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RAILBELT RESERVE ISSUES
JURISDICTION AND AUTHORITY FOR RESOLUTION
Introduction: Over the course of several months, the Railbelt
utilities have been discussing the interpretation of their reserve
obligations under various contracts. Of particular concern is the
appropriate forum for resolving the Railbelt reserve issues, since
some issues require technical expertise, while other issues present
policy considerations or questions of contractual intent.
Railbelt reserve issues have been considered by the Bradley Lake
PMC, the Railbelt Utilities Group (RUG), which has no formal
responsibilities for reserve issues, and the Intertie Operating
Committee (IOC), established under the Alaska Intertie Agreement
(AIA). In addition to the Bradley Lake PMC, the IOC, and the RUG,
the Alaska Systems Coordinating Council (ASCC) has been involved
and could continue to be involved in evaluating the ramifications
of alternative courses of action or suggesting possible solutions
to the Railbelt reserve issues. However, the ASCC is a purely
advisory group, with non-mandatory participation.
Issues: The Railbelt reserve issues stem from the application of
the Alaska Intertie Agreement (AIA) to the operation of the
Railbelt electric system in the absence of a power pooling agree-
ment. The issues are complicated by the existence of separately
owned, but jointly operated, generating facilities.
Three critical areas emerge from an analysis of Railbelt reserve
issues:
* The status of the Alaska Energy Authority as a "Particip-
ating Utility" under the terms of the AIA and the
consequences of that characterization.
* The obligations of the Railbelt utilities to provide
reserves, and the character of those reserves, under the
terms of the AIA.
* The role and the authority of the Intertie Operating
Committee, under the AIA, to ascertain or determine
project characteristics, to interpret, modify, or enforce
the provisions of the AIA, or to undertake revisions to
the AIA.
To resolve these issues, it is first necessary to determine the
appropriate forum for addressing these issues and then to do so
within the framework of established agreements.
Provisions of Existing Legal Agreements: Answers to several key
Railbelt reserve questions.can be found within the terms of
existing agreements, which in turn provide the forum and framework
RLS\ IOCRES . pp
for resolution of the issue. Given the broad latitude Addendum No.
1 gives to the IOC on reserve issues, and the deference given the
AIA in the Bradley Lake Agreement, the majority of issues under
discussion should be resolved by the IOC under the AIA.
» Is AFA a "Utility Participant" under the AIA?
Section 4.1.1 of the AIA provides that the AEA "will become a
Utility Participant at such time as it sells power to a party that
is not a Participant and is connected to the Participants’
interconnected system." AEA’s sale of Bradley Lake Power to
Seward, Homer and Matanuska, who are not AIA participants, makes
AEA a Utility Participant under the AIA. As a Utility Participant,
AEA has a Reserve Capacity Obligation and an Operating Reserve
Obligation.
PRE How _is a Utility Participant’s Reserve Capacity Obligation
determined?
Addendum No. 1 to the AIA establishes the basis for determin-
ing the reserve obligation of each Utility Participant. The
initial Reserve Capacity Obligation (RCO) of each Utility Partici-
pant was set at an amount equal to thirty (30) percent of the
projected Annual System Demand of the Utility Participant. The RCO
can be adjusted from time to time by the IOC.
ae How is a Utility Participant’s Operating Reserve Obligation
determined?
In addition to the RCO, each Utility Participant has an
Operating Reserve Obligation (ORO). Addendum No. 1 to the AIA
establishes a Total ORO, which shall be equal to "150 percent of
the largest generating unit contingency in operation on the
interconnected systems of the Utility Participants." Each Utility
Participant’s ORO is based on a formula set out in Section B-2.3.1
of Addendum No. 1. The AIA does not expressly provide the IOC with
the authority to modify this formula.
OROs can be modified or adjusted by the IOC from time to time.
(Section B-2.1.2 of Addendum No. 1).
Ars How much of a Utility Participant’s Operating Reserve Obliga-
tion must be Spinning and Non-Spinning Reserves?
Section B-2.2.1.1 provides that the "Spinning Reserve portion
of the total Intertie System shall not be less than an amount
equivalent to 100 percent of the Declared Capability of the largest
generating unit contingency in operation on the interconnected
systems of the Utility Participants." The Declared Capability of
a Utility Participant is determined by that Participant (§ B-
2.2.1.1), but the Declared Capability of a generating unit cannot
exceed the published capability of that unit (Exhibit A, Definition
2 RLS\ IOCRES. pp
No. 10) and is subject to verification by the I0C for reserve
purposes. The balance of the Total ORO can be maintained with Non-
Spinning Reserves.
Section B-2.4.1 provides that "System Spinning Reserves shall
be calculated at any given instant as the difference between the
sum of the net capability of all generating units on line in the
respective system and the integrated System Demand of the system
involved."
S. Can_load shed be used in lieu of Spinning Reserves?
Section B-2.4.2 provides that a "Utility Participant’s
Spinning Reserve may be satisfied by an automatically controlled
load shedding program. The load shedding program shall assure that
controlled load can be dropped to meet the requirements of Spinning
Reserve and in such a manner as to maintain system stability and
not cause objectionable system conditions or cascading effects in
other Utility Participants’ systems. The Operating Committee shall
review and approve the Utility Participant’s load shedding program
that will be used to satisfy its Spinning Reserve requirements."
6. How should "quality of spin" and "system response" issues be
resolved?
The IOC has a great deal of authority concerning reserve
issues. Section B-2.4.2 requires the IOC to review and approve
load shedding programs to assure system stability and section B-
2.4.4 requires the IOC to utilize prudent utility practices in
assessing effective utilization of capacity, transmission limita-
tions, and local area requirements. In the course of these duties,
it would be appropriate for the IOC to discuss and develop criteria
for assessing the reliability of various spinning reserve and
system reliability issues and options. Independent of the
provisions of the AIA, the ASCC could address, and has, in fact,
been considering, these issues.
ie Who determines reserve requirements?
The AIA delegates authority to the IOC on a number of reserve-
related issues. The IOC can establish criteria for automatic load
shedding and review and approve a Utility’s load shedding programs
(§§ B-3.2.3, B-2.4.2), adjust Reserve Capacity Obligations (§ A-
1.1.2), determine Accredited Capability for each Utility Partici-
pant (§ A-1.1.3), determine, adjust, or modify each Utility
Participants’ Operating Reserve Obligations (§§ B-2.1.2, B-2.3.1),
modify or change Total ORO, Spinning and Non-Spinning Reserve
ratios, and criteria for generating unit capability for Operating
Reserves (§ B-2.2.3), and establish procedures to assure that
Operating Reserves are available on the systems of the Utilities at
all times (§ B-2.4.3).
3 RLS\IOCRES. pp
If the IOC members are dissatisfied with capacity or operating
reserve obligations or criteria for the Railbelt, the IOC is an
appropriate forum to resolve those differences.
Be How should a jointly-owned generating unit be treated for the
purpose of determining reserve obligations?
The AIA does not specifically address jointly-owned generating
units. In the absence of IOC direction, it would be reasonable to
assign each utility a percentage of the generating unit based on
its ownership interest for reserve purposes.
9. Should Utility Participants be allowed to make non-firm sales
of their Spinning Reserves?
Nothing in the AIA precludes Utility Participants from making
non-firm sales of Spinning Reserves, provided the non-firm sales
can be discontinued quickly enough to insure system reliability.
(§B-2.4.2)
10. If a Utility Participant sells firm or non-firm power, should
the selling or the purchasing utility be required to provide
reserves for that sale?
This is an issue that must be resolved on a contractual basis
between the selling and the purchasing utility. Interconnected
utilities should seek a consistent approach.
Jurisdiction and Authority for Resolution: Only the IOC has
contractual responsibility for resolving issues related to reserve
obligations in the Railbelt. However, the IOC has tended to focus
on the technical expertise of the Railbelt utilities and has been
unsuccessful in resolving some of the fundamental policy questions
inherent in this debate. Thus, it may be appropriate to convene
the Railbelt Utility Managers to resolve these policy questions.
In addition, resolution of certain technical questions may depend
on the resolution of closely-related policy issues.
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
Although the majority of the Railbelt reserve issues are contractu-
ally reserved for the IOC, there are certain limited issues for
resolution by the BPMC.
* Declare Project capability
* Establish criteria for the allocation of capacity and
energy
* Establish criteria for Participant Project scheduling
RAILBELT UTILITY MANAGERS -- POLICY ISSUES
The following issues arise under the AIA, but have not successfully
4 RLS\ IOCRES . pp
been resolved on a technical level by the existing IOC members.
These policy issues require the immediate attention of the Railbelt
utility managers.
* Address AEA’s status as a "Utility Participant" under the
AIA.
* Determine the acceptability of selling spinning reserves
under AIA and IOC operating criteria.
* Discuss and consider possible amendments or modifications
to the technical and/or procedural provisions of the AIA.
* Clarify the status of the investigation into "quality"
and "system response" criteria for reserves. (Currently
being discussed by ASCC.)
* Affirm or, if necessary, recommend modification to, ASCC
planning and operating criteria for interconnected
utilities.
INTERTIE OPERATING COMMITTEE -- TECHNICAL ISSUES
The following issues are assigned to the IOC by the provisions of
Addendum No. 1. The relevant contract provision is cited.
* Determine each Utility Participant’s Reserve Capacity
Obligation. (B-2.1.2)
* Determine each Utility Participant’s Operating Reserve
Obligation. (B-2.1.2)
* Establish criteria for the approval of programs to
provide load shed in lieu of spin (SILOS). (B-2.4.2)
* Determine the spinning and non-spinning portions of each
Utility Participant’s Operating Reserve Obligations. (B-
2.4.3)
* Determine the availability of each Utility Participant’s
Operating Reserves. (B-2.4.3)
* Establish criteria for assessing the capability of a
generating unit used to provide Operating Reserves. (B-
2e2/J2) andy) 43)
* Determine each Utility Participant’s Accredited Capabili- ty. (A-1.1.3)
* Establish criteria for system response when Spinning
Reserves are sold. (B-2.4.3)
* Establish criteria for determining the reserve require-
ments of jointly-owned generating units. (B-2.1.2)
Summary and Recommendations
The range of issues outlined above is extensive and potentially
contentious among the Railbelt utilities. Issues that the IOC has
been unable to resolve are identified above and should immediately
be considered by the Railbelt utility managers. Simultaneously,
the IOC should begin the task of establishing the various technical
criteria, definitions, and requirements it is charged with
developing under the AIA. The establishment of objective, agreed-
5 RLS\IOCRES. pp
upon criteria for accrediting generating resources, determining
reserve obligations, assessing generating capability, etc. could
allow many of these issues to be resolved on a more objective, less
political basis, thus insuring that adequate reserve capability is
provided in the Railbelt.
6 RLS\IOCRES . pp