on ATCO Electric’s
experience, the logistics of transferring an asset
AESO Replies to Stakeholder Comments: 2011-09-27
Page 28 of 119
Capital Power Corporation
Cenovus Energy Inc.
Enbridge Pipelines
AESO Replies to Stakeholder Comments: 2011-09-27
(ensuring technical requirements are met and
suitable commercial terms reached) can be
extremely complex.
Although the “own” model may work for some
connection customers that would like to become
a TFO, in Capital Power’s view, the AESO
should not assume this would be advantageous
for all connection customers. The AESO’s
process should adapt to the commercial
contracts agreed to between connection
customers and TFOs.
An alternative that may be considered by
Capital Power would include the following. The
incumbent TFO would review the connection
requirements and design the transmission
facility. The connection customer would take
responsibility for constructing the facility to the
specifications provided by the incumbent TFO
just as any company contracted by the TFO
would. Upon energization, both the ownership
and operating responsibilities would be
transferred from the connection customer to the
incumbent TFO. In this scenario, the
connection customer takes responsibility for
some of the TFO requirements but ultimately it
is the TFO that would be required to satisfy all
the legislative and regulatory requirements.
The AESO’s request requirements should be
standardized and available before starting the
project. Time is likely an issue to customer’s
making this choice and it would be beneficial to
be able to work on this proposal even before
the AESO request. AESO should have
published target dates for request approvals.
The ability to transfer built assets to incumbent
TFO is an important part of participant choice
and we like to see TFO’s provide some
guidance on what this may look like. TFO’s
willingness to take over built assets would help
Page 29 of 119
ENMAX Corporation
EPCOR Utilities Inc.
FortisAlberta Inc.
garner wider support for this initiative.
To sell to a TFO who would determine the sale
price? Would sale price be based on TFO
estimate or sale for a $1 and a Rider-A payment
stream will apply to reduce operating costs?
Would current TFO’s share their standards for
customers to build to or would AESO draft new
standards customer TFOs must meet to ensure
an acceptable build quality? How would
standards be enforced?
Agreed
EPCOR generally agrees with the suggested
model which recommends that Rule 9.1 be
amended (i.e. presumably to delete or modify
AESO Rule 9.1.1.2(c)) allowing a market
participant that requires an interconnection at
transmission voltage to develop and own that
interconnection without the need for the
incumbent TFO’s consent and which does not
prohibit that market participant from partnering
with a third party (i.e. either as a subcontractor
or through a joint-ownership arrangement) to
fulfill all of its TFO responsibilities under existing
legislation.
FortisAlberta agrees that a market participant
that proposes to become a TFO must
demonstrate in its proposal readiness to
perform the responsibilities of transmission
facility ownership. The AESO has not identified
the criteria under which they will review and
accept or decline the market participant’s
proposal. FortisAlberta believes this to be an
important consideration that should be
addressed, so that clear expectations of the
TFO’s practices for construction and operation
are proactively set.
FortisAlberta understands that the AUC, and
not the AESO, approves or refuses transfers of
transmission facilities to other parties.
AESO Replies to Stakeholder Comments: 2011-09-27
Page 30 of 119
Industrial Power Consumers Association of
Alberta
However, in the interest of safe and reliable
transmission system operation, the AESO
should play a role in reviewing every purchasing
party’s readiness to perform the responsibilities
of transmission facility ownership, and make
submission to the AUC in that regard.
IPCAA has some major concerns with the
“Own” model. As pointed out earlier, Industrial
customers are generally not interested in
becoming TFOs and this model does not enable
transfers of these assets to TFOs – nor does it
compel incumbent TFOs to accept customerconstructed assets. Thus, a viable solution to
customer problems would be the creation of
“TFO Aggregators” who would take over
ownership, operation and maintenance of these
connection assets on behalf of customers who
are not interested in assuming TFO
responsibilities.
These “TFO Aggregators” could be new market
entities or existing TFOs. The AESO should
consider whether there are existing restrictions
to the creation of such entities.
IPPSA
AESO Replies to Stakeholder Comments: 2011-09-27
Alternatively, the AESO should provide a
distinctive list of all the obligations a new
“customer connection” TFO would be required
to perform – and subsequently consider
whether there are some obligations that will not
add any value to the system and can essentially
be eliminated. These “new TFOs” are not all
building complicated assets (i.e. bulk system
transmission), and as such, should not be
required to assume the same responsibilities as
incumbent TFOs.
IPPSA supports the AESO’s model whereby a
‘MP assumes responsibility for all facts of the
life cycle of the facility’, unless they voluntarily
enter into an arrangement with the TFO to
Page 31 of 119
transfer those responsibilities.
Again, we are concerned with the AESO’s view
that “a market participant – who is then, by
definition, a TFO…”
The AESO itself distinguishes between bulk and
Connection Facilities and we agree that this
distinction is important.
Connection Facilities are small scale generatorpaid-for, radial wires usually used by one MP to
carry that MP’s energy to the bulk AIES system.
Bulk AIES facilities, on the other hand, are large
scale, rate-payer funded interconnected
facilities, often carrying energy from many
generators to many end user customers.
Accordingly, Connection Facilities have entirely
different characteristics than the AIES – a
regulated, bulk system.
As an analogy, just because a homeowner
owns his or her driveway, or commissions the
construction of his or her driveway, it does not
make the homeowner - by any stretch of the
imagination - a professional road builder.
We note that s. 17(m) of the EUA provides the
AESO with a degree of latitude in carrying out
its mandate. Recognizing the distinct
obligations of market participant connection
facilities owners is an area where such latitude
is warranted. S. 17 m) states that an AESO
duties is “…to perform any other function or
engage in any activity the Independent System
Operator considers necessary or advisable to
exercise its powers and carry out its duties,
responsibilities and functions under this Act and
regulations.”
AESO Replies to Stakeholder Comments: 2011-09-27
Page 32 of 119
Joss Wind Power Inc.
Mainstream Renewable Power
MEG
Again, we request that the AESO define the
obligations commensurate with Connection
Facilities, as they differ from bulk AIES facilities.
We generally agree with the model. However,
there should be a recognition that transfer of the
transmission facilities could occur at a few
different stages, and not just upon energization
and commissioning. We agree that the logistics
of any transfers are outside the scope of the
AESO, but the rules should not preclude
transfers.
The process should consider two models: the
“Own” model and an alternative model where
the market participant transfers ownership of
the built transmission facility to the incumbent
TFO for operation going forward. This will likely
be a typical scenario pursued by many market
participants.
MEG supports the described “own” model – and
believes that the own model permits the market
participant to design/build/operate and maintain
or to contract to, or divest, the “asset” at any
point in the “design to maintain” cycle to a valid
third party. The valid third party can be a TFO,
DFO or a non regulated entity; if a regulated
utility the transaction will need AUC approval.
MEG does not support the suggestion that the a
market participant needs to file a tariff in the
circumstances that it is the only user of the
facility or that it can provide service to another
user under commercially agree to terms. In
these circumstances, a tariff filing requirement
would minimize the value of the self-connection
option and would essentially, and
unintentionally, support the present practice of
assigning the facility to the incumbent TFO.
MEG supports the flexibility to allow the market
participant to contract to, or divest the asset to,
AESO Replies to Stakeholder Comments: 2011-09-27
Page 33 of 119
SATL Inc.
Suncor Energy Marketing Inc.
the incumbent TFO or any other valid 3rd party
at any point in the process providing technical
and reliability standards are met.
A TFO should not be required to have its own
24 hour control centre but should be able to
contract for operations services (i.e. with
another Alberta TFO).
The aim of the market participant choice
initiative should be to foster a simplified and
commercially expedient manner in which
market participants can connect to the grid,
particularly in light of current market conditions
and extended wait times for service. To this end
market participants should not be mandated to
become TFOs.
This would be both a deterrent to use of the
self-connection option and an added burden on
a regulatory system that is already backlogged.
Given this deterrent it is not likely that the self
connection option would gain wide utilization
and Suncor questions whether the effort to
create the option would be worthwhile.
Suncor appreciates the work done to date by
the AESO on this initiative. However the option
should be designed to exclude the need for the
market participants to file a tariff and become a
TFO. Suncor recognizes that this will require
broader legislative change, but sees no reason
why, analogous to the oil and gas sectors,
market participants can not in effect build, own
and operate their own 'gathering systems' for
electricity without the burden of becoming
TFOs.
In addition, to open the market to competition,
market participants should be allowed to
contract to, or sell the line to any TFO or third
party of their choice, and not simply the existing
AESO Replies to Stakeholder Comments: 2011-09-27
Page 34 of 119
The Office of the Utilities Consumer Advocate
TransAlta Corporation
TFO in the area, under terms and conditions
commercially acceptable to the parties involved
and subject to approval by the AUC.
The proposed “Own” model would be
appropriate for larger single customer radial
extensions where right of way and landowner
relationships will be relevant to the long term
operation of the facility. For connection
projects with short extensions without a
substantial substation component, the
“Engineering, Procurement and Construction”
(EPC) Model may be workable. The EPC
Model is specifically designed to address cost
and schedule issues without the ongoing TFO
obligations. Significant cooperation with the
incumbent TFO would be required to facilitate
construction of facilities to acceptable TFO
standards but the life time administration costs
should be lower relative to the Own model for
these types of projects.
Subsequent transfer of ownership and so on
are subject to a negotiated agreement and to
regulatory approval of such transfer. There
should be no obligation for a TFO to enter into
such an agreement. There are many business
models which may be negotiated in a
competitive market with or without ownership
change. Such agreements could cover
operations, maintenance, and administration
including regulatory compliance.
We do not believe that customer contributed
assets fit very well into a regulated ratebase
business model (public utility model) and also
have concerns about entities providing both
regulated and non-regulated services.
We believe that a competitive model can
address any concerns market participants may
have about taking on TFO obligations.
AESO Replies to Stakeholder Comments: 2011-09-27
Page 35 of 119
Discussion Paper – Integration into the Existing AESO’s Connection Process
Do stakeholders agree with the suggested key connection process procedural changes? If you disagree, please provide alternative procedures and
the rationale supporting those alternative procedures.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
The new option should be able to fit into the
current AESO interconnection process. The
decision point for the transmission ownership
should be required during Stage 2 and be a
requirement for passing Gate 2 (not at Stage 0).
Without knowing what’s involved in the scope of
the interconnection, it is not possible to know
whether the market participant has the appetite
to build and operate the transmission facilities.
In addition, the incumbent TFO should be a
participant in the process through Stage 2 to
understand the impact the new power plant and
transmission facilities will have on their network.
ATCO Electric agrees that all stages of the
process must be met by any market participant
seeking to become a TFO. This would apply to
the filing of facilities applications as well as rate
matters. As long as the new TFO meets all of
the requirements and is treated in a manner
consistent with existing TFOs, the
interconnection process should apply.
While ATCO Electric agrees that a market
participant should understand and be prepared
to accept all responsibilities and obligations of a
TFO prior to making a decision, the full scope of
these responsibilities will not be clear until the
scope of a connection is defined, which takes
place after Gate 0. The decision as to whether
a connection is eligible or an eligible market
participant chooses to be a TFO should be
made in the context of some understanding of
the scope of the interconnection. This decision
should however, be made prior to an incumbent
AESO Replies to Stakeholder Comments: 2011-09-27
Page 36 of 119
TFO undertaking significant estimating,
preliminary design, or route selection activities.
Capital Power Corporation
Cenovus Energy Inc.
Enbridge Pipelines
ENMAX Corporation
EPCOR Utilities Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
It should also be clear that any work
(estimates, preliminary engineering, siting and
route selection, etc.) undertaken by an
incumbent TFO with respect to an
interconnection remains the property of the TFO
and will not be transferred to a market
participant who elects to change their decision
about the entity providing their connection,
regardless of who has paid for the work.
Capital Power agrees that in order to ensure
that all obligations are completed, Stage 0
would require written confirmation of which
entity will be responsible for each activity
involved in the connection process. However,
the MPC process should be flexible enough to
accept the various arrangements that may be
negotiated between connection customers and
the incumbent TFOs.
The AESO would reference the document
provided in Stage 0 to determine which party
will be responsible for each activity including
providing the PPS and filing the facility
application with the AUC for Stage 3 of the
process.
Disagree with the requirement to have choice
made in Gate 0. Customers have no knowledge
of cost or schedule restraints until process is
beyond Gate 0 and therefore no basis for
decision making.
Agreed. A new process will further complicate
an already complex world of interconnections
Agreed
EPCOR generally agrees with the concept of
using the existing connection process for
market participant choice projects. This is not
dissimilar to current entities that act as both
Page 37 of 119
Industrial Power Consumers Association of
Alberta
IPPSA
Joss Wind Power Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
TFOs and DFOs. However, EPCOR believes
that if a market participant chooses to follow the
Market Participant Choice process they should
not be required to solely own and operate the
connection transmission facilities. The
connection process at stage 0 should allow for
the market participant to either jointly-own
connection facilities with a third party TFO or to
solely own them and subcontract TFO operation
and maintenance responsibilities to a third party
TFO who may subsequently take ownership
through transfer of the facilities upon
energization and commissioning.
The main concern with this process is that the
market participant will have to commit to the
MPC model at Stage 0, before they necessarily
have reason to do so. IPCAA expects that
Industrials will opt for the MPC route if they
receive higher than expected costs and slower
than expected schedules from the incumbent
TFO – likely to be known after Stage 1.
The AESO should consider if Stage 1 is a better
time for the market participant to confirm it is
interested in the MPC option.
IPPSA agrees that the AESO’s existing
connection process can integrate the MP
Choice Model.
At stage 0, we would prefer an approach
whereby the market participants signals its
intent to be the owner of the Connection Facility
and adhere to the appropriate obligations
associated with the ownership of those
connection facilities. Again, we do not support
the idea that a market participant must assume
the same responsibilities of a bulk system TFO
to own connection facilities.
We generally agree, although there should be
an explicit option to select the incumbent TFO,
another potential TFO or to select the ”own
Page 38 of 119
Mainstream Renewable Power
MEG
model”.
The new option should be able to fit into the
current AESO interconnection process. The
decision point for the transmission ownership
should be required during Stage 2 and be a
requirement for passing Gate 2 (not at Stage 0).
Without knowing what’s involved in the scope of
the interconnection, it is not possible to know
whether the market participant has the appetite
to build and operate the transmission facilities.
In addition, the incumbent TFO should be a
participant in the process through Stage 2 to
understand the impact the new power plant and
transmission facilities will have on their network.
MEG supports the AESO’s proposal for
integrating market participant choice within the
existing AESO connection process.
MEG disagrees with the requirement to elect
the self-connection option at stage 0 and
believes that such election can be made at any
point up to the closure of stage 2.
SATL Inc.
Suncor Energy Marketing Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
MEG does not support the loss of queue
position if the self-connection choice is reversed
at any point before the closure of stage 2.
While the milestones identified with each stage
are realistic the underlying process can be
bureaucratic and filled with uncertainty and
delays. This process should have defined target
time lines for each milestone event with
exception reporting and AESO performance
metrics around each milestone. The focus of
the overall process should be one of continual
improvement and efficiency gain. We would
prefer to make the ownership decision at stage
3. SATL also supports the concept of filing both
the facility and needs application to the AUC
concurrently by the proponent.
Suncor disagrees with requirement to initially
Page 39 of 119
declare at stage 0.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
The option to delegate the construction or
ownership of the project to an existing TFO
under substantially similar technical
parameters, should be open up to the closure of
Stage 2, without the penalty of queue position
loss.
The Connection Process changes to
accommodate the Own model require the
Market Participant to commit at Stage 0 to the
Assumption of TFO obligations with little
certainty with respect to the required facilities or
their cost. When the project facility
requirements are identified, the market
Participant would be in a better position to make
commitments. This would also be the time for
the market Participant to bring forward an EPC
proposal for comparison to costing provided by
the incumbent TFO. Even if these estimates
are not at the PPS level they may be indicative
enough for the AESO to pursue a more detailed
comparison from both the incumbent and
market participant in Stage 3.
It may be reasonable to compensate the
incumbent for costs incurred to provide the PPS
estimate if the market participant is
subsequently directed to construct the facility.
Where the incumbent is directed to construct
the market participant would bear its own costs.
If a workable EPC and Own options are
available to the market participant then it would
be appropriate at Stage 0 to require a
commitment to provide an EPC estimate based
on the Connection Study.
Agreed
Discussion Paper – Request for Proposal Approach
Do stakeholders agree with the suggested Request for Proposal approach? If you disagree, please provide supporting rational for that position.
AESO Replies to Stakeholder Comments: 2011-09-27
Page 40 of 119
Stakeholder
Stakeholder Comment
Alberta Wind Energy Corporation
Agreed. If the market participant takes the
responsibility to build the transmission facility at
their cost, it is their responsibility to get the best
price through their own procurement process.
As outlined in comments in the introduction, the
decision about eligible recipients for requests
for proposals should only be made in the
context of a comprehensive review, adjustment
to policy, and thorough examination of risk and
associated mitigation.
No comment
Agreed
Yes
IPCAA agrees with the AESO approach in this
section.
IPPSA agrees with the AESO that the MP
seeking connection service be the only party
allowed to prepare a proposal to meet the need
for that service.
ATCO Electric
Capital Power Corporation
ENMAX Corporation
EPCOR Utilities Inc.
Industrial Power Consumers Association of
Alberta
IPPSA
Mainstream Renewable Power
MEG
SATL Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
Replies
Allowing anyone else – such as other MPs or a
TFO - to submit a competing proposal would
defeat the efficiency, choice and costs control
sought under the banner of the MP Choice
Model.
Agreed. If the market participant takes the
responsibility to build the transmission facility at
their cost, it is their responsibility to get the best
price through their own procurement process.
MEG agrees with the Request for Proposal
approach, provided however that the proposal
can come from either the market participant or
any 3rd party that the market participant
nominates as its agent/representative in the
own model.
SATL supports the request for proposals from
both the market participant and also the
Page 41 of 119
incumbent TFO. Upon receiving the proposals
the “Ownership” decision should be made by
the market participant rather than being
mandatory at Stage 0.
Suncor Energy Marketing Inc.
Suncor agrees with the Request for Proposal
approach, provided however that the proposal
can come from either the market participant or
any TFO that the market participant nominates
as owner or operator of the line.
The Office of the Utilities Consumer Advocate
See comments above.
TransAlta Corporation
Agreed
Discussion Paper – Connection Queue Administration
Do stakeholders agree with the suggested project cancellation and revoking of queue position? If you disagree, please provide an alternate
approach and supporting rational for that alternate approach.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
AESO Replies to Stakeholder Comments: 2011-09-27
As stated in the previous comment, the decision
should be taken at Stage 2 as a requirement for
Gate 2. Therefore there should be no need to
cancel an application due to this decision. The
participation by the incumbent TFO should be a
requirement through Stage 2 to understand the
impact the new power plant and transmission
facilities will have on their network. Therefore
there should not be any wasted costs incurred
by the incumbent TFO.
ATCO Electric agrees that if a project is
cancelled the market participant should
generally lose its queue position. A valid
exception may be in circumstances where the
TFO is able to accommodate the project
(assuming the market participant wishes to
move forward) and has the ability to respond to
the identified need. Such situations could
provide the most efficient and economic result,
depending on the specific circumstances. The
choice of proceeding in this manner must be
that of the TFO and it cannot be required to
assume responsibility for the project, the market
Page 42 of 119
ATCO Power
Capital Power Corporation
AESO Replies to Stakeholder Comments: 2011-09-27
participants cost estimates or the forecast
timeline.
ATCO Power disagrees with the opinion
regarding revoking queue position. The queue
position should be based on the facility, rather
than the owner. For example, if a market
participant had initiated the interconnection
process, and at a later time was able to enter
an agreement with the incumbent TFO for the
remaining balance of the project, the queue
position should remain, and vice versa. If the
participant cancelled the project, then they
should be removed from the queue as there is
no longer an intention for interconnection.
Queue position should be based on whether or
not the effort is progressing. This concept aligns
with the idea that the market participant may
transfer the facility to the incumbent TFO or
other party after energization and
commissioning.
Capital Power does not agree with the
proposed connection queue administration
process. The approach to connection queue
administration proposed by the AESO penalizes
connection customers that may be willing to
take on some of the connection process
responsibilities at a later stage. The AESO
explained at the stakeholder session on
October 14th, 2011 that the intent of the
cancellation policy was to discourage
connection customers from using incumbent
TFOs to “jump the queue” and then taking
ownership of the lines further in the process. In
this scenario, the incumbent TFO would likely
have negotiated the terms for transfer of
responsibility for some connection process
activities with the connection customer.
Therefore, adequate compensation for activities
already completed would be included in the
negotiation. The AESO’s MPC process should
Page 43 of 119
not impede the possibility for reasonable
agreements to be accepted.
Cenovus Energy Inc.
Enbridge Pipelines
ENMAX Corporation
AESO Replies to Stakeholder Comments: 2011-09-27
If the responsible party for each connection
process activity changes through agreement by
the parties, then the document originally
submitted at Stage 0 would need to be updated
to reflect the agreed upon changes in
accountability. However, this should not require
the project to be cancelled and the connection
queue position revoked. In many cases the
connection customer would not be in a position
to determine if it would makes sense to provide
its own connection facilities until further on in
the process. To the extent that the commercial
agreement allows the parties responsible for
each activity to change, the scheduling of the
facilities construction should be determined
between the connection customer and the
incumbent TFO, not by the AESO’s
administrative process.
Disagree. Unnecessarily punitive to customers
who must rely on incumbent TFOs for cost and
schedule information before proceeding.
Customers should expect to pay for all study
work completed by incumbent TFOs. AESO
should utilize completed studies and not require
duplicate.
In general we support the queue admin
approach presented; however, selection
decision should be delayed to stage-2 so
market participants have an opportunity to
understand the “final” project scope and change
their mind if req’d especially in cases where a
simple T-tap in Stage-0 turns into a complex
In/Out with RAS in Stage-2.
A cancelled project should be treated as a
cancelled project. A project that is delayed or
transferred from a potential TFO to an
incumbent or existing TFO should not lose their
Page 44 of 119
EPCOR Utilities Inc.
FortisAlberta Inc.
Industrial Power Consumers Association of
Alberta
AESO Replies to Stakeholder Comments: 2011-09-27
place in the connection queue. ENMAX
recommends that the project be moved back to
the last completed stage of the AESO
Interconnection process, and it can progress
from that stage once resumed or by the existing
or new TFO.
No. EPCOR believes that if a market
participant chooses to own the transmission
facilities at Stage 0 and before Stage 4
determines that it does not want to own the
transmission facilities, the AESO should cancel
the project resulting in the loss of the market
participant’s connection queue position. If the
project is past stage 4, EPCOR does not
believe the project’s queue position should be
lost.
FortisAlberta understands that the AESO
presently has time limits and other checks for
movement through the project stages and gates
in the connection process. If a market
participant and an incumbent TFO agree to
transfer a connection project to the incumbent
TFO in a close-to-seamless fashion, then
FortisAlberta sees no obvious reason why the
queue position should be revoked, provided that
the time limits are not violated.
IPCAA believes that if a market participant
wishes to opt for the MPC alternative later on in
the process (i.e. after Stage 0) due to high costs
and long schedules from the incumbent TFO,
this should be allowed without loss of queue
position – as long as the market participant is
able to continue within the expected schedule,
without negatively impacting other customers.
As long as the project is built to the AESO’s
expected standards, there should be no
queuing concerns. The market participant
should not be disadvantaged by an
unfavourable cost and schedule quote from a
monopoly, if they are prepared to perform the
Page 45 of 119
work themselves without inconveniencing other
customers.
IPPSA
With regards to the market participant who
attempts to go the MPC route and later opts
back into the TFO alternative, IPCAA agrees
with the AESO that it is the responsibility of the
market participant to understand its obligations
and “TFO” responsibilities. However, if the
change in option has no negative impact on
other customers, IPCAA has no concerns with
leaving the queue position as it stands. MPC is
a new process and there will be a learning
curve on all sides. To penalize a market
participant for not fully understanding a new and
untried process is unnecessarily harsh. The
most we can ask for is that they do not
negatively impact other market participants.
We strongly disagree with the AESO’s view that
changing the ownership of the connection
facilities during the connection process would
necessitate the participant losing its place in the
connection queue.
It is IPPSA’s view that the terms of commercial
arrangements for the construction of
Connection Facilities is outside the AESO’s
jurisdiction.
Joss Wind Power Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
We do not understand the bearing that a
change in ownership of connection facilities has
on the queue position. We do not see a
reliability issue resulting from a change of
ownership as the design of the facility will
ultimately be vetted by the AESO anyway.
We disagree. Stage 0 is too early to make a
binding irrevocable commitment to the
incumbent TFO. This Customer Choice
initiative is mainly about schedule and cost
performance. However, estimates from the
Page 46 of 119
Mainstream Renewable Power
MEG
SATL Inc.
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
AESO Replies to Stakeholder Comments: 2011-09-27
incumbent TFO are not available at Stage 0.
There needs to be explicit transfer rights,
recognizing that the incumbent TFO should not
be required to pick-up a project in mid-course.
However, there may be cases where the parties
agree to transfer a project from the incumbent
TFO to another party or vice versa. This should
not send a project back to the start. Projects
should be cancelled only if a qualified party is
not in place for performing the task at hand
(planning and permitting, construction, and
operating and maintenance each have different
core competencies to a certain degree).
As stated in the previous comment, the decision
should be taken at Stage 2 as a requirement for
Gate 2. Therefore there should be no need to
cancel an application due to this decision. The
participation by the incumbent TFO should be a
requirement through Stage 2 to understand the
impact the new power plant and transmission
facilities will have on their network. Therefore
there should not be any wasted costs incurred
by the incumbent TFO.
We do not support the AESO’s view that
changing the ownership of the connection
facilities would necessitate losing a participant’s
place in the connection queue.
SATL believes that the start over approach will
aggravate congestion in the queue and market
participant frustration whereas the ability to
make “ownership” choice at Stage 3 will stream
line queue process. Example -several market
participants may realize they share a common
interconnection need and assignment to
incumbent TFO may be a logical option.
Suncor does not agree that the queue position
needs to be revoked as per our previous
comments.
Offering a workable EPC model to market
participants as well as the Own model may
Page 47 of 119
reduce the consequences associated with a
firm commitment to assume TFO obligations at
Stage 0.
We disagree that a customer decision on
switching between owning and not owning or
vice versa should lose their queue position in
the connection process. One of the purposes of
the process is to study and gather more
information to inform subsequent decisions.
TransAlta Corporation
One would expect that changing a decision in
and of itself will cause some delays but this
should not result in loss of queue position.
Discussion Paper – TFO Requirements and Obligations – Legislative Domain
Do stakeholders agree that new TFOs should be subject to the same legislative requirements and obligations as incumbent TFOs? If you disagree,
please provide rationale supporting that position.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
The administrative and regulatory requirements
to become a TFO may be too onerous for a
Participant who may, for example, have a
relatively short transmission line to build in
order to connect their project. Consideration
should be given to the scale of the transmission
development in regards to subjecting a
Participant to the rigors of becoming a TFO.
Legislative requirements are placed on TFOs to
ensure the orderly development and safe,
reliable operation of the transmission system.
The creation of a sub-class of TFO to whom
these requirements do not apply clearly
compromises these objectives and is not in the
public interest. As indicated above, there is a
single legislative scheme that would be
applicable to all TFOs as defined in legislation.
Finally, any relaxation of legislative
requirements and / or obligations should not be
granted in such a way as to create a perverse
AESO Replies to Stakeholder Comments: 2011-09-27
Page 48 of 119
ATCO Power
Capital Power Corporation
Cenovus Energy Inc.
Enbridge Pipelines
ENMAX Corporation
EPCOR Utilities Inc.
FortisAlberta Inc.
AESO Replies to Stakeholder Comments: 2011-09-27
incentive to by-pass incumbent TFOs. If a
comprehensive review determines that
relaxation is warranted under particular
circumstances based on project scope and
associated risk, such relaxation should apply
equally to any party building the transmission
connection, regardless of whether they are the
applicant for system access service or not.
ATCO Power would like request clarification
regarding all connection facilities being
classified as transmission facilities. If a sole use
connection is fully paid for by the connecting
party, then tariff issues, which relate to the
“transmission system” should not apply.
Capital Power agrees that if a connection
customer wishes to become a TFO, compliance
with the applicable legislative requirements
necessary to ensure the reliable operation of
the Alberta power system is imperative.
Assuming requirements are related to reliability
etc then yes, obligations that are related to how
customer’s are treated seem unnecessary.
Difficult to comment on tariff due to lack of detail
– how would new TFO tariffs be treated –
become part of Alberta-wide postage stamp
rates?
If customer owners are req’d to act as TFO’s
then the regulatory work needed for tariff filing,
cost recovery and following ISO/AUC Rules
would be prohibitive for all but a few largest
projects. Independent ownership not easily
workable on a shared asset. Allowing
customers to build and transfer ownership to a
TFO is probably more practical and efficient.
Agreed
Yes
If the AESO proceeds with this initiative,
FortisAlberta agrees with the application of the
same legislative requirements for all TFOs.
There may be additional opportunity for the
Page 49 of 119
Industrial Power Consumers Association of
Alberta
IPPSA
AUC to streamline the regulatory processes for
TFOs.
The AESO needs to consider this section in the
context of the overall objectives of the MPC
initiative. If we are trying to help customers
address time and cost concerns, why are we
requiring them to be subject to the same
legislative requirements and obligations as
incumbent TFOs? This will only make their
activities slower and more costly without adding
any additional benefit to the system overall.
If the AESO views that these TFO obligations
cannot be avoided under the current framework,
some stakeholders may be willing to request
larger policy changes. Alternatively, the AESO
should consider other options that would help
facilitate the MPC process – such as enabling
“TFO Aggregators”, etc.
For reasons already set out herein, small scale
radial Connection Facilities are clearly
distinctive from large scale interconnected bulk
AIES facilities.
Based on the AESO recognizing these
distinctions, the AESO should continue that
distinction in defining the minimum obligations it
needs from a Connection Facility owner, in
terms of the AESO’s mandate to safely and
reliably operate the AIES.
In terms of those obligations the AESO lists in
its discussion paper, IPPSA anticipates that its
members would accept AESO ‘direction to
perform activities’ on their Connection Facilities.
In terms of the cost recovery and tariff
obligations that the AESO describes, it is
IPPSA’s view that a Connection Facility owner
should not be required to adhere to section
40(1) and 41(1) or T-Reg since a generation
AESO Replies to Stakeholder Comments: 2011-09-27
Page 50 of 119
customer pays 100% of the cost of its
Connection Facilities.
Similarly, it is IPPSA’s view that a generation
customer should not have to file a tariff in
association with a Connection Facility for which
it pays 100% of the cost.
These two obligations proposed by the AESO
risk undermining the objectives of minimizing
costs and controlling the schedule for
construction of Connection Facilities intended
by the MP Choice Model. Quite the opposite,
these obligations will add cost and time to
market participants.
Mainstream Renewable Power
We submit that such obligations for Connection
Facilities do not pass the efficiency test, as they
will absorb resources and time of the MP,
AESO and AUC, and to what end?
Participants who build their own transmission
connections ( either generation or Load) to the
existing TFO facilities will meter their power at
the point of connection and settle for it at that
point.
The participant would be in control of all costs
for the connection and would build the capital
costs into the costs of the project to determine
the feasibility of the project. Therefore there
would be no need for AESO to be involved in
determining the effects on tariffs or for the
participant to do all the reporting for Tariffs and
Cost Recoveries.
Should another participant want to use a line
that had been built by a participant that had
surplus capacity they would reimburse the
original owner for the original costs on the basis
of the % of capacity used and the length of
distance from connection point to connection
AESO Replies to Stakeholder Comments: 2011-09-27
Page 51 of 119
MEG
SATL Inc.
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
AESO Replies to Stakeholder Comments: 2011-09-27
with TFO.
As per previous comments MEG believes that
the market participant that selects the selfconnection option must meet the technical and
reliability standards but not the other
administrative requirements such as filing a
tariff. A tariff is required only if there is to be
more than one user of the facility and the users
cannot reach satisfactory commercial terms.
SATL believes that any interconnection cost
that will be ultimately added to the rate base
should go through a prudency and tariff fairness
assessment process. The converse is also true
in that if the market participant is bearing all the
interconnection costs then what is the purpose
of filing a separate tariff? Any interconnection,
regardless of who builds it must not adversely
impact AIES.
Developers/owners of merchant interties are
considered to be TFO. Therefore, the merchant
intertie developers will have to file a tariff. In
this case, can the AESO confirm that there will
not be a need to file two tariffs based on the
Market Participant Choice initiative?
As per previous comments Suncor does not
believe it should be necessary for a line owner
to become a TFO and that except for technical
and reliability standards, the line owner should
be exempt from the all other TFO related
legislative standards.
The fundamental obligations would be common
with incumbents but depending on the facility,
efficiencies may arise from reduced compliance
requirements as they may not be applicable
The purpose of a customer connection is to
serve the customer themselves. Given this as
the envisioned basis for ongoing operation it
would not be expected that the AESO would
direct the customer to undertake activities on
Page 52 of 119
behalf of the AESO. We do appreciate that the
AESO has the right to do so and, for example,
requires this of ISDs.
Requiring a tariff for self serving facilities
imposes an administrative burden on the
customer, the AESO, and the AUC. A tariff is
for a public utility and what is intended with
Choice is to serve one customer and not
multiple customers. We see little merit in a tariff
under expected operations. We would also
point out that a tariff is not required of ISDs
which is not a dissimilar concept in many ways
to Choice.
We can visualize where a tariff process could
be abused. The AESO DTS tariff is a blend of
various vintages of transmission facilities and in
the ratebase at depreciated costs. A customer
building new transmission facilities would
establish a ratebase at full cost and propose a
revenue requirement including return,
depreciation and other costs including
regulatory applications. It can be visualized that
the customer will receive more from its tariff
than if the traditional TFO owned the facilities.
We would not expect that the increase in the
AESO blended tariff due to the addition of the
customer tariff would be more than the amount
the customer TFO would receive from their
tariff. This would crossover at some point but
for part of the facility life other customers would
be paying for dedicated customer facilities. We
do not think that this is the intent of a tariff
which should be to recover the cost of the
shared or common system and not dedicated
facilities.
We foresee the only future TFO-like situation
being where another entity – load or generator
AESO Replies to Stakeholder Comments: 2011-09-27
Page 53 of 119
– wishes to connect to the facilities of the
existing customer. This situation needs to be
further discussed as to whether the existing
customer would take on greater TFO
obligations or whether the common facilities
would become systematized by the traditional
TFO purchasing them from the existing
customer. Again concepts similar to those
required of ISDs may be useful.
Our view is that if an existing customer has
contributed facilities, i.e. paid for, whether
owned by the traditional TFO (as now) or by a
customer TFO the customer should recover the
costs, i.e. customer contributions, of facilities
which become common, i.e. systematized.
Discussion Paper – TFO Requirements and Obligations – AESO Documents
Do stakeholders agree that new TFOs should be subject to the same requirements and obligations set out in AESO Documents as incumbent TFOs?
If you disagree, please provide rationale supporting that position.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
See above
AESO authoritative documents exist so that the
AESO can fulfill their mandate of ensuring the
orderly development and safe and reliable
operation of the transmission network in the
public interest. Exemption from any of the
AESO’s authoritative documents on any basis
other than applicability (like exemption from a
reliability standard on the basis that a particular
TFO does not have the kind of facilities to which
that particular standard applies) would clearly
compromise the safe and reliable operation of
the transmission system and hence is not in the
public interest.
Any relaxation of requirements under AESO
documents should not be granted in such a way
as to create a perverse incentive to by-pass
AESO Replies to Stakeholder Comments: 2011-09-27
Page 54 of 119
Capital Power Corporation
Cenovus Energy Inc.
ENMAX Corporation
EPCOR Utilities Inc.
FortisAlberta Inc.
Industrial Power Consumers Association of
Alberta
IPPSA
incumbent TFOs. If a comprehensive review
determines that relaxation is warranted under
particular circumstances based on project
scope and associated risk, such relaxation
should apply equally to any party building the
transmission connection, regardless of whether
they are the applicant for system access service
or not.
No comment
As above, agree to the extent that these
requirements impact other market participants.
Requirements and obligations must be
standardized for all incumbents and new TFOs.
Agreed
Yes
In principle, the requirements and obligations
should be the same for new TFOs as for
incumbent TFOs; however every reasonable
opportunity for streamlining the regulatory
processes should also be explored.
Again, the AESO should consider the end goal
here. We are interested in faster and less costly
connections. As long as there is no negative
impact on the system, there will be no benefit to
having market participants complete
unnecessary paperwork to comply with
obligation that will not make the system any
safer or more reliable. There should be some
requirements, obviously, but a drastically
reduced amount from what incumbent TFOs
must provide.
IPPSA disagrees with the AESO’s approach
that owners of Connection Facilities should
comply with all AESO documents applicable to
TFOs.
We recommend that the AESO define the
minimum obligations it needs from MP
Connection Facility owners, as it relates to the
AESO’s responsibility to operate a safe and
AESO Replies to Stakeholder Comments: 2011-09-27
Page 55 of 119
Mainstream Renewable Power
MEG
SATL Inc.
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
reliable system.
Agree
As per previous comments MEG believes that
the market participant that selects the selfconnection option must meet the technical and
reliability standards but not the other
administrative requirements such as filing a
tariff. A tariff is required only if there is to be
more than one user of the facility and the users
cannot reach satisfactory commercial terms.
See comments above.
Suggest that one logical metric to define what is
considered part of the market participant’s
facilities and what is part of the transmission
system is the point of settlement (metering
point). The majority of energy is bought and
sold at the metering point. In this case, tapping
a line moves the metering point and redefines
market participant’s facilities and transmission
system.
Please refer to the above comments
The fundamental obligations would be common
with incumbents but depending on the facility,
efficiencies may arise from reduced compliance
requirements as they may not be applicable
See our comments under 10.1 and 11.0 of the
Discussion Paper.
Discussion Paper – ISO Rules 9.1 Changes
Do stakeholders agree that ISO rules 9.1 should eventually be changed to apply to new TFOs removing references to incumbent TFOs and the
respective service areas? If you disagree please provide rationale supporting that position.
Stakeholder
Stakeholder Comment
Replies
Alberta Wind Energy Corporation
ATCO Electric
AESO Replies to Stakeholder Comments: 2011-09-27
Agree
ATCO Electric believes that the AESO has a
clear obligation to undertake a much more
comprehensive study of this proposal as
outlined above to ensure that the introduction of
Choice for Market Participants is in the public
Page 56 of 119
Capital Power Corporation
Cenovus Energy Inc.
ENMAX Corporation
EPCOR Utilities Inc.
FortisAlberta Inc.
Industrial Power Consumers Association of
Alberta
IPPSA
interest.
No comment
Agree
Agreed
EPCOR agrees that Rule 9.1.1.2 c) should be
deleted or changed to allow for TFOs, other
than incumbent TFOs, to build transmission
facilities provided the rule clearly states when
this may occur.
Any changes should be done within the context
of ensuring the continued orderly and economic
development of the Alberta interconnected
electric system transmission and distribution),
with full engagement of the AESO, incumbent
TFO and DFO to whose service area the
transmission connection pertains.
IPCAA does not believe large-scale rule
changes should be necessary in order to enable
MPC. These are not bulk system assets.
IPPSA does not support the idea that
Connection Facilities should face the same
reporting standards as the AIES bulk system
facilities.
Again, generator paid for, small-scale radial
Connection Facilities are simple facilities to
connect generators to the large scale
interconnected bulk AIES system.
As also stated, IPPSA views Connection
Facilities as analogous to a driveway
connecting a home to the street. IPPSA submits
that driveways are more part of homes than the
highways that the AESO and TFOs plan and
operate, and whose costs are born by third
parties. The AESO has made distinctions
between these facilities (in terms of who can
build what under Section 35.1) and we urge the
AESO to continue with its distinction when it
comes to defining the minimum obligations it
AESO Replies to Stakeholder Comments: 2011-09-27
Page 57 of 119
Mainstream Renewable Power
MEG
Suncor Energy Marketing Inc.
The Office of the Utilities Consumer Advocate
TransAlta Corporation
needs related to operation of Connection
Facilities.
Agree
Some changes may be required in order to
facilitate adoption and flexibility.
Some changes will be required in order to
facilitate the flexibility described without adding
undue administrative burden. This will include
changes to rule 9 to exempt new line owners
from requirements of existing TFOs as well as
allowing existing TFOs to compete for market
participant line construction and ownership
under commercial terms.
In addition sections of the Energy Utilities Act
will have to be amended to allow for the
exemption of new line owners under market
participant choice initiative from the requirement
to file tariffs.
ISO rules 9.1 would require changes to facilitate
administrative efficiencies for facilities that may
not require full compliance reporting.
References to service areas need to be
removed.
There are significant differences between
transmission built dedicated to a single
customer and a transmission system to serve
wide geographic areas. The dedicated
transmission is paid for by the specific customer
whereas the transmission system is paid for by
all customers. Much of Rule 9.1 is based on
oversight and prudency of costs given the tariff
process affecting customer rates. Given a view
that common facilities are systematized this
obviates the need for Rule 9.1 treatment.
Discussion Paper - Other ISO Rules
Do stakeholders think any new ISO rules are required, or any existing ISO rules need changing to support market participant choice?
Stakeholder
AESO Replies to Stakeholder Comments: 2011-09-27
Stakeholder Comment
Replies
Page 58 of 119
Alberta Wind Energy Corporation
Capital Power Corporation
Enbridge Pipelines
ENMAX Corporation
EPCOR Utilities Inc.
Industrial Power Consumers Association of
Alberta
Mainstream Renewable Power
MEG
Suncor Energy Marketing Inc.
TransAlta Corporation
Agree
No comment
Like to see a discussion on treatment of
AESO’s investment policy.
Existing ISO Rules should be modified to reflect
any changes
EPCOR does not believe any existing ISO
rules, other than Rule 9.1, are required to be
changed to support market participant choice.
No
Agree
Some changes may be required in order to
facilitate adoption and flexibility.
See above comments
The language in legislation and rules seems to
be focused on those who provide services for
others and are compensated through a
regulated tariff, i.e. they are a public utility.
The intent in Choice is not to have those who
serve only themselves go through an
administrative paper chase in a zero sum tariff
game.
Where there is not clarity in the legislation and
rules then modifications are needed so that
unintended results are avoided.
We would point out that carve-out or
designation of facilities not to be public utilities
already exists through the ISD designation.
Consideration needs to be given to modification
of the ISD or creation of other designations
which would meet the intent of customers being
able to construct, own, operate and maintain
dedicated facilities, and not become a public
utility.
Discussion Paper - Other Comments
AESO Replies to Stakeholder Comments: 2011-09-27
Page 59 of 119
Do stakeholders have any other comments regarding market participant choice?
Stakeholder
Stakeholder Comment
Alberta Wind Energy Corporation
Clarification needed on how a Participant may
build transmission to a distribution system.
A reasonable alternative to the proposal
outlined in this discussion paper may be for
eligible market participants to use incumbent
TFO standards to build transmission facilities
that would be transferred to the incumbent TFO
upon completion. Such a model could meet the
needs of market participants respecting cost
and schedule control, maintain the public
interest objectives outlined in the 2003 policy
paper and alleviate market participants of the
onerous obligations associated with being a
TFO.
ATCO Electric
Replies
Such a model requires significant up-front
planning and process definition to address the
aforementioned complexities that have been
experienced previously in attempting to transfer
assets to a TFO. Under such a model the
incumbent TFO should retain accountability for
securing right of way. Consultation and
compensation for rights of way is an area where
tremendous risk could be introduced to all
transmission customers by having multiple
parties participating in this exercise. In ATCO
Electric’s experience the area of consultation
and compensation for right of way is also an
area which, if not considered at the outset, can
make a transfer of an asset to an incumbent
TFO extremely complex.
This alternative should be well defined at the
outset to ensure seamless transfer of assets
including items such as:
AESO Replies to Stakeholder Comments: 2011-09-27
Page 60 of 119


Capital Power Corporation
Cenovus Energy Inc.
ENMAX Corporation
EPCOR Utilities Inc.
Industrial Power Consumers Association of
Alberta
IPPSA
Pro-forma agreements;
Mechanisms to ensure compatibility of
design with standards, specifications,
maintenance practices, etc.; and
 Mechanisms to ensure other rate
payers of cost prudence.
No comment
 We support market participant choice.
 AESO should be the sole approver of
customer choice.
ENMAX supports this initiative.
EPCOR believes the market participant choice
process should be flexible to allow a market
participant to partner with third parties to fulfill
its TFO responsibilities. This should include
options for the timely transfer of ownership and
responsibility of being a TFO to a third party if
necessary.
IPCAA reiterates that the overall objective here
is to enable customers to have control over the
costs and schedules associated with their
connections. Industrials are generally not
interested in becoming TFOs; hence, the MPC
process should be compiled in a way that
avoids this.
IPCAA would be happy to work with the AESO
to develop this process further.
Thank you for the opportunity to comment.
IPPSA would appreciate the AESO keeping in
mind the objectives that were set out to be
reached by the MP Choice Model, i.e., the
objective of improving schedule management
and cost control, without compromising safety
and reliability.
We appreciate the AESO’s recognition that
legislation allows for choice.
AESO Replies to Stakeholder Comments: 2011-09-27
Page 61 of 119
Joss Wind Power Inc.
Mainstream Renewable Power
SATL Inc.
TransAlta Corporation
AESO Replies to Stakeholder Comments: 2011-09-27
We wish to work with the AESO in defining a
mechanism to enable MP choice, with the goals
of cost control, schedule improvement and
choice in mind.
We support this initiative and any rule changes
or legislative changes that are reasonably
required to advance the goal of increased
competition.
How long before the new model can be
implemented?
Can the scope be broadened to investigate the
possibility of a participant TFO connecting to
the distribution network?
Will there be a provision for the possibility of
merchant transmission?
Why preclude market participant choice /
merchant transmission developers from bulk
transmission development?
TransAlta continues to advocate that
transmission lines which are 138 kV and 69 kV
should receive the same regulatory oversight as
distribution lines. The AUC does not approve
distribution lines and these can be
characterized as wood pole structures installed
in public road allowances. The concerns about
wood pole lines are few and, for example, most
landowner objections arise where a
transmission line is proposed to cross their
land. Such lines are typically on metal lattice
towers for transmission lines 240 kV and higher.
In large part customer connections are to 138
and 69 kV transmission systems. Streamlining
the regulatory process to deal with objections
by complaint rather than by the full need and
facilities application process would deal
appropriately with this class of project. Such a
change would benefit both regulated and
customer connection proposed transmission
lines.
Page 62 of 119
TransAlta also believes that the need for a
transmission line to connect a customer
whether load or generation is self-evident by
virtue of the customer request for connection.
As such we question why 34(1)(c) and 35 in the
EUA are necessary for customer connection
lines.
General Comments
Do stakeholders have any other comments regarding market participant choice?
Stakeholder
Stakeholder Comment
AltaLink
I. Introduction and Overview
Replies
1. AltaLink Management Ltd. (AltaLink) has
reviewed the Alberta Electric System Operator’s
(ISO’s or AESO’s) discussion paper entitled
“Market Participant Choice to Construct, Own,
Operate and Maintain Transmission Lines
Connecting its Facilities to the Interconnected
Electric System” (Discussion Paper). The AESO
encouraged stakeholders to respond to the
Discussion Paper using the stakeholder
comment matrix attached to the Discussion
Paper. Given the nature and focus of AltaLink’s
comments, the comment matrix has proven to
be a challenging framework for AltaLink’s
submissions. Therefore, AltaLink is responding
to the Discussion Paper in the form of this
Submission.
2. AltaLink has organized its Submission under
the following four headings:
(a) The applicable legislative scheme
constitutes a barrier to implementing market
participant choice as proposed in the
Discussion Paper.
AESO Replies to Stakeholder Comments: 2011-09-27
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(b) Implementing market participant choice as
proposed in the Discussion Paper is
inconsistent with the economic, orderly and
efficient development of the transmission
system.
(c) The material change in the structure of the
transmission function proposed in the
Discussion Paper fails to address resulting
risks, inefficiencies and unintended
consequences.
(d) The AESO has considered but one option to
address the perceived concerns of customers.
3. For ease of reference, the words and
phrases used in this Submission, that are
defined in the Discussion Paper will have the
same meanings attributed to them in this
Submission as were assigned to them in the
Discussion Paper, unless separately defined in
this Submission or the context otherwise
requires.
4. AltaLink considers the proposal for market
participant choice described in the Discussion
Paper to be fundamentally flawed. AltaLink
does not support the proposal for the following
reasons:
• The applicable legislative scheme constitutes
a barrier to implementing market participant
choice as proposed in the Discussion Paper.
• The Discussion Paper fails to demonstrate
how the proposal for market participant choice
is in the public interest as being either
consistent with or enhancing the economic,
orderly and efficient development and operation
of the transmission system in Alberta.
AESO Replies to Stakeholder Comments: 2011-09-27
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• The Discussion Paper fails to address or
justify with fact-based evidence and analysis
the material incremental costs, inefficiencies
and unintended consequences that would result
from implementation of the AESO’s proposal.
• The Discussion Paper fails to address with
fact-based evidence and analysis the real
potential for increased risk to the safe and
reliable operation of the interconnected
transmission system that would arise from the
implementation of the AESO’s proposal.
5. In view of AltaLink’s position respecting the
Discussion Paper, as outlined above and
elaborated upon later in this Submission,
AltaLink considers it premature to address other
topics raised in the Discussion Paper such as
eligible market participants, eligible connection
projects, integration with the existing AESO
connection process, connection queue
administration and ISO rule changes.
6. AltaLink is prepared to work with the AESO
and customers, collaboratively, to continue to
seek simple and workable solutions to concerns
regarding customer interconnections. AltaLink is
confident that there are an array of potential
options to what is proposed in the Discussion
Paper that are simpler, consistent with the
existing legislative scheme, more flexible for
customers and which do not impose significant
incremental costs and risk on the operation of
the interconnected transmission system.
II. The applicable legislative scheme
constitutes a barrier to implementing market
participant choice as proposed in the
Discussion Paper
AESO Replies to Stakeholder Comments: 2011-09-27
Page 65 of 119
A. Overview
7. Among other things in the Executive
Summary and Introduction sections of the
Discussion Paper, the AESO stated the
following:
The AESO is initiating discussion and
consultation on providing market
participants the opportunity to
construct, own, operate and maintain
the transmission facilities required to
connect their facilities to the
interconnected system; referred to as
“market participant choice” for the
purpose of this discussion paper.
The AESO is commencing discussion
and consultation on market participant
choice as it believes it is permitted
within the existing legislative framework
and can be implemented providing that
there are no adverse impacts on the
Alberta interconnected system and
market participants.
…
Section 35(1) of the EUA provides
authority for the AESO either to direct a
TFO to prepare a facility application or
to request a proposal from a market
participant. Therefore, the legislative
framework fundamentally supports
market participant choice.
…
In the AESO’s view, no barriers exist to
advancing market participant choice
and as such the AESO wishes to
AESO Replies to Stakeholder Comments: 2011-09-27
Page 66 of 119
discuss and seek feedback from
stakeholders on matters relating to
market
participant choice.1
8. In this section of its Submission, AltaLink
addresses:
• the legislative framework for the consideration
of the AESO’s proposal for market participant
choice, as outlined in the Discussion Paper;
• the AESO’s conclusions that there are no
barriers to the implementation of market
participant choice; and
• specifically, the AESO’s conclusion that the
applicable legislative scheme, which includes
but is not confined to the EUA, authorizes the
implementation of market participant choice.
9. The AESO has erred in concluding that the
applicable legislative scheme does not
constitute a barrier to implementing market
participant choice as proposed in the
Discussion Paper. Consistent with the public
policy, which finds its expression in applicable
legislative scheme, which includes the Electric
Utilities Act (EUA),2 theHydro and Electric
Energy Act3 (HEEA) and the Transmission
Regulation4 (TReg), incumbent TFOs alone are
eligible to construct, own, operate and maintain
transmission facilities5 determined on the basis
of the geographic areas under sections 28 and
29 of the HEEA, with four legislated
exceptions.6 The legislated exceptions are
limited to the following:
• where the Independent System Operator
grants or provides for an exception authorizing
AESO Replies to Stakeholder Comments: 2011-09-27
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alternative arrangements or agreements
between TFOs;7
• the construction, upgrading or enhancement
of an intertie;8
• critical transmission infrastructure in respect of
which the Minister has made a determination
under section 24.1(2) of the TReg;9 and
• a transmission facility that is the subject of an
industrial system designation.10
B. Statutory Interpretation
10. The purpose of statutory interpretation is to
discover the intent of the legislature and the
true purpose of the statute while preserving the
harmony, coherence and consistency of the
legislative scheme.11
11. The Supreme Court in Re Rizzo & Rizzo
Shoes Ltd.12 articulated the modern approach to
statutory interpretation, as follows:
Today there is only one principle or
approach, namely, the words of an Act
are to be read in their entire context, in
their grammatical and ordinary sense
harmoniously with the scheme of the
Act, the object of the Act, and the
intention of Parliament.
12. The Supreme Court of Canada in Canada
Trustco Mortgage Co. v. Canada13 provided
further direction as to how this method should
be employed, noting that the ordinary meaning
of the words in a statutory provision play a
dominant role in the analysis. The Court stated:
AESO Replies to Stakeholder Comments: 2011-09-27
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It has been long established as a
matter of statutory interpretation that
“the words of an Act are to be read in
their entire context and in their
grammatical and ordinary sense
harmoniously with the scheme of the
Act, the object of the Act, and the
intention of Parliament”: see 65302
British Columbia Ltd. v. Canada, [1999]
3 S.C.R. 804, at para. 50. The
interpretation of a statutory provision
must be made according to a textual,
contextual and purposive analysis to
find a meaning that is harmonious with
the Act as a whole. When the words of
a provision are precise and
unequivocal, the ordinary meaning of
the words play a dominant role in the
interpretive process. On the other hand,
where the words can support more than
one reasonable meaning, the ordinary
meaning of the words plays a lesser
role. The relative effects of ordinary
meaning, context and purpose on the
interpretive process may vary, but in all
cases the court must seek to read the
provisions of an Act as a harmonious
whole.
C. The Legislative Scheme Regulating
Transmission
13. Statutes must be interpreted to achieve their
intent. All legislation is presumed to have a
purpose. Interpretations that are consistent
with, or promote a purpose should be adopted.
Interpretations that undermine legislative
purpose should be avoided.14 To achieve a
sound interpretation of legislative text, a court
called upon to consider the matter will identify
AESO Replies to Stakeholder Comments: 2011-09-27
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and take into account the purpose of the
legislation.
14. In the case of the regulation of electricity in
Alberta, there are a number of interconnected
statutes, regulations, rules and policies that give
rise to a larger legislative scheme within which
participants in the electricity industry are
governed. The principles of statutory
interpretation require that a court make a
purposive interpretation of all the elements of
this legislative scheme in order to give effect to
the objects and purpose of any one component
piece. In performing this analysis, a court will
presume that the legislative scheme is “rational,
coherent and conomical.”15
15. The Alberta Court of Appeal in Bur v.
Alberta (Energy and Utilities Board)16 (the Bur
Case) considered the legislative scheme for the
regulation of electricity in Alberta. The Court
stated that provisions of the EUA, the HEEA
and the TReg were to be considered together to
give effect to a single scheme. The Court held:
Each statute must be read in the
context of the others, and with a view to
the overall regime. Statutes enacted by
a legislature that deal with the same
subject are presumed to be drafted with
one another in mind, so as to offer a
consistent treatment of the subject. In
effect, the statutes are construed
together as if they constituted a single
piece of legislation. Section 14(3) of the
HEEA must be therefore be read in the
context of section 34 of the EUA and
the Transmission Regulation.17
D. The Components of the Legislative
AESO Replies to Stakeholder Comments: 2011-09-27
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Scheme Regulating Transmission
16. Transmission in Alberta is governed by
provisions of the EUA, the HEEA, the TReg and
ISO Rule 9.18 Provisions relating to the ISO’s
duties and responsibilities, as the administrator
of the Alberta Interconnected Electric System
(AIES) including transmission, are set out in the
EUA and the TReg.
The Electric Utilities Act (EUA)
17. The phrase “transmission facility” is defined
in section 1(1)(bbb) of the EUA. As the AESO
points out in its Discussion Paper, the essential
underpinning for the AESO’s conclusion, that
the legislative framework fundamentally
supports market participant choice, is the
AESO’s view that section 35(1) of the EUA
provides authority for the AESO either to direct
a TFO to prepare a transmission facility
proposal or to request a proposal from market
participants.19
18. With respect, the AESO has misinterpreted
section 35(1) of the EUA and as result has
come to the incorrect conclusion that the
legislative framework fundamentally supports
market participant choice, as that phrase is
used in the Discussion Paper. Section 35(1) of
the EUA reads as follows:
35(1) The Independent System
Operator may, at the time of preparing
a needs identification document, after
submitting a needs identification
document to the Commission or after
receiving Commission approval of a
needs identification document,
AESO Replies to Stakeholder Comments: 2011-09-27
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(a) direct the owner of a transmission
facility to submit, for Commission
approval under the Hydro and Electric
Energy Act, a transmission facility
proposal to meet the need identified, or
(b) request market participants to
submit, for approval by the Independent
System Operator, a proposal to meet
the need identified. [Emphasis supplied]
19. What is obvious from a plain reading of
section 35(1)(a) and (b) of the EUA, and what,
fundamentally, was overlooked by the AESO in
its analysis, is that the phrase “transmission
facility” proceeds the word “proposal” in section
35(1)(a) and is not found in section 35(1)(b).
20. There are two reasons the omission of the
phrase “transmission facility” before the word
“proposal”, in section 35(1)(b), is (i)
determinative of the correct interpretation of
section 35 of the EUA and (ii) demonstrates the
AESO’s erroneous conclusion in respect of the
existence of authority for the AESO to request a
“transmission facility” proposal from market
participants that are not TFOs. First, based on
the well accepted rules of statutory
interpretation discussed above, the omission
must be read as having been intended. There is
a presumption that, because the legislature
thought of including a word or phrase in one
section of an act but not in a related section of
the act, the legislature intended the exclusion of
the word or phrase in the related section.
Otherwise stated, “legislative exclusion can be
implied when an express reference is expected
but absent”.20 Second, on a plain reading of
section 35(1)(b), the only proposals that can be
requested by the AESO from market
AESO Replies to Stakeholder Comments: 2011-09-27
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participants, that are not owners of a
transmission facility, are proposals that do not
include a “transmission facility” as that phrase is
defined in the EUA. As is discussed later in this
Submission, this interpretation of section 35(1)
of the EUA, is (i) evident from a plain reading of
the section in the context of the EUA, (ii)
consistent with the legislative scheme
applicable to transmission development in this
province and (iii) consistent with the expression
of government policy found in the Transmission
Development Policy.21
21. It is respectfully submitted that, on a plain
reading of section 35 of the EUA within its
proper context, the only proposals that the
AESO is empowered to request from market
participants that are not owners of transmission
facilities are proposals which do not include a
“transmission facility” as that phase is defined in
the EUA.
22. Further, the AESO’s proposal to allow “…a
market participant to choose to provide its own
connection project…”22 is inconsistent with a
plain reading of the clear language of section
35(1)(b) of the EUA, which provides that the
AESO may request “market participants” to
make a proposal to meet a need. The EUA
does not empower the AESO to enable a
market participant to choose to provide its own
connection project.
23. Section 35 must be read in its plain and
ordinary meaning and in harmony with the other
provisions of the EUA and the other
components of the legislative scheme
governing the development of electric
transmission in Alberta. Later in this Submission
AltaLink will address other elements of the
AESO Replies to Stakeholder Comments: 2011-09-27
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legislative scheme, which properly interpreted,
support the plain reading of section 35
described above.
24. Section 3 of the EUA makes it clear that
nothing in the EUA requires any change in the
boundaries of the service area of an electric
distribution system.23 This section provides
important context for the discussion below of
the HEEA provisions that deal with electric
distribution service areas and section 24 of the
TReg that establishes general rules for the
construction and operation of transmission
facilities “…determined on the basis of
geographic areas under section 28 and 29 of
the Hydro and Electric Energy Act…”.24
25. Section 35 is the key to this analysis and
has been discussed earlier in this Submission.
Interpreting section 35(1)(b) as restricting
proposals to meet AESO identified needs to
proposals that do not include a “transmission
facility”, as that term is defined in the EUA, is
reinforced by section 36 of the EUA. Section 36
is found under a heading entitled “Other
proposals to alleviate transmission constraints”.
Plainly read in the context of section 35(1)(a)
and (b), “other proposals” must refer to
proposals referred to in section 35(b) which,
when contrasted with the proposals referred to
in section 35(1)(a), are proposals other than
“transmission facility” proposals.
26. Section 40 deals with the obtaining of
access to transmission facilities that are part of
an industrial system. As is elaborated upon
below, where industrial systems are addressed
in the context of the HEEA, industrial systems
are one of the limited number of legislated
exceptions to the general scheme of the
AESO Replies to Stakeholder Comments: 2011-09-27
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applicable legislation, which general scheme
provides that only incumbent TFOs are
empowered to seek authorization to construct,
own, operate and maintain transmission
facilities. Enabling the ownership and operation
of transmission facilities by a number of TFOs,
that may be anyone of several types of market
participant, creates a “patchwork quilt” of
transmission, within the AIES. Addressing
issues of access to a patchwork of transmission
facilities is one of the challenges to the
economic, orderly and efficient operation of the
AIES, which would arise if an attempt were
made to implement the proposal outlined in the
Discussion Paper.
The Hydro Electric and Energy Act (HEEA)
27. There are two aspects of the HEEA that are
important in the consideration as to whether the
applicable legislative scheme is a barrier to the
implementation of the AESO’s proposal
described in the Discussion Paper. The two
important aspects are industrial systems and
service areas.
28. The HEEA empowers the Commission to
designate the whole or any part of an electric
system as an industrial system.25 As discussed
above, industrial systems, which may include
transmission facilities, are one of the four
legislated exceptions to the general scheme of
the applicable legislation. The legislative
scheme implements the public policy, which
recognizes that the economic, orderly and
efficient development of transmission facilities
in the province is best achieved through
authorizing incumbent TFOs alone to construct,
own, operate and maintain transmission
facilities, determined on the basis of the
AESO Replies to Stakeholder Comments: 2011-09-27
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geographic areas under sections 28 and 29 of
the HEEA.
29. The fact that the applicable legislative
scheme creates limited legislated exceptions to
the general statutory scheme reinforces the
plain reading of section 35 of the EUA. As
addressed earlier in this Submission, on a plain
reading of section 35, apart from fitting within
one of the legislated exceptions, only incumbent
TFOs are empowered to seek authorization to
construct, own, operate and maintain
transmission facilities. As is noted in the
Transmission Development Policy (referenced
above and discussed separately later in this
Submission), “Generators (and customers) will
continue to own and operate transmission
facilities on their own property for their own use
(as per the Hydro Electric Energy Act)”.26
30. It is also instructive to consider the Industrial
Systems Policy Statement, which states that the
exemption provided for industrial systems “… is
not intended to facilitate development of
independent electricity systems driven by the
avoidance of system costs, therefore
administration of the industrial system
exemption should avoid un-economic bypass”.27 This public interest and public policy
determination is reflected in the HEEA, in
section 4(2)(c) and (d), as follows:
4(2) Where the Commission is
considering an application for
designation as an industrial system, the
Commission shall have regard to the
following principles:
…
(c) the designation must not facilitate
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(i) the development of
independent electric systems
that attempt to avoid costs
associated with the
interconnected electric system,
and
(ii) uneconomical by-pass of
the interconnected electric
system;
(d) duplication of the interconnected
electric system must be avoided where
it is more economical to use the
transmission facilities or electric
distribution systems owned by persons
in whose service areas the industrial
system is or will be located.
31. The significance of these provisions is
twofold. First, the provisions demonstrate that,
even for the legislative exception of industrial
systems, the public policy embedded in the
Transmission Development Policy, is honoured
by the avoidance of the development of
independent electric systems (the patchwork
quilt addressed in the Transmission
Development Policy), the avoidance of
uneconomic by-pass and the avoidance of
duplication. Second, the provisions focus on
ensuring the adherence to the public policy of
economic, orderly and efficient development of
transmission facilities in the Alberta public
interest, an underlying purpose of the HEEA.
The policy objective embodied in these
legislative provisions is critical to a
consideration of the public interest in
implementing the proposal in the AESO’s
Discussion Paper, examined later in this
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Submission.
32. Equally important, and for the same
reasons, is the requirement in section 4(3)(g) of
the HEEA, that:
(g) where an industrial operation
extends beyond contiguous property,
the owner of the industrial operation
satisfies the Commission that the
overall cost of providing the owner’s
own distribution or transmission
facilities to interconnect the integral
parts of the industrial operation is equal
to or less than the tariffs applicable for
distribution or transmission in the
service area where the industrial
operation is located.
33. Section 14 of the HEEA provides that no
person shall construct a transmission line or
any part of a transmission line unless the
person is a holder of a permit issued by the
Commission. Section 15 of the HEEA provides
that no person shall operate a transmission line
unless the person is a holder of a subsisting
licence to operate the transmission line.
34. Section 15.3 of the HEEA reads as follows:
15.3 When considering an application
for an approval, permit or licence under
this Part in respect of a transmission
line or part of a transmission line that
the Independent System Operator has
directed the owner to submit for
Commission approval under section
35(1)(a) of the Electric Utilities Act, the
Commission may approve incentives,
including incentives proposed by the
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applicant, that are intended to result in
cost savings or other benefits
associated with the project. [Emphasis
supplied]
35. It is instructive that section 15.3 of the EUA
makes no mention of section 35(1)(b) of the
Electric Utilities Act. Consistent with the scheme
of the applicable legislation this Submission
examines, the only rational explanation for the
omission of a reference to section 35(1)(b) in
section 15.3 is that the proposals referred in
section 35(1)(b) do not include transmission
facilities.
36. It is also instructive to note that section 16
of the HEEA, states that sections 14 and 15
(the requirements to obtain a permit and licence
for a transmission facility) do not apply to a
person transmitting or proposing to transmit
electric energy over the person’s own land
solely for the person’s own use by means of a
line or to the owner of an industrial system
transmitting electric energy or proposing to
transmit electric energy over the land of the
owner of the industrial system solely for use by
the industrial system.28
37. It is clear that the owner of a transmission
facility directed to submit a transmission facility
proposal under section 35(1)(a) of the EUA
must apply to the Commission for a permit and
licence under the HEEA.29 However, there is no
similar requirement made of a market
participant that is requested to make a proposal
under section 35(1)(b). This is entirely
consistent with the plain reading of section 35,
addressed above, which leads to the
inescapable conclusion, as a matter of statutory
interpretation, that proposals referred to in
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section 35(1)(b) of the EUA do not include
transmission facilities. Section 36(2) of the EUA
merely provides that:
The Independent System Operator may
specify the time within which the person
who obtains an approval of a proposal
must apply to the Commission for
approval under the Hydro and Electric
Energy Act, if approval is required
under that Act.
38. If it were to be suggested that section
35(1)(b) should be read as including
transmission facility proposals, in the same
manner as does section 35(1)(a) of the EUA,
one would have expected a reference to section
35(1)(b) would have been included in section
35(3) and there would have been no need for
section 36(2).
39. The second important aspect of the HEEA
that must be considered is Part 3 – “Electric
distribution systems” and the provisions under
this Part that define service areas for
distributors and establish the rules for
distribution system service areas.
40. It is instructive in this context to observe that
the applicable statutory scheme creates a clear
distinction between distribution systems and
transmission systems. Significantly, section
1(1)(b) of the HEEA defines an electric
distribution system as follows:
“electric distribution system” means any
system, works, plant, equipment or
service for delivery, distribution, or
furnishing of electric energy directly to
the consumers, but does not include a
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power plant or a transmission line.
[Emphasis supplied]
41. In view of the fact that the HEEA, and the
applicable statutory scheme, draws a clear
distinction between distribution systems and
transmission systems and between owners of
distribution systems and owners of transmission
systems, it is impossible to reconcile the
AESO’s proposal,30 that owners of distribution
systems be authorized to construct, own,
operate and maintain transmission facilities,
with the clear provisions of the applicable
legislation.
42. Sections 25 through 29 of the HEEA,
provide for the designation of service areas for
each distributor;31 allow a distributor to
construct and operate an electric distribution
system in the service area of another distributor
only if approved by the Commission32 and
enable the Commission to alter the boundary of
a service area.33 The critical importance of
these sections of the HEEA, addressing
distribution service areas, becomes apparent
when one considers section 24 of the TReg,
discussed in the following section of this
Submission.
43. The TReg, and particularly section 24 of the
TReg, plays an important part in this analysis.
Interestingly, there is no mention of section 24
of the TReg in the Discussion Paper.
44. As discussed at the outset of these
submissions respecting Legislative Framework
for the AESO’s proposal, it is clear from section
24 of the TReg that incumbent TFOs alone are
eligible to construct, own, operate and maintain
transmission facilities34 determined on the basis
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of the geographic areas under sections 28 and
29 of the HEEA, with four legislated
exceptions.35 As discussed above, the
legislated exceptions are limited to the
following:
• where the Independent System Operator
grants or provides for an exception authorizing
alternative arrangements or agreements
between TFOs;36
• the construction, upgrading or enhancement
of an intertie;37
• critical transmission infrastructure in respect of
which the Minister has made a determination
under section 24.1(2) of the TReg;38 and
• a transmission facility that is the subject of an
industrial system designation.39
ISO Rule 9
45. As the AESO states on its website:
…the AESO is given authority through
legislation to make ISO Rules, adopt
Reliability Standards and to prepare the
ISO Tariff. These documents are
referred to as the AESO’s authoritative
documents.
Authoritative documents are used by
the AESO to communicate the binding
and legal rights, requirements and
obligations of market participants and
the AESO. Compliance with the
requirements set out in authoritative
documents is mandatory. 40
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46. ISO Rule 941 is part of the AESO’s
authoritative documents and governs certain
transmission related activities of market
participants. Rule 9.1 governs “transmission
facility projects.” Rule 9.1.1.1 states that
“Subject to rule 9.1.1.2 b), c), d) and e) each
service area shall have one TFO eligible to
apply for the construction or operation of
transmission facilities in such area”. Rule
9.1.1.1 goes on to state that “For the purposes
of Rule 9.1.1.1, the following TFOs are eligible
for the referenced service area”:
TFO
AltaLink L.P.
ATCO Electric Ltd.
ENMAX Power
Corporation
EPCOR Distribution &
Transmission Inc.
City of Red Deer
City of Lethbridge
Service area
FortisAlberta Inc.
ATCO Electric
ENMAX Corp.
EPCOR Distribution &
Transmission Inc.
City of Red Deer
City of Lethbridge
47. Rule 9.1.1.1 b) deals with transmission
facilities that existed as of August 12, 2004 and
provides that the owner of such facilities, or its
successors or assigns, shall be the eligible TFO
receive directions from the AESO. Rule 9.1.1.1
c) enables the AESO to issue a direction to a
TFO, other than a TFO that is eligible, if such
TFO and the TFO in whose service area the
project is located enter into an arrangement or
agreement which would result in the safe,
reliable and efficient operation of the
transmission system and such arrangement or
agreement has been filed with the Commission.
Rule 9.1.1.1 d) enables the AESO to issue a
direction to one or more TFOs, or a separate
entity created for that purpose, where the
project is located in more than one service area,
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provided that an arrangement of the nature
referred to in Rule 9.1.1.1 c) is in place. Rule
9.1.1.1 e) addresses the circumstance where all
but a small portion of a project is locate in the
service area of a TFO and enables the AESO to
provide a direction to the TFO in whose service
area in which the largest portion of the project is
located.
48. What is significant about ISO Rule 9.1.1 is
that is entirely consistent with the legislative
scheme outlined above and in particular section
24 of the TReg. The AESO references a
potential need to amend ISO Rule 9.1 to enable
implementation of its proposal as outlined in the
Discussion Paper. However, as discussed
above, the Discussion Paper makes no mention
of section 24 of the TReg, which, consistent
with the scheme of the applicable legislation,
mandates by regulation that the ownership,
construction, operation and maintenance of
transmission facilities is restricted to incumbent
TFOs, determined on the basis of the
geographic areas under sections 28 and 29 of
the HEEA, with four legislated exceptions. The
AESO focus in the Discussion Paper, on its
ability to amend ISO Rule 9.1 to enable the
implementation of its proposal, ignores the
scheme of the applicable legislation as reflected
in section 24 of the TReg and ISO Rule 9.1.
E. The Transmission Development Policy –
The Policy Context for the Legislative
Scheme Regulating Transmission
49. Issued in November, 2003 and remaining
on the Department of Energy’s website as a
statement of government policy, the
Transmission Development Policy establishes
the “foundation principles, recommendations
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and supporting rationale for a sustainable
transmission development policy.”42 The
primary “Foundation Principle” is “… to ensure
that consumers are served with reliable,
reasonably priced electricity, and to support
continued economic growth in Alberta.”43 A key
supporting principle and one stated “to further
articulate this goal” is that “Transmission is a
monopoly service.”44
50. The Transmission Development Policy
states that:
Transmission will remain a regulated
monopoly. Transmission assets should
be planned by the ISO and approved by
the EUB. The EUB will regulate rates of
return and recovery of transmission
costs. Transmission facility applications
will be reviewed and approved by the
EUB in an open and transparent
process. The regulatory and approval
process must be timely and efficient.45
51. Further, the Transmission Development
Policy states the following respecting
transmission ownership:
Transmission will continue to be
regulated as a natural monopoly by the
EUB to ensure open, nondiscriminatory access and to protect the
public interest.
Since transmission is characterized by
large economies of scale, there are
efficiencies in having an incumbent
Transmission Facility Owner (TFO)
provide operations and maintenance
services to new facilities that are
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required in a geographic area they
currently serve. This localized “critical
mass” of service infrastructure allows
the incumbent TFO to respond to
apparatus failures and other events that
may jeopardize service to customers. A
“patchwork quilt” of ownership does not
have the same level of coordination or
economy of scale and so it would not
operate as reliably and efficiently.
Contiguous ownership of lines,
substation facilities and the associated
operating infrastructure therefore
provides the greatest assurance of
reliable and safe operation of the
transmission system for customers (and
employees) and is therefore in the
public interest.
To accomplish this intent, all new
transmission facilities, including radial
interconnection facilities, will be directassigned to the incumbent TFO’s.
Projects involving connections or
upgrades to existing transmission
facilities or use of existing right-of-ways
will also be direct assigned to the
incumbent TFO to ensure safe and
reliable service.46
The Discussion Paper ignores the policy
rationale that underlies the Transmission
Development Policy. Specifically, the
Discussion Paper fails to address, with factbased analysis, the issues of the need to
ensure efficiency, economies of scale and
coordination in the provision of operation and
maintenance services and the fact that the
Transmission Development Policy determined
that a “patchwork quilt” of ownership would not
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operate reliably or efficiently.
F. The Legislative Evolution
52. The current EUA came into force on March
27, 2003. Of the provisions relevant here, only
section 35(1) has been amended since. In
2007, this provision was amended to allow the
ISO to direct a TFO (per (a)) or make a request
of a market participant (per (b)) prior to the
Commission’s receipt of the needs identification
document.
53. The relevant provisions were amended in
2007, but these amendments did not change
the substantive meaning of these provisions,
but merely were changed to reflect the
introduction of the AUC as the electricity
regulator.
54. The TReg. was introduced on April 11,
2007.47 Section 24(1) has not been amended
substantively since. Section 24.1 and 24.2 were
added to the TReg in 2010.48
55. ISO Rule 9 was implemented on August 25,
2005 and underwent one change on November
13, 2008. This change was inconsequential for
this analysis.
56. In conclusion, the legislative evolution since
the introduction of the current form EUA in 2003
has been inconsequential respecting the
relevant legislative provisions.
G. Conclusion
57. It is clear that the AESO has erred in
concluding that the applicable legislative
scheme does not constitute a barrier to
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advancing or implementing market participant
choice as proposed in the Discussion Paper.
Consistent with the public policy embodied in
the Transmission Development Policy, which
finds expression in applicable legislative
scheme, incumbent TFOs alone are eligible to
construct, own, operate and maintain
transmission facilities determined on the basis
of the geographic areas under sections 28 and
29 of the HEEA, with four legislated exceptions
that do not support the AESO’S view.
III. Implementing market participant choice
as proposed in the Discussion Paper is
inconsistent with the economic, orderly and
efficient development of the transmission
system.
58. As the AESO explains in the Discussion
paper, the rationale for its proposal is to provide
“…the opportunity for a market participant to
construct, own, operate and maintain (“own”)
the transmission facilities required to connect a
market participant’s facilities to the
interconnected electric system”.49 Should the
market participant choose to do so, that market
participant will become a TFO, with all the
commensurate obligations and accountabilities
of a TFO, “…including construction, ownership,
operations and maintenance and all other
obligations stipulated in legislation and AESO
authoritative documents.”50
59. AltaLink further understands the reason the
AESO has brought forward the Discussion
Paper is that the “…AESO understands this
desire results generally from both the perceived
high cost and extensive schedule associated
with the incumbent TFO’s constructing the
connection projects”.51
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60. In section II of this Submission, AltaLink
provided a comprehensive analysis of the
legislative framework for transmission of
electricity within this province. A fundamental
underpinning of that legislative scheme is that
transmission is to be developed in a manner
that provides for the economic, orderly, efficient
development and operation of the transmission
system in Alberta.
61. The AESO indicates that the proposal
outlined in the Discussion Paper is in response
to an expressed desire on the part of market
participants for an alternative, to TFO’s
constructing, owning, maintaining and operating
transmission facilities required to connect their
facilities to the interconnected electric system,
arising out of a “…the perceived high cost and
extensive schedule associated with incumbent
TFO’s constructing the connection projects.”52
62. The Discussion Paper neither contains nor
references any evidence or fact-based analysis
that demonstrates the AESO’s proposal will
either ensure or enhance the economic, orderly,
and efficient development and operation of the
interconnected transmission system, when
compared to the current industry approach
where connection facilities that include
transmission facilities are constructed, owned,
operated and maintained by incumbent TFOs.
63. It is essential to any meaningful assessment
of the public interest in implementing the
AESO’s proposal that such fact-based analysis
be undertaken and the results distributed to
stakeholders for their consideration as part of
the consultation process. AltaLink would expect
that any such analysis, undertaken by the
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AESO, would include consideration of the basic
factors germane to any meaningful assessment
of reasonableness of project schedule and
project cost. In addition, given the AESO’s
position that any market participant choosing
market participant choice, as defined by the
AESO, would become a TFO and be subject to
all of the obligations and accountabilities of a
TFO, any analysis of cost/benefit of the AESO
proposal must include an assessment of the
costs a market participant would incur carrying
out the obligations and accountabilities of a
TFO.
A. Misperceptions Respecting the Schedule
Associated with the Incumbent TFO’s
Constructing the Connection Projects
64. The AESO and industry have been working
collaboratively to improve the customer
interconnection process and corresponding
timelines.
65. The AESO is keenly aware of the
challenges it faces in moving a customer
request for an interconnection through its own
process. There are five industry players whose
involvement impacts the overall timeline to
move a customer interconnection through the
AESO’s process. These five industry players
include the customer, the AESO, the DFO, the
TFO and the AUC.
66. Notwithstanding this, the role of the TFO is
the sole focus of AESO’s Discussion Paper.
There is no mention of the roles of the
customer, the AUC, the AESO, the DFOs and
the important impact that each of these entities
has on the length of any interconnection
schedule.
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67. On October 4, 2011, the AESO provided a
stakeholder update on the progress being made
in optimizing the connection process. In that
paper, the AESO indicates that the industry
working group had worked on a redesign
process under which the target time for the
connection process was to be reduced from 36
to 24 months. The AESO report indicates that,
on average, the total duration of the connection
process has been reduced to approximately 25
months. The AESO points out that, for most
projects, stage durations typically fall between
the target timelines and the maximum stage
guidelines, with the exception of Stage 1. As a
result, it appears that the AESO and industry
efforts would be better focused on
improvements to Stage 1, which is the
Connection Study Scope. Stage 2 results are
hitting slightly above the target timeline. Stage
3, NID and FA timelines, are currently low and
below the target timeline. Stage 4, Application
Filings and Approvals, are landing between
target and maximum, and the AESO indicates
that this stage is mainly dependent on the
timing of AUC approvals. This is outside the
control of both the TFO and the customer.
Stage 5, construction, is hitting between target
and maximum, and industry teams consistently
discuss the critical nature of completing the
prior stages in a timely manner given that
construction in many areas of the province
requires frozen soil conditions.
B. Perceived High Cost Associated with the
Incumbent TFO’s Constructing Connection
Projects
68. The Discussion Paper refers to the
perceived high cost associated with incumbent
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TFO’s constructing connection projects.
AltaLink acknowledges that the perceived high
cost of incumbent TFO’s constructing
transmission infrastructure has been an industry
topic for several years, notwithstanding the
many layers of oversight, reasonableness
reviews by the AESO and prudence reviews by
interested parties and the AUC in the course of
General Tariff Applications and Capital Deferral
Account Reconciliation proceedings. To justify a
structural change of the significance suggested
by the AESO, an analysis would have to
demonstrate that market participants can
consistently construct interconnections, that
include transmission facilities, and meet all the
obligations of a new TFO at a cost that is
materially lower than costs being incurred by
incumbent TFOs. AltaLink expects that an
analysis would have been undertaken to
address the following factors, among others:
(a) The TFO currently constructs transmission
facilities at cost, there is no return or margin
included in the TFO’s cost to construct
transmission facilities when such facilities are
included in rate base.
(b) The AESO determines the scope of the
transmission facilities required to be built
through the project functional specifications, not
the TFO.
(c) The AESO determines the technical
standards to which the incumbent TFO must
construct transmission facilities, including such
key cost standards as return periods and
ice/snow/wind loadings, transmission line
standards, and protection and control
standards.
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(d) The customer determines the schedule for
the requested in service date.
(e) The TFO is currently required to bid into the
market for material and construction contractors
for transmission projects. The TFO
competitively procures or negotiates within the
market 75%-80% of the total transmission
project costs incurred.
(f) There are numerous safety, environment,
consultation, permitting, and regulatory
obligations, under a myriad of statutes,
regulations and rules, with which TFOs must
comply when constructing transmission facilities
in Alberta.
(g) The average customer interconnection total
project cost is approximately $15 million.
(h) In AltaLink’s in excess of 10 years as a
regulated TFO, whose costs are rigorously
scrutinized by the AESO and the AUC, there
have been no findings of imprudent cost
incurrence or the disallowance of costs related
to transmission projects.
69. Since 75% to 80% of the cost of
interconnection projects, averaging $15 million,
must be competitively bid into the market, any
possible efficiency gains could only potentially
have an impact on $3 to $4 million. Given that
the project scope and technical standards are
defined by the AESO, and market participants
would be obligated to meet the same scope and
standards as would incumbent TFOs, there is
little room to achieve cost savings within the $3
to $4 million of the cost of an interconnection
project that is not required to be competitively
bid. It is difficult to rationally contemplate how a
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market participant that is a new TFO, with likely
little to no experience in constructing
transmission facilities, no procurement
experience in the transmission market, and no
experience in delivering on all the safety,
environment, consultation, permitting,
regulatory and construction obligations, would
be able to bring material cost efficiencies to an
interconnection project.
70. AltaLink submits that meaningful
consideration of the public interest in the
AESO’s proposal for market participant choice
cannot reasonably proceed in the absence of
substantive evidence and fact-based analysis
that demonstrates that market participants will
be able to consistently and materially reduce
the costs associated with the incumbent TFO’s
role in delivering customer interconnections.
Without such analysis and evidence, there
exists no demonstrable value in the AESO’s
proposal to reduce customer interconnection
costs nor a rational basis upon which
stakeholders can assess whether the AESO’s
proposal will result in or enhance the economic,
orderly and efficient development of the
transmission system.
C. The Ongoing Costs Associated with
Being a TFO Must be Taken into Account
71. The AESO acknowledges in the Discussion
Paper that that any market participant that
chooses to construct and own its
interconnection becomes a TFO subject to all of
the obligations and duties imposed on TFOs by
the applicable statutory scheme.
72. There are numerous obligations imposed
upon a TFO as the owner and operator of
regulated transmission facilities in Alberta. Any
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rational and comprehensive analysis of the cost
versus benefit of the AESO’s proposal, in terms
of its impact on the economic, orderly, and
efficient development of the interconnected
transmission system, must consider the
incremental costs and potential for duplication
of processes that would result from numerous
market participants choosing to construct
interconnection facilities and becoming TFOs.
AltaLink would expect the AESO, as part of its
analysis, would have considered the
incremental cost and potential for duplication of
processes that would result from the
introduction of potentially 10 to 30 individual
new TFOs. Such an analysis would need to fully
account for the incremental costs to the AESO,
AUC and MSA in their various roles of oversight
and regulation of TFOs.
73. As a minimum, AltaLink would expect the
AESO to incorporate within its analysis, the
costs associated with the obligations every new
TFO would be required to meet, which include
but are not limited to the following:
(a) preparation, approval and administration of
an Inter-Affiliate Code of Conduct, and all
associated obligations of a Compliance Plan,
quarterly reporting to the AUC, confirmation of
all employees acknowledgement of the Code
and all obligations to demonstrate compliance;
(b) filing and processes for AUC approval of
TFO Terms and Conditions of service;
(c) filing and processes for AUC approval of a
tariff, including all revenue requirements
necessary to deliver on all the obligations as a
TFO. Related processes would include the
establishment of necessary accounts and
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processes and reporting in compliance with the
Uniform System of Accounts and Minimum
Filing Requirements;
(d) internal processes and external review and
compliance enforcement processes to
demonstrate compliance with the Alberta
Reliability Standards, including the AESO’s,
MSA’s and AUC’s incremental costs to audit,
assess compliance, and determine sanctions.
Currently, there are 12 standards in place and
up to 30 additional standards in development;
(e) internal processes and external review and
compliance enforcement processes to ensure
compliance with all AUC Rules including Rule
007, Rule 012, and Rule 027 to name but a few;
(f) internal processes and external review and
compliance enforcement processes to ensure
compliance with all ISO Rules, including direct
assign rules, technical standards and operating
procedures;
(g) internal processes and external review and
compliance enforcement processes to ensure
compliance with Industry Canada’s metering
regulations including the Electricity and Gas
Inspection Act;
(h) internal processes and external review and
compliance enforcement processes to ensure
the safety of employees and the public by
ensuring the TFO meets all obligations within
the Alberta Safety Codes Act, the Alberta
Occupational Health and Safety Code –Part 40
Utility Workers Electrical, the Alberta Electric
Utility Code and its referenced standards, such
as:
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(i) the Canadian Electrical Code Part 1;
(ii) CSA C22.3 No. 1 “Overhead
Systems”;
(iii) CSA C22.3 No. 6 “Principles and
Practices of Electrical Coordination
Between Pipelines and Electric Supply
Lines”; and
(iv) CSA C22.2 No. 41 “Grounding and Bonding
Equipment”;
(i) operating the transmission facilities on a real
time basis, monitoring the facility on a 24 hour,
7 day a week basis and as directed by the
AESO;
(j) maintaining the transmission facilities reliably
and safely, including regular patrols and
inspections;
(k) submitting quality of service reports to the
AUC and performance statistics to the CEA;
(l) internal processes and external review and
compliance enforcement processes to ensure
compliance with environmental legislation such
as the Migratory Birds Convention Act, the
Fisheries Act, the Species at Risk Act, the
Reclamation Act, the Weed Control Act, the
Wildlife Act, the Water Act and the Historical
Resources Act, to name but a few; and
(m) obligation to maintain access to debt
markets including maintenance of credit ratings
to enable the issuance of debt on reasonable
terms during all phases of the business cycle.
74. Many of the above obligations result in
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annual costs that the TFO must incur. What is
provided here are only a few of the basic
obligations a TFO has to meet, which have the
potential to add incremental costs for the
transmission of electricity. Should the AESO
consider proceeding with its proposal, AltaLink
will expect that the AESO’s analysis to include
all TFO obligations in order to ensure the
AESO’s proposal can confidently demonstrate
no overall increase in costs to ratepayers.
75. In order for the AESO’s proposal to
demonstrate an economic advantage to
customers, the incremental costs savings
associated with the AESO’s proposal must
materially exceed the incremental benefits. This
is because the fact that incremental costs will
be incurred by new TFOs under the AESO’s
proposal is real, demonstrable and inevitable
while the potential for incremental benefits have
not been demonstrated.
IV. The material change in the structure of
the transmission function proposed in the
Discussion Paper fails to address resulting
risks, inefficiencies and unintended
consequences.
76. The Discussion Paper fails to address or
reference any comprehensive fact-based
analysis of the risks, inefficiencies and the
unintended consequences of implementing the
AESO’s proposal. No meaningful assessment
of the public interest in implementing the
AESO’s proposal can be made in the absence
of such a comprehensive analysis.
77. Since the AESO released its Discussion
Paper, AltaLink has identified a few potential
risks, unintended consequences, and
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inefficiencies associated with the AESO’s
proposal, as follows:
(a) There does not appear to be any current
AESO tariff that would enable the proposal. The
market participant must become a TFO and file
a TFO tariff. As such, the market participant
would be a customer to the AESO with a DTS
or STS tariff through which it must pay for
transmission service to the AESO and it will
also be a TFO that has a tariff approved by the
AUC to recover all its costs as a TFO. This is
very inefficient and can only be expected to
result in incremental costs to ratepayers.
(b) The electric industry structure in Alberta has
been established to ensure there is open
access to transmission for all participants. This
structure is facilitated by the fact that incumbent
TFOs, who are the owners of the transmission
system, are either stand-alone transmission
utilities or divisions of integrated regulated
utilities, in each case subject to codes of
conduct. The AESO’s proposal enables market
participants to become TFOs in circumstances
where the market participant could include
entities competing in the energy market, such
as generators, or industrial customers
participating in industrial markets, such as oil
and gas companies that directly compete with
each other. The AESO proposal is not related to
industrial systems nor transmission facilities on
a customer’s own property. It is related to
transmission facilities that will be used by other
ratepayers, customers and the public. It is
unclear how the AESO intends to ensure open
access to market participant owned
transmission facilities for other competing
market participants who may wish to connect to
these transmission facilities in the future. While
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legislated remedies may exist to enable the
obtaining of access, pursuing such remedies
consumes resources, takes time and leads to
uncertainty, which are not characteristics or
challenges under the current regime. Often
delay can amount to effective denial of timely
access and provide an advantage to a
competitor that is the TFO owning the
connection facilities.
(c) The Discussion Paper fails to address how
the AESO intends to pre-qualify market
participants that will become new TFOs. The
AESO’s requirement to meet its duty and
obligation to ensure the safe, reliable and timely
development of the interconnected system
requires that the AESO establish a rigorous
prequalification process for market participants
choosing to become TFOs. Any such prequalification process should be as extensive as
that being proposed by the AESO in its
Competitive Bid process as the end result of
both is the same, a new TFO.
(d) It is apparent that the AESO’s proposal for
market participant choice contemplates that a
market participant that chooses to construct an
interconnection will be enabled to construct,
own, operate and maintain the interconnection
without any process for testing to ensure that
market participant ownership is consistent with
economic, orderly and efficient development of
the interconnected system, both in near and
longer term. There is no way for the AESO to
ensure, on behalf of ratepayers, that the market
participant can construct and own such
transmission facilities more cost effectively than
the incumbent TFO.
(e) There have been primarily two major TFOs
AESO Replies to Stakeholder Comments: 2011-09-27
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within Alberta for decades, along with four
smaller TFOs for a total of six TFOs. The AESO
has coordinated the operation of the power
system in Alberta with primarily two
experienced TFOs for many years. A power
system is a complex, networked, integrated
system that provides a critical service to all
Albertans. Seamless coordination of activities,
processes, accountabilities and execution on a
minute by minute, day-by-day basis is
necessary to ensure a reliable grid. The
Discussion Paper neither includes nor
references any fact-based analysis undertaken
by the AESO demonstrating that the addition of
10 to 30 new TFOs intermingled into incumbent
TFO service areas will result in an improvement
to the reliable, safe, orderly, economic and
efficient operation of the transmission system.
(f) There are significant economies of scale that
arise from incumbent TFO’s constructing,
owning, operating and maintaining transmission
facilities within a service region. Incumbent
TFOs have control centers for real time
operation, which are operated 24 hours a day
and seven days a week, field resources for
emergency response and maintenance, critical
spares and inventory, and experienced asset
managers and engineers to maintain
transmission facilities. The
Discussion Paper neither contains or references
any assessment or analysis of how specifically
a proliferation of small TFOs scattered across
the province of Alberta, imbedded within an
incumbent TFO’s service areas, will impact the
current operation of the system and the
economies of scale that are currently achieved.
V. The AESO has considered but one option
to address the perceived concerns of
AESO Replies to Stakeholder Comments: 2011-09-27
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customers
78. AltaLink is confident that there are an array
of potential options to what is proposed in the
Discussion Paper that are simpler, consistent
with the existing legislative scheme, more
flexible for customers and which avoid
duplication of processes and do not impose
significant incremental costs and risks on the
operation of the interconnected transmission
system.
79. As a next step, AltaLink proposes that the
AESO and stakeholders work together in an
expeditious manner to seek simple and
workable solutions to concerns regarding
customer interconnections.
VI. Summary
80. AltaLink considers the proposal for market
participant choice described in the Discussion
Paper to be fundamentally flawed. AltaLink
does not support the proposal for the following
reasons:
• The applicable legislative scheme constitutes
a barrier to implementing market participant
choice as proposed in the Discussion Paper.
• The Discussion Paper fails to demonstrate
how the proposal for market participant choice
is in the public interest as being either
consistent with or enhancing the economic,
orderly and efficient development and operation
of the transmission system in Alberta.
• The Discussion Paper fails to address or
justify with fact-based evidence and analysis
the material incremental costs, inefficiencies
AESO Replies to Stakeholder Comments: 2011-09-27
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and unintended consequences that would result
from implementation of the AESO’s proposal.
• The Discussion Paper fails to address with
fact-based evidence and analysis the real
potential for increased risk to the safe and
reliable operation of the interconnected
transmission system that would arise from the
implementation of the AESO’s proposal.
81. AltaLink supports continuing to work with
the AESO and customers, collaboratively, to
seek simple and workable solutions to concerns
regarding the cost and schedule related to
customer interconnections. AltaLink fully
supports solutions to such concerns that can be
implemented in a reasonable timeframe,
effectively and efficiently, while respecting the
strong policy foundation expressed in the
legislative scheme for this province and the
electricity market. That strong policy foundation
requires that the economic, orderly and efficient
development and regulation of the AIES be
preserved and respected.
1 Discussion Paper pages 3 and 4.
2 Statutes of Alberta c. E.5.1, 2003, as
amended.
3 Revised Statutes of Alberta 2000, c. H-16, as
amended.
4 Alberta Regulation 86/2007, as amended.
5 The phrase “transmission facility” is defined in
section 1(1) (bbb) of the EUA.
6 TReg, Part 4, section 24.
7 TReg, Part 4, section 24(2).
8 TReg, Part 4, sections 24(3) (a) and 27.
9 TReg, Part 4, sections 24(3)(b), 24.1(2).
10 EUA section 1(1)(x), defines an “industrial
system; EUA section 40, among other things,
imposes certain duties
AESO Replies to Stakeholder Comments: 2011-09-27
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on owners of industrial systems, empowering
the ISO to apply for certain orders related to the
use of industrial
systems for system access service, the granting
of access to industrial systems for system
access service and the
establishment of rates and terms and condition
for service.
11 City of Calgary v. ATCO Gas and Pipelines
Ltd. [2006] 1 SCR 140 at paragraph 49.
12 Re Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R.
27, paragraph 21.
13 [2005] 2 S.C.R. 601, paragraph 10.
14 R. Sullivan ed., Sullivan on Construction of
Statutes, 5th ed. (Markham: LexisNexis, 2008
(Sullivan on Construction of Statutes), page
255.
15 Sullivan on Construction of Statutes, page
366.
16 2007 ABCA 210.
17 The Bur Case, paragraph 22.
18 AESO Rules, part of the AESO’s
Authoritative Documents published on the
AESO website.
19 Discussion Paper page 3.
20 Sullivan on Construction of Statutes, page
244; University Heath Network v. Ontario
(Minister of Finance),
[2001] O.J. No. 4485 at paragraph 31 (Ont.
C.A.); and Conservative Fund Canada v.
Canada (Chief Electoral
Officer), 2010 ONCA 882, paragraphs 76 and
77.
21 Transmission Development, The Right Path
for Alberta, a Policy Paper, Alberta Energy
November 2003
(Transmission Development Policy), found at
http://www.energy.alberta.ca/Electricty/539.asp,
page 4.
22 Discussion Paper page 3.
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23 EUA, section 3(1)(b).
24 TReg, section 24.
25 EUA, section 4.
26 Transmission Development Policy, page 4.
27 Industrial Systems Policy Statement, found
at
http://www.energy.alberta.ca/Electricty/539.asp,
section 2.0, second
bullet.
28 HEEA, sections 16(1) and (2).
29 EUA, section 35(3).
30 Discussion Paper, section 4, Eligible Market
Participants, page 4.
31 HEEA, section 25.
32 HEEA, section 26.
33 HEEA, section 29(1).
34 The phrase “transmission facility” is defined
in section 1(1) (bbb) of the EUA.
35 TReg, Part 4, section 24.
36 TReg, Part 4, section 24(2).
37 TReg, Part 4, sections 24(3) (a) and 27.
38 TReg, Part 4, sections 24(3)(b), 24.1(2).
39 EUA section 1(1)(x), defines and “industrial
system; EUA section 40, among other things,
imposes certain duties
on owners of industrial systems, empowering
the ISO to apply for certain orders related to the
use of industrial
systems for system access service, the granting
of access to industrial systems for system
access service and the
establishment of rates and terms and condition
for service.
40
http://www.aeso.ca/rulesprocedures/15981.html
.
41 ISO Rules Part Two – Market Participation.
Note that AESO is currently undertaking a
comprehensive review of
its authoritative documents, including the ISO
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Rules to achieve several objectives, including
clarifying mandatory
requirements, standardizing structure and form,
eliminating duplication and inconsistencies,
addressing gaps and
improving the overall organization. ISO Rule 9
remains to be transitioned.
42 Transmission Development Policy, page 2.
43 Transmission Development Policy, page 2.
44 Transmission Development Policy, page 2.
47 Alberta Regulation 86/2007.
48 Alberta Regulation 153/2010.
49 Discussion Paper, page 3.
50 Discussion Paper, page 3.
51 Discussion Paper, page 3.
52 Discussion Paper, page 3.
AESO Replies to Stakeholder Comments: 2011-09-27
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Benign Power Inc.
The purpose of this correspondence is to
provide stakeholder comment and
recommendations on what is now being called
“Market Participant Choice,” but what was
originally requested of AESO and ADOE was
simple “COMPETIVE PROCUREMENT””. On a
very high level, B9 Power finds this initiative
commendable and one of the most constructive,
proactive tasks AESO has undertaken since its
inception, and Alberta deregulation of electrical
generation occurred. Therefore, AESO is
encouraged to use the KISS principle and get
this long overdue industry request completed by
December 31, 2011.
BACKGROUNDER
1) The Alberta Government deregulated
generation but missed deregulation of
transmission. This failure to deregulate
transmission ultimately has become the single
largest flaw in the government’s initiative and
the resultant massive, continuous re-regulation.
2) As a result of the major flaw, neither
generators, and now it appears, load
businesses can or could, build their own short
transmission connect to the AESO governed
grid.
3) Transmission monopolies were created.
4) As a result of transmission monopolies,
AESO determined that it must create the most
contentious issue in the Alberta electricity
market called “Direct Assign.”
5) The flawed concept of “direct assign” to a
monopoly has been problematic for all
Albertans, generators, load businesses and the
AESO Replies to Stakeholder Comments: 2011-09-27
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Alberta consumers since inception, and has
never truly been in the public interest due to
excessive cost overruns and scheduling by the
monopolies.
6) As a result of the major flaws, industry has
requested that it simply be allowed to do what it
had the right and capability to do before “direct
assigns” to monopolies, which was to obtain its
own costs through a competitive bidding
process, award the contract to the lowest
qualified bidder, and build the short connection
to the AESO mandated grid.
7) Arguably, ADOE, AUC, AESO, and MSA are
all on the same team given they all report to the
Minister of Energy and moreover, all have a
duty and responsibility to act in the public
interest of lower or lowest reasonable possible
costs, which direct assign by AESO monopolies
has not done.
THE PATH FORWARD OUTSIDE THE BOX
INNOVATION
1) A renowned legal team, and arguably
industry’s leading electncal association at
November 2010, had already scoped all the
legal realities and the process to achieve a
"process to enable market participants to meet
need for their own connection facilities". Prior to
this, a market participant had already proven
the legal capability for generators (and
presumably load businesses) to build their own
transmission and connection to bulk
transmission point facilities (i.e. via competitive
procurement, which is/was the path forward
initiated by Mr. S. Battacharya and
Mr. C Monar).
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It is now November 2011 and the path forward
continues to be re-invented, and will at this
pace, take two or more years to fruition. The
question then becomes how did this simple
project task get off the rails and from a simple
"competitive procurement process" to over
complicated "market participant choice for
transmission connections" where every load
business and generator, large or small, has to
become a TFO and all the myriad of
bureaucratic complications therein? The facts
are no small load business, nor do most small
or large generators want to become TFO's They
just want the lowest possible, reasonable, bid
connection cost period, and which 1n fact,
ultimately results in becoming in the public
Interest as mandated by ADOE, AUC, MSA,
AESO and the Minister.
2) How then does industry achieve the lowest,
reasonable, costs for competitive procurement
for both the public interest and itself? Answer:
Simply have the AESO mandate five (5) bids:
Four (4) from qualified connection/transmission
corporations, and One (1) from the incumbent
TFO itself, rather than the direct assignment
process, which now occurs with no true
accountable costs, no bids, no scheduling, and
no accountability.
The business owner, in load scenarios or the
generator, it is submitted, will be pleased to
have achieved the lowest possible reasonable,
qualified connection cost. This then also
provides comfort to ADOE, UC, MSA, and
AESO whose mandates all require acting in the
public interests that the lowest possible costs
were achieved. The AESO has previously
argued to date this is not in its mandate.
Contrary, and arguably, it is absolutely within
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the AESO mandate given they, like AUC, MSA,
and ADOE, all report to the same Minister, the
Alberta Government, thus ultimately the public.
The no bid monopoly system has never been in
the public interest.
3) The paper and the power point presentation
of 2011 10 14 appear to indicate that minor
regulation changes may need to be modified to
achieve what industry had the right and the
capability to do (competitive procurement)
before deregulation, and resultant massive reregulation and excessive rules. Under the
Alberta legislative framework, simple regulation
changes can be made expeditiously without
having to go through the Alberta legislature and
political process. This being the case, then
ADOE, AUC, MSA, and AESO are all on the
same team. All report to the same Minister and
ought to be able to get this accomplished and
reduce red tape using the KISS principle in an
expeditious timeline by the end of 2011.
Moreover, given that most of the consternation
appears to be with AESO's own created rules
Appendix 2- 9.3 at pages 13 to 18 VS ADOE,
AUC, MSA, then they ought to be easily
changed or deleted, especially since the legal
team and industry association did not request
any of this at November 2010. It simply already
set the clear path forward.
4) Given the overall intention of the now called
"market participant choice for transmission
connection” has now been deemed as
constructive (above introductory para 1), it
appears as if this thanksgiving bird is a bit over
cooked, over thought, over legalized and is
constrained or hide-bound by over complicated
regulation and rules, when the simple
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"competitive procurement" is all that was asked
for and simply achievable by the AESO refusing
all further direct assignments other than bulk
transmission. (Likely that ought to go to
competitive bidding as well).
The November 2010 legal and industry
association paper did not request any load side
dynamics and so how did the simple process
request get bogged down to where it now is?
Moreover, the AESO new request for simple
connections proponents to become TFO's is
overkill and overt complication in its finest form
when it is not required, nor requested by
business or generators.
5) Demanding simple business owners, large
and small, and generators both large and small,
becoming TFO's borders on the ridiculous,
given the massive bureaucratic complications of
becoming a TFO. Moreover, this gives existing
TFO's listed at page 13 of the paper distinct
advantages, and given they were TFO's prior to
deregulation and subsequent over reregulations and rules. Demanding business and
generators become TFO's just so they can
achieve competitive procurement is plain
wrong, and not the deal requested nor that
anyone really wants to do.
AESO INSIDE THE BOX DEMANDS WITHOUT
SIMPLE INNOVATION
AESO questions:
1) "Do stakeholders have any comments?"
YES
2) "Do stakeholders have comments on the
intro section?" YES
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3) "Do stakeholders agree with the suggested
market participants?" NO
Forcing business owners large and small and
generators large and small to become TFO's
just so they can obtain "competitive
procurement" of their connection at lowest
reasonable bid costs instead of monopoly
procurement costs borders on insanity?
4) "Do stakeholders agree with the suggested
eligible connection projects?" NO
As above in 4
5) "Do stakeholders agree with the suggested
model?" NO!
As above, use the KISS model to have AESO
do its job in the public interest, the same as
AUC, ADOE, MSA, Minister of Energy and
Alberta Government for its citizens, and
demand five bids for all connections (bulk
transmission excepted), Four bids from qualified
connection/transmission firms, and One from
the incumbent TFO. This meets the test for
AUC as its current mandate, ADOE, MSA and
the Minister and the Government. With lowest
possible reasonable costs everyone wins VS
direct assignment to monopoly costs, where no
one wins in the end. The legal teams and the
industry association did not ask for this
overcomplicated model.
6) "Do stakeholders agree with the suggested
key connection process procedural changes?"
Possibly, provided there are no massive
changes to the connection model AESO rolled
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out March 31 2010. At the connection process,
update held by AESO October 12, 2011 , the
moderator advised AESO has got the message
to stop changing the connection process, given
it has undergone continuous change since 2003
dozens of times.
Moreover, no one is asking for change in the
connection process but rather only
"COMPETITIVE PROCUREMENT" without any
and all of the rules and legalese provided in the
paper. Again, the KISS principle is reiterated
without more excessive bureaucracy and more
red tape.
7) "Do stakeholders agree with the suggested
request for proposal approach?" NO
This section lacks adequate detail, intent,
understanding to make any informed response.
Moreover, it locks participants into the blackmail
threat of getting punted out of the queue for
changing industry and global market conditions
outside the control of the business. Just
eliminate the direct assign practice and this is
not required.
8) "Do stakeholders agree with the suggested
project cancelation and revoking of queue
position?" NO
The AESO needs to be a lot less dictatorial and
understand that globally, all business face
extreme global market conditions, largely not of
their own making and control. The AESO ought
not to have the right for punting Alberta
business out of the queue, and/or killing their
business opportunities. That is not what the
Alberta government is about, nor any other
provincial or Federal Government is about. This
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needs a severe reality check if not by AESO
itself, then ADOE and the Minister.
9) "Do you agree that new TFO's should be
subjected to the same legislative requirements
as incumbent TFO's?" NO!
First, most business who want a simple load
connection, and most, if not all, generators who
are not already TFO's, have absolutely no
desire to become a TFO with all of their
bureaucratic complications. The more important
and better question is who came up with this
insane scenario? Clearly, the legal
teams and association generators did not ask
anyone to become TFO's, but rather only
fairness, restore the previous capability for
lowest cost simple connection, and "competitive
procurement" mandated by AESO as already
mandated by AUC. If a business wants to get
into the business for the sole purpose of
becoming a TFO, then absolutely all the same
rules ought to apply as applicable to existing
TFO's .
10) "Do stakeholders agree that new TFO's
should be subject to the same requirements
and obligations set out in AESO Documents as
incumbent TFO'S?" NO
Same comments as in 10 above apply. Virtually
no one wants to become a TFO other than
those already listed in the paper at page 13
Appendix 2. All business and the public want is
to delete the AESO "direct assignment" to no
bid monopolies, and give back to Albertans the
competitive procurement principles they had
previously, and that exist in every large oil and
gas, pipeline company, every municipal
organization, and indeed the Alberta
AESO Replies to Stakeholder Comments: 2011-09-27
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government itself. The direct assignment
system is the root cause of dissatisfaction, so
just fix it.
11) "Do stakeholders agree that ISO rules 9.1
should eventually be changed to apply to new
TFO's removing references to incumbent TFO's
and the respective service areas?" YES
Utilizing the KISS principle likely fifty to sixty
percent of these AESO rules could be thrown
out and miniscule changes made to allow
competitive procurement.
12) "Do stakeholders think any new ISO rules
need changing to support "market participant
choice?" NO
Typically less rules and constantly changing
rules are preferred by business. The Prime
Minister of Canada, the Government of Alberta
(attached), the Mayor of Calgary, and the
former Minister of Energy, are all on the record
for "reducing red tape". The AESO needs to
seriously comprehend this 'reduce red tape'
message and get with the program in this
regard. Realistically, and at a high level, to
achieve competitive procurement, the only rule
needed is to allow the five bids process which
arguably it should have been doing since its
inception. Had this been done multi-millions of
dollars would have been saved by Albertans
and businesses throughout Alberta.
13) "Do stakeholders have any other
comments regarding market participant
choice?" YES
Call it what it was and is all about in the first
place, which is "competitive procurement," and
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bids as started by the legal team, the
association, at ADOE, and later by Mr. S.
Battacharya and Mr. C. Monar for all
connections to the grid. This is simple, exists
already in almost all businesses, and ought to
have been already completed. 2011 10 19.
**2 pages of attachments**
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TransCanada Energy Ltd.
TransCanada Energy Ltd. (TCE) appreciates
the opportunity to comment on the discussion
paper referenced above. Generally,
connections have become more of a challenge,
especially around cost overruns and schedule
management. Both have negative
consequences to market participants that desire
to connect. TCE is therefore supportive of this
initiative and presents the following comments:
1. Legislation and Policy Objectives
While TCE supports allowing market
participants to submit a transmission solution to
meet "need", it disagrees with the AESO's
interpretation of Section 35(1) of the EUA that a
market participant would be required to become
a new TFO and be subjected to all the
requirements of a TFO. Nothing ins. 35(l)(b)
requires that the market participant own,
operate and maintain the transmission facilities.
TCE believes that taking such a narrow
interpretation of the provision could lead to an
early failure of this initiative. This concern is
discussed further below.
2. Market participants who build their own
facilities would need to own, operate and
maintain such facilities unless a private sale
of the assets occurred.
TCE does not agree that market participants,
who wish to manage the costs and schedule of
their connection, need to own, operate and
maintain the connection. TCE suggests an
evaluation be done to determine if, under the
current legislation, the AESO could continue to
direct the incumbent TFOs to meet "need", but
require TFOs to allow market participants to
lead the project, in essence having the TFO act
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as the "general contractor" for key technical
requirements. The AESO Rules may be the
mechanism to implement this option, and if so
should be reviewed and updated accordingly.
3. Market participants who choose to build
their own facilities and, under the above
restriction to then own, operate and
maintain the facilities, would therefore be
TFOs and would need to comply with all
requirements and obligations as do
incumbent TFOs.
As discussed above, TCE's view is that this
requirement goes beyond what is provided for
in the legislation and may restrict participants
from electing to build their own transmission
connection. The AESO and industry should
define the minimum connection requirements in
order to enable market participant choice while
maintaining grid reliability and operability. In
addition, if an agreement with the incumbent
TFO can be reached, the participant developing
the connection might sell the facilities to the
incumbent TFO, either at market value for loads
or negligible value for generators.
4. Market participants must declare at Stage
0 of the connection process that they will
build their own transmission
TCE suggests that this decision should be
made prior to passing Gate 2 and would likely
not be made prior to reviewing connection
alternatives as well as cost and schedule
estimates. TCE believes the incumbent TFOs
will work with the market participant in a
collaborative manner to get to that decision
point and does not agree with the AESO's
position that the TFOs may be uncooperative.
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TCE notes that several mechanisms to improve
transmission cost and/or schedule management
are currently in place or in development Transmission Cost Monitoring Committee,
Transmission
Competitive Procurement Process, Abbreviated
Need Identification Rule, and Market Participant
Choice. Consideration should be given to the
overlap or gaps between each of these areas
with the overall objective of facilitating customer
choice regarding their connections.
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