2013-025 - Alberta Utilities Commission
2013-025 - Alberta Utilities Commission
2013-025 - Alberta Utilities Commission
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Decision <strong>2013</strong>-<strong>025</strong><br />
<strong>Alberta</strong> Electric System Operator<br />
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path<br />
Management<br />
February 1, <strong>2013</strong>
The <strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
Decision <strong>2013</strong>-<strong>025</strong>: <strong>Alberta</strong> Electric System Operator<br />
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
Application Nos. 1607958, 1607986, 1607987, 1607988, 1607993 and 1608013<br />
Proceeding ID No. 1633<br />
Published by<br />
The <strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
Fifth Avenue Place, Fourth Floor, 425 First Street S.W.<br />
Calgary, <strong>Alberta</strong><br />
T2P 3L8<br />
Telephone: 403-592-8845<br />
Fax: 403-592-4406<br />
Web site: www.auc.ab.ca
Contents<br />
1 INTRODUCTION ................................................................................................................. 1<br />
1.1 The application ............................................................................................................... 1<br />
1.2 The objections ................................................................................................................ 2<br />
1.3 Process schedule............................................................................................................. 3<br />
2 BACKGROUND ON INTERTIES AND AVAILABLE TRANSFER CAPABILITY .. 4<br />
2.1 Introduction to interties .................................................................................................. 5<br />
2.2 The AB-BC intertie ........................................................................................................ 6<br />
2.3 The AB-SK Intertie ........................................................................................................ 6<br />
2.4 The MATL intertie ......................................................................................................... 7<br />
2.5 Current ATC rule and the development of the Proposed ATC Rule ............................. 7<br />
3 REGULATORY FRAMEWORK ....................................................................................... 8<br />
3.1 Statutory interpretation................................................................................................... 8<br />
3.2 Legislation ...................................................................................................................... 9<br />
4 INTERTIES, AVAILABLE TRANSFER CAPABILITY AND ACCESS TO THE<br />
ALBERTA INTERCONNECTED ELECTRONIC SYSTEM ............................................... 11<br />
4.1 Are interties part of the transmission system and the <strong>Alberta</strong> interconnected electric<br />
system ......................................................................................................................... 11<br />
4.2 What is the nature of ATC and how is it created ....................................................... 12<br />
4.3 How can ATC be allocated ........................................................................................ 15<br />
4.4 What is the AESO’s obligation to provide access to the AIES .................................. 16<br />
4.4.1 Access to the AIES ......................................................................................... 16<br />
4.4.2 Access for anticipated versus scheduled energy ............................................. 20<br />
5 GROUNDS FOR OBJECTIONS ...................................................................................... 23<br />
5.1 Rule does not support the FEOC operation of the market ........................................... 23<br />
5.1.1 Economic incentives ....................................................................................... 24<br />
5.1.2 Open competition considerations .................................................................... 28<br />
5.1.3 Rule fails to alight with existing AESO practices .......................................... 29<br />
5.1.4 Rule fails to align with existing North American practices ............................ 32<br />
5.1.5 Rule negatively impacts pool price ................................................................. 34<br />
5.1.6 Rule leads to increased bookout fees .............................................................. 37<br />
5.1.7 Rule impacts parties with firm transmission rights in other jurisdictions ...... 39<br />
5.1.8 Rule was not finalized when an investment decision was made .................... 41<br />
5.1.9 Summary of <strong>Commission</strong> findings - FEOC .................................................... 41<br />
5.2 Rule is not in the public interest ................................................................................... 41<br />
5.2.1 Transmission Regulation Section 16 and allocation of availability transfer<br />
capability ......................................................................................................... 41<br />
5.2.2 Transmission Regulation Section 27 and cost responsibilities of merchant<br />
interties ............................................................................................................ 44<br />
5.2.3 Previous commitments for connection of MATL ........................................... 48<br />
5.2.4 Seams issue between jurisdictions .................................................................. 50<br />
5.2.5 Summary of <strong>Commission</strong> findings – public interest ....................................... 51<br />
5.3 Rule is technically deficient ......................................................................................... 51<br />
5.3.1 Rule prematurely incorporates a pricing mechanism ...................................... 52<br />
5.3.2 Rule fails to adequately address allocation and curtailment of ancillary<br />
services ............................................................................................................ 53<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • i
5.3.3 Rule fails to account for existing transmission commitments ........................ 54<br />
5.3.4 Rule incorrectly allocates ATC created by LSSi ............................................ 55<br />
5.3.5 Rule is insufficiently transparent and is missing definitions .......................... 56<br />
5.3.6 Rule uses incorrect values for the calculation of pro-rata allocation .............. 58<br />
5.3.7 Rule fails to reallocate stranded capacity between T-85 and T-20 ................. 60<br />
5.3.8 Rule fails to contemplate future interties ........................................................ 60<br />
5.3.9 Summary of <strong>Commission</strong> findings – technically deficient ............................. 61<br />
6 RELIEF REQUEST AND ORDER .................................................................................. 62<br />
Appendix 1 – Proceeding participants ...................................................................................... 63<br />
Appendix 2 – Abbreviations ....................................................................................................... 65<br />
Appendix 3 – Propsed ISO rules Section 203.6: Available Transfer Capabilty and Transfer<br />
Path Management ............................................................................................... 67<br />
List of tables<br />
Table 1. ISO Rules filed December 5, 2011 with the <strong>Commission</strong> ........................................ 1<br />
List of figures<br />
Figure 1. NERC interconnections. ............................................................................................. 4<br />
Figure 2. Interconnections between <strong>Alberta</strong> and neighbouring jurisdictions. ...................... 5<br />
ii • AUC Decision 2010-<strong>025</strong> (February 1, <strong>2013</strong>)
The <strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
Calgary, <strong>Alberta</strong><br />
<strong>Alberta</strong> Electric System Operator Decision <strong>2013</strong>-<strong>025</strong><br />
Objections to ISO rules Section 203.6 Application Nos. 1607958, 1607986<br />
Available Transfer Capability 1607987, 1607988, 1607993 and 1608013<br />
and Transfer Path Management Proceeding ID No. 1633<br />
1. The <strong>Alberta</strong> Electric System Operator (AESO) has proposed a rule to allocate<br />
transmission capacity between interties that connect <strong>Alberta</strong> to adjacent jurisdictions. After<br />
considering evidence and arguments presented by market participant objectors (MPOs) and their<br />
supporters, for reasons given below in this decision the <strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong> (AUC or<br />
the <strong>Commission</strong>) has not been persuaded that the rule is against the public interest or the fair,<br />
efficient and openly competitive operation of the electricity market in <strong>Alberta</strong> or that the rule is<br />
technically deficient.<br />
1 Introduction<br />
1.1 The application<br />
2. On December 5, 2011, the AESO filed Independent System Operator (ISO) rules Section<br />
203.6: Available Transfer Capability and Transfer Path Management (Proposed ATC Rule) with<br />
the AUC in accordance with Section 20.2(1) of the Electric <strong>Utilities</strong> Act, S.A. 2003, c. E-5.1.<br />
The filing was assigned Application No. 1607958.<br />
3. The AESO’s December 5, 2011 notice of filing advised that with the pending<br />
energization of the Montana <strong>Alberta</strong> Tie Limited (MATL) intertie in 2012, the AESO must<br />
proceed to allocate system available transfer capability (ATC) in a different fashion to ensure<br />
transaction volumes remain within limits<br />
4. The AESO stated that the Proposed ATC Rule reflects a consolidation and<br />
rationalization of the existing operating policies and procedures (OPPs) indicated in Table 1<br />
below. 1 A copy of the proposed rule is available in Appendix 3. 2<br />
Table 1.<br />
ISO Rules filed December 5, 2011 with the <strong>Commission</strong><br />
Rule Rule name and description Proposed action<br />
Section 203.6 Available Transfer Capability and Transfer Path Management New<br />
OPP 301 <strong>Alberta</strong>-BC Interconnection Scheduling Remove<br />
OPP 302 <strong>Alberta</strong>-Saskatchewan Interconnection Scheduling Remove<br />
OPP 303 <strong>Alberta</strong>-BC Interconnection Operation Remove<br />
OPP 304 <strong>Alberta</strong>-BC Interconnection Transfer Limits Remove<br />
OPP 306 Reliability Curtailments to <strong>Alberta</strong>-Saskatchewan Transactions Remove<br />
OPP 307 <strong>Alberta</strong>-Saskatchewan Interconnection Transfer Limits Remove<br />
OPP 309 Saskatchewan Inadvertent Energy Management Remove<br />
ISO rule 6.3.3 Interconnection Dispatching Remove<br />
1<br />
2<br />
Exhibit 0027.00, ISO Notice of Filing, December 5, 2011, page 2.<br />
Exhibit 0018.00, New ISO Rules Section 203.6, December, 5, 2011.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 1
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
5. As required by Section 20 of the Electric <strong>Utilities</strong> Act, the <strong>Commission</strong> issued a notice of<br />
filing and notice for objection in respect of the ISO rules listed above on December 9, 2011. 3<br />
1.2 The objections<br />
6. Section 20.4(1) of the Electric <strong>Utilities</strong> Act permits a market participant to object to an<br />
ISO rule on one or more of the following grounds:<br />
(a) that the ISO, in making the ISO rule, did not comply with <strong>Commission</strong> rules under<br />
section 20.9;<br />
(b) that the ISO rule is technically deficient;<br />
(c) that the ISO rule does not support the fair, efficient and openly competitive operation of<br />
the market;<br />
(d) that the ISO rule is not in the public interest.<br />
7. Notices of objections regarding the Proposed ATC Rule were received by the December<br />
19, 2011 deadline from the following market participants and assigned the following application<br />
numbers:<br />
ATCO Power Ltd. (ATCO Power) – Application No. 1607988<br />
British Columbia Hydro and Power Authority (BC Hydro) – Application No. 1607993<br />
Cargill Limited (Cargill) – Application No. 1607990<br />
NorthPoint Energy Solutions Inc. (NorthPoint) - Application No. 1608013<br />
PowerEx Corporation (PowerEx) - Application No. 1607987<br />
Saskatchewan Power Corporation (SaskPower) - Application No. 1607986<br />
TransCanada Energy Ltd. (TransCanada) – Application No. 1607989.<br />
8. Cargill and TransCanada were originally treated as MPOs. However, both parties<br />
subsequently clarified they were not objecting to the Proposed ATC Rule but were rather<br />
supporting the MPOs, and as such the <strong>Commission</strong> closed Application Nos. 1607990 and<br />
1607989. 4<br />
9. PowerEx indicated that it would form a coalition with NorthPoint and Cargill for<br />
preparing joint submissions (the Coalition). 5<br />
10. Based on one or more of the following grounds MPOs submitted that the Proposed ATC<br />
Rule is technically deficient, does not support the fair, efficient and openly competitive operation<br />
of the market and is not in the public interest, being the grounds for objection identified in<br />
Section 20.4(1)(b), (c) and (d) of the Electric <strong>Utilities</strong> Act. None of the MPOs objected on the<br />
basis of Section 20.4(1)(a) of the Electric <strong>Utilities</strong> Act.<br />
11. The <strong>Commission</strong> combined the aforementioned applications into Proceeding ID No.<br />
1633 to address the objections to the Proposed ATC Rule, and on December 23, 2011, the<br />
3<br />
4<br />
5<br />
Exhibit 0048.00, AUC Notice of Filing, December 9, 2011.<br />
Exhibit 0077.01, AUC Letter re Cargill status, February 16, 2012, and Exhibit 0068.01, AUC Letter re<br />
TransCanada status, February 7, 2012.<br />
Exhibit 0094.01, PowerEx Procedural Submission, March 21, 2012, page 2.<br />
2 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
<strong>Commission</strong> issued a notice of proceeding and requested statements of intent to participate from<br />
interested parties. 6<br />
1.3 Process schedule<br />
12. Statements of intent to participate were received from the following parties:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
AESO<br />
Capital Power Corporation (Capital Power)<br />
ENMAX Energy Corporation (ENMAX)<br />
Montana <strong>Alberta</strong> Tie Ltd. c/o Enbridge Inc. (Enbridge/MATL)<br />
Morgan Stanley Capital Group Inc. (Morgan Stanley)<br />
NaturEner USA, LLC (NaturEner)<br />
Saskatchewan-<strong>Alberta</strong> Tie Line Project (SATL)<br />
<strong>Utilities</strong> Consumer Advocate (UCA)<br />
Consumers Coalition of <strong>Alberta</strong> (CCA).<br />
13. On February 17, 2012, the AUC issued a proceeding schedule that originally set the oral<br />
hearing to begin on April 30, 2012. 7 In response to requests from parties to reschedule the<br />
hearing due to various conflicts, on March 30, 2012, the AUC issued a subsequent notice which<br />
set out an updated process schedule with an oral hearing planned to start September 10, 2012. 8<br />
The proceeding schedule was revised again on May 1, 2012 to adjust the deadlines for filing<br />
evidence, but the hearing remained scheduled for September 10, 2012. 9<br />
14. At the oral hearing the <strong>Commission</strong> gave directions that written argument was due from<br />
the MPOs and MPO supporters on October 15, 2012, and reply argument from the AESO and<br />
parties supporting the AESO was due October 29, 2012. Rebuttal argument from the MPOs,<br />
Cargill, TransCanada and the UCA only was due November 5, 2012.<br />
15. The <strong>Commission</strong> considers the close of record for this proceeding was November 5,<br />
2012, when the final reply argument was filed.<br />
16. In reaching the determination contained within this Decision, the <strong>Commission</strong> has<br />
considered all relevant materials comprising the record of this proceeding, including the<br />
evidence and argument provided by each party. Accordingly, references in this decision to<br />
specific parts of the record are intended to assist the reader in understanding the <strong>Commission</strong>’s<br />
reasoning relating to a particular matter and should not be taken as an indication that the<br />
<strong>Commission</strong> did not consider all relevant portions of the record with respect to that matter.<br />
6<br />
7<br />
8<br />
9<br />
Exhibit 0056.01, AUC Notice of Proceeding, December 23, 2011.<br />
Exhibit 0078.01, AUC Proceeding Schedule, February 17, 2012.<br />
Exhibit 0101.01, AUC Proceeding Schedule, March 30, 2012. Deadlines relating to arguments were provided<br />
after the oral hearing in exhibit 0267.01, AUC Argument Schedule, September 25, 2012.<br />
Exhibit 0126.01, AUC Proceeding Schedule, May 1, 2012.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 3
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
2 Background on Interties and Available Transfer Capability<br />
17. The following maps are provided for the convenience of the reader. Figure 1 indicates the<br />
North American Electric Reliability (NERC) regional entities, and Figure 2 indicates the<br />
interconnections between <strong>Alberta</strong> and neighbouring jurisdictions.<br />
Figure 1. NERC interconnections. 10<br />
10 Exhibit 0144.02, Morgan Stanley Evidence, June 15, 2012, page 8.<br />
4 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Figure 2. Interconnections between <strong>Alberta</strong> and neighbouring jurisdictions. 11<br />
2.1 Introduction to interties<br />
18. Interties are transmission lines for electric energy that connect neighbouring<br />
transmission systems and allow the transfer of electric energy between those jurisdictions.<br />
Interties, like any other transmission line, have a path rating which is the maximum capacity for<br />
electric energy that can be safely and reliably transferred. The path rating is generally determined<br />
by the physical characteristics of the line or lines, such as the type of material in the wiring, the<br />
line capacity, transformer capacity, and other factors.<br />
19. One or both of the jurisdictions connected by an intertie may not be able to safely and<br />
reliably send or receive electric energy up to the path rating, so the maximum capacity for<br />
electric energy that can be safely and reliably transmitted on the intertie is often less than the<br />
path rating. The amount of electric energy that can be reliably transferred over an intertie is<br />
called the total transfer capability (TTC). The amount of electric energy transferred over an<br />
intertie is often further reduced by what is known as the transmission reliability margin, or TRM.<br />
The TRM is the amount of transfer capability necessary to ensure the reliably operation taking<br />
into account uncertainties in system conditions and the need for operating flexibility. The<br />
commercially available transfer capability of an intertie is called the available transfer capability,<br />
or ATC, and is simply the TTC minus the TRM.<br />
20. Depending on the physical characteristics of interties and the transmission systems there<br />
may be a simultaneous transfer limit; that is, one or more interties may be subject to the same<br />
TTC limit, and thus the same ATC limit. If there is a simultaneous transfer limit between<br />
11 Exhibit 0136.02, SaskPower Evidence, May 7, 2012, Appendix A, page 8.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 5
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
interties there has to be some way of allocating the ATC between the interties that are subject to<br />
simultaneous transfer limits.<br />
21. The energization of MATL will result in a situation where a simultaneous limit applies<br />
to the MATL and AB-BC interties. 12 The AESO’s Proposed ATC Rule contains a methodology<br />
for allocating ATC between interties when there is a simultaneous limit and there is more<br />
demand for ATC than there is capacity, and it is this methodology that is one of the key issues in<br />
this proceeding.<br />
2.2 The AB-BC intertie<br />
22. <strong>Alberta</strong> and British Columbia are both members of the Western Electricity Coordinating<br />
Council (WECC) which is responsible for coordinating and promoting bulk electric system<br />
reliability in <strong>Alberta</strong>, British Columbia, all or portions of 14 western US states and the northern<br />
portion of Baja Mexico. 13 WECC makes up the Western Interconnection as set out by the NERC.<br />
All of the electric utilities in the Western Interconnection are electrically tied together during<br />
normal system conditions and operate at a synchronized frequency. 14 The AESO is a member of<br />
the WECC as per the WECC-AESO Membership and Operating Agreement.<br />
23. BC Hydro described the AB-BC intertie as a 500-kV alternating current (AC)<br />
interconnection between the electric systems of <strong>Alberta</strong> and British Columbia. The AB-BC<br />
intertie consists of a 500-kV AC transmission line between Langdon, AB and Cranbrook, BC, a<br />
138-kV AC transmission line between Pocaterra, AB and Natal, BC and a 138-kV AC<br />
transmission line between Coleman, AB and Natal, BC. The AB-BC intertie is designated by<br />
WECC as Path 1 and has a path rating of 1,200 MW for flows from British Columbia to <strong>Alberta</strong><br />
and 1,000 MW for flows from <strong>Alberta</strong> to British Columbia. The WECC path ratings represent<br />
the maximum electric energy that can flow under realistic conditions while still meeting the<br />
appropriate reliability criteria. The AESO is the operator for the AB-BC intertie. 15<br />
2.3 The AB-SK Intertie<br />
24. Saskatchewan is a member of the Midwest Reliability Organization (MRO), which is<br />
dedicated to ensuring the reliability and security of the bulk power systems in Saskatchewan,<br />
Manitoba, and all or portions of 9 Midwest US states. The MRO and several other reliability<br />
organizations in eastern Canada and the US form NERC’s Eastern Interconnection. All of the<br />
electric utilities in the Eastern Interconnection are electrically tied together during normal system<br />
conditions and operate at a synchronized frequency. 16 The Eastern and Western Interconnections<br />
are tied to each other in a manner that permits a controlled flow of energy while also functionally<br />
isolating the independent AC frequencies of each interconnection.<br />
12 Exhibit 0129.01, Coalition Evidence, May 7, 2012, page 7; Exhibit 0133.01, TransCanada Evidence, May 7,<br />
2012, page 15; Exhibit 134.02, BC Hydro Evidence, May 7, 2012, pages 10-11; Exhibit 0145.02, AESO<br />
Evidence, June 15, 2012, page 7.<br />
13 http://www.wecc.biz/About/Pages/default.aspx.<br />
14 http://energy.gov/oe/recovery-act/recovery-act-interconnection-transmission-planning/learn-more-aboutinterconnections.<br />
15 Exhibit 0134.02, BC Hydro Evidence, May 7, 2012, page 2.<br />
16 http://energy.gov/oe/recovery-act/recovery-act-interconnection-transmission-planning/learn-more-aboutinterconnections.<br />
6 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
25. SaskPower described the intertie connecting <strong>Alberta</strong> and Saskatchewan (AB-SK) as a<br />
single 230-kV transmission line that runs between Swift Current, SK to the McNeill converter<br />
station in Empress, AB. The McNeill converter station is a back-to-back direct current (DC)<br />
converter. Consequently the interface is not synchronous and is fully controllable. The converter<br />
station is connected to the <strong>Alberta</strong> interconnected electric system (AIES) via a single 138-kV AC<br />
transmission line to the Empress, AB substation. Power flow on the AB-SK intertie can be set at<br />
a specified amount and does not typically vary due to system conditions in real-time. However,<br />
the converter has a control system and an automatic power runback scheme that serves to keep<br />
the interconnection in service for a wide range of operating conditions. For example, should a<br />
major disturbance occur in either Saskatchewan or <strong>Alberta</strong>, the controls system can temporarily<br />
reduce the power flow, or automatically run back to the present value to preserve the AB-SK<br />
intertie. The AB-SK intertie has been designated by WECC as Path 2 and has a path rating of<br />
150 MW for flows from Saskatchewan to <strong>Alberta</strong>, and also 150 MW path rating for flows from<br />
<strong>Alberta</strong> to Saskatchewan. ATCO Electric owns and operates the converter station, and the<br />
AESO provides system operating instructions to ATCO Electric. 17<br />
2.4 The MATL intertie<br />
26. Montana, like <strong>Alberta</strong>, is a member of the WECC and thus the Western Interconnection.<br />
All of the electric utilities in the Western Interconnection are electrically tied together during<br />
normal system conditions and operate at a synchronized frequency. 18<br />
27. Enbridge/MATL described the intertie connecting <strong>Alberta</strong> and Montana as a 230-kV AC<br />
transmission line between Great Falls, MT and just outside Lethbridge, AB. 19 Enbridge/MATL<br />
expects the AB-MT intertie to be energized sometime in the first quarter of <strong>2013</strong>. 20<br />
2.5 Current ATC rule and the development of the Proposed ATC Rule<br />
28. ISO rule Section 203.1: Offers and Bids for Energy, which is currently in effect,<br />
indicates in Section 3(3)(a) that all imports must be offered at $0/MWh, and in Section 7(2)(a)<br />
that all exports must be bid at $999.99/MWh. This means that all imports, regardless of the<br />
intertie, are priced identically at $0/MWh and all exports, regardless of the intertie, are priced<br />
identically at $999.99/MWh.<br />
29. The AESO indicated that the current process for handling intertie transactions involves<br />
coordination with external electricity markets though an hourly process known as scheduling,<br />
which sets out by at least 15 minutes in advance of a delivery hour the flow or potential flow of<br />
energy between regions along the intertie. The AESO, as the operator of the AB-BC intertie, 21<br />
approves all pool participant import and export transaction schedule submissions (known as e-<br />
tags). If the submitted volume of e-tags is greater than the ATC for an intertie, the neighbouring<br />
transmission providers, currently BC Hydo or SaskPower, will curtail in a priority as determined<br />
in accordance with their transmission products and tariffs. If BC Hydro or SaskPower do not<br />
curtail enough volume by 15 minutes before the scheduled hour then the AESO curtails<br />
17 Exhibit 0136.01, SaskPower Evidence, May 7, 2012, page 2.<br />
18 http://energy.gov/oe/recovery-act/recovery-act-interconnection-transmission-planning/learn-more-aboutinterconnections.<br />
19 Exhibit 0147.02, Enbridge/MATL Evidence, June 15, 2012, page 2.<br />
20 Transcript Volume 7, page 1464.<br />
21 As indicated in OPP 303: <strong>Alberta</strong>-BC Interconnection Operation, page 1.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 7
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
transmission schedules on a last-in-first-out (LIFO) basis according to the timing of e-tag<br />
approval. 22<br />
30. The AESO indicated that with the pending energization of MATL, the AESO must<br />
proceed to allocate system ATC in a different fashion by applying a new method to ensure<br />
transaction volumes remain within limits. The AESO indicated that if the LIFO method<br />
continues to be used, existing interties or certain market participants would likely have an unfair<br />
advantage in that they could submit e-tags far in advance of the delivery hour and effectively<br />
lock other interties or participants out of the market, and that the LIFO method makes no<br />
provision for any future market based signal to be used in the allocation process. 23<br />
31. The AESO indicated that the Proposed ATC Rule sets out the requirements and<br />
obligations with respect to: the calculation and communication of transfer capability limits,<br />
interchange transaction bids and offers, submission and validation of import and export e-tags,<br />
scheduling of interchange transactions including schedule changes and dispatches, Saskatchewan<br />
inadvertent energy management, and transfer path management including allocation of ATC and<br />
interchange transaction curtailment. 24<br />
32. The AESO indicated that the Proposed ATC Rule will ensure that ISO rules are in place<br />
to appropriately allocate ATC and external operators of transmission facilities cannot be<br />
expected to allocate across competing interties. The AESO advised that essential changes in the<br />
ISO rules to operational and scheduling provisions were also needed once MATL is energized.<br />
As a result, the AESO submitted that it was required to revisit ISO rules Section 6.3.3 and<br />
several OPPs, which are listed in Table 1 of this decision. 25<br />
33. In developing the Proposed ATC Rule, an AESO consultation process began on May 7,<br />
2010 when the AESO issued the Intertie Framework discussion paper and invited stakeholder<br />
comments. The AESO then issued the Intertie Framework recommendation paper on October 7,<br />
2010, followed by the Intertie Framework – Available Transfer Capacity Allocation – Draft<br />
Term Sheet on December 16, 2010. On March 17, 2011, the AESO issued a letter of notice<br />
requesting comments from stakeholders on proposed ISO rules Section 203.6, and replied to<br />
stakeholder comments on July 26, 2011. On September 20, 2011 the AESO issued a letter of<br />
notice requesting a second round of comments from stakeholders on proposed ISO rules Section<br />
203.6, and replied to stakeholder comments on November 17, 2011. 26<br />
3 Regulatory Framework<br />
3.1 Statutory interpretation<br />
34. <strong>Commission</strong> consideration of the Proposed ATC Rule requires consideration and<br />
interpretation of various provisions of the Electric <strong>Utilities</strong> Act and sections of the Transmission<br />
Regulation made under that legislation, particularly Section 16. As with all such questions of<br />
statutory interpretation, the <strong>Commission</strong> has applied the modern principle of statutory<br />
22 Exhibit 0027.00, AESO Notice of Filing, December 5, 2011, page 2.<br />
23 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 13.<br />
24 Exhibit 0027.00, AESO Notice of Filing, December 5, 2011, page 2.<br />
25 Exhibit 0027.00, AESO Notice of Filing, December 5, 2011, page 2.<br />
26 Exhibit 0062.01, AESO Consultation Record, filed January 20, 2012.<br />
8 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
interpretation which requires “the words of an Act be read in their entire context and in their<br />
grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act<br />
and intention of Parliament. When interpreting the plain wording one must pay sufficient<br />
attention to the scheme of the act, its object and the intention of the legislature. 27<br />
35. As indicated in Sullivan on the Construction of Statutes, 28 generally the rules governing<br />
the meaning of statutory texts and the types of analysis relied upon by interpreters to determine<br />
legislative intent apply equally to regulations. Regulations too must be read in the context of<br />
their enabling act, having regard to the language and purpose of the act in general and more<br />
particularly the language and purpose of the relevant enabling provisions. 29 This is consistent<br />
with Section 13 of the Interpretation Act 30 providing that interpretation provisions in an<br />
enactment apply to regulations made under an enactment.<br />
3.2 Legislation<br />
36. Section 5 of the Electric <strong>Utilities</strong> Act addresses the purposes of the legislation which<br />
include:<br />
(b) to provide for a competitive power pool so that an efficient market for electricity<br />
based on fair and open competition can develop, where all persons wishing to<br />
exchange electric energy through the power pool may do so on non-discriminatory<br />
terms and may make financial arrangements to manage financial risk associated with<br />
the pool price;<br />
(c) to provide for rules so that an efficient market for electricity based on fair and open<br />
competition can develop in which neither the market nor the structure of the <strong>Alberta</strong><br />
electric industry is distorted by unfair advantages of government-owned participants<br />
or any other participant;<br />
…<br />
(h) to provide for a framework so that the <strong>Alberta</strong> electric industry can, where necessary,<br />
be effectively regulated in a manner that minimizes the cost of regulation and<br />
provides incentives for efficiency.<br />
37. Section 17 of the Electric <strong>Utilities</strong> Act imposes on the AESO, inter alia, the duty to:<br />
(a) operate the power pool in a manner that promotes the fair, efficient and openly<br />
competitive exchange of electric energy;<br />
(b) to facilitate the operation of markets for electric energy in a manner that is fair and<br />
open and that gives all market participants wishing to participate in those markets and<br />
to exchange electric energy a reasonable opportunity to do so;<br />
(c) to determine, according to relative economic merit, the order of dispatch of electric<br />
energy and ancillary services in <strong>Alberta</strong> and from scheduled exchanges of electric<br />
27 Rizzo & Rizzo Shoes Ltd. (Re), [1998]1 SCR 27, 154 DLR (4 th ) 193 at paragraph 21 quoting Driedger in<br />
Construction of Statutes (2 nd ed. 1983) at 87 and paragraph 23.<br />
28 Sullivan on the Construction of Statutes, 5 th edition, page 368.<br />
29 Bristol-Myers Squibb Co. v. Canada (Attorney General) [2005] 1 SCR 533.<br />
30 Interpretation Act, S.A. 2000, Chapter I-8.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 9
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
energy and ancillary services between the interconnected electric system in <strong>Alberta</strong><br />
and electric systems outside <strong>Alberta</strong>, to satisfy the requirements for electricity in<br />
<strong>Alberta</strong>;<br />
…<br />
(g) provide system access service on the transmission system and to prepare an ISO<br />
tariff;<br />
(h) to direct the safe, reliable and economic operation of the of interconnected electric<br />
system;<br />
(i) to assess the current and future needs of market participants and plan the capability of<br />
the transmission system to meet those needs;<br />
(j) to make arrangements for the expansion of and enhancement to the transmission<br />
system;<br />
38. Section 18 of the Electric <strong>Utilities</strong> Act prescribes that the AESO “must operate the power<br />
pool in a manner that is fair, efficient and open to all market participants exchanging or wishing<br />
to exchange electric energy through the power pool and that gives all market participants a<br />
reasonable opportunity to do so.”<br />
39. Section 20(1) of the Electric <strong>Utilities</strong> Act states that ISO may make rules respecting,<br />
inter alia, the practice and procedures of the Independent System Operator, the operation of the<br />
power pool and the exchange of electric energy through the power pool, the operation of the<br />
interconnected electric system, and planning the transmission system, including criteria and<br />
standards for the reliability and adequacy of the transmission system.<br />
40. Section 20.4 of the Electric <strong>Utilities</strong> Act describes the circumstances under which a<br />
market participant may object to an ISO rule, and Section 20.4(3) describes the onus that such a<br />
market participant bears if a hearing is convened to consider the objection:<br />
20.4(3) The market participant filing the notice of objection has the onus of proving<br />
(a) that the Independent System Operator, in making the ISO rule, did not<br />
comply with <strong>Commission</strong> rules made under section 20.9,<br />
(b) that the ISO rule is technically deficient,<br />
(c) that the ISO rule does not support the fair, efficient and openly competitive<br />
operation of the market, or<br />
(d) that the ISO rule is not in the public interest<br />
41. Section 33 of the Electric <strong>Utilities</strong> Act states that the AESO “must forecast the needs of<br />
<strong>Alberta</strong> and develop plans for the transmission system to provide efficient, reliable and nondiscriminatory<br />
system access service and the timely implementation of required transmission<br />
system expansions and enhancements.”<br />
42. Section 8 and 10 of the Transmission Regulation indicate that the AESO must forecast<br />
the needs of <strong>Alberta</strong> and plan the transmission system to meet those needs. Section 15 of the<br />
10 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Transmission Regulation outlines the matters the AESO must take into account when making<br />
rules and exercising its duties. Section 16 of the Transmission Regulation imposes an obligation<br />
on the AESO to restore capacity on interties that existed on August 12, 2004. Section 17 of the<br />
Transmission Regulation states that “[t]he ISO must make rules and establish practices<br />
respecting the operation and the management of transmission constraints that may occur from<br />
time to time.” And Section 27 of the Transmission Regulation clarifies the cost responsibilities<br />
associated with intertie projects.<br />
4 Interties, available transfer capability and access to the <strong>Alberta</strong> interconnected<br />
electronic system<br />
43. Determination of the objections filed regarding the Proposed ATC Rule required the<br />
<strong>Commission</strong> to address the following questions about the nature of ATC and entitlement to<br />
access the AIES under <strong>Alberta</strong> legislation.<br />
4.1 Are interties part of the transmission system and the <strong>Alberta</strong> interconnected<br />
electric system<br />
44. PowerEx submitted that interties fall within the meaning of “transmission facilities”, but<br />
not within the meaning of the “transmission system” or “interconnected electric system”, and<br />
that the plain meaning of these definitions is that an intertie is not part of the interconnected<br />
electric system in <strong>Alberta</strong>. Based on this interpretation, PowerEx argued that Section 15 of the<br />
Transmission Regulation is not applicable to interties and does not provide the AESO with any<br />
guidance with respect to allocation of existing transfer capability on those interties. 31<br />
45. Enbridge/MATL counter-argued that the term “interconnected electric system” is<br />
defined as “all transmission facilities in <strong>Alberta</strong> that are interconnected”, and that interties are, by<br />
definition, interconnected transmission facilities. Enbridge/MATL submitted that consequently<br />
interties “are part of the AIES/transmission system.” 32 Enbridge/MATL argued that PowerEx’s<br />
interpretation of the term “intertie” would lead to absurd consequences under the Electric<br />
<strong>Utilities</strong> Act and Transmission Regulation, including that the ISO’s duty to direct the safe,<br />
reliable and economic operation of the AIES would not apply to the interties; the need<br />
identification document process would not apply to interties; allocation of just and reasonable<br />
costs of the transmission system to load and exporters would not apply to interties; and several<br />
other examples set out in Enbridge/MATL’s submission. 33<br />
46. The AESO submitted that a plain reading of the definitions of “transmission system”,<br />
“interconnected electric system”, “transmission facility” and “intertie” make clear that interties<br />
are part of <strong>Alberta</strong>’s transmission system and mandate the AESO to include interties when<br />
planning for an unconstrained transmission system in accordance with Section 15(e) of the<br />
Transmission Regulation. 34<br />
31 Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 13.<br />
32 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 9.<br />
33 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, pages 10-12.<br />
34 Exhibit 0281.02, AESO Argument, October 29, 2012, page 12.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 11
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
<strong>Commission</strong> findings<br />
47. The term “intertie” is defined in the Transmission Regulation as:<br />
1(1)(d) “intertie” means a transmission facility, including its associated components,<br />
that links one or more electric systems outside <strong>Alberta</strong> to one or more points<br />
on the interconnected electric system;<br />
48. The terms “interconnected electric system” and “transmission facility” are defined in the<br />
Electric <strong>Utilities</strong> Act as:<br />
1(1)(z) “interconnected electric system” means all transmission facilities and<br />
all electric distribution systems in <strong>Alberta</strong> that are interconnected, but<br />
does not include an electric distribution system or a transmission<br />
facility within the service area of the City of Medicine Hat or a<br />
subsidiary of the City, unless the City passes a bylaw that is approved<br />
the Lieutenant Governor in Council under section 138;<br />
1(1)(bbb) “transmission facility” means an arrangement of conductors and<br />
transformation equipment that transmits electricity from the high<br />
voltage terminal of the generation transformer to the low voltage<br />
terminal of the step down transformer operating phase to phase at a<br />
nominal high voltage level of more than 25 000 volts to a nominal low<br />
voltage level of 25 000 volts or less, and includes<br />
(i) transmission lines energized in excess of 25 000 volts,<br />
…<br />
(vi) connections with electric systems in jurisdictions bordering <strong>Alberta</strong>,<br />
49. The term “transmission system” is defined in the Electric <strong>Utilities</strong> Act as:<br />
1(1)(ccc) “transmission system” means all transmission facilities in <strong>Alberta</strong> that are<br />
part of the interconnected electric system.<br />
50. The <strong>Commission</strong> finds that the <strong>Alberta</strong> portions of the interties are transmission facilities<br />
which are physically and electrically connected to the rest of the interconnected electric system<br />
and thus are part of the <strong>Alberta</strong> interconnected electric system and the transmission system as<br />
defined in the Electric <strong>Utilities</strong> Act. As such, the AESO has the same general responsibilities for<br />
interties that the AESO has for the interconnected electric system and the transmission system<br />
within <strong>Alberta</strong>. Further, legislative provisions applicable to transmission facilities in <strong>Alberta</strong> and<br />
the interconnected electric system are applicable to <strong>Alberta</strong> portions of the interties.<br />
4.2 What is the nature of ATC and how is it created<br />
51. The Proposed ATC Rule provides a method to allocate ATC between interties. Several<br />
parties objected to the Proposed ATC Rule on the ground that the Proposed ATC Rule does not<br />
reflect the contribution of each individual intertie to <strong>Alberta</strong> ATC. 35 The <strong>Commission</strong> considers it<br />
helpful to clarify the nature of ATC and how ATC is created in dealing with this argument.<br />
35 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 26; Exhibit 0152.02,<br />
Coalition Rebuttal Evidence, July 20, 2012, page 12; Exhibit 0271.01, PowerEx Argument, October 15, 2012,<br />
page 2; Exhibit 0278.01, Cargill Argument, October 15, 2012, page 2; Exhibit 0272.03, TransCanada Argument,<br />
October 15, 2012, page 47.<br />
12 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
52. ATCO Power submitted that ATC is created by the interaction of the underlying electric<br />
systems in the neighbouring jurisdictions and the interties between jurisdictions. ATCO Power<br />
also submitted that to the extent that <strong>Alberta</strong> load customers have paid and continue to pay for<br />
<strong>Alberta</strong>’s system and for a portion of the interties, <strong>Alberta</strong> ratepayers have contributed to the<br />
creation of ATC. 36<br />
53. BC Hydro submitted that ATC is one measure of the ability of an electric system to<br />
transfer energy, and it establishes both the commercial and operational limits of an intertie.<br />
Further, ATC is distinct from the path rating of an intertie, which is the measure of the physical<br />
ability of an intertie to accommodate energy transfers. 37<br />
54. NorthPoint submitted that ATC between two systems A and B would be the lowest of (i)<br />
the ability of system A to reliably supply exports to system B, (ii) the ability of system B to<br />
reliably receive imports from system A and (iii) the thermal capacity of the transmission line(s)<br />
connecting the two systems. 38<br />
55. PowerEx submitted that the debate about whether an individual party could be said to<br />
create ATC was barren, and that it was undeniable that prior to the existing intertie with BC<br />
being interconnected, the ATC from BC to <strong>Alberta</strong> was 0 MW while subsequent to its<br />
interconnection ATC has increased to as much as 765 MW. 39<br />
56. TransCanada submitted that path ratings for interties within the Western Interconnection<br />
are approved by WECC and represent the physical operating capacity of a transmission path,<br />
while TTC is the actual operating capacity of the path and may be less than the path rating.<br />
Further, TTC reflects the actual volume of energy that can safely flow over a path, is dependent<br />
on operating conditions and is therefore non-static. 40<br />
57. TransCanada submitted that the AESO currently uses OPP 304: <strong>Alberta</strong>-BC<br />
Interconnection Transfer Limits to describe the process the AESO currently follows when<br />
calculating ATC and TTC for the AB-BC intertie, and that system conditions will impact the<br />
level of ATC available for the AB-BC intertie. 41<br />
58. Enbridge/MATL submitted that <strong>Alberta</strong> ATC is a result of the entire <strong>Alberta</strong> network<br />
capability, not just the line portion, all of which was funded by <strong>Alberta</strong> consumers, and that ATC<br />
is created by the system. 42<br />
59. Enbridge/MATL submitted that tie-lines are a bridge between two systems that enables<br />
flows to happen, and that the actual transfer capability is created by all three elements together:<br />
the source system, the link or tie, and the destination system. Further, the first time an isolated<br />
system gets connected to another system there appears to be a lot of ATC created simply because<br />
the isolated system has to be strong on its own to serve all the needs of the generation and loads<br />
36 Transcript Volume 5, pages 1089-1091, and Exhibit 0277.02, ATCO Power Argument, October 15, 2012, page<br />
2.<br />
37 Exhibit 0270.02, BC Hydro Argument, October 15, 2012, page 2.<br />
38 Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page 4.<br />
39 Exhibit 0271.01, PowerEx Argument, October 15, 2012, pages 18-19.<br />
40 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, page 5.<br />
41 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 7-8.<br />
42 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 27.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 13
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
within that system. As subsequent interties are added they start to tax the existing system and<br />
there may have to be investment inside the system to increase ATC. 43<br />
60. Morgan Stanley submitted that ATC is affected by any changes to the AIES, including<br />
the addition of interties, internal transmission, generation and load, and ATC does not have static<br />
characteristics but is instead dynamic. This is demonstrated by the fact that since 2005 the<br />
amount of ATC in the AIES has declined, when no interties were constructed, and the BC-AB<br />
intertie did not contribute to the decline in ATC. 44<br />
<strong>Commission</strong> findings<br />
61. Path rating is defined in the Transmission Regulation as follows:<br />
1(1)(i) “path rating” means the rating of capacity to transfer electric energy assigned to a<br />
transmission facility when it was placed in service and rated in accordance with<br />
reliability standards in effect at that time;<br />
62. ATC and TTC are not defined in the Electric <strong>Utilities</strong> Act or the Transmission<br />
Regulation. They are terms defined in the AESO’s Consolidated Authoritative Documents<br />
Glossary 45 as follows (as is TRM):<br />
“available transfer capability” means the remaining transfer capability the ISO<br />
determines can be commercially available for transfers over the interconnected<br />
transmission network over and above already committed uses, and is calculated as the<br />
total transfer capability minus the sum of any applicable transmission reliability<br />
margin and existing transmission commitments.<br />
“total transfer capability” means the amount of real power the ISO determines can be<br />
reliably transferred over the interconnected transmission network under specified system<br />
conditions.<br />
“transmission reliability margin” means that amount of transfer capability the ISO<br />
determines is necessary to ensure the reliable operation of the interconnected electric<br />
system taking into account uncertainties in system conditions and the need for operating<br />
flexibility.<br />
63. From the definitions of these terms it is evident that the amount of ATC at any point in<br />
time is distinct from the path rating of a line and is dependent upon the system conditions and the<br />
need for operating flexibility. 46<br />
64. Most parties in this proceeding submitted that ATC is a measure of the ability of a<br />
system to transfer energy and that the amount of ATC depends on the interaction between<br />
neighbouring jurisdictions and the intertie(s) that connect them. 47 Not only is this consistent with<br />
the defined terms noted above, it is also consistent with the basics of power system dynamics in<br />
43 Transcript Volume 6, pages 1267-1268 and pages 1419-1420.<br />
44 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 37-38.<br />
45 The AESO’s Consolidated Authoritative Documents Glossary is an ISO rule, and as such the Electric <strong>Utilities</strong><br />
Act provides market participants opportunities to raise concerns with these definitions as a market participant can<br />
object to an ISO rule that is filed with the <strong>Commission</strong> (Section 20.4) or complain about an ISO rule that is in<br />
effect (Section 25).<br />
46 Parties in this proceeding have raised issues with the methodology used to calculate the value of these terms, but<br />
not the definitions themselves. These issues are addressed later in this decision.<br />
47 Including ATCO Power, BC Hydro, NorthPoint, TransCanada, Enbridge/MATL and Morgan Stanley.<br />
14 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
that electric energy cannot be safely and reliability transmitted at a level beyond the safe and<br />
reliable limits of what can be provided at one end of a transmission line, received at the other end<br />
of the transmission line, or transmitted over the transmission line.<br />
65. Table 2 in OPP 304 indicates different levels of TTC over the AB-BC intertie. 48 Further,<br />
Table 3 of OPP 304 indicates the TTC levels when various elements of the AIES are out of<br />
service. The various TTC levels in OPP 304 do not coincide with the path rating of the AB-BC<br />
intertie, but rather is limited by system conditions in <strong>Alberta</strong> or BC. This reinforces the idea that<br />
interties do not create ATC in and of themselves, but rather that ATC is a function of the<br />
underlying system(s) and is realized by connecting those systems though an intertie.<br />
66. The submission of Enbridge/MATL are compelling in that the first time an isolated<br />
system gets connected to another system there appears to be a considerable amount of ATC<br />
created simply because the previously isolated system had to be strong on its own to serve all the<br />
needs of the generation and loads within that system. The <strong>Commission</strong> is further convinced that<br />
<strong>Alberta</strong> ATC has changed between 2005 and the present despite no new interties being<br />
constructed. 49<br />
67. While there is no doubt that there was no ATC between <strong>Alberta</strong> and BC prior to<br />
energization of the AB-BC intertie, the <strong>Commission</strong> is not convinced by the argument that the<br />
interties created the ATC and are consequently entitled to its benefit in preference to other<br />
market participants.<br />
68. The <strong>Commission</strong> also recognizes that the AESO’s load shed service for imports (LSSi)<br />
program, which is separate from the interties and is initiated and operated solely by the AESO,<br />
increases the ATC available to the interties. The LSSi program is discussed later in this decision.<br />
69. It is clear to the <strong>Commission</strong> that ATC is a measure of the ability of an interconnected<br />
electric system to transfer electric energy from one jurisdiction to another and is the result of the<br />
conditions within each of the interconnected electric systems. The <strong>Commission</strong> concludes that<br />
interties do not in and of themselves create ATC, but rather they enable (up to the path rating of<br />
the intertie) the transfer of electric energy between neighbouring interconnected electric systems<br />
(up to the transfer capability of each of those interconnected electric systems). The <strong>Commission</strong><br />
concludes that ATC should be treated as a system resource which does not inure to the benefit of<br />
any particular market participant or facility owner.<br />
4.3 How can ATC be allocated<br />
70. Several parties submitted that the energization of MATL will result in a situation where<br />
a simultaneous limit applies to the MATL and AB-BC interties. 50<br />
71. TransCanada submitted that <strong>Alberta</strong> currently has two interties, a synchronous<br />
alternating current (AC) connecting <strong>Alberta</strong> and British Columbia (the AB-BC intertie) and an<br />
48 The AESO witness clarified during the oral hearing that the Import TTC in Table 2 of OPP 304 relates only to<br />
the AB-BC intertie and not the overall <strong>Alberta</strong> TTC. See Transcript Volume 9, pages 1971-1972.<br />
49 Exhibit 0134.02, BC Hydro Evidence, May 7, 2012, page 4; Exhibit 0280.02, Morgan Stanley Argument,<br />
October 29, 2012, pages 37-38.<br />
50 Exhibit 0129.01, Coalition Evidence, May 7, 2012, page 7; Exhibit 0133.01, TransCanada Evidence, May 7,<br />
2012, page 15; Exhibit 134.02, BC Hydro Evidence, May 7, 2012, pages 10-11; Exhibit 0145.02, AESO<br />
Evidence, June 15, 2012, page 7.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 15
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
asynchronous direct current (DC) intertie connecting <strong>Alberta</strong> and Saskatchewan. Since the AB-<br />
SK intertie employs DC back-to-back technology, it has the capability to control the power flow<br />
to predetermined levels independent of contingency events, frequency differences or phase angle<br />
differences between the two systems. The proposed MATL intertie will be a synchronous AC<br />
intertie connecting <strong>Alberta</strong> and Montana. TransCanada submitted that the ability to schedule<br />
interchange transactions on the AB-SK intertie is not currently, in many cases, limited by the<br />
interchange transactions scheduled on the AC interties, but may be limited by internal AIES<br />
constraints. 51<br />
72. The AESO submitted that where an intertie avoids a simultaneous system limit, that<br />
intertie will not be impacted by the allocation contemplated in the Proposed ATC Rule. 52<br />
<strong>Commission</strong> findings<br />
73. The <strong>Commission</strong> accepts that the AB-BC intertie and the MATL intertie are subject to a<br />
simultaneous AC limit, while the AB-SK intertie, due to its physical characteristics, will not be<br />
subject to this simultaneous AC limit. All interties, whether AC or DC, are subject to the overall<br />
capability of the AIES to transmit and receive electric energy. The physical capabilities of a DC<br />
intertie, including the capability to control the power flow to predetermined levels independent<br />
of contingency events, frequency differences or phase angle differences between systems, make<br />
it independent from other interties such that the ATC from a DC intertie cannot physically be<br />
allocated to other interties.<br />
4.4 What is the AESO’s obligation to provide access to the AIES<br />
74. Market participants wishing to access the AIES from neighbouring jurisdictions and to<br />
exchange electric energy through the <strong>Alberta</strong> power pool or to export electric energy from<br />
<strong>Alberta</strong> must have access to ATC over the interties. There is a finite amount of <strong>Alberta</strong> ATC<br />
available, and with the imminent connection of MATL there must a methodology to allocate<br />
ATC between these interties. The Proposed ATC Rule provides an allocation methodology for<br />
ATC and regulates access to the AIES. One of the issues in this proceeding relates to the<br />
AESO’s obligation to provide access to the AIES.<br />
4.4.1 Access to the AIES<br />
75. PowerEx submitted that the two most important purposes of the Electric <strong>Utilities</strong> Act in<br />
the context of this proceeding are Section 5(b) and Section 5(c), that these purposes of the<br />
Electric <strong>Utilities</strong> Act should inform the AESO’s objectives and activities, and that in developing<br />
rules the AESO should provide for the expansion and enhancement of the transmission system in<br />
a way which serves these objectives subject to its overriding duties and responsibilities. 53<br />
76. Several parties submitted 54 that Section 28 and 29 of the Electric <strong>Utilities</strong> Act provide<br />
guidance to the AESO regarding access to the AIES.<br />
51 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 4 and 5.<br />
52 Exhibit 0281.02, AESO Argument, October 29, 2012, page 4.<br />
53 Exhibit 0271.01, PowerEx Argument, October 15, 2012, pages 8-9.<br />
54 AESO in Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 5-7; Enbridge/MATL in Exhibit 0283.02,<br />
Enbridge/MATL Argument, October 29, 2012, pages 19-21.<br />
16 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
77. Enbridge/MATL submitted that Section 33 of the Electric <strong>Utilities</strong> Act sets out how the<br />
AESO is to plan the transmission system and requires the AESO to forecast the needs of <strong>Alberta</strong><br />
and develop plans for the transmission system to provide efficient, reliable and nondiscriminatory<br />
system access service. Further, the obligation to plan the transmission system to<br />
provide non-discriminatory system access service includes providing it to importers of electric<br />
energy, which is consistent with Section 8(c) and Section 10(1) of the Transmission Regulation. 55<br />
78. Morgan Stanley submitted that Section 17(b) and 17(c) and Section 29 of the Electric<br />
<strong>Utilities</strong> Act and Section 15(1)(e) and 15(1)(f) of the Transmission Regulation require the AESO<br />
to ensure that there is sufficient transmission so that all market participants wishing to participate<br />
in the electric energy market are able to do so. Further, these sections mean that transmission<br />
must be in place to support the overarching purpose of the Electric <strong>Utilities</strong> Act which is to<br />
provide for a competitive power pool so that an efficient market for electricity based on fair and<br />
open competition can develop. Morgan Stanley argued that this interpretation is consistent with<br />
the <strong>Commission</strong>’s interpretation of the Electric <strong>Utilities</strong> Act in AUC Decision 2009-042 and the<br />
nature of the <strong>Alberta</strong> market as an energy-only market with no rights to transmission. Morgan<br />
Stanley argued that there is no independent right or property in transmission or capacity that<br />
exists in law or can be assigned or allocated as asserted by some of the MPOs in this<br />
proceeding. 56<br />
79. NaturEner submitted that transmission of energy to or “into” the <strong>Alberta</strong> energy only<br />
market is facilitated through transmission service on the AIES which is a fully regulated<br />
monopoly service. Section 28 of the Electric <strong>Utilities</strong> Act sets out that the AESO is the sole<br />
provider of system access service on the AIES, and a market participant cannot have access to<br />
the <strong>Alberta</strong> energy market without access to the AIES. Further, the allocation of ATC or access<br />
to the <strong>Alberta</strong> interchange capability results in access or limitation of access to the <strong>Alberta</strong><br />
energy market. 57<br />
80. NaturEner also submitted that “[i]f access to the AIES is not FEOC, access to the energy<br />
market cannot be FEOC.” 58<br />
81. NaturEner further submitted that a monopoly service has the duty to: (a) serve all who<br />
ask for service, (b) provide safe and adequate service, and (c) charge only just and reasonable<br />
prices, equally to all shippers using the same service. 59<br />
82. NaturEner submitted that characterization of the <strong>Alberta</strong> energy only market as one<br />
requiring “no rights” access of in merit electric energy to this market is supported by AUC<br />
Decision 2009-042 at paragraph 158. 60<br />
83. The AESO submitted that several sections of legislation support treating imports and<br />
exports in a similar manner as other supply and demand transactions in the market, including:<br />
55 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 12.<br />
56 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 4-6.<br />
57 Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages 2-4.<br />
58 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 23.<br />
59 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 29.<br />
60 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 4.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 17
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
<br />
<br />
<br />
Section 5(b) of the Electric <strong>Utilities</strong> Act indicates that a power pool should exist where all<br />
persons wishing to exchange electric energy can do so on non-discriminatory terms;<br />
Section 17(b) of the Electric <strong>Utilities</strong> Act sets out the duty on the AESO to facilitate a<br />
market that gives all market participants wishing to participate in those markets and to<br />
exchange electric energy a reasonable opportunity to do so; and<br />
Section 18(1) of the Electric <strong>Utilities</strong> Act states the AESO must operate a power pool in a<br />
manner that is open to all market participants exchanging or wishing to exchange electric<br />
energy. 61<br />
84. The AESO submitted that the regulatory scheme also provides support for this approach<br />
as indicated in the statement “to the extent possible, industry suppliers with import capacity<br />
should be treated the same as intra-<strong>Alberta</strong> generators.” 62<br />
85. The AESO submitted that several sections of legislation indicate that the AESO is<br />
supposed to facilitate open access for interties, including:<br />
<br />
<br />
<br />
<br />
Section 29 of the Electric <strong>Utilities</strong> Act states that the AESO “must provide system access<br />
service on the transmission system in a manner that gives all market participants wishing<br />
to exchange electric energy and ancillary services a reasonable opportunity to do so”;<br />
Section 15(e) of the Transmission Regulation states that the AESO must plan a<br />
transmission system that “is sufficiently robust so that 100% of the time, transmission of<br />
all anticipated in-merit electric energy referred to in section 17(c) of the Act can occur<br />
when all transmission facilities are in service”;<br />
Section 17(c) of the Electric <strong>Utilities</strong> Act includes “scheduled exchanges of electric<br />
energy and ancillary services between the interconnected electric system in <strong>Alberta</strong> and<br />
electric systems outside <strong>Alberta</strong>…”; and<br />
Section 15(f) of the Transmission Regulation which states the AESO is to “make<br />
arrangements for the expansion or enhancement of the transmission system so that, under<br />
normal operating conditions, all anticipated in-merit electricity referred to in clause (e)(i)<br />
and (ii) can be dispatched without constraint”. 63<br />
<strong>Commission</strong> findings<br />
86. Section 28 of the Electric <strong>Utilities</strong> Act states that the ISO “is the sole provider of system<br />
access service on the transmission system” and Section 29 states the ISO “must provide system<br />
access service on the transmission system in a manner that gives all market participants wishing<br />
to exchange electric energy and ancillary services a reasonable opportunity to do so.” System<br />
access service is defined in the Electric <strong>Utilities</strong> Act as “…the service obtained by market<br />
participants through a connection to the transmission system, and includes access to exchange<br />
electric energy and ancillary services.” The ability to exchange electric energy is facilitated<br />
61 Exhibit 0145.02, AESO Evidence, June 15, 20122, page 5.<br />
62 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 5-7.<br />
63 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 5-7.<br />
18 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
through the power pool, which is defined in the Electric <strong>Utilities</strong> Act as “…the scheme operated<br />
by the Independent System Operator for (i) exchange of electric energy, and (ii) financial<br />
settlement for the exchange of electric energy.” A market participant is defined in the Electric<br />
<strong>Utilities</strong> Act as “…any person that supplies, generates, transmits, distributes, trades, exchanges,<br />
purchases or sells electricity, electric energy, electricity services or ancillary services…”<br />
87. The definition of market participant includes a person who transmits electricity or<br />
electric energy (an intertie operator) and a person who trades, purchases or sells electricity or<br />
electric energy (shippers on the interties). Thus it is clear to the <strong>Commission</strong> that the AESO’s<br />
statutory duty is to provide both intertie operators and shippers with system access service that<br />
gives them a reasonable opportunity to access the AIES and by extension to the power pool.<br />
88. In deciding what is a reasonable opportunity the <strong>Commission</strong> referred to the purpose of<br />
the legislation and the duties imposed on the AESO. The purposes of the Electric <strong>Utilities</strong> Act<br />
includes Section 5(b) which states that access to the power pool must be on a non-discriminatory<br />
basis to all persons wishing to exchange electric energy, and Section 5(c) further states that the<br />
market structure should not be distorted by unfair advantages of government-owned participants<br />
or any other participant. However, Section 5 does not further clarify what constitutes a<br />
reasonable opportunity for system access.<br />
89. Section 17(i) of the Electric <strong>Utilities</strong> Act states that the AESO has a duty to plan the<br />
transmission system to meet the current and future needs of market participants. Section 33(1) of<br />
the Electric <strong>Utilities</strong> Act states that “[t]he Independent System Operator must forecast the needs<br />
of <strong>Alberta</strong> and develop plans for the transmission system to provide efficient, reliable and nondiscriminatory<br />
system access service and the timely implementation of required transmission<br />
system expansions and enhancements.” Section 33 is clear in that the AESO must plan the<br />
transmission system to provide system access service on a non-discriminator basis. However,<br />
Section 33 does not further clarify what constitutes a reasonable opportunity for system access.<br />
90. Several parties in this proceeding cited AUC Decision 2009-042 regarding its<br />
determination regarding system access for generators to the AIES. 64 In Decision 2009-042 the<br />
<strong>Commission</strong> considered sections 17 and 29 of the Electric <strong>Utilities</strong> Act and determined that there<br />
are no explicit or implicit transmission rights, and that access to the AIES, for all generators, is a<br />
reasonable opportunity and not a right. In Decision 2009-042 the <strong>Commission</strong> stated:<br />
158. The <strong>Commission</strong> is not persuaded by NaturEner’s submission that curtailing new<br />
entrants is discriminatory. The AESO stated that new entrants are subject to the results of<br />
system impact studies during the planning stage which may indicate the need for some<br />
mechanism, such as RAS, to ensure the safety and reliability of the AIES. The<br />
<strong>Commission</strong> has determined that there are no explicit or implicit transmission “rights”<br />
but that the obligation imposed on the AESO is to provide market participants with a<br />
reasonable opportunity to access the AIES. There is nothing inconsistent with the<br />
requirement of a RAS scheme and the provision of a reasonable opportunity to access the<br />
AIES where there may be insufficient transmission available.<br />
64 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 4; Exhibit 0280.02, Morgan Stanley Argument,<br />
October 29, 2012, pages 4-6.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 19
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
91. Regarding arguments made in this proceeding about treating interties and generators<br />
differently, 65 the <strong>Commission</strong> is not persuaded to treat imports and exports differently than other<br />
supply and demand transactions in the market, having regard to clear reference in the Electric<br />
<strong>Utilities</strong> Act to Section 5(b) to “all persons wishing to exchange electric energy”, Section 17(b)<br />
to “all market participants wishing to participate in those markets” and in Section 18(1) to “all<br />
market participants exchanging or wishing to exchange”. The <strong>Commission</strong> considers the AESO<br />
is correct in treating interties in the same manner as generators for the purposes of providing<br />
system access service and access to the power pool.<br />
92. The <strong>Commission</strong> finds a clear legislative requirement to provide non-discriminatory<br />
system access service to market participants. The <strong>Commission</strong> has previously found that there is<br />
nothing inconsistent with the requirement of a RAS scheme to ensure the safety and reliability of<br />
the AIES and the provision of a reasonable opportunity to access the AIES, and a system that<br />
treated all market participants equally. The <strong>Commission</strong> concludes that a reasonable opportunity<br />
for system access service constitutes non-discriminatory access and equal treatment of market<br />
participants, subject to any RAS requirements for maintaining safety and reliability of the AIES<br />
where there may be insufficient transmission available. The <strong>Commission</strong> considers this<br />
reasonable opportunity for system access applies equally to generators and interties.<br />
4.4.2 Access for anticipated versus scheduled energy<br />
93. ATCO Power submitted that Section 15(1)(e) of the Transmission Regulation obligates<br />
the AESO to plan the transmission system taking into consideration the characteristics and<br />
expected availability of generating units, and that there is no reference to any obligation to take<br />
into consideration the characteristics or availability of any existing or future interties. 66<br />
94. ATCO Power submitted that it is only scheduled exchanges of energy that form part of<br />
the anticipated in-merit electric energy referred to in Section 17(c) of the Electric <strong>Utilities</strong> Act,<br />
and that the amount of scheduled exchanges is limited by the available ATC. Accordingly, it is<br />
not all imports and exports up to the path rating of each intertie that should be anticipated as inmerit<br />
electric energy. 67<br />
95. ATCO Power submitted that the AESO’s interpretation of Section 15(1)(e) of the<br />
Transmission Regulation that the AESO plan the transmission system, including all interties, to<br />
be congestion free is contrary to the principle of statutory interpretation as it renders Section 16<br />
of the Transmission Regulation redundant, and that Section 16 of the Transmission Regulation<br />
was not a “poke” or “nudge” for the AESO to build unconstrained interties. 68<br />
96. PowerEx submitted that the AESO conflated its role with respect to the transmission<br />
system as prescribed in Section 15 of the Transmission Regulation, which is expressly internal to<br />
<strong>Alberta</strong>, with its role in respect of interties, in that the AESO believes it is obligated to expand its<br />
65 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, Appendix 2, pages 2-3; Exhibit 0152.02, Coalition<br />
Rebuttal Evidence, July 20, 2012, pages 17-19; Exhibit 0153.02, TransCanada Rebuttal Evidence, July 20, 2012,<br />
page 7.<br />
66 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, pages 8-9.<br />
67 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, pages 8-9.<br />
68 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, pages 8-9.<br />
20 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
system so as to accommodate all interties by ensuring that there is available transfer capability<br />
sufficient to import all scheduled in-merit electric energy on all interties. 69<br />
97. TransCanada submitted that Section 17(c) of the Electric <strong>Utilities</strong> Act deals with<br />
scheduled exchanges of energy, which by their nature have already factored in the limits<br />
imposed by ATC. This follows because an interchange transaction is only scheduled if the e-tag<br />
has been approved and e-tags are only approved if transmission is available. That is, scheduled<br />
exchanges take into account any limits on transmission system and the AESO is not therefore<br />
obligated to relieve these limits. 70<br />
98. TransCanada submitted that the AESO has misinterpreted its obligation and it is unclear<br />
how the AESO interprets Section 15 of the Electric <strong>Utilities</strong> Act such that it must decongest all<br />
interties. TransCanada submitted that Section 15 of the Electric <strong>Utilities</strong> Act expressly states the<br />
AESO’s obligation is to take into consideration the “expected availability of generating units” in<br />
planning a 100% in-merit electric energy; however, there is no mention of an AESO requirement<br />
to take into consideration the expected availability of interties. 71<br />
99. The UCA submitted the AESO appears to interpret scheduled exchanges in Section<br />
17(c) of the Electric <strong>Utilities</strong> Act to mean before ATC or neighbours’ curtailments are<br />
considered; however, a more reasonable interpretation is to consider scheduled from the<br />
perspective of the end of the scheduling process after taking into account ATC and neighbouring<br />
jurisdictions potential restrictions. 72 This interpretation was reflected in an exchange between Mr.<br />
Dawson, on behalf of the AESO, and Mr. Sanderson, on behalf of PowerEx, when Mr. Dawson<br />
stated “…in terms of calling it scheduled energy, I mean, the AESO wouldn’t allow the final<br />
schedule of energy to exceed the simultaneous limit” and “…my understanding is that you can’t<br />
have a schedule until all the parties along the path have agreed to implement that schedule.” 73<br />
100. Enbridge/MATL argued that under the current rules, imports are usually in-merit. They<br />
are bid [offered] in at $0/MWh and will be dispatched before any energy bid [offered] in at a<br />
price greater than $0/MWh. If changes are made and imports are allowed to set prices some<br />
imports will likely still be in-merit. Further, Section 15(1)(f) dictates that the AESO must not<br />
only make a plan providing for all anticipated in-merit imports to be transmitted under normal<br />
operating conditions, but it must also arrange for the development of the transmission system to<br />
effect this plan. 74<br />
101. Enbridge/MATL countered ATCO Power’s argument regarding sections 15 and 16 of<br />
the Transmission Regulation by submitting ATCO Power ignores the difference between the<br />
tools the ISO has available to it to build an unconstrained transmission system under Section 15,<br />
which is generally limited to adding more wires and expanding existing wires, while intertie<br />
restoration under Section 16 is not necessarily a function of adding or expanding wires and can<br />
be achieved with other options such as LSSi. 75<br />
69 Exhibit 0271.01, PowerEx Argument, October 15, 2012, pages 13-14.<br />
70 Exhibit 0272.03, TransCanada Evidence, October 15, 2012, pages 21-22.<br />
71 Exhibit 0272.03, TransCanada Evidence, October 15, 2012, page 21.<br />
72 Exhibit 0275.01, UCA Argument, October 15, 2012, page 16.<br />
73 Transcript Volume 9, page 1948.<br />
74 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, pages 13-15.<br />
75 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, pages 13-15.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 21
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
102. The AESO argued that Section 15(1)(e) and 15(1)(f) of the Transmission Regulation<br />
require the AESO to plan and make arrangements for a congestion free transmission system for<br />
all anticipated in-merit electric energy, and that the definition of anticipated should apply unless<br />
the application of the literal rule would lead to an absurdity, saying it does not. Further, in<br />
fulfilling its duty to plan for an unconstrained transmission system, the AESO must take notice<br />
of the fact that there is underutilized transmission capacity on the interties due to system<br />
limitations that restrict imports and exports. 76<br />
103. The AESO argued 77 that ATCO Power’s contention that only scheduled exchanges<br />
referred to in Section 17(c) of the Electric <strong>Utilities</strong> Act are to be considered anticipated in-merit<br />
electric energy leads to the incorrect conclusion that system limits are able to drive ATC on the<br />
interties to zero, and that zero would be an appropriate level of anticipated in-merit energy for<br />
planning purposes. Further, in light of <strong>Alberta</strong>’s market design this could not have been the<br />
intent of the legislation and that anticipated in-merit energy includes not only the energy that<br />
actually flows, but also the energy that can reasonably be expected to flow, which in this context<br />
is comprised of those transactions affected by ATC limits.<br />
104. The AESO said 78 that it interprets the legislation and regulatory scheme to require that<br />
imports and exports up to the path rating of each intertie should be considered as anticipated inmerit<br />
electric energy and argued that the AESO thus has an obligation to plan the transmission<br />
system so that every intertie (both existing and future) can simultaneously transfer up to its path<br />
rating.<br />
<strong>Commission</strong> findings<br />
105. If a market participant has made an investment in infrastructure in order to connect to<br />
the AIES, for example an intertie, it is clear to the <strong>Commission</strong> that the market participant wishes<br />
to exchange electric energy with the AIES. In providing system access service the AESO must<br />
meet its legislated requirements regarding all in-merit or scheduled electric energy while also<br />
taking into account electric energy that is reasonably expected to be in-merit or scheduled. In this<br />
regard the <strong>Commission</strong> sees no distinction between an intertie and a generator.<br />
106. Section 15 of the Transmission Regulation states:<br />
15(1) In making rules under section 20 of the Act, and in exercising its duties under<br />
sections 17 and 33(1) of the Act, the ISO must:<br />
…<br />
(e) taking into consideration the characteristics and expected availability of generating units,<br />
plan a transmission system that<br />
(i) is sufficiently robust so that 100% of the time, transmission of all anticipated inmerit<br />
electric energy referred to in section 17(c) of the Act can occur when all<br />
transmission facilities are in service, and<br />
76 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 11-12.<br />
77 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 11-12.<br />
78 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 5-7.<br />
22 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(ii) is adequate so that, on an annual basis, and at least 95% of the time, transmission<br />
of all anticipated in-merit electric energy referred to in section 17(c) of the Act<br />
can occur when operating under abnormal operating conditions,<br />
(f) make arrangements for the expansion or enhancement of the transmission system so that,<br />
under normal operating conditions, all anticipated in-merit electricity referred to in clause<br />
(e)(i) and (ii) can be dispatched without constraint, and<br />
107. Section 17 of the Electric <strong>Utilities</strong> Act states:<br />
17 The Independent System Operator has the following duties:<br />
…<br />
(c) to determine, according to relative economic merit, the order of dispatch of<br />
electric energy and ancillary services in <strong>Alberta</strong> and from scheduled exchanges<br />
of electric energy and ancillary services between the interconnected electric<br />
system in <strong>Alberta</strong> and electric systems outside <strong>Alberta</strong>, to satisfy the<br />
requirements for electricity in <strong>Alberta</strong>;<br />
108. The legislated requirement rests with the AESO to plan the transmission system, which<br />
is done in stages and may take time to construct and energize, in order to provide nondiscriminatory<br />
system access service to the market participant and a reasonable opportunity to<br />
exchange electric energy.<br />
109. The <strong>Commission</strong> considers that Section 15 the Transmission Regulation speaks to the<br />
performance criteria that the AESO must meet when planning and constructing the transmission<br />
system and does not limit the AESO’s requirement to provide non-discriminatory system access<br />
service and a reasonable opportunity to exchange electric energy. The performance criteria in<br />
Section 15 simply provide a goal to measure the AESO’s performance in meeting the<br />
requirements of Section 16 and does not render Section 16 of the Transmission Regulation<br />
redundant, as argued by ATCO Power.<br />
5 Grounds for Objections<br />
110. The <strong>Commission</strong> has discussed the issues in the following order, based largely on the<br />
order provided by several of the MPOs. However, the <strong>Commission</strong> has considered the issues in<br />
all contexts when determining whether the MPOs have met the onus of proving the Proposed<br />
ATC Rule is technically deficient, does not support the fair, efficient and openly competitive<br />
operation of the market, or is not in the public interest.<br />
5.1 Rule does not support the FEOC operation of the market<br />
111. Parties submitted that the Proposed ATC Rule does not support the fair, efficient and<br />
openly competitive operation of the market because the Proposed ATC Rule:<br />
(a) Provides incorrect economic incentives;<br />
(b) Impedes open competition;<br />
(c) Fails to align with existing AESO practices;<br />
(d) Fails to align with existing North American practices;<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 23
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(e) Negatively impacts pool price;<br />
(f) Leads to increased bookout fees;<br />
(g) Impacts parties with firm transmission rights in other jurisdictions; and<br />
(h) Was not finalized when an investment decision was made.<br />
5.1.1 Economic incentives<br />
Dynamic signal/investment signal<br />
112. Several parties in this proceeding indicated that the Proposed ATC Rule is not efficient<br />
because it does not send a market signal or provide an appropriate economic incentive that will<br />
encourage investment in new interties that result in increased transfer capacity as opposed to<br />
displacing existing capacity. 79<br />
113. PowerEx submitted that Government policy firmly established through legislation and<br />
regulation that interties are to be restored to their 2004 capacity whether or not the <strong>Commission</strong><br />
or anyone else considers that to be economically efficient. 80<br />
114. The Coalition submitted the Proposed ATC Rule creates a perverse incentive by<br />
encouraging the builders of new transmission facilities to develop transmission projects without<br />
creating new transmission capacity. 81<br />
115. TransCanada submitted that since the Proposed ATC Rule derogates from existing firm<br />
transmission service, new interties will likely be unable to sell the firm transmission rights<br />
elsewhere that is required to finance the investment in the new intertie, 82 and that requiring new<br />
merchant interties to invest in creating incremental <strong>Alberta</strong> interchange capability (AIC) 83<br />
coincident with any sale of firm transmission service will send the proper investment signal. 84<br />
116. PowerEx submitted that the development of ATC for either new or existing interties<br />
may require transmission investments outside <strong>Alberta</strong>, and that the Proposed ATC Rule relies on<br />
the AESO to make the necessary investments to create intertie ATC which inefficiently limits<br />
such investments to the geographical constraints of <strong>Alberta</strong>. 85<br />
79 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, page 8; Exhibit 0129.01, Coalition Policy and Financial<br />
Impact Evidence, May 7, 2012, pages 2-3; Exhibit 0050.00, PowerEx Objection, December 19, 2011, page 6;<br />
Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 21-22; Exhibit 0138.01, TransCanada (Roach)<br />
Evidence, May 7, 2012, pages 6-7; Exhibit 0153.02, TransCanada Rebuttal Evidence, July 20, 2012, page 3;<br />
Exhibit 0275.01, UCA Argument, October 15, 2012, pages 8-9.<br />
80 Exhibit 0271.01, PowerEx Final Argument, October 15, 2012, page 23.<br />
81 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 12.<br />
82 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 21-22.<br />
83 AIC is defined in the AESO’s Consolidated Authoritative Documents Glossary as “the amount of interconnected<br />
electric system transmission capability that the ISO determines is available for allocation to all transfer paths,<br />
after subtracting amounts for relevant factors including system operating limits, generating capacity and <strong>Alberta</strong><br />
internal load.”<br />
84 Exhibit 0153.02, TransCanada Rebuttal Evidence, July 20, 2012, page 6.<br />
85 Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 31.<br />
24 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
117. The AESO, Enbridge/MATL and NaturEner submitted that the facts indicate that the<br />
Proposed ATC Rule does send an appropriate investment signal for new interties as the parties<br />
who are currently building a new intertie (and most likely to construct additional intertie<br />
capacity) support the Proposed ATC Rule. 86 In addition, the AESO submitted that the Proposed<br />
ATC Rule creates an incentive to make a new intertie additive, because an intertie that avoids a<br />
simultaneous ATC limit is not subject to the sharing of ATC. 87<br />
118. Enbridge/MATL submitted during the hearing that “…in the case of MATL proper, if<br />
they had adopted a configuration that included, for example, the AC-DC-AC converter and<br />
added $120 million of additional costs to the project, it wouldn’t have been viable.” 88<br />
119. Morgan Stanley submitted that the Proposed ATC Rule will increase competition for<br />
imports into <strong>Alberta</strong> as it will bring an additional measure of discipline to the <strong>Alberta</strong> import<br />
market and increased liquidity in the forward market. 89<br />
Static efficiency<br />
120. PowerEx submitted that <strong>Alberta</strong> is interested in the aggregate use of the interties because<br />
it makes no difference to the <strong>Alberta</strong> pool price which intertie actually supplies that aggregated<br />
power and that the only material difference from an economic efficiency perspective between the<br />
Proposed ATC Rule and the capacity contribution approach advocated by the Coalition,<br />
PowerEx and TransCanada relates to dynamic efficiency. 90<br />
121. PowerEx, TransCanada, NorthPoint and Cargill submitted that they have objected to the<br />
Proposed ATC Rule in favour of an alternative rule, which is consistent with their belief that<br />
their opportunity to trade with <strong>Alberta</strong> will be enhanced, not diminished, if their access to both<br />
interties is determined under the Capacity Contribution Approach 91 rather than the Proposed<br />
ATC Rule. 92<br />
122. Enbridge/MATL submitted that under the Proposed ATC Rule there is the potential risk<br />
for pro rata reduction in transactions across each intertie, but traders on either intertie will face<br />
an equal risk of reduction regardless of the path upon which they are trading (approximately a<br />
one-third reduction) which can be managed. Further, intertie developers can determine with<br />
sufficient certainty how much ATC will be available to proceed with a project. 93<br />
123. Morgan Stanley submitted that a proper evaluation of the Proposed ATC Rule cannot be<br />
limited to a static analysis in a single hour. Morgan Stanley submitted the Proposed ATC Rule<br />
will result in positive short-term economic efficiency through discipline amongst traders<br />
86 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 19-20; Exhibit 0283.02, Enbridge/MATL Argument,<br />
October 29, 2012, pages 32-34; Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages 25-26.<br />
87 Transcript Volume 8, page 1712; Exhibit 0281.02, AESO Argument, October 29, 2012, page 23.<br />
88 Transcript Volume 6, September 18, 2012, page 1331.<br />
89 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 54-55.<br />
90 Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 29.<br />
91 PowerEx clarified that the capacity contribution approach considers the extent to which the energization of a new<br />
intertie increase the ATC of the AIES, such that ATC is allocated based on the capacity contribution of each<br />
intertie. See Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 3 and page 24.<br />
92 Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 29; Exhibit 0278.01, Cargill Argument, October<br />
15, 2012, page 2.<br />
93 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, pages 28-29.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 25
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
resulting from repeated competition, rather than static competition in a single hour, on all<br />
interties to use the capacity allocated to the intertie when there is a price spread between the<br />
<strong>Alberta</strong> and US markets. Further, this discipline will only increase as the number of constrained<br />
hours increases. 94<br />
SATL considerations<br />
124. Several parties in this proceeding indicated that the development of the Saskatchewan<br />
<strong>Alberta</strong> Transmission Line (SATL) will be less likely to proceed if it cannot preserve access to<br />
any ATC that results from SATL, 95 or that SATL may reasonably expect the <strong>Alberta</strong> system to<br />
pay for those facility costs that enable the intertie to increase ATC. 96<br />
125. Morgan Stanley argued that SATL intervened in this proceeding and chose not to<br />
participate, and as a result there is no basis to infer what SATL’s views are in respect of the<br />
Proposed ATC Rule and its effects. 97<br />
126. SATL submitted that it is in the process of developing a bi-directional 150 MW AC-DC-<br />
AC converter station to interconnect the SaskPower transmission grid to the AIES near<br />
Lloydminster, and that SATL did not intend to, nor did it, file in support of any MPOs or the<br />
AESO as SATL’s position is that a DC interconnection as proposed by SATL will not adversely<br />
impact the existing nor future ATC allocation on <strong>Alberta</strong>’s interties. 98<br />
<strong>Commission</strong> findings<br />
Dynamic signal/investment signal<br />
127. An ATC allocation methodology that requires new interties to create or add incremental<br />
ATC would send a different investment signal than the Proposed ATC Rule. The <strong>Commission</strong><br />
considers the investment signal under the Proposed ATC Rule treats all market participants<br />
equally in that if any intertie developer wishes to capture the full benefit of resulting ATC up to<br />
its path rating it will have the option to invest in various technologies or methods that ensure<br />
such an outcome, 99 but is not required to make such investments in order to connect to the AIES<br />
for system access service.<br />
128. The <strong>Commission</strong> is not convinced that under the Proposed ATC Rule new intertie<br />
developers may not be able to sell firm transmission rights to finance their project as the<br />
construction of the MATL intertie is evidence to the contrary. The <strong>Commission</strong> accepts that the<br />
94 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 25-26.<br />
95 Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page 15; Exhibit 0274.01, SaskPower Argument,<br />
October 15, 2012, page 5.<br />
96 Exhibit 0272.03, TransCanada Argument, October 15, 2012, pages 12-13.<br />
97 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 49.<br />
98 Exhibit 0057.01, Saskatchewan <strong>Alberta</strong> Tie Line Statement of Intent to Participate, January 11, 2012.<br />
99 In this proceeding there was considerable evidence presented on various technologies that could be installed on<br />
the MATL intertie that would make it no longer subject to a simultaneous limit with the AB-BC intertie. Some of<br />
these technologies included an AC-DC-AC converter station or an HVDC transmission line, and there may be<br />
other options. The <strong>Commission</strong> does not consider it necessary to investigate any of these options as they are<br />
outside the scope of this proceeding, which is to determine the merits of the Proposed ATC Rule for allocating<br />
ATC.<br />
26 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
MATL intertie would likely not have been constructed if there was a requirement for incremental<br />
ATC with a new intertie. 100<br />
129. The <strong>Commission</strong> finds that development of more interties and import capacity and the<br />
resulting prospects of increased power supply in the future from outside <strong>Alberta</strong> is more likely to<br />
achieve greater economic efficiency in the <strong>Alberta</strong> power market. Further, it is likely to result in<br />
public benefit for the consumers through increased competition.<br />
130. The <strong>Commission</strong> is not persuaded that the dynamic economic effect of the Proposed<br />
ATC Rule will be to decrease future intertie development or promote future intertie development<br />
without investing in facilities resulting in additional ATC.<br />
131. Regarding PowerEx’s submission that the Proposed ATC Rule will inefficiently limit<br />
investments to create intertie ATC to within the geographical borders of <strong>Alberta</strong>, the<br />
<strong>Commission</strong> refers to the unchallenged evidence of BC Hydro that since 2003 the constraints<br />
responsible for limiting <strong>Alberta</strong> ATC have been sourced in <strong>Alberta</strong> approximately 90% of the<br />
time for imports and approximately 93% of the time for exports. 101 With this information it<br />
appears <strong>Alberta</strong> could do more to relieve the constraints on import and export ATC.<br />
Static efficiency<br />
132. The <strong>Commission</strong> recognizes that under the current market rules in any instant in time the<br />
<strong>Alberta</strong> pool price is indifferent to which intertie delivers the required energy. The <strong>Commission</strong><br />
also agrees under the Proposed ATC Rule the potential risk for pro rata reduction would<br />
effectively be shared equally between interties that share simultaneous limits, that traders on<br />
those interties can make a reasonable estimate of their expected flows and that through repeated<br />
competition traders will discipline each other for unused capacity.<br />
SATL considerations<br />
133. The <strong>Commission</strong> recognizes there are potentially differences in the facility requirements<br />
for MATL and SATL as the MATL interconnection joins two jurisdictions within the WECC,<br />
while SATL is proposed to join the WECC (part of NERC’s Western Interconnection) and the<br />
MRO (part of NERC’s Eastern Interconnection). These differences have not been established in<br />
this proceeding. The <strong>Commission</strong> finds the evidence of the likely impact of the Proposed ATC<br />
Rule on the SATL project to be inconclusive.<br />
134. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
100 Transcript Volume 6, September 18, 2012, page 1331; Exhibit 0283.02, Enbridge/MATL Argument, October 29,<br />
2012, pages 32-34.<br />
101 Exhibit 0134.02, BC Hydro Evidence, May 7, 2012, page 4.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 27
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
5.1.2 Open competition considerations<br />
Race to zero<br />
135. Several parties submitted that the Proposed ATC Rule will effectively result in<br />
participants offering their energy at $0/MWh (referred to as the race to zero), which some argued<br />
was not an outcome that supports the FEOC operation of the market. 102<br />
136. Morgan Stanley and the AESO submitted that the race to zero is a legitimate market<br />
response and is no more or no less than a demonstration of competition. 103 In addition, the AESO<br />
submitted this form of competition is no different than the strategy employed today by many<br />
generators in <strong>Alberta</strong>, often comprising more than half of total supply. 104<br />
Allocation to the interties or to the shippers<br />
137. ATCO Power submitted that in order to allocate ATC based on the offers received by<br />
the AESO, the AESO must deal directly with the shippers on the interties rather than with the<br />
interties themselves because by failing to deal directly with pool participants the reverse merit<br />
order provision under the Proposed ATC Rule presents opportunities for withholding and will<br />
lead to arbitrary, unfair and inefficient import/export transactions. 105 ATCO Power also submitted<br />
that non-firm shippers can offer their energy on the BC intertie which will impact the allocation<br />
between the AB-BC intertie and MATL. ATCO Power submitted that the offers from non-firm<br />
shippers, which are unlikely to ever be scheduled, can impact the allocation of ATC among the<br />
other shippers which is an example of an unfair and arbitrary result. 106<br />
138. Morgan Stanley submitted that if the Proposed ATC Rule is not confirmed and another<br />
rule which allows for the de facto creation of property rights is implemented, the message to the<br />
marketplace is that the <strong>Alberta</strong> market is closed to new entrants. 107 Conversely, the AESO<br />
submitted that investors in MATL have confirmed that they consider the Proposed ATC Rule to<br />
welcome competitive supply sources to <strong>Alberta</strong>. 108<br />
Subsidy from existing interties to new interties<br />
139. Several parties submitted that the Proposed ATC Rule amounts to a subsidization from<br />
interties that create ATC to those that do not, which they argue is inefficient, unfair and counter<br />
to open competition. 109<br />
102 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, Appendix 1, pages 1-2; Exhibit 0277.02, ATCO Power<br />
Argument, October 15, 2012, pages 10-12; Exhibit 0129.01, Coalition Policy and Financial Impact Evidence,<br />
May 7, 2012, page 25; Exhibit 0055.00, NorthPoint Objection, December 19, 2011, page 5; Exhibit 0273.01,<br />
NorthPoint Argument, October 15, 2012, page 18; Exhibit 0272.03, TransCanada Argument, October 15, 2012,<br />
pages 48-49; Exhibit 0153.02, TransCanada Rebuttal Evidence, July 20, 2012, page 12.<br />
103 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 21; Exhibit 0281.02, AESO Argument,<br />
October 29, 2012, pages 17-18.<br />
104 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 17-18.<br />
105 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, page 14.<br />
106 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, pages 11-12.<br />
107 Exhibit 0144.02, Morgan Stanley Capital Group Evidence, June 15, 2012, pages 3-4.<br />
108 Exhibit 0281.02, AESO Argument, October 29, 2012, page 22.<br />
109 Exhibit 0156.03, ATCO Power Rebuttal Evidence, July 20, 2012, page 9; Exhibit 0278.01, Cargill Argument,<br />
October 15, 2012, page 2; Exhibit 0272.03, TransCanada Evidence, October 15, 2012, page 44.<br />
28 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
140. Morgan Stanley submitted that ATCO Power’s cross subsidy concept is actually rent<br />
dissipation that would occur as new market players compete with incumbents and is a result of<br />
and indication of competition. 110<br />
<strong>Commission</strong> findings<br />
Race to zero<br />
141. The <strong>Commission</strong> recognizes that in the <strong>Alberta</strong> wholesale electricity market there are<br />
multiple market participants that offer their energy in at $0/MWh, as noted by the AESO, and<br />
that the <strong>Alberta</strong> wholesale electricity markets is a competitive market. Further, in this market the<br />
pool price does, on occasion, settle at $0/MWh. The <strong>Commission</strong> is not convinced by<br />
suggestions that a race to zero does not support the fair, efficient and openly competitive<br />
operation of the market.<br />
Allocation to the interties or to the shippers<br />
142. Regarding ATCO Power’s submissions that the AESO not dealing directly with shippers<br />
on the interties may lead to arbitrary, unfair and inefficient results, the <strong>Commission</strong> considers the<br />
AESO has no other option available. In the absence of a pricing mechanism for intertie<br />
transactions the AESO has no way to distinguish between shippers on a given intertie. With no<br />
transmission rights in <strong>Alberta</strong> there is no means for the AESO to recognize the transmission<br />
rights of a shipper in a neighbouring jurisdiction. Under the current market rules the <strong>Commission</strong><br />
considers that Proposed ATC Rule properly prescribes dealing with the intertie operators rather<br />
than with the shippers on the interties.<br />
Subsidy from existing interties to new interties<br />
143. As mentioned previously in this decision the <strong>Commission</strong> considers that ATC should be<br />
treated as a system resource accessible to users on a non-discriminatory individual basis. As<br />
there is no ATC belonging to any existing intertie to be transferred to a new entrant it cannot be<br />
considered a subsidy.<br />
144. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
5.1.3 Rule fails to alight with existing AESO practices<br />
145. Several parties in this proceeding argued that the AESO’s use of the transmission<br />
constraints management (TCM) principles, which were approved by the <strong>Commission</strong> in AUC<br />
Decision 2009-042, were intended to apply for real-time unforeseen congestion that is infrequent<br />
and of short duration, and should not apply for the Proposed ATC Rule because ATC allocation<br />
is neither infrequent or of short duration. 111<br />
110 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 44-45.<br />
111 Exhibit 0051.00, ATCO Power Objection, December 19, 2011, page 2; Exhibit 0142.02, ATCO Power Evidence,<br />
May 7, 2012, Appendix 2, pages 2-3; Exhibit 0156.03, ATCO Power Rebuttal Evidence, July 20, 2012, page 5;<br />
Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, pages 16-17; Exhibit 0272.03, TransCanada<br />
Argument, October 15, 2012, pages 31-32; Exhibit 0153.02, TransCanada Rebuttal Evidence, July 20, 2012,<br />
page 11.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 29
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
146. PowerEx submitted the AESO has established policies for dealing with generation and<br />
load interconnection requests where a proposed connection will cause or exacerbate an existing<br />
constraint on the AIES in that the AESO may assign and utilize a remedial action scheme, and<br />
the customer can choose to either accept the RAS as a condition to interconnect or decline<br />
service until the system is reinforced. 112<br />
147. The Coalition and TransCanada indicated that with respect to the wind power<br />
management rule (WPM Rule), only wind facilities are subject to the pro rata curtailments and<br />
not other generation sources. This is consistent with both the cost causation principle, in<br />
recognition that ramping events are caused by wind facilities and not other generators, and the<br />
fairness principle whereby equals are treated equally and unequals are treated unequally. 113<br />
148. The Coalition submitted that the AESO’s system access policy, as described in a<br />
February 28, 2012 letter from the AESO to the AUC, gives priority to existing customers over<br />
new customers whose impending interconnection would cause or exacerbate transmission<br />
congestion. In addition, providing MATL conditional access to the AIES such that the combined<br />
AB-BC intertie and MATL intertie transfer capability limit is not exceeded by flows over the<br />
interconnection is consistent with the AUC Decision 2009-042 ruling that conditional access to a<br />
new participant constitutes reasonable access when it causes transmission constraints. 114<br />
149. NaturEner submitted that access to the AIES is determined based on relative economic<br />
merit, and where energy offers at the same price are both in merit a pro rata determination grants<br />
non-discriminatory access without giving preferential rights to one party or another to access<br />
<strong>Alberta</strong>’s energy only market. Further, this concept has been established and is currently used in<br />
the TCM Rule, WPM Rule, and the AESO’s supply surplus rule. 115<br />
150. The AESO submitted that the Proposed ATC Rule does not differ from current practice<br />
with respect to the consideration given to firm transmission rights held on the other side of the<br />
border; neither current practice nor the Proposed ATC Rule give them consideration. 116 The<br />
AESO submitted that the Proposed ATC Rule and the TCM Rule use economic dispatch<br />
following the merit order as contemplated in Section 17(c) of the Electric <strong>Utilities</strong> Act, and that<br />
the Proposed ATC Rule, the TCM Rule and the WPM Rule all employ pro rata calculations in<br />
situations where energy offer price cannot be used to differentiate among transactions. 117<br />
151. Further, the AESO indicated aspects of the current ISO rules are found in the Proposed<br />
ATC Rule, including curtailment that is done by LIFO ahead of time and by pro rata during the<br />
delivery hour with no regard to the existence of firm/non-firm transmission rights in other<br />
jurisdictions. Also, exports are curtailed real time on a pro rata basis if necessary, and import<br />
opportunity service and export opportunity service do not provide preferential access, rollover<br />
rights seniority or the ability to sell in a secondary market. 118<br />
112 Exhibit 0050.00, PowerEx Objection, December 19, 2011, pages 7-8.<br />
113 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, pages 16-17; Exhibit 0272.03, TransCanada<br />
Argument, October 15, 2012, pages 29-32.<br />
114 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 19.<br />
115 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 4.<br />
116 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 16.<br />
117 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 10-11.<br />
118 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 15-16<br />
30 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
<strong>Commission</strong> findings<br />
152. The AESO has not indicated that the Proposed ATC Rule will apply to situations where<br />
there is real-time unforeseen congestion that is infrequent and short duration, as it did in<br />
Proceeding ID No. 41 concerning the TCM Rule. Rather, the AESO has indicated the Proposed<br />
ATC Rule will employ pro rata calculations in situations where energy offer price does not<br />
differentiate among transactions. The <strong>Commission</strong> does not find this inconsistent with the TCM<br />
Rule or to be unfair or technically deficient.<br />
153. In considering other existing AESO practices using pro rata allocations, as identified by<br />
NaturEner, ISO rules Section 202.5: Supply Surplus (ISO rules Section 202.5), which is currently<br />
in effect, states at Section 2(2) that the AESO, when considering a supply surplus situation, must<br />
follow certain procedures including “(d) issue, on a pro rata basis: (i) dispatches to generating<br />
units for partial volumes of flexible blocks of the zero dollar ($0) offers; and (ii) directives to any<br />
available wind aggregated generating facilities.” In addition, the <strong>Commission</strong> recognizes that<br />
ISO rules Section 202.3: Issuing Dispatches for Equal Prices (ISO rules Section 202.3), which is<br />
currently in effect, states that for equal priced operating block the ISO can issue dispatches on a<br />
pro rata basis. Finally, OPP 303: <strong>Alberta</strong>-BC Interconnection Operation, which is currently in<br />
effect (as part of its application for the Proposed ATC Rule the AESO proposes to remove this<br />
OPP) states “if schedule curtailments are required within the hour on the <strong>Alberta</strong>-BC<br />
interconnection, they must be carried out on a pro-rata basis, if the reason for the curtailment<br />
originates in <strong>Alberta</strong>.” The <strong>Commission</strong> considers that the pro rata allocation in the Proposed<br />
ATC Rule is consistent with these ISO rules.<br />
154. The Proposed ATC Rule allocates ATC between interties on a pro-rata basis, which the<br />
<strong>Commission</strong> finds treats them equitably in terms of their right to access the AIES. The<br />
<strong>Commission</strong> considers this is consistent with the principles set out in the WPM Rule which treats<br />
all wind generators equally.<br />
155. Regarding the AESO policy and practice of requiring new entrants to install a RAS<br />
scheme, the <strong>Commission</strong> accepts the testimony of the AESO that the MATL intertie will be<br />
equipped with a RAS scheme as set out in the pending WECC system studies. 119 The<br />
<strong>Commission</strong> finds this is a reasonable opportunity for system access service which is nondiscriminatory<br />
access and equal treatment of market participants, subject to any RAS<br />
requirements for maintaining safety and reliability of the AIES where there may be insufficient<br />
transmission available.<br />
156. The AESO’s February 28, 2012 letter to the AUC indicates that the option that reflects<br />
the practice that is most closely followed at the current time is that the AESO would connect<br />
market participants as long as (i) there is an ability to compete; (ii) the system remains operable;<br />
and (iii) there is a plan to fix any existing constraints on the system. 120 Upon a plain reading of<br />
the February 28, 2012 letter from the AESO to the AUC the <strong>Commission</strong> does not agree with the<br />
Coalition’s interpretation that the AESO’s system access policy gives priority to existing<br />
customers over new customers.<br />
119 Exhibit 0062.01, AESO Intertie Framework Recommendation Paper, p. 14-15 (tile 130 of the exhibit); Exhibit<br />
0145.02, AESO Evidence, June 15, 2012, pages 19-21.<br />
120 Exhibit 0209.01, PowerEx’s submission of AESO’s February 28, 2012 letter to AUC, page 3.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 31
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
157. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
5.1.4 Rule fails to align with existing North American practices<br />
158. Several parties in this proceeding indicated that jurisdictions throughout North America<br />
require that new transmission facility interconnection do not have a negative commercial or<br />
reliability impact on the transfer capability of existing facilities, also known as priority to<br />
existing firm transmission customers or the hold harmless principle. 121<br />
159. The Coalition submitted that the AESO’s existing policy provides de facto firm service<br />
priority to existing customers with firm service rights outside <strong>Alberta</strong> on interconnected systems<br />
and that ATC for imports and exports is currently allocated to those with firm service rights on<br />
the other side of the interconnection. Further, the Coalition submitted that the AESO should<br />
continue to honor firm service rights granted in other jurisdictions by treating such rights holders<br />
as a common class and assessing priority within the class in the same manner as it does other<br />
classes. This means that when there is a new entrant to the class the new entrant assumes the<br />
burden of the foreseeable outages it creates and unforeseeable outages are handled on a pro rata<br />
basis. 122<br />
160. The Coalition submitted the nature of opportunity service is not relevant to this<br />
proceeding because this proceeding is concerned with the allocation of ATC between interties<br />
and not between market participants. Opportunity service applies to the market participants<br />
transacting over the interties and not to the interties themselves. 123<br />
161. NorthPoint and TransCanada submitted that a recent British Columbia <strong>Utilities</strong><br />
<strong>Commission</strong> (BCUC) decision indicated that the British Columbia Transmission Corporation<br />
(BCTC), now BC Hydro, 124 should respect the system constraints in <strong>Alberta</strong> when selling firm<br />
transmission, and there is a responsibility on a control area to account for restrictions in other<br />
jurisdictions when allocating intertie usage. 125<br />
162. TransCanada provided several Federal Energy Regulatory <strong>Commission</strong> (FERC)<br />
precedents which consistently respected the rights of existing firm customers, 126 and the granting<br />
of increased transfer capability to those customers that pay for network upgrades. 127 In addition,<br />
TransCanada cited Canadian precedent in the Regie de l’energie decision 128 in Quebec that<br />
acknowledged that existing firm customers had a priority right under the rollover provisions of<br />
Hydro Quebec’s tariff.<br />
121 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 20; Exhibit 0271.01,<br />
PowerEx Argument, October 15, 2012, page 31; Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page<br />
17; Exhibit 0131.01, TransCanada (Musco) Evidence, May 7, 2012, pages 5-6.<br />
122 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 19.<br />
123 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, page 5.<br />
124 BCUC Order G-103-09, September 10, 2009.<br />
125 Exhibit 0055.00, NorthPoint Objection, December 19, 2011, page 4; Exhibit 0133.01, TransCanada Evidence,<br />
May 7, 2012, pages 23-24; Exhibit 0138.01, TransCanada (Roach) Evidence, May 7, 2012, pages 5-6.<br />
126 Exhibit 0131.01, TransCanada (Musco) Evidence, May 7, 2012, pages 10-12.<br />
127 Exhibit 0131.01, TransCanada (Musco) Evidence, May 7, 2012, pages 19-21.<br />
128 Regie de l’Energie, Quebec, D-2010-160, December 20, 2010.<br />
32 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
163. Enbridge/MATL submitted that payment of export opportunity service (XOS) or import<br />
opportunity service (IOS) under the ISO tariff does not secure a transmission path across the<br />
provincial border. Further, XOS and IOS are not firm service, they are not comparable to the<br />
FERC contract path concept, and they are not point to point. 129<br />
164. Regarding FERC precedent, Enbridge/MATL submitted that it is not applicable as the<br />
FERC regime involves firm transmission customers, which do not exist in <strong>Alberta</strong>. 130<br />
Enbridge/MATL submitted the Regie de l’energie case is different from this proceeding because<br />
both parties in the Regie case had firm transmission service on both sides of the interconnect. 131<br />
165. Further, Enbridge/MATL indicated that there is a difference between physical and<br />
financial rights in regard to existing facilities. Regarding physical rights, a new transmission<br />
facility should not affect the reliability of the system to which it connects, as the WECC would<br />
require for a new intertie. However, Enbridge/MATL submitted the hold harmless principle<br />
should not be extended beyond reliability matters to include commercial impacts. 132 and that<br />
suppliers outside the <strong>Alberta</strong> grid have historically not paid for and received firm transmission<br />
rights on the <strong>Alberta</strong> grid. 133<br />
166. Morgan Stanley submitted that the vesting of de facto property rights is contrary to the<br />
<strong>Alberta</strong> market design and if accepted will deter new entrants, 134 and disputed the notion that any<br />
transmission rights created and existing in BC and Saskatchewan through their respective market<br />
designs should take paramountcy over the <strong>Alberta</strong> market design legislated under the Electric<br />
<strong>Utilities</strong> Act. 135<br />
167. The AESO submitted the BCUC decision cited is not relevant as it pertains to selling<br />
additional firm transmission rights elsewhere in a jurisdiction that has a system of explicit<br />
transmission rights, which is not the case in <strong>Alberta</strong>. 136<br />
168. The AESO submitted the FERC principles regarding recognition of existing firm rights<br />
are not a relevant consideration in this proceeding because there are no firm transmission rights<br />
for intertie transactions in <strong>Alberta</strong> and no recognition of firm transmission rights purchased<br />
outside of <strong>Alberta</strong>. Transmission access historically enjoyed by market participants into or out of<br />
<strong>Alberta</strong> across currently existing interties has never been represented nor treated as firm on the<br />
<strong>Alberta</strong> side of the border. 137<br />
<strong>Commission</strong> findings<br />
169. In Decision 2009-042 the <strong>Commission</strong> determined that there are no explicit or implicit<br />
transmission rights, and that generators are only entitled to reasonable access to the AIES on a<br />
non-discriminatory basis. Previously in this decision the <strong>Commission</strong> has determined that access<br />
129 Exhibit 0147.03, Enbridge/MATL (Stout) Evidence, June 15, 2012, page 15.<br />
130 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, pages 10-11.<br />
131 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, page 16.<br />
132 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, page 6; Exhibit 0283.02,<br />
Enbridge/MATL Argument, October 29, 2012, pages 37-38.<br />
133 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, page 6.<br />
134 Exhibit 0144.02, Morgan Stanley Capital Group Evidence, June 15, 2012, page 3.<br />
135 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 30.<br />
136 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 15-16.<br />
137 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 15-16.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 33
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
which is subject to RAS requirements for maintaining safety and reliability of the AIES still<br />
constitutes reasonable access where there may be insufficient transmission available and that the<br />
requirement applies equally to generators and interties.<br />
170. While the <strong>Commission</strong> considers the nature of opportunity service is not at issue in this<br />
proceeding, the <strong>Commission</strong> finds the nature of opportunity service to be informative. Within the<br />
AESO tariff importers and exporters are charged for access to the transmission system based on<br />
the Rate ISO Import Opportunity Service and Rate XOS Export Opportunity Service, which are<br />
provided as an opportunity service only when sufficient capacity exists on the transmission<br />
system to accommodate the scheduled capacity. 138 Simply put there are no transmission rights in<br />
<strong>Alberta</strong>, whether they are rights for physical facilities (for intertie developers) or for commercial<br />
traders (for importers and exporters).<br />
171. As noted by parties in this proceeding jurisdictions throughout North America, including<br />
BC, Quebec, and several US ISOs have various forms of transmission capacity markets. The<br />
<strong>Commission</strong> considers that transmission capacity markets, whether for the owners of physical<br />
facilities or for commercial traders, do not exist in <strong>Alberta</strong> and access to the AIES for importers<br />
and exporters is not provided on a firm basis. Without transmission rights in <strong>Alberta</strong> the<br />
<strong>Commission</strong> considers the existing practices elsewhere based on the existence of transmission<br />
rights are not instructive.<br />
172. Regarding the hold harmless principle as argued by parties, the <strong>Commission</strong> considers<br />
there is a distinction between the rights for owners of physical facilities and for commercial<br />
traders. The potential requirement for a RAS scheme on a new intertie connecting to <strong>Alberta</strong><br />
addresses the aspects of the hold harmless principle for physical facilities by ensuring a new<br />
intertie does not impair the reliability of the existing transmission system. As there are no<br />
transmission rights in <strong>Alberta</strong>, the commercial trading aspects of the hold harmless principle do<br />
not apply in <strong>Alberta</strong> since there are simply no transmission rights to protect.<br />
173. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
5.1.5 Rule negatively impacts pool price<br />
Impacts on pool price<br />
174. Several parties conceded that during times of unconstrained interties the MATL intertie<br />
will result in increased imports into <strong>Alberta</strong> which, other things being unchanged, will result in<br />
decreased pool prices. 139 MPOs argued that this consideration was irrelevant as the Proposed<br />
ATC Rule only comes into effect during times of constraint. 140<br />
175. Morgan Stanley submitted the Proposed ATC Rule will provide competition for the<br />
limited import space into <strong>Alberta</strong> and result in market discipline ensuring when there is a spread<br />
between <strong>Alberta</strong> and US markets that energy is able to flow. Over the course of 2010 and 2011<br />
there were 2944 hours where there was a positive price difference of $10 /MWh or more between<br />
the hourly price in <strong>Alberta</strong> and the hourly price at Mid-Columbia (an electricity trading point in<br />
138 The current AESO Tariff, effective July 1, 2011, as posted on the AESO website.<br />
139 Exhibit 0146.01, NaturEner Evidence, June 15, 2012, pages 10-12.<br />
140 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, pages 7-8.<br />
34 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
southern Washington state) and at the same time the available transfer capacity to <strong>Alberta</strong> was<br />
not fully utilized. The Proposed ATC Rule facilitates market access for interties such as MATL,<br />
which will reduce hours when energy does not flow into <strong>Alberta</strong> when it should have. 141 In<br />
addition, market participants who do not own firm transmission may access the unused capacity,<br />
however traders who do not have the predictability to flow energy across an intertie to access the<br />
<strong>Alberta</strong> market will not take the risk of not being able to flow energy. 142<br />
176. TransCanada submitted that under the Proposed ATC Rule the value of firm<br />
transmission service on the existing interties is reduced as holders face increased curtailments as<br />
a result of the new entrant MATL intertie, which will increase costs to holders of firm<br />
transmission service and may translate into higher prices in <strong>Alberta</strong>. 143<br />
177. The Coalition submitted that between T-85 and T-20 if any one of the AB-BC, MATL,<br />
or AB-SK interconnections is unable to supply up to its import ATC allocation for whatever<br />
reason, the Proposed ATC Rule would make up for the lost volume by dispatching up the supply<br />
curve rather than re-allocating this volume to the other intertie, which results in an increased pool<br />
price and is therefore inefficient. 144<br />
178. The Coalition submitted that the Proposed ATC Rule is likely to cause unnecessary pool<br />
price volatility as the RAS scheme on the MATL intertie may interrupt import transactions and,<br />
unlike on the AB-BC intertie, cause the AESO to dispatch up the merit order to maintain service<br />
to load. 145<br />
179. TransCanada submitted the increased risk to curtailments creates uncertainty and<br />
increases the risks associated with importing for firm transmission holders, which ultimately will<br />
increase the cost of importing and has the potential to reduce total imports and thus increase the<br />
<strong>Alberta</strong> pool price. 146<br />
Ancillary services<br />
180. The Coalition submitted that the Proposed ATC Rule requires ancillary services<br />
transacted over the interconnections to be curtailed before energy transactions, which will have<br />
an impact on <strong>Alberta</strong>’s ancillary services market. As the interties have contributed between 20<br />
and 25 per cent of the spinning reserves and a modest share of supplemental reserves to <strong>Alberta</strong><br />
between 2007 and 2011, the Proposed ATC Rule will significantly impact the volume of reserves<br />
offered into the ancillary services market, and the lost ancillary services will need to be provided<br />
from a more expensive source which will increase the cost of ancillary services in <strong>Alberta</strong>. 147<br />
181. The AESO submitted that there is currently only one market participant who provides<br />
operating reserves across the AB-BC and AB-SK interties, and the ancillary services market<br />
restrictions limit the size of operating reserves per asset. Also, the AESO expects curtailments to<br />
141 Exhibit 0144.02, MSCG Evidence, June 15, 2012, pages 24-25.<br />
142 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 54-55.<br />
143 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 21-22.<br />
144 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 14.<br />
145 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 23.<br />
146 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 23-24.<br />
147 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 14.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 35
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
be relatively infrequent provided that adjacent transmission providers schedule within transfer<br />
limits as allocated at T-85 minutes. 148<br />
Additional transfers due to the energization of MATL<br />
182. The Coalition submitted that the MATL interconnection can permit additional transfers<br />
of energy to the benefit of <strong>Alberta</strong> in two circumstances: when the BC Hydro system has an<br />
outage, and when market price differentials between jurisdictions render flows economic. Since<br />
2003 roughly ten per cent of the hourly constraints on the AB-BC interconnection have been<br />
caused by restrictions in BC, which are hours when <strong>Alberta</strong> would be able to accept energy<br />
beyond what the AB-BC interconnection could deliver, however these circumstances are<br />
infrequent and impact on future price is anticipated to be minimal. Also, during six per cent of<br />
the hours in 2011 imports into <strong>Alberta</strong> would have increased as a result of imports over MATL<br />
being economic while imports over the AB-BC interconnection were not economic. However,<br />
the gross price spreads are relatively small at approximately $4/MWh for imports and exports,<br />
without including delivery costs, risk premiums and profit margins. 149<br />
183. Similarly TransCanada submitted that when the full import capability limit created by<br />
the AB-BC intertie is not fully used by market participants scheduling imports through BC, then<br />
imports could be scheduled over the MATL intertie which would reduce <strong>Alberta</strong> prices and<br />
thereby benefit <strong>Alberta</strong>ns. 150<br />
<strong>Commission</strong> findings<br />
Impacts on pool price<br />
184. The <strong>Commission</strong> considers that during times of constraint the <strong>Alberta</strong> pool price is<br />
unaffected by which intertie supplies energy to the AIES. However, the <strong>Commission</strong> accepts that<br />
there were hours when there were price spreads between <strong>Alberta</strong> and US markets but the AB-BC<br />
intertie was not used full capacity. The <strong>Commission</strong> considers competition should be most<br />
effective when there are more competing traders to discipline each other, whether during times<br />
of constraint or not.<br />
185. Regarding impacts to firm transmission rights holders in neighbouring jurisdictions, the<br />
<strong>Commission</strong> has previously determined in this decision that these impacts are a competitive<br />
market response when there is a new entrant. Currently there is no ability for pricing imports and<br />
exports other than $0/MWh and $999.99/MWh respectively; and as such the <strong>Commission</strong><br />
considers this impact to firm transmission rights holders in other jurisdictions is likely to have<br />
little, if any, impact on pool price in <strong>Alberta</strong>.<br />
186. The <strong>Commission</strong> has previously determined in this decision that given the complexity of<br />
scheduling intertie transactions and the potential short timeframe to do so the <strong>Commission</strong><br />
concludes that any resulting stranded capacity discovered between T-85 and T-20 will be<br />
infrequent and is one of the risks of operating interties in an electricity market two hours prior to<br />
the start of a settlement interval.<br />
148 Exhibit 0145.02, AESO Evidence, June 20, 2012, page 23.<br />
149 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 9.<br />
150 Exhibit 0138.01, TransCanada (Roach) Evidence, May 7, 2012, pages 7-8.<br />
36 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
187. The <strong>Commission</strong> was not presented with evidence of establishing expected pool price<br />
volatility under the Proposed ATC Rule. Several parties, including MPOs, submitted that the<br />
MATL intertie will provide additional imports into <strong>Alberta</strong> under various conditions and when<br />
there are no constraints on the interties. 151 The <strong>Commission</strong> concludes that increased imports<br />
will, other things being equal, lead to greater competition to supply power in <strong>Alberta</strong>.<br />
Enbridge/MATL submitted the MATL intertie would not have been built if it weren’t for the<br />
ATC allocation method in the Proposed ATC Rule, 152 and the <strong>Commission</strong> considers the prospect<br />
of greater competition to supply power to <strong>Alberta</strong> during non-constrained hours outweighs the<br />
potential for <strong>Alberta</strong> pool price volatility if or when the MATL intertie flows are interrupted by a<br />
RAS scheme.<br />
188. Based on the evidence in this proceeding, including the pending requests from Cargill to<br />
BC Hydro for firm transmission service 153 and the potential for the MATL intertie expansion, the<br />
<strong>Commission</strong> considers there are enough market participants that want to access the <strong>Alberta</strong><br />
market that it is unlikely that imports into <strong>Alberta</strong> will decrease under the Proposed ATC Rule.<br />
Ancillary services<br />
189. Regarding ancillary services, the <strong>Commission</strong> accepts that the AESO system controller<br />
would require some flexibility when determining which operating reserves transactions should<br />
be applicable under various system conditions, and that the Proposed ATC Rule provides the<br />
system controller with the needed flexibility. The <strong>Commission</strong> is persuaded that the impact on<br />
pool price from such decisions by the system controller are likely to be minimized as<br />
curtailments are expected to be infrequent if adjacent transmission providers schedule within<br />
transfer limits as allocated at T-85 minutes.<br />
Additional transfers due to the energization of MATL<br />
190. The <strong>Commission</strong> accepts that the MATL intertie can permit additional transfers of<br />
energy when the BC electric system has an outage and during times of certain market price<br />
differentials, resulting in increased imports into <strong>Alberta</strong> via the MATL intertie. Enbridge/MATL<br />
submitted and the <strong>Commission</strong> concludes that if MATL was required to bring incremental ATC<br />
the MATL intertie may not have been constructed. The <strong>Commission</strong> accepts that the Proposed<br />
ATC Rule encouraged the construction of MATL, which will contribute to more competitive<br />
<strong>Alberta</strong> pool prices.<br />
191. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
5.1.6 Rule leads to increased bookout fees<br />
192. Several parties in this proceeding submitted that the Proposed ATC Rule will increase<br />
curtailments to transmission holders in other jurisdictions, resulting in higher occurrences of<br />
151 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 9; Exhibit 0152.02,<br />
Coalition Rebuttal Evidence, July 20, 2012, pages 7-8; Exhibit 0146.01, NaturEner Evidence, June 15, 2012,<br />
pages 10-12; Exhibit 0144.02, MSCG Evidence, June 15, 2012, pages 24-25.<br />
152 Transcript Volume 6, September 18, 2012, page 1331; Exhibit 0283.02, Enbridge/MATL Argument, October 29,<br />
2012, pages 32-34.<br />
153 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 18.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 37
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
bookout fees 154 and higher transaction costs, which is economically inefficient and will lead to<br />
increased pool price in <strong>Alberta</strong>. 155<br />
193. TransCanada submitted the Proposed ATC Rule will lead to economically inefficient<br />
outcomes because the immediate cost of bookout fees could deter competition to import power<br />
into <strong>Alberta</strong>, resulting in the need for greater price differences between markets to incent<br />
exchanges that otherwise may have occurred. Further, in the long-term these increased fees could<br />
result in the termination of commercial relationships between <strong>Alberta</strong> market participants and<br />
suppliers in other jurisdictions. 156<br />
194. The Coalition and TransCanada submitted that to avoid bookout fees a firm transmission<br />
customer must receive knowledge of the amount of its allocation of transmission in sufficient<br />
time to procure the corresponding volume of energy. The Coalition submitted that under the<br />
Proposed ATC Rule the holders of firm transmission on the AB-BC intertie will not know their<br />
individual share of transmission until BC Hydro performs its curtailments at T-20, by which time<br />
it is too late to avoid bookout fees. 157<br />
195. Morgan Stanley submitted that PowerEx, as the largest holder of transmission rights on<br />
the AB-BC intertie with 78 per cent of firm and conditional firm transmission rights, does not<br />
incur bookout fees because it has access to the generation supply of BC Hydro, and so it does not<br />
have to unwind transactions with un-affiliated counterparties. Also, the T-2 and T-85 timing in<br />
the Proposed ATC Rule was adopted to be consistent with the timing of neighbouring and<br />
interconnected transmission and power markets, including Mid-C, and that with the knowledge<br />
at T-85 of the allocation to each intertie market participants will have ample time to source<br />
supply. 158<br />
196. The AESO and Morgan Stanley submitted the T-85 allocation provision in the Proposed<br />
ATC Rule provides greater certainty to shippers earlier in the allocation process. 159<br />
<strong>Commission</strong> findings<br />
197. The <strong>Commission</strong> accepts that the AESO must provide sufficient time for the system<br />
controllers to operate the transmission system, and therefore must set cutoff times for<br />
submissions of offers and bids as well communicate with intertie operators and intertie shippers,<br />
among other tasks.<br />
198. OPP 304: <strong>Alberta</strong>-BC Interconnection Transfer Limits is currently in effect. As part of<br />
its application for the Proposed ATC Rule the AESO proposes to remove this OPP. It states in<br />
Section 5.1 that in determining export transfer limits, prior to T-70 the system controller must<br />
154 Bookout fees are costs that market participants pay on a per MWh basis for volumes of electric energy that does<br />
not flow according to a pre-negotiated agreement between two counterparties.<br />
155 Exhibit 0129.01, Coalition Policy and Financial Evidence, May 7, 2012, pages 12-13; Exhibit 0273.01,<br />
NorthPoint Argument, October 15, 2012, page 18; Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages<br />
23-25.<br />
156 Exhibit 0272.03, TransCanada Evidence, October 15, 2012, pages 38-39.<br />
157 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, page 13-14; Exhibit 0272.03, TransCanada<br />
Evidence, October 15, 2012, pages 38-39.<br />
158 Exhibit 0144.02, Morgan Stanley Evidence, June 15, 2012, pages 23-24.<br />
159 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 18-19; Exhibit 0280.02, Morgan Stanley Argument,<br />
October 29, 2012, pages 53-54.<br />
38 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
determine various limits including ATC for the AB-BC intertie. Similarly, Section 5.2 of OPP<br />
304 outlines the steps for import transfer limits without specifying a time limit.<br />
199. Section 10(3) of the Proposed ATC Rule states that at T-85 160 the ISO must post on its<br />
website the total MW of all import offers and export bids received by T-120 for each transfer<br />
path, the limits for each transfer path as referenced under Section 2 of the Proposed ATC Rule,<br />
and the allocations made to each transfer path as referenced under Section 10 of the Proposed<br />
ATC Rule.<br />
200. The Proposed ATC Rule then states in Section 6(2) that the ISO must receive e-tags no<br />
later than T-20 in order for the energy components of the interchange transactions to be included<br />
in an interchange schedule referenced in Section 8 of the Proposed ATC Rule.<br />
201. The <strong>Commission</strong> recognizes that the Proposed ATC Rule increases the time between<br />
when ATC limits are available and when e-tags have to be submitted. While the <strong>Commission</strong><br />
recognizes that the allocation performed by the AESO at T-85 is at the intertie level, not the<br />
shipper level, and it is the responsibility of BC Hydro and MATL to reduce scheduled energy<br />
deliveries based on their respective curtailment priorities, the <strong>Commission</strong> is not convinced that<br />
there will be a material impact due to the potential increase to bookout fees. The <strong>Commission</strong><br />
concludes that market participants will have sufficient time between T-85 and T-20 to make their<br />
final adjustments to procure energy and transmission capacity in other jurisdictions and submit e-<br />
tags for <strong>Alberta</strong>.<br />
5.1.7 Rule impacts parties with firm transmission rights in other jurisdictions<br />
202. Several parties in this proceeding indicated that the Proposed ATC Rule would degrade<br />
both existing and potential firm transmission rights in neighbouring jurisdictions and beyond, 161<br />
and some parties provided estimated financial impacts (including reduced firm energy<br />
transactions and bookout fees) on firm transmission holders in the neighbouring jurisdictions. 162<br />
TransCanada submitted that the AESO and Enbridge/MATL are in a position to mitigate the<br />
impacts of MATL intertie on the AB-BC intertie while BC Hydro and its customers who<br />
purchased firm transmission rights on it are not in a position to mitigate such risks. 163<br />
203. NorthPoint submitted that when it purchased firm transmission rights in BC that the<br />
interties received the ATC they provided to the system, and that PowerEx did not consider the<br />
effect of additional ties. 164<br />
204. The Coalition submitted the Proposed ATC Rule is unfair because it transfers, without<br />
compensation, ATC created by existing rate payer funded interconnection and paid for on<br />
160 Throughout this proceeding parties used various methods to reference the time periods immediately leading into<br />
a settlement interval. The <strong>Commission</strong> will refer to these time periods in a consistent manner as T-20, read as “T<br />
minus twenty”, to indicate 20 minutes prior to the start of the settlement interval, or T-120 to indicate one<br />
hundred twenty minutes prior to the start of the settlement interval.<br />
161 Exhibit 0050.00, PowerEx Objection, December 19, 2011, page 6; Exhibit 0129.01, Coalition Policy and<br />
Financial Impact Evidence, May 7, 2012, pages 16-18; Exhibit 0133.01, TransCanada Evidence, May 7, 2012,<br />
pages 30-32; Exhibit 0138.01, TransCanada (Roach) Evidence, May 7, 2012, pages 5-6.<br />
162 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 17; Exhibit 0133.01,<br />
TransCanada Evidence, May 7, 2012, pages 30-31.<br />
163 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 31-32.<br />
164 Transcript Volume 1, pages 42-43.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 39
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
interconnected systems by the firm service rights holders on those systems to the merchant<br />
MATL line. 165<br />
205. Enbridge/MATL submitted that the value of firm transmission rights on the BC system<br />
is not relevant as the customers in BC did not pay for any rights to deliver into or through<br />
<strong>Alberta</strong>. 166 In addition, Enbridge/MATL submitted that MATL intertie users are in the same<br />
position as the users of the AB-BC and AB-SK interties in that they have to hold firm<br />
transmission rights up to the MATL intertie’s point of connection with the AIES where they<br />
have injection/withdrawal rights that entitle them to a reasonable opportunity to exchange<br />
energy. 167<br />
206. Enbridge/MATL submitted that allocating ATC to the interties and having the intertie<br />
operator reallocate that ATC among its users in accordance with the OATT in the adjoining<br />
jurisdiction is a practical efficiency, and respects the rules of adjoining jurisdictions. 168<br />
207. The AESO submitted that rights purchased and effective in a jurisdiction outside of<br />
<strong>Alberta</strong> are not relevant, <strong>Alberta</strong> has never sold rights similar to those in BC, and has not made<br />
any representation that rights purchased in external jurisdictions have any value or weight in<br />
determining <strong>Alberta</strong> system access. Further, it is not common practice within the industry to<br />
enforce or impose rights purchased in external jurisdictions when allocating transmission<br />
capability within another jurisdiction. 169 The AESO does not recognize transmission rights sold<br />
in other jurisdictions as providing any implicit or explicit priority access to the <strong>Alberta</strong> market. 170<br />
<strong>Commission</strong> findings<br />
208. The BCUC decision limited the amount of firm or conditional firm transmission on the<br />
AB-BC intertie that could be sold by BCTC (now BC Hydro) to the amount of energy that could<br />
reasonably be delivered to <strong>Alberta</strong>. The <strong>Commission</strong> anticipates this practice will continue to<br />
apply. However, the <strong>Commission</strong> considers that the amount or volume of firm transmission<br />
rights sold in neighbouring jurisdictions is a matter to be dealt with appropriately in those<br />
jurisdictions.<br />
209. Regardless of their rights in neighbouring jurisdictions, market participants who transmit<br />
electric energy over interties pay IOS or XOS tariff rates in <strong>Alberta</strong>. The <strong>Commission</strong> recognizes<br />
that interties, to the extent they are part of the AIES, are paid for by load in <strong>Alberta</strong> through the<br />
AESO tariff, with the exception of the MATL intertie which is privately funded. As such, the<br />
interties are not paid for by importers. Previously in this decision the <strong>Commission</strong> concluded that<br />
ATC should be treated as a system resource, and the <strong>Commission</strong> does not consider the<br />
allocation of ATC to the merchant MATL intertie under the Proposed ATC Rule to be unfair.<br />
210. The Proposed ATC Rule may have an impact on the holders of firm transmission rights<br />
held in neighbouring jurisdictions, but the <strong>Commission</strong> does not find such impacts to be unfair or<br />
anti-competitive.<br />
165 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 20.<br />
166 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, page 13.<br />
167 Exhibit 0147.02, Enbridge/MATL Evidence, June 15, 2012, page 9.<br />
168 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 6.<br />
169 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 14-15.<br />
170 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 18-19.<br />
40 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
211. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule does not support the<br />
FEOC operation of the market on this basis.<br />
5.1.8 Rule was not finalized when an investment decision was made<br />
212. PowerEx submitted that Enbridge/MATL and Morgan Stanley might suggest that either<br />
the public interest standard or the fairness aspects of FEOC require the <strong>Commission</strong> to consider<br />
the investment decision of Enbridge/MATL initially and Morgan Stanley ultimately in assessing<br />
the Proposed ATC Rule. PowerEx submitted that Enbridge/MATL and Morgan Stanley knew the<br />
risks they were taking with respect to the development of the rule and the outcome of this<br />
proceeding when they made their investment, and that their investment decision should not play<br />
a part in the <strong>Commission</strong>’s assessment of the Proposed ATC Rule. 171<br />
<strong>Commission</strong> finding<br />
213. The <strong>Commission</strong> agrees with PowerEx that Enbridge/MATL, NaturEner and Morgan<br />
Stanley made investment decisions prior to a finalized ISO rule regarding ATC allocation, and as<br />
sophisticated market participants they should have been aware of the potential risks associated<br />
with the final ATC allocation rule taking some kind of different form than the Proposed ATC<br />
Rule. In considering the objections in this proceeding the <strong>Commission</strong> has not given any weight<br />
to the investment decision made by Enbridge/MATL and Morgan Stanley while the Proposed<br />
ATC Rule was being developed.<br />
5.1.9 Summary of <strong>Commission</strong> findings - FEOC<br />
214. In summary, the <strong>Commission</strong> is not persuaded by any of the grounds raised by the<br />
MPOs that the Proposed ATC Rule does not support the FEOC operation of the market.<br />
5.2 Rule is not in the public interest<br />
215. Parties submitted that the Proposed ATC Rule is not in the public interest because the<br />
Proposed ATC Rule:<br />
(a) Contravenes Section 16 of the Transmission Regulation;<br />
(b) Contravenes Section 27 of the Transmission Regulation;<br />
(c) Does not honour previous commitments for the connection of MATL; and<br />
(d) Creates or aggravates seams issues between jurisdictions.<br />
5.2.1 Transmission Regulation Section 16 and allocation of availability transfer<br />
capability<br />
216. Section 16 of the Transmission Regulation states:<br />
Restoring interties existing on August 12, 2004 to their path rating<br />
16(1) In making rules under section 20 of the Act, and in exercising its duties<br />
under section 17 of the Act, the ISO must prepare a plan and make<br />
171 Exhibit 0271.01, PowerEx Final Argument, October 15, 2012, page 34.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 41
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
arrangements to restore each intertie that existed on August 12, 2004 to, or near<br />
to, its path rating.<br />
(2) The plan to restore interties to their path ratings must specify how the ISO<br />
intends to restore and maintain each intertie to, or near to, its path rating<br />
without the mandatory operation of generating units.<br />
(3) The plan to restore and maintain interties must be incorporated into and<br />
form part of the transmission system plan as soon as practicable.<br />
(4) This section shall not be interpreted as meaning that priority should be<br />
given to interties that existed on August 12, 2004 over interties existing after<br />
that date in respect of the allocation of available transfer capability.<br />
Obligation to restore interties up to their path ratings<br />
217. Several parties submitted that the AESO’s obligation to restore interties is limited to<br />
those that existed on August 12, 2004, as set out in Section 16 of the Transmission Regulation,<br />
and the AESO does not have an obligation to restore new intertie projects to their path ratings. 172<br />
218. The AESO submitted that its obligation to restore interties that existed on August 12,<br />
2004 to their path ratings is connected to its obligation to plan an unconstrained transmission<br />
system. The AESO does not view its obligation to mean that the AESO must plan to upgrade<br />
MATL to its path rating; rather the AESO is committed to addressing the <strong>Alberta</strong> system<br />
operating limit. 173<br />
Section 16(4) of the Transmission Regulation<br />
219. Several parties submitted that Section 16(4) of the Transmission Regulation avoids any<br />
suggestion that ATC that might otherwise be allocated to new interties should be mandatorily<br />
allocated to existing interties, and that Section 16 does not provide the AESO with any guidance<br />
as to how it should allocate ATC, leaving the AESO flexibility when allocating ATC. 174<br />
TransCanada submitted Section 16(4) clarifies that the AESO cannot grant AIC resulting from a<br />
new intertie to an existing intertie as a means of restoring the existing interties to their path<br />
ratings. 175 The UCA submitted that the rules of statutory interpretation guide the use of the words<br />
“shall not be interpreted as” and “should” is deliberate, and if the intent of Section 16(4) had<br />
been to prohibit a priority allocation, the words would have been more restrictive. 176<br />
220. Enbridge/MATL and Morgan Stanley submitted that Section 16(4) of the Transmission<br />
Regulation expressly contemplates that ATC will be allocated between new and existing interties<br />
and that such allocation should not provide existing interties with priority to ATC. 177<br />
Enbridge/MATL submitted that Section 16(4) of the Transmission Regulation is an interpretive<br />
172 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, Appendix 2, page 1; Exhibit 0129.01, Coalition Policy<br />
and Financial Impact Evidence, May 7, 2012, pages 20-21.<br />
173 Exhibit 0281.02, AESO Argument, October 29, 2012, pages 12-13.<br />
174 Exhibit 0271.01, PowerEx Argument, October 15, 2012, pages 5-6.<br />
175 Exhibit 0272.03, TransCanada Evidence, October 15, 2012, pages 22-24.<br />
176 Exhibit 0275.01, UCA Argument, October 15, 2012, page 13.<br />
177 Exhibit 0147.02, Enbridge/MATL Evidence, June 15, 2012, page 9; Exhibit 0283.02, Enbridge/MATL<br />
Argument, October 29, 20122, pages 23-24; Exhibit 0144.02, MSCG Evidence, June 15, 2012, pages 6-7;<br />
Exhibit 0144.02, MSCG Evidence, June 15, 2012, page 15.<br />
42 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
clause, and that the phrase “shall not be interpreted” is mandatory. Further, Enbridge/MATL<br />
submitted the legislature did not need to provide a more broad based prohibition because such a<br />
prohibition is already entrenched in the Electric <strong>Utilities</strong> Act, and an interpretation of Section<br />
16(4) of the Transmission Regulation that permits priority allocation conflicts with the<br />
framework set out in the Electric <strong>Utilities</strong> Act. 178 Morgan Stanley submitted that the Electric<br />
<strong>Utilities</strong> Act establishes an energy-only market and to interpret Section 16(4) of the Transmission<br />
Regulation to grant priority in ATC is to grant a de facto right in transmission capacity in the<br />
<strong>Alberta</strong> market to legacy interties, which is in conflict with its parent legislation. 179<br />
Diminished ATC on existing interties<br />
221. Several parties submitted that the Proposed ATC Rule diminishes ATC on the existing<br />
interties, that is not consistent with the requirements in Section 16 of the Transmission<br />
Regulation, and it increases the amount of capacity that the AESO will be required to acquire to<br />
restore the existing interties to their path rating. 180<br />
222. The Coalition submitted that it took the AESO approximately 20 months from the time it<br />
solicited stakeholder feedback on the October 2010 Intertie Restoration Recommendation Paper<br />
to the time it released its July 2012 Intertie Restoration: Response to Recommendation Paper<br />
Stakeholder Comments and Next Steps paper, and that it appears unlikely there will be an<br />
established plan to address transmission constraints anytime soon. 181<br />
223. TransCanada submitted the approach under the Proposed ATC Rule is inconsistent with<br />
the modern approach to statutory interpretation. It includes the presumption of coherence and<br />
Section 16(4) should not be read so as to defeat the original purpose and effect of Section<br />
16(1). 182<br />
<strong>Commission</strong> findings<br />
Obligation to restore interties up to their path ratings<br />
224. The <strong>Commission</strong> considers sections 16(1) through (3) of the Transmission Regulation<br />
obligates the AESO to plan and make arrangements to restore each intertie that existed on<br />
August 12, 2004 to, or near to, its path rating without the mandatory operation of generating<br />
units, and that this plan must be incorporated into and form part of the transmission system plan<br />
as soon as practicable. The <strong>Commission</strong> finds that Section 16(1), (2) or (3), does not apply to<br />
future interties and does not obligate the AESO to plan to enable MATL, or any future interties,<br />
to transfer up to its path rating.<br />
178 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 20122, pages 23-24; Exhibit 0283.02,<br />
Enbridge/MATL Argument, October 29, 20122, page 42.<br />
179 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 11-12.<br />
180 Exhibit 0050.00, PowerEx Objection, December 19, 2011, page 7; Exhibit 0055.00, NorthPoint Objection,<br />
December 19, 2011, page 3; Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012,<br />
pages 20-21; Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page 10.<br />
181 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, pages 20.<br />
182 Exhibit 0272.03, TransCanada Evidence, October 15, 2012, pages 22-24.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 43
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Section 16(4) of the Transmission Regulation<br />
225. Section 16(4) of the Transmission Regulation must be read in the context of the scheme<br />
and the object of the Electric <strong>Utilities</strong> Act. The modern principle of statutory interpretation,<br />
described previously in this decision, was also identified by parties in this proceeding. 183<br />
Previously in this decision the <strong>Commission</strong> has provided its interpretation of electric system<br />
access rights under <strong>Alberta</strong> law.<br />
226. The <strong>Commission</strong> interprets Section 16(4) as preventing sections 16(1) through (3) being<br />
taken as the basis for giving the interties existing on August 12, 2004 priority in respect of ATC<br />
allocation. The section does not prohibit the giving of such priority to these interties for other<br />
reasons which might readily have been expressed had such been the legislative intent. The<br />
section is silent about the outcome of such issue. The <strong>Commission</strong> concludes that the issue of<br />
such priority is left to be decided elsewhere in this decision for other reasons independent of<br />
Section 16 of the Transmission Regulation.<br />
227. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is not in the public<br />
interest on this basis.<br />
Diminished ATC on existing interties<br />
228. The <strong>Commission</strong> interprets Section 16 to leave the AESO with the discretion, under<br />
sections 16(2) and (3), on the form and timing of intertie restoration methods. Wholly consistent<br />
with the overarching scheme and context of the Electric <strong>Utilities</strong> Act regarding system access<br />
service and the requirement in Section 16(4) that the AESO not grant priority to existing interties<br />
when allocating ATC, the <strong>Commission</strong> considers the AESO is required to allocate ATC on a<br />
non-priority basis between interties. In certain circumstances this allocation may diminish ATC<br />
on the existing interties, but the AESO is in no way relieved of its legislated obligation to<br />
eventually restore those existing interties as set out in Section 16(1).<br />
229. The <strong>Commission</strong> is not persuaded that by diminishing the ATC on the existing interties<br />
that the Proposed ATC Rule is not in the public interest.<br />
5.2.2 Transmission Regulation Section 27 and cost responsibilities of merchant interties<br />
230. Section 27 of the Transmission Regulation states:<br />
Intertie projects<br />
27(1) This section applies to the following:<br />
(a) an intertie proposed to be constructed;<br />
(b) an upgrade or enhancement to an intertie that proposes, or would result<br />
in, an increase to the path rating of the intertie.<br />
183 ATCO Power in Exhibit 0277.02, ATCO Power Argument, October 15, 2012, page 9; NorthPoint in Exhibit<br />
0273.01, NorthPoint Argument, October 15, 2012, pages 7-8; PowerEx in Exhibit 0271.01, PowerEx Argument,<br />
October 15, 2012, pages 7-8; Morgan Stanley in Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012,<br />
pages 4-6.<br />
44 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(2) When the ISO prepares a needs identification document under section 34(1) of the Act<br />
for an intertie described in subsection (1), the needs identification document must<br />
(a) contain the information required by section 11(3), unless the ISO<br />
determines that any of those matters are not required,<br />
(b) describe the extent to which the ISO will make use of the proposed<br />
intertie to provide system access service,<br />
(c) contain proposed agreements, arrangements, rates and terms and<br />
conditions for the ISO’s use of the intertie, and<br />
(d) contain any other information that the ISO considers necessary in view<br />
of the nature of the proposed intertie.<br />
(3) A person proposing an intertie to which this section applies must assist the ISO in<br />
preparing the needs identification document.<br />
(4) The cost of planning, designing, constructing, operating and interconnecting an intertie<br />
to which this section applies must be paid by<br />
(a) the person proposing the intertie, and<br />
(b) other persons to the extent that they directly benefit from the intertie,<br />
based on the use described in the needs identification document<br />
approved by the <strong>Commission</strong>, and then only to the extent permitted by<br />
the ISO tariff.<br />
(5) A person proposing an intertie to which this section applies, in accordance with the ISO<br />
rules, must<br />
(a) provide open access to market participants by auction or other<br />
transparent process, and file the terms and conditions respecting open<br />
access with the <strong>Commission</strong> for information, and<br />
(b) provide that the intertie be available in an open and non-discriminatory<br />
manner, similar to the access available to other transmission facilities.<br />
(6) The ISO must include in the ISO tariff, rates and terms and conditions that include costs<br />
for use of the interconnected electric system, appropriate for the class of service provided to<br />
persons who use the intertie referred to in this section for import or export of electricity to or<br />
from <strong>Alberta</strong>.<br />
Costs associated with building an intertie<br />
231. Several parties in this proceeding submitted that the Proposed ATC Rule assigns ratepayer<br />
funded ATC from the AB-BC intertie to the merchant MATL intertie, and that this<br />
contravenes Section 27 of the Transmission Regulation which requires that intertie developers<br />
pay the costs associated with their interties. 184<br />
184 Exhibit 0055.00, NorthPoint Objection, December 19, 2011, pages 3-4; Exhibit 0273.01, NorthPoint Argument,<br />
October 15, 2012, page 10; Exhibit 0274.01, SaskPower Argument, October 15, 2021, page 5.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 45
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
232. The Coalition submitted that both provincial policy and regulatory precedent confirm<br />
that load is to bear the cost of facilities and operational measures on the interties themselves as<br />
well as any reinforcements within <strong>Alberta</strong>. 185<br />
233. NorthPoint submitted that the AESO lacks jurisdiction to make a rule under Section 20<br />
of the Electric <strong>Utilities</strong> Act that transfers ratepayer funded ATC to a merchant intertie that is<br />
unregulated and not under the jurisdiction of the <strong>Commission</strong> or the AESO, and that such power<br />
could only rest with the <strong>Commission</strong> exercising its jurisdiction under Part 9, Division 2 of the<br />
Electric <strong>Utilities</strong> Act which provides the <strong>Commission</strong> with ratemaking authority. 186<br />
234. Morgan Stanley submitted that Section 27 is clear that the costs to be borne by the<br />
intertie developer are to be determined at the time the needs identification document is approved<br />
by the <strong>Commission</strong>. The needs identification document for MATL was approved by the EUB on<br />
January 31, 2008. Morgan Stanley submitted it would be unfair and inappropriate to now seek to<br />
attribute an AIES system cost for the creation of ATC to MATL on the basis that the cost falls<br />
under Section 27(4) of the Transmission Regulation. 187 In addition, Morgan Stanley submitted<br />
that the cost of planning, designing, constructing, operating and interconnecting an intertie for<br />
the purposes of Section 27(4) of the Transmission Regulation should not include the creation of<br />
ATC because this treats existing and new interties differently by giving ATC priority to existing<br />
interties contrary to Section 16 of the Transmission Regulation. 188<br />
235. The AESO submitted that enabling merchant investment, whether in generating or<br />
transmission facilities, is in the public interest as minimal ratepayer costs are incurred to expand<br />
sources of potential power supply and increase competition. 189<br />
Costs associated with restoring existing interties<br />
236. Several parties in this proceeding submitted that the Proposed ATC Rule, in conjunction<br />
with the AESO’s legislated obligation to restore existing interties to their path rating, will require<br />
<strong>Alberta</strong> ratepayers to pay the cost of replacing ATC that is transferred from the AB-BC intertie<br />
to MATL, and that this cost is imposed on them without a prudency review by the<br />
<strong>Commission</strong>. 190<br />
237. TransCanada submitted that the Proposed ATC Rule fails to differentiate between ATC<br />
that is enabled by LSSi and ATC that is not. This results in a subsidy from <strong>Alberta</strong> rate payers to<br />
the MATL intertie and requires the AESO to procure more LSSi or other products to offset the<br />
impacts of the Proposed ATC Rule on existing interties. 191<br />
185 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, pages 20-21.<br />
186 Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page 14.<br />
187 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, pages 7-8.<br />
188 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 9.<br />
189 Exhibit 0281.02, AESO Argument, October 29, 2012, page 23.<br />
190 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 21; Exhibit 0273.01,<br />
NorthPoint Argument, October 15, 2012, page 13; Exhibit 0133.01, TransCanada Evidence, May 7, 2012, page<br />
29; Exhibit 0137.02, <strong>Utilities</strong> Consumer Advocate Evidence, May 7, 2012, pages 5-6; Exhibit 0275.01, UCA<br />
Argument, October 15, 2012, pages 6-8;.<br />
191 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, pages 26-29; Exhibit 0138.01, TransCanada (Roach)<br />
Evidence, May 7, 2012, page 15; Exhibit 0272.03, TransCanada Argument, October 15, 2012, pages 22-24.<br />
46 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
238. The AESO, in its October 2010 Intertie Restoration Recommendation Paper, considered<br />
that the cost of import and export restoration mechanisms, including LSSi, should be charged to<br />
load on the basis that these costs are akin to a non-wires solution. 192<br />
239. NaturEner submitted it would be inappropriate and inaccurate to characterize the costs<br />
for additional restoration efforts like LSSI as being on the account of the MATL intertie. 193<br />
Potential system costs for incremental ATC<br />
240. Several parties in this proceeding submitted that the Proposed ATC Rule is premised on<br />
the proposition that the AESO is required to restore all interties up to their path ratings and that it<br />
is not in the public interest for the AESO to propose facility upgrades that are ratepayer funded<br />
or system costs associated with increasing the ATC on a merchant intertie. 194<br />
241. Capital Power expressed concern that load customers may be required to pay for any<br />
new DC converter stations associated with a merchant intertie, and submitted that there was<br />
insufficient evidence on the record to support any findings that such costs should fall to load and<br />
such a determination is outside the scope of this proceeding. 195<br />
242. Several parties submitted that the costs of system upgrades to build a system that<br />
provides for reasonable system access service are paid for by load, including VAR compensators<br />
for exports and LSSi service for imports. 196 The AESO and Enbridge/MATL submitted that if the<br />
best way to increase import capability into <strong>Alberta</strong> was to build a converter station, the AESO<br />
would have to determine where the benefits lie and what portion of that would be a system<br />
versus customer cost, and then a need application would have to be brought before the<br />
<strong>Commission</strong> for approval. 197<br />
243. NaturEner submitted it remains open to BC Hydro to pursue an AC-DC-AC converter<br />
on its system and/or for the AESO to identify a need for one on either the MATL intertie or the<br />
AB-BC intertie. 198<br />
<strong>Commission</strong> findings<br />
Costs associated with building an intertie<br />
244. The <strong>Commission</strong> finds that there is no evidence persuading it that the costs described in<br />
Section 27(4) of the Transmission Regulation have not been paid by the operator of the MATL<br />
192 AESO’s Intertie Restoration Recommendation Paper, October 7, 2010. Filed as Exhibit 0133.01, TransCanada<br />
Evidence, May 7, 2012, Appendix E (tile 81 of the exhibit).<br />
193 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 26.<br />
194 Exhibit 0156.03, ATCO Power Rebuttal Evidence, July 20, 2012, page 8; Exhibit 0272.03, TransCanada<br />
Argument, October 15, 2012, pages 11-12; Exhibit 272.03, TransCanada Argument, October 15, 2012, pages 25-<br />
26; Exhibit 0272.03, TransCanada Evidence, October 15, 2012, pages 39-40; Exhibit 0275.01, UCA Argument,<br />
October 15, 2012, pages 6-8..<br />
195 Exhibit 0269.02, Capital Power Argument, October 15, 2012, pages 3-4.<br />
196 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 19; Exhibit 0147.03, Enbridge/MATL (Stout) Evidence,<br />
June 15, 2012, pages 15-16; Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 18; Exhibit<br />
0283.02, Enbridge/MATL Argument, October 29, 20122, pages 40-41.<br />
197 AESO witness at Transcript Volume 9, page 2010; Exhibit 0283.02, Enbridge/MATL Argument, October 29,<br />
2012, page 19.<br />
198 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 27.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 47
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
intertie. The <strong>Commission</strong> does not interpret the types of cost impacts argued by the MPOs<br />
discussed under this heading as likely to result from future AESO requirements to make <strong>Alberta</strong><br />
system enhancements to restore transfer capacity including fulfillment of the AESO’s obligation<br />
to restore ATC under Section 16 of the Transmission Regulation are costs to which Section 27 of<br />
the Transmission Regulation is applicable. Accordingly, these cost impacts of the Proposed ATC<br />
Rule do not constitute a breach of Section 27 of the Transmission Regulation, rendering the rule<br />
contrary to the public interest or otherwise constitute a valid ground for objection.<br />
245. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is not in the public<br />
interest on this basis.<br />
Costs associated with restoring existing interties<br />
246. Previously in this decision the <strong>Commission</strong> has determined that ATC should be treated<br />
as a system resource which is enabled by interties rather than created by interties. LSSi facilitates<br />
an increase in ATC and is currently paid for by load customers in <strong>Alberta</strong> and treated as a system<br />
cost. The <strong>Commission</strong> considers that in order to meet the requirement of Section 16(4) of the<br />
Transmission Regulation of no priority access to ATC for existing interties, the Proposed ATC<br />
Rule should not distinguish between existing and new interties when allocating ATC that was<br />
enabled by LSSi.<br />
247. The <strong>Commission</strong> is not persuaded that by not distinguishing between existing and new<br />
interties when allocating ATC enabled by LSSi the Proposed ATC Rule is not in the public<br />
interest.<br />
248. ATCO Power introduced considerable evidence on the cost and effectiveness of the<br />
AESO’s LSSi initiative. 199 This proceeding addresses the method for allocating ATC contained in<br />
the Proposed ATC Rule and whether it is technically deficient, does not support the FEOC<br />
operation of the market or is not in the public interest. The <strong>Commission</strong> considers the cost and<br />
effectiveness of the AESO’s LSSi initiative is not relevant to these issues and as such makes no<br />
determination regarding the AESO’s LSSi initiative.<br />
Potential system costs for incremental ATC<br />
249. This proceeding addresses the method for allocating ATC contained in the Proposed<br />
ATC Rule and whether it is technically deficient, does not support the FEOC operation of the<br />
market or is not in the public interest. The <strong>Commission</strong> considers the cost of potential facility<br />
upgrades or deep system costs are not relevant to this proceeding and as such makes no<br />
determination regarding such potential costs. Further, as noted by several parties, the<br />
<strong>Commission</strong> would expect these potential facilities would be brought before the <strong>Commission</strong> via<br />
the needs identification process, at which time a determination could be made regarding the<br />
appropriateness of the allocation of the costs for these potential facilities.<br />
5.2.3 Previous commitments for connection of MATL<br />
250. Several parties submitted that during the MATL facility application the AESO and<br />
Enbridge/MATL made commitments regarding the impact to existing interties, and that the<br />
199 Exhibit 0139.04, ATCO Power Evidence, May 7, 2012, Appendix 3.<br />
48 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Proposed ATC Rule contravenes those commitments. 200 The UCA submitted the original and<br />
approved approach to the effects of the MATL intertie on the AIES and ATC levels was to<br />
require MATL to implement technical or operational measures that would add ATC and not<br />
affect ATC provided by other interties. 201<br />
251. Morgan Stanley submitted that the National Energy Board (NEB) regulations are<br />
focused on technical and other reliability concerns and do not expressly consider economic<br />
impacts. 202<br />
252. Enbridge/MATL submitted that it has recognized its obligations to meet the WECC<br />
requirements by mitigating potential reliability impacts on the AIES and adjacent systems, but<br />
has never contemplated nor committed to protecting the incumbent users of the AB-BC intertie<br />
from the consequences of increased competition. 203<br />
253. Enbridge/MATL submitted that when the <strong>Alberta</strong> Energy and <strong>Utilities</strong> Board (AEUB)<br />
approved the need for MATL it did so with evidence before it, including the AESO’s need<br />
information documents, which anticipated the general characteristics of MATL, and any issues<br />
of design should have been raised at the time. 204<br />
254. The AESO submitted the commitments made in the initial MATL intertie proceeding<br />
were to ensure the operation of the MATL intertie would be undertaken in a safe and reliable<br />
way, such that existing users of the grid are not adversely impacted by the intertie. The AESO<br />
submitted that this is consistent with AEUB Decision 2008-006 approving the MATL need<br />
identification document and the NEB’s recent decision refusing to review and vary the issuance<br />
of its MATL permit. 205<br />
<strong>Commission</strong> findings<br />
255. In Section 6 of AEUB Decision 2008-006, in relation to the NEB’s April 4, 2007,<br />
decision issuing Permit EP-301, approving the MATL intertie, the AEUB indicated “[t]he Board<br />
[AEUB] does not believe that it has the authority to overturn or revisit the findings of the NEB”<br />
including:<br />
<br />
<br />
The Board (NEB) is of the view that the issue of potential impacts on the AIES is being<br />
considered by AESO and the EUB.<br />
The Board (NEB) notes that due to the nature of the interconnection between <strong>Alberta</strong> and<br />
Saskatchewan, instability on the proposed IPL [MATL intertie] would not negatively<br />
impact power systems in the province of Saskatchewan. As well, the Board (NEB) is<br />
satisfied that once the WECC study is completed and appropriate mitigation measures<br />
200 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, pages 2-3; Exhibit 0272.03,<br />
TransCanada Argument, October 15, 2012, pages 37-38; Exhibit 0137.02, <strong>Utilities</strong> Consumer Advocate<br />
Evidence, May 7, 2012, page 7.<br />
201 Exhibit 0137.02, <strong>Utilities</strong> Consumer Advocate Evidence, May 7, 2012, pages 9-10.<br />
202 Exhibit 0144.02, MSCG Evidence, June 15, 2012, pages 15-16.<br />
203 Exhibit 0147.02, Enbridge/MATL Evidence, June 15, 2012, pages 6-8.<br />
204 Exhibit 0147.02, Enbridge/MATL Evidence, June 15, 2012, pages 2-3.<br />
205 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 19-21.<br />
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Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
and remedial action schemes are implemented, the proposed IPL [MATL intertie] would<br />
not negatively impact power systems in British Columbia. 206<br />
256. The <strong>Commission</strong> considers that the impacts to the AIES of the MATL intertie are being<br />
addressed by WECC and AESO system studies, and expects that the MATL intertie will be<br />
compliant with any RAS schemes identified in those studies as required for the safe and reliable<br />
operation of the AIES.<br />
257. The <strong>Commission</strong> considers the NEB decision was clear regarding impacts to the BC and<br />
Saskatchewan systems, in that the NEB was satisfied that the WECC studies would identify the<br />
need for mitigation measures and remedial action schemes so that the MATL intertie would not<br />
negatively impact power systems in British Columbia. Further, the NEB stated in its Letter<br />
Decision that it was not persuaded there was a requirement on MATL to “…identify and mitigate<br />
outstanding concerns related to the reduction in transfer capability on other paths beyond those<br />
concerns identified through the WECC path rating process” and that the WECC path rating<br />
process “…is concerned with reliability concerns and not commercial matters.” Further, the NEB<br />
stated that “the requirements in condition 10 [being the 10 th condition for the approval of the<br />
MATL facility as set out by the NEB] are consistent with subsections 6 (d) and (h) of the<br />
Regulations [National Energy Board Regulations], which define certain terms and conditions<br />
that may be included in any permit for an international power line in regards to, among others,<br />
the adverse effects on the reliability of any power systems to which the facilities are<br />
interconnected. The Board notes that these subsections are focused on technical and other<br />
reliability concerns and do not expressly consider economic impacts.” 207<br />
258. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is not in the public<br />
interest on this basis.<br />
5.2.4 Seams issue between jurisdictions<br />
259. PowerEx submitted that while the AESO can determine the allocation limits for each<br />
intertie, the neighbouring jurisdictions will deliver whatever energy they schedule up to their<br />
allocation limits, and that the AESO cannot determine which shippers actually receive ATC. 208<br />
260. TransCanada submitted the Proposed ATC Rule impedes the integration of the <strong>Alberta</strong><br />
market into the North American electricity market as it fails to accommodate widely accepted<br />
practices, such as accommodating existing firm transmission customers, and that while FERC<br />
has no regulatory jurisdiction in <strong>Alberta</strong> it could take action only through reciprocity concerns. 209<br />
261. Enbridge/MATL submitted the potential of inter-jurisdictional seams is inherent in the<br />
architecture of the <strong>Alberta</strong> system and that the AESO’s role is to find trade-offs and practical<br />
206 AEUB Decision 2008-006, issued January 31, 2008, page 11.<br />
207 NEB File OF-Fac-IPL-M159-2005-01 06, British Columbia Hydro and Power Authority (BC Hydro) application<br />
for relief regarding the Montana <strong>Alberta</strong> Tie Ltd. Permit EP-301 issued by the National Energy Board on 4 April<br />
2007, dated February 16, 2012, page 7. In this proceeding there were several submissions relating to the possible<br />
impact of the NEB ruling on this proceeding, and on May 1, 2012, the <strong>Commission</strong> issued a process letter<br />
indicating it added the NEB decision to the record in this proceeding. It was assigned Exhibit 0127.01, filed on<br />
May 1, 2012.<br />
208 Exhibit 0271.01, PowerEx Argument, October 15, 2012, page 16.<br />
209 Exhibit 0138.01, TransCanada (Roach) Evidence, May 7, 2012, pages 9-11.<br />
50 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
compromises on a system that must rank safety, supply security, and longer-term FEOC market<br />
goals above short-term trading outcomes. 210<br />
262. Enbridge/MATL submitted that FERC reciprocity concerns were in regard to<br />
transmission system owners that were not providing open system access and did not concern<br />
specific forms of transmission service or the treatment of transmission rights. 211<br />
263. NaturEner submitted that the allocation of ATC to the interties rather than directly to the<br />
shippers on them was one consistent message delivered by stakeholders which the AESO has<br />
incorporated into the Proposed ATC Rule, and that the Proposed ATC Rule reduces seams issues<br />
by allowing the intertie operators to carry out necessary curtailments in accordance with the<br />
commercial rights held on each intertie outside <strong>Alberta</strong>. 212<br />
264. The AESO submitted that its current practices recognize seams issue management by<br />
providing sufficient time to adjacent providers to conduct curtailments according to their tariff<br />
and the terms and conditions of transmission rights they have sold within their jurisdiction, and<br />
that the Proposed ATC Rule continues this practice by providing a capacity allocation amongst<br />
interties at T-85. 213<br />
<strong>Commission</strong> findings<br />
265. There are always likely to be seams issues between jurisdictions that have different<br />
electricity market structures, such as between <strong>Alberta</strong> and British Columbia or Saskatchewan. As<br />
there are no transmission rights in <strong>Alberta</strong>, under the Proposed ATC Rule the AESO will<br />
determine the ATC over each intertie and at T-85 will post the offers and bids received over all<br />
interties and the ATC limits for each intertie on its website for all market participants to access.<br />
At T-85 BC Hydro and MATL, which are the operators responsible for scheduling shippers in<br />
accordance with their own curtailment priority, will have the information needed to allocate ATC<br />
to shippers on their own interties. Also at T-85 shippers on each intertie will be able to see the<br />
total import offers and export bids and will be able to reasonably determine their anticipated<br />
ATC allocation, and complete the necessary steps to arrange their e-tags.<br />
266. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is not in the public<br />
interest on this basis.<br />
5.2.5 Summary of <strong>Commission</strong> findings – public interest<br />
267. In summary, the <strong>Commission</strong> is not persuaded by the grounds raised by the MPOs that<br />
the Proposed ATC Rule is not in the public interest.<br />
5.3 Rule is technically deficient<br />
268. Parties submitted that the Proposed ATC Rule is technically deficient because the<br />
Proposed ATC Rule:<br />
(a) Prematurely incorporates a pricing mechanism;<br />
210 Exhibit 0147.03, Enbridge/MATL (Stout) Evidence, June 15, 2012, page 7.<br />
211 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, pages 14-15.<br />
212 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 17.<br />
213 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 15.<br />
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Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(b) Fails to adequately address allocation and curtailment of ancillary services;<br />
(c) Fails to account for existing transmission commitments;<br />
(d) Incorrectly allocates ATC created by LSSi;<br />
(e) Is insufficiently transparent and is missing definitions;<br />
(f) Uses incorrect values for calculation of pro-rata allocation<br />
(g) Fails to re-allocate stranded capacity between T-85 and T-20; and<br />
(h) Fails to contemplate future interties.<br />
5.3.1 Rule prematurely incorporates a pricing mechanism<br />
269. Several parties referred to the current lack of a mechanism for intertie transactions to set<br />
market price in <strong>Alberta</strong> and argued that the Proposed ATC Rule prematurely incorporates a<br />
mechanism for allocating ATC between interties based on the offer and bid prices of intertie<br />
transactions. 214<br />
270. The Coalition submitted it is not possible to determine the effect that this mechanism<br />
may have at this time, and that the inclusion of pricing is illusory and obscures the significance<br />
of the pro-rata allocation methodology. 215<br />
271. ATCO Power submitted that the Proposed ATC Rule cannot meet the AESO’s stated<br />
objective of curtailing based on energy price because actual flows are determined by whether<br />
transactions are firm in neighbouring jurisdictions. Depending on the scenario it could be the<br />
cheapest offers that are actually curtailed rather than the most expensive offers. 216<br />
272. Morgan Stanley submitted that it is through the operation of the pricing portion of the<br />
Proposed ATC Rule that the effect will be known, and that if at the time that a pricing<br />
mechanism is implemented a concern arises with the operation of the Proposed ATC Rule there<br />
are avenues available for such concerns to be considered and addressed under the Electric<br />
<strong>Utilities</strong> Act. 217<br />
273. NaturEner supported the AESO’s efforts to achieve pricing of power supplied on the<br />
interties and noted that it has been requested by market participants, including TransCanada and<br />
PowerEx, for some time. 218<br />
214 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, Appendix 1, pages 1-2; Exhibit 0277.02, ATCO Power<br />
Argument, October 15, 2012, page 10; Exhibit 0156.03, ATCO Power Rebuttal Evidence, July 20, 2012, page 5;<br />
Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 25; Exhibit 0055.00,<br />
NorthPoint Objection, December 19, 2011, page 5; Exhibit 0273.01, NorthPoint Argument, October 15, 2012,<br />
page 18; Exhibit 0272.03, TransCanada Argument, October 15, 2012, pages 48-49; Exhibit 0153.02,<br />
TransCanada Rebuttal Evidence, July 20, 2012, page 12.<br />
215 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 25.<br />
216 Exhibit 0277.02, ATCO Power Argument, October 15, 2012, page 10.<br />
217 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 22.<br />
218 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 16.<br />
52 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
274. The AESO submitted that merit order dispatch is central to the <strong>Alberta</strong> market design,<br />
and that it plans in <strong>2013</strong> to introduce the capability for intertie transactions to be dispatchable.<br />
Further, there is no detriment caused from including reverse merit order (RMO) in the allocation<br />
procedure at this time, and that signaling the future use of RMO now will enable a more efficient<br />
ISO rule and IT system development and provide clear direction to market participants including<br />
potential intertie developers. 219<br />
<strong>Commission</strong> findings<br />
275. As indicated in the consultation record for Proposed ATC Rule the <strong>Commission</strong><br />
recognizes that market participants have requested a mechanism to allow for shippers to price<br />
their bids and offers over the interties, and through inclusion of a pricing mechanism in the<br />
Proposed ATC Rule the AESO has signaled that such a mechanism may be imminent. However,<br />
the <strong>Commission</strong> must consider the Proposed ATC Rule in the context of the current conditions in<br />
which shippers on the interties are not able to control their bid and offer prices.<br />
276. The Proposed ATC Rule provides that when transfer path limits are exceeded the first<br />
allocation is done based on bid and offer prices, as stated in Section 10(2)(c)(ii) of the rule,<br />
before moving to a pro-rata allocation in Section 10(2)(c)(iii).<br />
277. ISO rules Section 201.5: Block Allocation, currently in effect in <strong>Alberta</strong>, indicates that<br />
the ISO will allocate “to each source asset that is an import, one (1) operating block for energy<br />
with a zero dollar ($0.00) offer price” and “to each sink asset that is an export, one (1) operating<br />
block for energy with a nine hundred and ninety-nine dollar and ninety-nine cent ($999.99) bid<br />
price.” It is clear that import and export transactions are assigned rather than choose a price,<br />
either $0 or $999.99, respectively.<br />
278. While it is clear from ISO rule 3.5.1 that shippers are assigned their bid and offer prices,<br />
the <strong>Commission</strong> considers that imports and exports are still offered and bid at a price, and the<br />
inclusion of an allocation based on price simply reflects this process. Further, while the Proposed<br />
ATC Rule may in effect revert to a pro-rata methodology under the current market rules, the<br />
<strong>Commission</strong> recognizes that market participants in this proceeding clearly understand that<br />
shippers cannot control their bid or offer prices on the interties, and as such are aware that under<br />
the current ISO rules the Proposed ATC Rule will effectively skip allocation based on price and<br />
will default to pro rata allocation.<br />
279. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.2 Rule fails to adequately address allocation and curtailment of ancillary services<br />
280. Parties submitted that the Proposed ATC Rule fails to adequately address ancillary<br />
services curtailment as the Proposed ATC Rule does not include a mechanism to apportion any<br />
required ancillary service curtailments between interties or participants. 220<br />
219 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 21.<br />
220 Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012, page 26; Exhibit 0050.00,<br />
PowerEx Objection, December 19, 2011, page 6.<br />
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Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
281. The AESO and Morgan Stanley submitted that the Proposed ATC Rule clearly outlines<br />
ancillary service curtailment which will be performed prior to any energy transactions on the<br />
intertie and that the system controller will determine which operating reserves transactions are<br />
curtailed considering the reliability assessment made at the time. 221<br />
<strong>Commission</strong> findings<br />
282. Section 10(2)(c)(i) of the Proposed ATC Rule, which is attached as an appendix to this<br />
decision, specifies that if the combined transfer path limit in Section 2(1)(b) is exceeded the BC,<br />
or the Montana, or both the BC and the Montana transfer path allocations must be reduced as<br />
necessary by the applicable ancillary services type interchange transaction amounts.<br />
283. The <strong>Commission</strong> accepts that the AESO system controller would require some<br />
flexibility when determining which operating reserves transactions would be applicable under<br />
various system conditions, and that the Proposed ATC Rule needs to and does provide the<br />
system controller with this flexibility.<br />
284. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.3 Rule fails to account for existing transmission commitments<br />
285. TransCanada submitted that the Proposed ATC Rule ignores the existing users on the<br />
AB-BC intertie and thus the Proposed ATC Rule is technically deficient because it does not<br />
correctly calculate ATC, which by industry standards (as set out by NERC for all US utilities)<br />
includes deducting existing transmission commitment (ETC) from TTC to determine ATC. 222<br />
TransCanada indicated that the NERC glossary of terms included a definition for existing<br />
transmission commitments, which is “[c]ommitted uses of a Transmission Service Provider’s<br />
Transmission system considered when determining ATC or AFC.” 223<br />
286. Supporters of the Proposed ATC Rule argued that there are no transmission rights in<br />
<strong>Alberta</strong>, that firm transmission rights in neighbouring jurisdictions should not be recognized in<br />
<strong>Alberta</strong>, and as such there are no ETC’s in <strong>Alberta</strong> to consider when calculating the ATC for<br />
interties. 224 Further, NaturEner submitted that if recognizing firm transmission commitments in a<br />
neighbouring system were recognized in the Proposed ATC Rule then it would also have to be<br />
recognized on the MATL intertie, not just the AB-BC intertie, in order to allow shippers on all<br />
interties equal opportunity to access the <strong>Alberta</strong> market. 225<br />
221 Exhibit 0145.02, AESO Evidence, June 20, 2012, page 23; Exhibit 0280.02, Morgan Stanley Argument, October<br />
29, 2012, pages 22-23.<br />
222 Exhibit 0138.01, TransCanada (Roach) Evidence, May 7, 2012, pages 8-9; Exhibit 0272.03, TransCanada<br />
Argument, October 15, 2012, page 48.<br />
223 Exhibit 0133.01, TransCanada Evidence, May 7, 2012, page 35.<br />
224 Exhibit 0150.02, Enbridge/MATL (Craig Baker) Evidence, June 15, 2012, page 14; Exhibit 0280.02, Morgan<br />
Stanley Argument, October 29, 2012, page 23; Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages<br />
13; Exhibit 0145.02, AESO Evidence, June 20, 2012, page 18; Exhibit 0281.02, AESO Argument, October 29,<br />
2012, page 25.<br />
225 Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages 13.<br />
54 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
<strong>Commission</strong> findings<br />
287. In <strong>Alberta</strong> there are no transmission rights and transmission is allocated upon dispatch<br />
from the AESO. The NERC definition of ETC has not been adopted in <strong>Alberta</strong>. The <strong>Commission</strong><br />
finds that no existing transmission commitments or committed uses of transmission outside of<br />
<strong>Alberta</strong> should be considered when calculating ATC on the <strong>Alberta</strong> transmission system. There<br />
is no ETC applicable in <strong>Alberta</strong>.<br />
288. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.4 Rule incorrectly allocates ATC created by LSSi<br />
289. TransCanada submitted that the Proposed ATC Rule does not include a mechanism for<br />
identifying <strong>Alberta</strong> interchange capability (AIC) created through the arming of LSSi and AIC<br />
that is not, treats all AIC in the same fashion, and fails to provide a mechanism to account for<br />
costs of LSSi that should be allocated to the owner of a merchant intertie as required under<br />
Section 27 of the Transmission Regulation. 226<br />
290. ATCO Power raised concerns regarding the effectiveness and cost allocation for the<br />
AESO’s LSSi program. 227 The AESO responded that arguments regarding the cost efficiency of<br />
LSSi are beyond the scope of the issue in this proceeding, which is the merit of the Proposed<br />
ATC Rule. 228<br />
291. NaturEner submitted that under the applicable legislative framework the AESO is not<br />
permitted to allocate ATC in a manner that recognizes a priority access by granting ATC or<br />
capacity created through restoration initiatives to existing interties first. 229<br />
292. The AESO submitted that there is no distinction between ATC created by LSSi or by<br />
other methods, it cannot with any certainty identify who created ATC and it would be<br />
inappropriate to attempt to allocate ATC in different ways. 230<br />
<strong>Commission</strong> findings<br />
293. The <strong>Commission</strong> considers that it does not need to decide the issues of the effectiveness<br />
and cost efficiency of LSSi to determine the merits of the Proposed ATC Rule and so it will not<br />
make any determinations regarding the effectiveness and costs of LSSi in this proceeding.<br />
294. The AESO’s LSSi program increases ATC throughout the entire AIES, is one of the<br />
costs associated with operating the AIES, and is paid for by load customers in <strong>Alberta</strong>. While in<br />
the past the AB-BC intertie has enjoyed the benefits of increased imports due to the LSSi<br />
program, shippers on the AB-BC intertie have not paid the costs associated with LSSi. As LSSi<br />
is a program to increase ATC on the AIES, the <strong>Commission</strong> considers that shippers on the<br />
MATL intertie should have as much access to ATC enabled by LSSi as created in any other<br />
manner.<br />
226 Exhibit 0272.03, TransCanada Argument, October 15, 2012, page 47.<br />
227 Exhibit 0142.02, ATCO Power Evidence, May 7, 2012, pages 7-8 and Appendix 3.<br />
228 Exhibit 0145.02, AESO Evidence, June 15, 2012, page 2.<br />
229 Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages 10-13.<br />
230 Exhibit 0281.02, AESO Argument, October 29, 2012, page 25.<br />
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Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
295. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.5 Rule is insufficiently transparent and is missing definitions<br />
296. Parties argued that the Proposed ATC Rule lacked definitions for key terms used in the<br />
rule, and certain key information should be located in the Proposed ATC Rule and not in the<br />
Draft Information Document Available Transfer Capability and Transfer Path Management ID#<br />
2011-001R (ID# 2011-001R).<br />
297. NorthPoint submitted that several terms require clarification. NorthPoint submitted the<br />
AESO indicated that system studies will determine path ratings which will then be used to<br />
determine curtailments under the Proposed ATC Rule, and the Proposed ATC Rule provides<br />
examples of capability limits but there is no certainty about them as studies are ongoing and their<br />
completion cannot be reasonably predicted at this time. Further, “transfer path” is not a defined<br />
term and “available transfer capability” has a different meaning in ID# 2011-001R than in the<br />
ISO Consolidated Authoritative Documents Glossary. NorthPoint indicated that available<br />
transfer capability is defined in ID# 2011-001R, however in the new definitions available<br />
transfer capability includes reference to terms such as “commercially available”, “committed<br />
uses” and “existing transmission commitments”, none of which are defined terms. It is also<br />
unclear whether Section 2(1)(b) of the Proposed ATC Rule refers to available transfer capability<br />
of the combined British Columbia and Montana transfer paths or some other concept and<br />
whether the term “limit” in Section 2(2) refers to available transfer capability or some other<br />
limit. 231<br />
298. Several parties raised concerns that the mechanisms used to calculate various limits are<br />
not included in the Proposed ATC Rule but rather in the incomplete ID# 2011-001R that is not<br />
subject to regulatory oversight, and that these mechanisms and calculations are needed to assess<br />
the impact of the Proposed ATC Rule. 232<br />
299. TransCanada also raised a concern that the AESO has indicated it will follow the<br />
practices outlined in several <strong>Alberta</strong> reliability standards that have not yet been approved by the<br />
<strong>Commission</strong> as they have yet to be filed, which creates uncertainty for market participants. 233<br />
300. NaturEner submitted the mechanism for allocating ATC to interties under the Proposed<br />
ATC Rule clearly sets out the process steps that the AESO intends to follow to allocate ATC<br />
among interties when there is insufficient ATC to accommodate all shippers, and the fact that the<br />
amount of energy that can flow is variable does not mean that the Proposed ATC Rule is not<br />
clear. 234<br />
231 Exhibit 0055.00, NorthPoint Objection, December 19, 2011, page 5.<br />
232 Exhibit 0055.00, NorthPoint Objection, December 19, 2011, page 5; Exhibit 0050.00, PowerEx Objection,<br />
December 19, 2011, pages 5-6; Exhibit 0129.01, Coalition Policy and Financial Impact Evidence, May 7, 2012,<br />
page 25; Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, page 14; Exhibit 0272.03, TransCanada<br />
Argument, October 15, 2012, page 47.<br />
233 Exhibit 0272.03, TransCanada Argument, October 15, 2012, page 47.<br />
234 Exhibit 0282.01, NaturEner Argument, October 29, 2012, page 14.<br />
56 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
301. Morgan Stanley submitted that in AUC Decision 2009-007 235 the <strong>Commission</strong><br />
previously noted that the fact that an AESO rule is not completely self-contained is not in and of<br />
itself fatal, nor is it technically deficient. Also, the AESO has confirmed that the methodology<br />
for calculating import and export transfer limits will not change as a result of the Proposed ATC<br />
Rule, and upon completion of certain studies an information document will be published to<br />
accompany the Proposed ATC Rule. 236<br />
302. The AESO submitted that specific details regarding transfer limits under various system<br />
conditions can vary as the system configuration changes and are not appropriate content for a<br />
rule. Also, these transfer limits do not alter the underlying principles as to how the limits are<br />
calculated or allocated, or how curtailment is conducted. The AESO has committed to include<br />
specific details of transfer limits in an information document as they become available. 237 The<br />
AESO submitted that despite the MPOs claims that the Proposed ATC Rule is unclear, the<br />
Proposed ATC Rule and draft information document provided enough detail for MPOs to<br />
produce their expected revenue impact due to the Proposed ATC Rule. 238<br />
<strong>Commission</strong> finding<br />
303. Regarding the definition of “path rating”, the AESO has indicated that it is participating<br />
in the MATL WECC path rating and RAS design review process and conducting operational<br />
studies to determine individual intertie and system transfer limits such that the reliability of the<br />
grid is maintained. 239 The <strong>Commission</strong> considers the term path rating is a common industry<br />
standard, the value of the MATL path rating will be determined by the WECC design review<br />
process and it does not need to be defined in the Proposed ATC Rule at this time.<br />
304. Regarding the capability limits indicated in the Proposed ATC Rule, the <strong>Commission</strong><br />
accepts that the AESO is conducting system studies and will publish the resulting capability<br />
limits in an information document.<br />
305. The term “transfer path” is not defined in the Electric <strong>Utilities</strong> Act, Transmission<br />
Regulation or the AESO’s Consolidated Authoritative Documents Glossary. However, the term<br />
“intertie” is defined in the AESO’s Consolidated Authoritative Documents Glossary as having<br />
the same meaning as that provided in the Transmission Regulation, but the term intertie does not<br />
appear anywhere else in the AESO’s Consolidated Authoritative Documents Glossary nor does it<br />
appear in the Proposed ATC Rule. The <strong>Commission</strong> understands that Path 1 is defined in the<br />
AESO’s Consolidated Authoritative Documents Glossary as “the <strong>Alberta</strong> – British Columbia<br />
transfer path as identified by WECC in the document Major WECC Transfer Paths in the Bulk<br />
Electric System”, and that in the same document the term “qualified transfer path” is defined as<br />
“a transfer path designated by the WECC Operating Committee as being qualified for WECC<br />
unscheduled flow mitigation.” The <strong>Commission</strong> understands the term “transfer path” as defined<br />
235 AUC Decision 2009-007: Objections to ISO Rule 6.3.5, 6.3.6 and Appendix 7, Long Lead Time Energy<br />
Dispatches and Directives, January 19, 2009, page 10.<br />
236 Exhibit 0280.02, Morgan Stanley Argument, October 29, 2012, page 22.<br />
237 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 22-23.<br />
238 Exhibit 0281.02, AESO Argument, October 29, 2012, page 24.<br />
239 Exhibit 0145.02, AESO Evidence, June 15, 2012, pages 20-21.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 57
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
by WECC 240 encompasses the term intertie as defined in the Electric <strong>Utilities</strong> Act, unless<br />
otherwise stated in the ISO rules.<br />
306. The term “available transfer capability” is defined in the AESO’s Consolidated<br />
Authoritative Documents Glossary. On December 5, 2011, the AESO filed an application to<br />
amend, among other things, the definition of available transfer capability, which was assigned<br />
Application No. 1607957 by the <strong>Commission</strong>. On December 6, 2011, the <strong>Commission</strong> published<br />
a notice of filing of ISO rules and notice for objection. No objections were received by the<br />
December 16, 2011 deadline, and the amendment to the definition of available transfer capability<br />
came into effect on January 31, 2012 as indicated in the AESO’s application. The <strong>Commission</strong><br />
considers market participants were given sufficient notice of the proposed amendments to the<br />
definition of available transfer capability. The legislation provides market participants an<br />
opportunity under Section 25(1) of the Electric <strong>Utilities</strong> Act to complain about an ISO rule that is<br />
currently in effect; such would be the appropriate forum to hear NorthPoint’s concerns about this<br />
defined term.<br />
307. Regarding the contents of information documents and pending reliability standards,<br />
Section 20(1)(c) of the Electric <strong>Utilities</strong> Act states the AESO may make rules respecting the<br />
operation of the interconnected electric system. As raised by Morgan Stanley the <strong>Commission</strong><br />
has previously indicated it would prefer that any rules filed by the ISO are complete and<br />
reasonably self-contained; however, it recognizes that there may be occasions where the<br />
interaction between one rule or OPP or another rule or OPP does not allow for a complete set of<br />
rules and/or OPPs to be considered at a single point in time. Such circumstances are best dealt<br />
with on a case by case basis. In this case the <strong>Commission</strong> considers the information to be<br />
provided in the pending information document and reliability standards is not needed to<br />
understand the principles of how the Proposed ATC Rule will allocate ATC among the interties.<br />
308. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.6 Rule uses incorrect values for the calculation of pro-rata allocation<br />
309. MPOs in this proceeding indicated that the path rating should be used in determining the<br />
pro-rata allocation of ATC. While the MPOs did not clearly indicate the ground of this objection,<br />
namely whether it was a technical deficiency, did not support the FEOC operation of the market<br />
or was not in the public interest, the <strong>Commission</strong> will consider this issue here.<br />
310. NorthPoint and the Coalition indicated it is unclear why MATL is assigned its path<br />
rating of 300 MW for the purpose of calculating allocations when the AESO indicated that path<br />
ratings are not used in ID# 2011-001R for the purpose of calculating allocations. 241<br />
311. BC Hydro argued that instead of using the volume of offers and bids to allocate ATC,<br />
the AESO should use the path rating of each intertie; this would reflect the full physical<br />
240 http://www.wecc.biz/library/WECC%20Documents/Publications/WECC%20Glossary%2012-9-2011.pdf<br />
241 Exhibit 0273.01, NorthPoint Argument, October 15, 2012, page 19; Exhibit 0129.01, Coalition Policy and<br />
Financial Impact Evidence, May 7, 2012, page 26; Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012,<br />
pages 14-15.<br />
58 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
capabilities of the respective interties to which it applies and reflect both the commercial and<br />
reliability value of each intertie. 242<br />
312. Enbridge/MATL submitted that whether the path rating of the AB-BC intertie is 1,200<br />
MW or 12,000 MW does not change the ATC available on the <strong>Alberta</strong> system. Further, using<br />
path rating as an allocation methodology would allocate ATC to the AB-BC intertie that it<br />
cannot use to deliver into <strong>Alberta</strong>, even if all of the available ATC were allocated to the AB-BC<br />
intertie. 243<br />
313. Morgan Stanley submitted that BC Hydro is proposing to allocate ATC based primarily<br />
on path ratings in neighbouring jurisdictions without regard for <strong>Alberta</strong> system capabilities and<br />
limitations, even though the combined AB-BC and MATL transfer path ATC will be limited to a<br />
significantly lower capacity, and that any MW’s beyond the <strong>Alberta</strong> system capability have no<br />
chance of actually flowing. In support of this, Morgan Stanley cited a recent ruling by the<br />
BCUC. The decision indicated that the BCTC (now BC Hydro) cannot reasonably expect to be<br />
able to flow up to the WECC path rating of 1,200 MW and decided the capacity is not properly<br />
available if the energy cannot flow to its intended destination. The BCTC was prevented from<br />
selling more than a maximum of 785 MW of transmission access (consisting of 480 MW of firm<br />
and 305 MW of conditional firm transmission). Further, Morgan Stanley submitted that the<br />
Proposed ATC Rule has been constructed to accurately reflect the system realities present inside<br />
<strong>Alberta</strong> and in neighbouring jurisdictions.<br />
<strong>Commission</strong> ruling<br />
314. Section 3(1) of the Proposed ATC Rule states “[t]he ISO must determine the import total<br />
transfer capability and the export total transfer capability for an individual transfer path, in order<br />
to determine the import available transfer capability and the export available transfer capability<br />
for that transfer path.” Also, upon review of draft ID# 2011-001R it is clear to the <strong>Commission</strong><br />
that where the AESO is using the path rating of MATL, it is doing so for illustrative purposes.<br />
For example, the title of Table 6 in ID# 2011-001R is Capability Limits Illustration [emphasis<br />
added]. As noted earlier in this decision the AESO’s Consolidated Authoritative Documents<br />
Glossary defines ATC. While under certain system conditions the ATC for MATL may reach its<br />
path rating, the <strong>Commission</strong> does not believe the AESO is allocating capacity to MATL based on<br />
its path rating as alleged by NorthPoint and the Coalition.<br />
315. BC Hydro’s evidence indicates that in 2011 the ATC over the AB-BC intertie exceeded<br />
600MW five per cent of the time and exceeded 500MW 50 per cent of the time, and since 2003<br />
the constraints responsible for limiting this ATC have been sourced in <strong>Alberta</strong> approximately 90<br />
per cent of the for import or export. 244 While the WECC defined path rating of the AB-BC<br />
intertie is 1,200 MW for import purposes, based on the evidence the <strong>Commission</strong> considers it<br />
unrealistic to assume that 1,200 MW could currently be transmitted over the AB-BC intertie<br />
given the constraints in the <strong>Alberta</strong> system.<br />
316. The <strong>Commission</strong> accepts the AESO’s use of the transfer capability to determine the prorata<br />
allocation because transfer capability reflects flows that are actually achievable over the<br />
242 Exhibit 0270.02, BC Hydro Argument, October 15, 2012, page 15.<br />
243 Exhibit 0283.02, Enbridge/MATL Argument, October 29, 2012, page 38.<br />
244 Exhibit 0134.02, BC Hydro Evidence, May 7, 2012, page 4.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 59
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
interties under the current system conditions in both <strong>Alberta</strong> and BC. The <strong>Commission</strong> does not<br />
consider that using the path rating to determine the pro-rata allocation would be realistic.<br />
317. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.7 Rule fails to reallocate stranded capacity between T-85 and T-20<br />
318. The Coalition submitted that if after T-85 the AESO became aware that a constraint on<br />
the AB-BC or MATL interties would limit flows on that intertie below its allocated quantity,<br />
there is no mechanism to re-allocate any stranded capacity to the other intertie prior to the start<br />
of the hour, which would cause the AESO to move up the merit order and dispatch enough<br />
generation to make up the stranded capacity. The Coalition argued that the Proposed ATC Rule<br />
should contain a provision for the re-allocation of capacity prior to T-20 should a constraint arise<br />
that would limit flows on either intertie. 245<br />
<strong>Commission</strong> findings<br />
319. The <strong>Commission</strong> recognizes there is the potential for stranded capacity if a constraint<br />
develops on the AB-BC or MATL interties after T-85. However, scheduling intertie transactions<br />
is more complex than dispatching intra-<strong>Alberta</strong> generation as intertie transactions first require the<br />
AESO to communicate transfer capability to the neighbouring jurisdictions, the neighbouring<br />
jurisdictions must then determine which transmission customers to dispatch, the dispatched<br />
transmission customers must then arrange or confirm generation, and finally the dispatched<br />
transmission customers must then submit it e-tags to the AESO. In addition, time is also a factor<br />
in that after T-85 a constraint might not be detected until moments before T-20. Given the<br />
complexity of scheduling intertie transactions and the potential short timeframe the <strong>Commission</strong><br />
considers that any resulting stranded capacity discovered between T-85 and T-20 is one of the<br />
inherent minor complications of operating interties in an electricity market two hours prior to the<br />
start of a settlement interval that an ATC allocation rule cannot reasonably be expected to<br />
eliminate or reduce more significantly.<br />
320. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.8 Rule fails to contemplate future interties<br />
321. TransCanada submitted the Proposed ATC Rule is insufficiently transparent because it<br />
is not robust enough to accommodate future interties. The Proposed ATC Rule does not account<br />
for and respect the respective contributions to AIC from a new intertie so that a new intertie will<br />
not be able to predict how much AIC it will be allocated, and there is no way to quantify the<br />
impact of future interties. 246<br />
322. NaturEner submitted that the Proposed ATC Rule establishes a principle for how<br />
allocation would work, and that the interaction of a new intertie with the Proposed ATC Rule<br />
245 Exhibit 0152.02, Coalition Rebuttal Evidence, July 20, 2012, pages 15-16.<br />
246 Exhibit 0272.03, TransCanada Argument, October 15, 2012, page 47.<br />
60 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
would be dependent on where the new intertie was coming from and the characteristics of that<br />
intertie. 247<br />
323. The AESO submitted that while the Proposed ATC Rule would require changes to add<br />
future interties, as each intertie is specifically named in the Proposed ATC Rule and each has<br />
specific characteristics, the methodology is robust enough to accommodate the addition of any<br />
future interties. 248<br />
<strong>Commission</strong> finding<br />
324. As stated in Section 20(1)(c) of the Electric <strong>Utilities</strong> Act, the AESO may make rules<br />
respecting the operation of the interconnected electric system, which would include allocating<br />
ATC among interties. In regards to quantifying the expected impact of future interties on existing<br />
interties, the <strong>Commission</strong> considers that intertie proponents, just like generators, are capable of<br />
forecasting potential future scenarios to assess consequences to their projects. The <strong>Commission</strong><br />
considers that the AIES interaction with a new intertie would depend on the characteristics of the<br />
new intertie, which may vary greatly from project to project. The Proposed ATC Rule may<br />
require changes to add future interties. The Proposed ATC Rule provides an acceptable principle<br />
for allocation of ATC between interties for the immediate future.<br />
325. The <strong>Commission</strong> finds that predicting the exact changes which the future may dictate<br />
are required or desirable is sufficiently uncertain and unpredictable that confirmation of the<br />
Proposed ATC Rule should not be denied for that reason.<br />
326. The <strong>Commission</strong> is not persuaded that the Proposed ATC Rule is technically deficient<br />
on this basis.<br />
5.3.9 Summary of <strong>Commission</strong> findings – technically deficient<br />
327. In summary, the <strong>Commission</strong> is not persuaded on the grounds raised by the MPOs that<br />
the Proposed ATC Rule is technically deficient.<br />
247 Exhibit 0282.01, NaturEner Argument, October 29, 2012, pages 15.<br />
248 Exhibit 0281.02, AESO Argument, October 29, 2012, page 24.<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 61
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
6 Relief request and order<br />
328. Given that the <strong>Commission</strong> finds that none of the grounds for objection to the Proposed<br />
ATC Rule have been established, this decision does not summarize or address the relief sought<br />
by the MPOs.<br />
329. The AESO requested that the <strong>Commission</strong> confirm the Proposed ATC Rule, pursuant to<br />
section 20.5(1)(a) of the Electric <strong>Utilities</strong> Act, with an effective date no later than the commercial<br />
operation date of MATL. 249<br />
<strong>Commission</strong> findings<br />
330. Section 20.5 of the Electric <strong>Utilities</strong> Act authorizes the <strong>Commission</strong>, after hearing an<br />
objection to an ISO rule, to confirm, disallow or direct the ISO to change the ISO rule or a<br />
provision of the ISO rule.<br />
331. The <strong>Commission</strong> has not been persuaded that the Proposed ATC Rule is against the<br />
public interest or the FEOC operation of the market or is technically deficient.<br />
332. The Proposed ATC Rule is confirmed and will come into effect no later than the<br />
commercial operation date of the MATL intertie, as requested by the AESO. The AESO is<br />
directed to immediately notify market participants and the <strong>Commission</strong> of this effective date<br />
once it has been ascertained.<br />
Dated on February 1, <strong>2013</strong><br />
The <strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
(original signed by)<br />
Tudor Beattie, QC<br />
Panel Chair<br />
(original signed by)<br />
Bill Lyttle<br />
<strong>Commission</strong> Member<br />
(original signed by)<br />
Moin Yahya<br />
Acting <strong>Commission</strong> Member 250<br />
249 Exhibit 0281.02, AESO Argument, page 35.<br />
250 On October 3, 2012, O.C. 306/2012 rescinded the appointment of Dr. Yahya as a member of the <strong>Commission</strong><br />
and nominated him as an acting member of the <strong>Commission</strong> until October 2, 2017.<br />
62 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Appendix 1 – Proceeding participants<br />
Name of Organization (Abbreviation)<br />
Counsel or Representative<br />
<strong>Alberta</strong> Electric System Operator (AESO)<br />
James Smellie<br />
Lisa Jamieson<br />
ATCO Power Ltd. (ATCO Power)<br />
Marie Buchinskii<br />
Allison Sears<br />
British Columbia Hydro and Power Authority (BC Hydro)<br />
Jeff Christian<br />
Witnesses<br />
Miranda Keating Erickson, Director Market Design<br />
Kevin Dawson, Senior Program Manager<br />
Doug Simpson, Director Market Operations, Market<br />
Services<br />
Judy Chang, Principal, The Brattle Group.<br />
Carl Fuchshuber, VP Commercial Strategic Planning<br />
Horst Klinkenborg, Manager of Regulatory and<br />
Strategic Planning<br />
Gordon Doyle, Tariff and Contracts Manager<br />
Martin Huang, VP Grid Operations<br />
Capital Power Corporation (Capital Power)<br />
Alan Ross<br />
Shaun Pillott<br />
Cargill Limited (Cargill) – part of the Coalition<br />
Philip Pauls<br />
Robert Walker, Director NA Transmission and<br />
Origination<br />
Consumers Coalition of <strong>Alberta</strong> (CCA)<br />
J.A. Wachowich<br />
Montana <strong>Alberta</strong> Tie Ltd c/o Enbridge Inc. (Enbridge/MATL)<br />
David Holgate<br />
Matthew Synnott<br />
Morgan Stanley Capital Group Inc. (Morgan Stanley)<br />
Dennis Langen<br />
Lisa Cherkas<br />
NaturEner Energy USA, LLC (NaturEner)<br />
Rosa Twyman<br />
Kimberly Howard<br />
Erica Young<br />
NorthPoint Energy Solutions Inc.(NorthPoint) – part of the<br />
Coalition<br />
Rangi Jeerakathil<br />
Lino Luison, VP Financial Partnerships, Enbridge Inc.<br />
Craig Baker, Retired, American Electric Power Co.<br />
Robert Baker, VP Teshmont Consultants LP<br />
Richard Stout, Executive Director, Association of Major<br />
Power Customers of BC<br />
Cliff Hamal, Managing Director, Navigant Economics<br />
Inc.<br />
Julie Carey, Director, Navigant Economics Inc.<br />
Alireza Sedighzadeh Yazdi, Executive Director<br />
Jasper Wright, Associate<br />
Julia Frayer, Partner and Managing Director, London<br />
Economics International LLC.<br />
Chris Hodge, VP Commercial Operations North<br />
America<br />
Dean Jones, Manager Energy Trading<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 63
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Name of Organization (Abbreviation)<br />
Counsel or Representative<br />
PowerEx Corporation (PowerEx) – part of the Coalition<br />
Chris Sanderson<br />
Clara Ferguson<br />
Saskatchewan Power Corporation (SaskPower)<br />
Rangi Jeerakathil<br />
TransCanada Energy (TransCanada)<br />
Gordon Nettleton<br />
Azalea Jin<br />
<strong>Utilities</strong> Consumer Advocate (UCA)<br />
Matthew Keen<br />
Witnesses<br />
Arne Olson, Partner, Energy and Environmental<br />
Economics Inc.<br />
Donald Martin, Executive Consultant<br />
Gordon Dobson-Mack, Transmission Issues Manager<br />
Khosro Kabiri, Senior Consultant, Powertech Labs Inc.<br />
Michael MacDougall, Director Trade Policy and IT<br />
Robert Knecht, Industrial Economics Inc.<br />
Wayne Guttormson, Supervisor Interconnections<br />
Paul Kos, Managing Director, Power System Solutions<br />
International Inc.<br />
Vince Kostesky, Director Market Services Western<br />
Power<br />
Janene Taylor, Manager of Market Services Western<br />
Power<br />
Roger Williams, Manager Short Term Trading<br />
Operations and Analytics<br />
Craig Roach, President, Boston Pacific Company, Inc.<br />
Vincent Musco, Project Manager, Boston Pacific<br />
Company, Inc.<br />
Kevin Phillips, Principal, Phillips Partners Inc.<br />
<strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
<strong>Commission</strong> Panel<br />
T. Beattie, QC, Panel Chair<br />
B. Lyttle, <strong>Commission</strong> Member<br />
M. Yahya, Acting <strong>Commission</strong> Member<br />
<strong>Commission</strong> Staff<br />
J. Petch (<strong>Commission</strong> counsel)<br />
A. Davison (Market Analyst)<br />
G. Andrews (Market Analyst)<br />
A. Chen (Engineering Specialist)<br />
T. Wilde (Engineer in Training)<br />
64 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Appendix 2 – Abbreviations<br />
Abbreviation<br />
AESO<br />
AB-BC<br />
AB-SK<br />
AC<br />
AIC<br />
AIES<br />
ATC<br />
ATCO Power<br />
AUC<br />
BC Hydro<br />
BCTC<br />
BCUC<br />
Capital Power<br />
Cargill<br />
CCA<br />
Coalition<br />
DC<br />
Enbridge/MATL<br />
ENMAX<br />
E-tags<br />
ISO<br />
LIFO<br />
LSSi<br />
MATL<br />
Morgan Stanley<br />
MPO<br />
MRO<br />
NaturEner<br />
NEB<br />
NERC<br />
NorthPoint<br />
OPP<br />
Name in Full<br />
<strong>Alberta</strong> Electric System Operator<br />
Intertie connecting <strong>Alberta</strong> and British Columbia<br />
Intertie connecting <strong>Alberta</strong> and Saskatchewan<br />
Alternating current<br />
<strong>Alberta</strong> interchange capability<br />
<strong>Alberta</strong> Interconnected Electric System<br />
Available transfer capability<br />
ATCO Power Ltd.<br />
<strong>Alberta</strong> <strong>Utilities</strong> <strong>Commission</strong><br />
British Columbia Hydro and Power Authority<br />
British Columbia Transmission Corporation<br />
(predecessor to BC Hydro)<br />
British Columbia <strong>Utilities</strong> <strong>Commission</strong><br />
Capital Power Corporation<br />
Cargill Limited<br />
Consumers Coalition of <strong>Alberta</strong><br />
PowerEx, NorthPoint and Cargill formed a coalition to<br />
make joint submissions in this proceeding<br />
Direct current<br />
Montana <strong>Alberta</strong> Tie Ltd. c/o Enbridge Inc.<br />
ENMAX Energy Corporation<br />
Export transaction schedule submissions<br />
Independent System Operator<br />
Last-in-first-out<br />
Load shed service for imports<br />
Montana <strong>Alberta</strong> Tie Ltd.<br />
Morgan Stanley Capital Group Inc.<br />
Market participant objector<br />
Midwest Reliability Organization<br />
NaturEner USA, LLC<br />
National Energy Board<br />
North American Electric Reliability Corporation<br />
NorthPoint Energy Solutions Inc.<br />
Operating policies and procedures of the AESO<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 65
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
PowerEx<br />
Proposed ATC Rule<br />
RMO<br />
SaskPower<br />
SATL<br />
TCM<br />
TransCanada<br />
UCA<br />
WECC<br />
WPM Rule<br />
PowerEx Corporation<br />
Proposed ISO rule Section 203.6: Available Transfer<br />
Capability and Transfer Path Management<br />
Reverse merit order<br />
Saskatchewan Power Corporation<br />
Saskatchewan-<strong>Alberta</strong> Tie Line Project Inc.<br />
Transmission constraints management<br />
TransCanada Energy Ltd.<br />
<strong>Utilities</strong> Consumer Advocate<br />
Western Electricity Coordinating Council<br />
Wind power management rule<br />
66 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Appendix 3 – PROPSED ISO RULES SECTION 203.6: AVAILABLE TRANSFER<br />
CAPABILTY AND TRANSFER PATH MANAGEMENT<br />
Proposed New ISO Rules<br />
Part 200, Markets<br />
Division 203, Energy Markets<br />
Section 203.6<br />
Available Transfer Capability<br />
and Transfer Path Management<br />
Final Proposed Filing Draft<br />
December 5, 2011<br />
Applicability<br />
1 Section 203.6 applies to:<br />
(a) a pool participant seeking to exchange or transact an import or export<br />
interchange transaction; and<br />
(b) the ISO.<br />
Capability Limits Determinations by the ISO<br />
2(1) The ISO must determine and post on the AESO website the following capability<br />
limits in MW prior to each settlement interval, and also on an as required basis when<br />
interconnected electric system operating conditions change:<br />
(a) the <strong>Alberta</strong> interchange capability;<br />
(b) the import and export capability of the combined British Columbia and<br />
Montana transfer paths; and<br />
(c) the import available transfer capability and export available transfer<br />
capability for each of the British Columbia, Montana and Saskatchewan<br />
transfer paths.<br />
(2) Once the ISO has determined the limits under subsection 2(1), it must ensure that:<br />
(a) the amount in MW of all transmission service for all import and export<br />
interchange transactions for all transfer paths does not exceed the <strong>Alberta</strong><br />
interchange capability limit referenced in subsection 2(1)(a);<br />
(b) the amount in MW of all transmission service for all import and export<br />
interchange transactions for the combined British Columbia and Montana<br />
transfer paths does not exceed the combined limit referenced in subsection<br />
2(1)(b); and<br />
(c) the amount in MW of all transmission service for all import and export<br />
interchange transactions for an individual transfer path does not exceed the<br />
limit for that transfer path referenced in subsection 2(1)(c).<br />
Filed with the <strong>Commission</strong>: 2011-12-05 Page 1 of 8<br />
AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 67
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Total Transfer Capability Determinations by the ISO<br />
3(1) The ISO must determine the import total transfer capability and the export<br />
total transfer capability for an individual transfer path, in order to determine the import<br />
available transfer capability and the export available transfer capability for that<br />
transfer path.<br />
(2) The ISO must make the determinations under subsection 3(1) with reference to<br />
the applicable provisions of any related reliability standards.<br />
Available Transfer Capability Determinations by the ISO for a Transfer Path<br />
4(1) The ISO must use the import available transfer capability and the export<br />
available transfer capability limits as referenced under subsection 2(1)(c) for an<br />
individual transfer path, as the maximum capability for scheduling interchange<br />
transactions on that transfer path.<br />
(2) The ISO must post on the AESO website the import available transfer<br />
capability and the export available transfer capability as determined for an individual<br />
transfer path.<br />
(3) The ISO must post on the AESO website as soon as is reasonably practical any<br />
change to the import available transfer capability or the export available transfer<br />
capability for an individual transfer path.<br />
Submission of Interchange Transaction Bids and Offers by a Pool Participant<br />
5(1) Notwithstanding subsection 3.5.2 of the ISO rules, Submission Timing, a pool<br />
participant with an import or export energy interchange transaction must submit<br />
through the Energy Trading System the import offer or export bid for the interchange<br />
transaction, as applicable, no later than two (2) hours prior to the start of the settlement<br />
interval in order for the interchange transaction to be included in the energy market<br />
merit order.<br />
(2) A pool participant with any form of interchange transaction must use all<br />
reasonable efforts to procure transmission service from applicable transmission service<br />
providers in an amount in MW at least equal to the available capability of the<br />
interchange transaction, which reasonable efforts must include:<br />
(a) determining whether there is transmission service posted by the applicable<br />
transmission service providers and available for that interchange<br />
transaction; and<br />
(b) submitting a request to the applicable transmission service providers to<br />
procure the transmission service, if it has been posted and is available.<br />
(3) If after complying with subsection (2):<br />
(a) the pool participant is unable to procure all or a portion of the requested<br />
transmission service for an energy interchange transaction; or<br />
(b) the transmission service for an energy interchange transaction is curtailed<br />
after procurement either by any transmission service provider or the ISO;<br />
then such a circumstance is a reason the pool participant must submit a restatement of<br />
available capability, and may be the basis for the determination of an acceptable<br />
operational reason under subsection (iv) of that definition.<br />
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68 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(4) For any pool participant with an interchange transaction, if due to a<br />
determination by the ISO under subsection 10 the amount in MW of the interchange<br />
transaction on an individual transfer path exceeds the individual transfer path available<br />
transfer capability allocation as determined under that subsection, then that<br />
circumstance is a reason the pool participant may submit a restatement of available<br />
capability to the level of the allocation, and may be the basis for the determination of an<br />
acceptable operational reason under subsection (iv) of that definition.<br />
Submission of E-tags by Pool Participants<br />
6(1) Pool participants with any import or export interchange transactions who have<br />
acquired transmission service must submit e-tags to the ISO for the interchange<br />
transactions.<br />
(2) The ISO must receive e-tags no later than twenty (20) minutes prior to the start<br />
of the settlement interval in order for the energy components of the interchange<br />
transactions to be included in an interchange schedule referenced in subsection 8.<br />
(3) A pool participant must submit one (1) or more e-tags for an energy<br />
interchange transaction such that the final total amount in MW agrees with the<br />
available capability of the single source asset:<br />
(a) as stated two (2) hours prior to the start of the settlement interval; or<br />
(b) as may be restated in accordance with the provisions of this section 203.6,<br />
but in any event the final total amount in MW must not exceed the available<br />
capability of the single source asset as stated at two (2) hours prior to the<br />
start of the settlement interval.<br />
(4) If:<br />
(a) the pool participant is unable to procure transmission service, or the<br />
transmission service is curtailed by any transmission service provider or the<br />
ISO, as referenced under subsection 5(3); or<br />
(b) there is any other change in the available capability for the sink asset or the<br />
source asset, as applicable;<br />
then the pool participant must submit, as applicable:<br />
(i) an energy restatement in accordance with either subsection 3.5.3.2 or<br />
subsection 3.5.4.2 of the ISO rules, Mandatory Energy Restatements; or<br />
(ii) an ancillary services restatement in accordance with subsection 3.6.3 of<br />
the ISO rules, Restatements.<br />
Validation of E-Tags by the ISO<br />
7(1) The ISO must validate e-tags for interchange transactions in accordance with<br />
the provisions of this subsection 7.<br />
(2) An e-tag must be validated by the ISO prior to the e-tag being included in an<br />
interchange schedule.<br />
(3) The ISO must validate an e-tag with reference to the provisions of the reliability<br />
standards, INT-006-AB-2 Response to Interchange Authority.<br />
(4) The ISO must reject an e-tag:<br />
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AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 69
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(a) if the interchange transaction is not being transacted by a pool participant;<br />
(b) for an import interchange transaction if the source balancing authority is<br />
in the WECC and the sink balancing authority is the ISO, and the source<br />
balancing authority is not carrying reserves allocated for that import<br />
interchange transaction; or<br />
(c) if the e-tag is not fully completed.<br />
(5) If the provisions of this subsection 7 otherwise are complied with, then the ISO<br />
may validate and include in the interchange schedule any e-tags that are submitted after<br />
the twenty (20) minute deadline set out in subsection 6(2).<br />
Interchange Schedules and Dispatches by the ISO<br />
8(1) Subject to the provisions of this section 203.6, the ISO must include in the<br />
interchange schedule the energy components of interchange transactions if the e-tags<br />
for the interchange transactions have been:<br />
(a) received by the submission deadline set out in subsection 6(2); and<br />
(b) validated under subsection 7.<br />
(2) The ISO must determine the interchange schedule for each transfer path before<br />
the start of the settlement interval, taking into account the allocation and constraint<br />
management procedures and sequencing set out in subsection 10 and subsection 11.<br />
(3) Each interchange schedule period must be equal to the settlement interval,<br />
unless the ISO has an agreement with an adjacent balancing authority specifying an<br />
alternative interchange schedule start and end time for an individual transfer path, and in<br />
that event the timing of the interchange schedule for the transfer path must be governed<br />
by the form of agreement.<br />
(4) The ISO must treat the energy component of a scheduled interchange<br />
transaction as a dispatch in accordance with the applicable energy market merit<br />
order.<br />
(5) The ISO must not make any changes to an interchange schedule for a transfer<br />
path except if required to accommodate:<br />
(a) the delivery of external supplemental reserves, spinning reserves or<br />
contingency reserves;<br />
(b) a matter of reliability on the interconnected electric system, or a similar<br />
matter which may occur in any other balancing authority area;<br />
(c) an emergency or a system emergency on the interconnected electric<br />
system or in any other balancing authority area;<br />
(d) a supply shortfall or supply surplus matter; or<br />
(e) any curtailments resulting from the procedures and sequencing set out in<br />
subsection 10 and subsection 11.<br />
(6) If the ISO is required to accommodate any matter referred to in subsection 8(5),<br />
then the ISO must issue the resulting interchange schedule changes.<br />
Filed with the <strong>Commission</strong>: 2011-12-05 Page 4 of 8<br />
70 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
Saskatchewan Inadvertent Energy Management<br />
9 If the ISO is required to manage an amount of inadvertent energy on the<br />
Saskatchewan transfer path, then:<br />
(a) the inadvertent energy is not eligible to set the pool price; and<br />
(b) inadvertent energy payback on the Saskatchewan transfer path must not<br />
exceed twenty-five (25) MW.<br />
Available Transfer Capability Allocations for Transfer Paths<br />
10(1) At approximately eighty-five (85) minutes prior to a settlement interval, the<br />
ISO must determine whether the capability limits under subsection 2 may be exceeded,<br />
and if so then the ISO must determine the individual transfer path available transfer<br />
capability allocations in accordance with the following procedures:<br />
(a) the ISO must calculate the net interchange transaction amount in MW, at<br />
each potential system marginal price, taking into account:<br />
(i) the energy interchange transaction amounts in MW, and the prices for<br />
bids and offers;<br />
(ii) the interchange transaction amount in MW for ancillary services; and<br />
(iii) applicable counterflows; and<br />
(b) the ISO may exclude any wheel through transaction amounts in MW if<br />
those amounts will not result in any limits or allocations under this section<br />
203.6 being exceeded.<br />
(2) The ISO must comply with the following additional procedures in the following<br />
sequence to determine the allocation of each of the individual transfer path available<br />
transfer capability allocations:<br />
(a) the net amount in MW of all interchange transactions for the individual<br />
transfer path must be compared to the limit determined for that individual<br />
transfer path as referenced in subsection 2(1)(c), and:<br />
(i) if that net amount is equal to or greater than the limit, then the allocation<br />
must be set at that limit; and<br />
(ii) if that net amount is less than the limit, then the allocation must be set at<br />
that net amount;<br />
(b) for the British Columbia and Montana transfer paths, the sum in MW of their<br />
individual transfer path allocations calculated under subsection 10(2)(a)<br />
must be compared to the combined British Columbia and Montana transfer<br />
path limit referenced in subsection 2(1)(b);<br />
(c) if the combined transfer path limit of subsection 2(1)(b) is not exceeded,<br />
then the allocations must remain as determined in accordance with<br />
subsection 10(2)(a), but if it is exceeded, then a further allocation must be<br />
done in accordance with the following sequence in order to ensure the<br />
combined transfer path limit as determined under subsection 2(1)(b) is not<br />
exceeded:<br />
(i) first, the British Columbia, or the Montana, or both the British Columbia<br />
and the Montana transfer path allocations must be reduced as<br />
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AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 71
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
necessary by the applicable ancillary services type interchange<br />
transaction amounts in MW;<br />
(ii) second, the British Columbia, or the Montana, or both the British<br />
Columbia and the Montana transfer path allocations must be reduced as<br />
necessary by the applicable energy interchange transaction amounts<br />
in MW, with the reduction being in reverse merit order based on bid<br />
and offer prices; and<br />
(iii) third, if there are equally priced British Columbia and Montana energy<br />
interchange transactions, then the British Columbia and Montana<br />
allocations must be reduced on a pro rata basis using the following<br />
formula:<br />
the MW allocation for each of the Montana and British<br />
Columbia transfer paths as determined in accordance with<br />
subsection 10(2)(a), as may be reduced under subsections<br />
10(2)(c)(i) and 10(2)(c)(ii);<br />
divided by<br />
the sum in MW calculated under in subsection 10(2)(b) as may<br />
be reduced under subsections 10(2)(c)(i) and 10(2)(c)(ii);<br />
multiplied by<br />
the amount by which that sum exceeds the combined British<br />
Columbia and Montana transfer path limit referenced in<br />
subsection 2(1)(b);<br />
(d) the allocation resulting from subsection 10(2)(c) plus the Saskatchewan<br />
transfer path allocation calculated under subsection 10(2)(a) must then be<br />
compared to the <strong>Alberta</strong> interchange capability limit referenced in<br />
subsection 2(1)(a); and<br />
(e) if the <strong>Alberta</strong> interchange capability limit is not exceeded, then the<br />
allocations must remain as determined in accordance with subsections<br />
10(2)(a) and 10(2)(c), but if that limit is exceeded, then a further allocation<br />
of available transfer capability must be done in accordance with the<br />
following sequence in order to ensure that the <strong>Alberta</strong> interchange<br />
capability limit as determined under subsection 2(1)(a) is not exceeded:<br />
(i) first, any individual one (1), or any combination of the British<br />
Columbia, Montana, and Saskatchewan transfer path allocations must<br />
be reduced as necessary by the applicable ancillary service type<br />
interchange transaction amount in MW;<br />
(ii) second, any individual one (1), or any combination of the British<br />
Columbia, Montana, and Saskatchewan transfer path allocations must<br />
be reduced as necessary by the applicable energy interchange<br />
transaction amounts in MW, with the reduction being in reverse merit<br />
order based on bid and offer prices; and<br />
(iii) third, if there are equally priced British Columbia, Montana and<br />
Saskatchewan energy interchange transactions, then the British<br />
Columbia, Montana and Saskatchewan allocations must be reduced on<br />
a pro rata basis using the following formula:<br />
Filed with the <strong>Commission</strong>: 2011-12-05 Page 6 of 8<br />
72 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
the MW allocation for each of the Montana and British<br />
Columbia transfer paths as determined in accordance with<br />
subsection 10(2)(c) and the Saskatchewan transfer path<br />
allocation under subsection 10(2)(a), as may be reduced under<br />
subsections 10(2)(e)(i), and 10(2)(e)(ii);<br />
divided by<br />
the sum in MW referred to in subsection 10(2)(d), as may be<br />
reduced under subsections 10(2)(e)(i) and 10(2)(e)(ii);<br />
multiplied by<br />
the amount by which that sum exceeds the <strong>Alberta</strong> interchange<br />
capability limit referenced in subsection 2(1)(a);<br />
(3) At approximately eighty-five (85) minutes prior to a settlement interval, the<br />
ISO must post on the AESO website:<br />
(a) the total in MW of all energy import offers and export bids received for each<br />
transfer path and the combinations of transfer paths referenced under<br />
subsection 2, at two (2) hours prior to the start of the settlement interval in<br />
accordance with subsection 5(1);<br />
(b) the limits referenced under subsection 2; and<br />
(c) all allocations made under this subsection 10.<br />
(4) If, after eighty-five (85) minutes prior to a settlement interval, any of the limits<br />
referenced in subsection 2 have decreased, then the ISO must curtail interchange<br />
transactions in accordance with the procedures and sequence set out in subsection 11.<br />
Transfer Path Constraint Management<br />
11(1) If, after carrying out the procedures set out in subsection 10, within fifteen (15)<br />
minutes prior to the start of the settlement interval and based on the e-tags submitted<br />
under subsection 6 the limits referenced in subsection 2 are still exceeded, then the ISO<br />
must curtail interchange transactions in accordance with the sequential procedures set<br />
out in this subsection 11.<br />
(2) The ISO must determine the effective interchange transactions for mitigating a<br />
constraint caused by limits being exceeded at the <strong>Alberta</strong> interchange capability level,<br />
the combined Montana and BC transfer path capability level, or at each individual<br />
transfer path level.<br />
(3) The ISO may determine that any wheel through transaction is not effective in<br />
mitigating a constraint, based on its analysis under subsection 11(2).<br />
(4) The ISO must comply with the following procedures in the following sequence<br />
to mitigate the remaining constraint:<br />
(a) assess all interchange transactions for transmission services against the<br />
limits referenced under subsection 2 and allocations made under subsection<br />
10, and determine the interchange transactions that will be effective in<br />
mitigating the constraint;<br />
(b) curtail the transmission service of interchange transactions under the<br />
sequencing set out in subsection 11(4)(c), mitigating the constraint in the<br />
following order at the following levels, where effective:<br />
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AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>) • 73
Objections to ISO rules Section 203.6<br />
Available Transfer Capability and Transfer Path Management<br />
<strong>Alberta</strong> Electric Systems Operator<br />
(i) an individual transfer path limit level;<br />
(ii) the combined Montana and British Columbia transfer path level; or<br />
(iii) the <strong>Alberta</strong> interchange capability level; and<br />
(c) curtail at the effective level:<br />
(i) inadvertent energy payback interchange transactions, prior to the<br />
curtailment of any interchange transactions on the Saskatchewan<br />
transfer path;<br />
(ii) transmission services of any effective interchange transactions for<br />
ancillary services;<br />
(iii) transmission services of any effective energy interchange transactions<br />
based on bid and offer prices in reverse merit order; and<br />
(iv) transmission services of any effective energy interchange transactions<br />
on a pro rata basis in accordance with the following formula:<br />
scheduled amount of each effective interchange transaction;<br />
multiplied by<br />
total amount necessary to mitigate the constraint;<br />
divided by<br />
total scheduled amount of all effective interchange transactions.<br />
Revision History<br />
Effective Description<br />
yyyy/mm/dd<br />
74 • AUC Decision <strong>2013</strong>-<strong>025</strong> (February 1, <strong>2013</strong>)