MR-00305 (“Day-Ahead Reliability Guarantees”) – An Overview IESO Technical Panel Meeting Tuesday, December 6 th 2005 1
MR-00305 Overview • This presentation provides an overview to MR- 00305 – “ Day-Ahead Reliability Guarantees ” • Topics: 1. Relationship to the other Day-Ahead Commitment Process (DACP) Amendments 2. A brief overview to each of the 9 sub-parts to MR- 00305 2
Interrelationships between the DACP Amendments Related Market Rule Amendments: – MR-00303 – Day-Ahead Commitment Process – Data Submission – MR-00304 – Day-Ahead Commitment Process – Pre-Dispatch Scheduling and Commitment • Data processing relationship (offer submission, election for DA-GCG, etc.) • Eligibility for Day-Ahead Generation Cost guarantees (new section 2.2C) • IESO de-commitment events affecting MR-00303 DA-GCG (new section 6.3B) Time-dependent data MR-00305 processing relationship MR-00304 • Data processing relationship (timelines for pre-dispatch of record) 3 • Upstream impact on pre-dispatch of record schedules used by settlements
MR-00305 – Part R00 Affected Market Rule Provisions : Chapter 9, section 3.1 General Topic: Inputs from DACP to Settlements • New inputs from the Day-Ahead Commitment Process required by Settlements • Includes: – Constrained schedules for import transactions (used in Day-Ahead Intertie Offer Guarantee calculations) – Constrained schedules for generation facilities (used in Day-Ahead Generation Cost Guarantee calculations) – Day-ahead import offers (used in Day-Ahead Import Failure Charge calculations) – IESO De-commitments of generation facilities (used in Day-Ahead Generation Cost Guarantee calculations) – Bona fide and legitimate import failures (i.e. transactions exempted from Day- Ahead Import Failure Charge calculations) – Financially-binding status of day-ahead import transactions (used in Intertie Offer Guarantee Offset calculations) – Day-Ahead Generation Cost Guarantee elections made by generators in the day-ahead pre-dispatch of record (used in Day-Ahead Generation Cost Guarantee calculations) 4
MR-00305 – Part R01 Affected Market Rule Provisions : Chapter 9, section 3.8A General Topic: Intertie Offer Guarantees and Offsets • Day-Ahead Intertie Offer Guarantees (DA-IOG): • Same type of guarantee as real-time IOG, however: • Based upon constrained quantities • By using the MINIMUM of the day-ahead and real-time quantity, this settlement amount ensures that the guarantee only covers those import transactions that are actually delivered in real-time • Where a day-ahead import transaction attracts a DA-IOG and a real-time IOG, the market participant is entitled to receive the higher of the two • Where a day-ahead import transaction does NOT have financially binding status, it may be subject to the IOG OFFSET process • With these modifications, the IOG OFFSET will… – continue to act upon al real-time import transactions that were not arranged in the day-ahead commitment process – now also include day-ahead import transactions that do not have financially- binding status 5
MR-00305 – Part R02 Affected Market Rule Provisions : Chapter 9, section 3.8B (new) General Topic: Day Ahead Import Failure Charge (DA-IFC) The DA-IFC rules outline a 3 step process 1) Determine the amount of the shortfall (if any) 2) Determine if the import transaction is exempt from the charge due to bona fide and legitimate reasons 3) Calculate the settlement amount as a function of the amount of the shortfall and the implied profit function derived from: • prevailing 5-minute energy market price in Ontario • Offers submitted into the day-ahead pre-dispatch of record Calculation of DA-IFC: EMP (Ontario zone) DA-IFC DA Offer Curve 6 Shortfall amount
MR-00305 – Part R03 Affected Market Rule Provisions : Chapter 9, section 3.9 General Topic: Modifications to hourly uplift settlement amount Two changes: 1) Recover the costs of Day-Ahead IOG payments on the same hourly basis as they are incurred 2) Distribute proceeds from the Day-Ahead Import Failure Charge on the same hourly basis as they are assessed In both cases: • The IESO would have interim authority to allocate these charges on a monthly basis (related amendment sub-part: R07) 7
MR-00305 – Part R04 Affected Market Rule Provisions : Chapter 9, section 4.7B General Topic: Modifications to RT Generation Cost Guarantee • Minor change to clarify the rule that the real- time Generation Cost Guarantee (also known as the “SGOL” program) should not overlap with any payments from the day-ahead IOG 8
MR-00305 – Part R05 Affected Market Rule Provisions : Chapter 9, section 4.7D (new) General Topic: (new) Day-Ahead Generation Cost Guarantee • The Day-Ahead Generation Cost Guarantee (DA-GCG) offers a guarantee of cost recovery for eligible costs for commitments scheduled in the day- ahead pre-dispatch of record. • Assessed on the basis of eligible revenues determined by the IESO settlement process over the course of the minimum run-time and eligible costs submitted by the market participant: – Eligible Revenues: • Energy revenues up to the minimum loading point • CMSC for energy up to minimum loading point • All operating reserve revenues • All CMSC for operating reserve – Eligible Costs: • Same “combined guaranteed costs” (see also, amendment sub-part R09) as the real-time GCG program PLUS – Incremental variable operating costs – Incremental variable maintenance costs 9
MR-00305 – Part R06 Affected Market Rule Provisions : Chapter 9, section 4.7E (new) General Topic: (new) Day-Ahead Fuel Cost Compensation Settlement Amount • The Day-Ahead Fuel Cost Compensation Settlement Amount is meant to be triggered on the basis of the following chain of events: 1. An eligible generation facility (see also, MR-00303) is committed for a Day- Ahead Generation Cost Guarantee in the day-ahead pre-dispatch-of-record 2. The IESO subsequently de-commits the facility in the intervening time between the day-ahead pre-dispatch-of-record and the end of the scheduled minimum run-time 3. As a result of the above, the market participant incurs a demonstrable financial loss on any associated fuel costs. • Successful claims credited to the market participant at the end of the applicable billing period • Costs for such claims are recovered as a non-hourly uplift amount (see also, amendment sub-part R07) 10
MR-00305 – Part R07 Affected Market Rule Provisions : Chapter 9, section 4.8 General Topic: DACP Non-hourly Settlement Amounts • Sections 4.8.1.13 and 4.8.2.2 reserved for interim, monthly allocation of: – Day-Ahead Interie Offer Guarantee costs – Proceeds from Day-Ahead Import Failure Charges • New, enduring non-hourly charges: – Recovery of costs for Day-Ahead Generation Costs Guarantee (section 4.8.11) – Recovery of costs for Day-Ahead Fuel Cost Compensation Settlement Amount (section 4.8.12) 11
MR-00305 – Part R08 Affected Market Rule Provisions : Chapter 9, section 1 General Topic: DACP Consequential Amendment • Overall scope of chapter 9 (“Settlements and Billing”) expanded to include the necessary provisions for DACP settlement amounts 12
MR-00305 – Part R09 Affected Market Rule Provisions : Chapter 11, revised definitions General Topic: DACP Definitions related to Settlements • New Definition: pre-dispatch of record – The essential sub-process of the day-ahead commitment process that provides most of the necessary schedules necessary to settle the DACP settlement amounts included in this amendment. • Revised Definition: combined guaranteed costs – Releases the IESO and market participant from the obligation of ensuring that the submission of combined guaranteed costs correspond exactly with the facility’s minimum loading point – Does NOT change the fact that submitted combined guaranteed costs must reflect only those costs actually incurred – Does NOT relieve the registered market participant for the generation facility from its responsibility to follow dispatch instructions 13
End of Slides 14
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