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HomeMy WebLinkAboutIntertie Managment Commitee Meetings 07-09-2013 4Alaska Intertie Management Committee MEETING MINUTES Thursday,May 23,2013 Anchorage,Alaska 1.CALL TO ORDER Chair Brad Evans called the meeting of the Alaska Intertie Management Committee to order on May 23,2013 at 10:04 a.m.A quorum was established. 2.ROLL CALL Members present:Brad Evans (Chugach Electric);Jim Posey -Anchorage Municipal Light & Power (ML&P);Allen Gray -Golden Valley Electric Association (GVEA),Joe Griffith - Matanuska Electric Association (MEA);and Gene Therriault -Alaska Energy Authority (AEA). 3.PUBLIC ROLL CALL Public present in Anchorage:Sara Fisher-Goad,Kirk Warren,Kelli Veech and Teri Webster (AEA);Jeff Warner and Louis Agi (ML&P);Burke Wick and Brian Hickey (Chugach Electric); Bernie Smith (Regulatory Commission of Alaska);Denali Daniels (MEA);Brian Bjorkquist (Department of Law);John Burns (GVEA);Kirk Gibson (McDowell Rackner &Gibson);and Sunny Morrison (Accu-Type Depositions). 4,PUBLIC COMMENT There was no public comment. 5.AGENDA COMMENTS/MOTION FOR APPROVAL Mr.Griffith proposed the introduction of a resolution for consideration entitled "Resolution of the IMC on Railbelt Reliability and Reserves Criteria,"to be set for action at some point in the future.Mr.Griffith also introduced a proposed fiscal '14 budget to be approved within the next 30 days.Mr.Warner stated it needs to be approved by July Ist,2013. Chair Evans stated discussion items can be put on the agenda,but action items have to be given public notice before they can be put on the agenda. MOTION:Mr.Griffith made a motion to approve the agenda as amended.Motion seconded by Mr.Therriault.The motion was approved unanimously. IMC Meeting Minutes-May 23 2013 Page 1 of 6 6.APPROVAL OF PRIOR MEETING MINUTES -September 13,2012 The September 13,2012 minutes were approved as amended. 7.NEW BUSINESS 7A.Update on Budget,FY '14 Budget and Operations Mr.Warner stated the Intertie Operating Committee (OC)approved the amended proposed budget and suggested going through the budget line by line at the next meeting when it will be approved.Mr.Griffith stated the biggest two line items are the cyber study and the Eva Creek stability study totaling $230,000. Chair Evans requested someone speak about the Eva Creek stability study.Mr.Warner stated the study was brought forward to address issues regarding how the intertie has changed over the years and determine if any operational changes should be implemented. Chair Evans asked Mr.Gray if the study will include the near-term anticipated changes.Mr. Gray assumes the Battery Energy Storage System (BESS)operations will be included in the study.Chair Evans asked the technical group to consider reaching out a couple of years when they scope the study to keep it from becoming stale.Mr.Warner stated the data is available for a lot of the new units which could be included in the study.He stated the focus has been a 2015 system study. Mr.Griffith requested the study recognizes Eva Creek,Healy Clean Coal and everybody else that is hooking up to the system as factors in the study.He suggested having a system stability study,rather than only Eva Creek's effects on the system. Chair Evans stated this study is a refresh of the prior work and recommendations are made from the analytics.He stated this is not an asset management activity,but an activity of the reliability council.Chair Evans said there is a blurring of the lines in doing this study.He recommends setting a timely meeting date to approve the proposed budget. Mr.Griffith commented there needs to be more than just a cyber-security study.He believes cyber security should be implemented across the control system,but first there needs to be an understanding of who the generating utilities are and how the control system is currently protected.Chair Evans and Mr.Griffith agreed $50,000 would probably be enough to scope out a study for this system. Mr.Therriault asked what the date was that the modified proposed budget was released because the requirement in the agreement is that the budget is available for comment for 30 days.Mr. Griffith stated April 18th,2013,was when the budget was approved by the OC to send to the IMC. IMC Meeting Minutes-May 23 2013 Page 2 of 6 Mr.Therriault asked Mr.Gray if the new numbers for GVEA's utilization of the intertie includes any additional negotiations regarding power sent to them from Southcentral.Mr.Gray stated the numbers only included Chugach Electric,ML&P and Bradley Lake receipts.He said if they end up buying power from Homer Electric Association (HEA),then the numbers will increase a little bit.Mr.Therriault asked Mr.Gray if the numbers in the budget will provide a solid basis.Mr. Gray believes that is an accurate statement.He stated they have not finalized purchasing of any other power. Chair Evans stated he will place the approval of the budget as an action item on the agenda for the next meeting. Chair Evans asked if the operators wanted to bring anything to the Committee's attention.Mr. Warner commented the OC is in the process of addressing the task associated with HEA given to them by the IMC.He stated HEA is participating in the OC meetings. 7B.Update on Static Var Compensator (SVC)Projects Mr.Griffith asked if there are adequate funds in the budget to complete the SVC project and incorporate it into the existing control system with the appropriate security. Mr.Agi stated they have had problems with the contractor,including not being able to meet their scheduled commitments within the year 2013.He said the contractor's new projection for the Teeland install is December 1,2014.He stated there is a possibility that a last generation machine could be used onsite as an interim solution before the start of winter.Mr.Agi stated the Teeland interim solution would cost approximately $450,000,creating a financial problem. Mr.Griffith asked if the problem was hardware delivery or software.Mr.Agi stated the problem is not having sufficient controller software development/writing capacity in place to make the deadlines.He stated the consequences have not been decided,but they might insist on an increased surety arrangement to meet the contract commitment going forward.Mr.Agi stated the interim solution will not be as adequate compared to what was contracted,but it should be enough to keep current power transfers working through the winter.Mr.Agi said he is not currently addressing who would pay for the interim unit,but using it as a spur to accelerate getting the contract for the SVC's in place on time. Chair Evans asked when the bid was put out on the street.Mr.Agi stated it was approximately two years ago.Mr.Griffith and Mr.Warner believe it was in 2011.Chair Evans asked when we first sat down with the awardees.Mr.Agi stated it was in the fall of 2011.Chair Evans asked if any of the bidders had a shelf-stable platform to do this job.Mr.Agi doesn't believe any of thebiddershadashelf-stable platform.Mr.Agi stated the only problem the contractor is having is getting the adequate programmers in place to address the software. Chair Evans asked what schedule was put out in the bid.Mr.Agi stated the bidders proposed schedules which were revised to reflect mid-year completion in 2013.The 2013 schedule wasn't met because of supplier constraints and internal problems.It was then revised to a third quarter completion in 2013. IMC Meeting Minutes-May 23 2013 Page 3 of 6 Chair Evans said he would not ask for all the details at this juncture.Mr.Griffith stated he believes all the details are needed to assess the situation.Chair Evans asked who the technical people are on this project.Mr.Agi stated Russ Thorton from Electric Power Systems is the construction manager. Mr.Warren commented this was a design/build contract and the first deadline date was extended for half a year.He stated the crux of the issue with the schedule is if the contractor will not have the originally designed SVC installed,then the contractor needs to provide a date they will have the temporary unit installed to get us through the winter without any damages to the participants of the intertie.Mr.Warren commented IMC should not participate in any additional costs that are incurred because of the contractor's delay.He recommends the next change order require the contractor pay damages if they do not meet the new completion date. Chair Evans stated the update on the SVC projects will be put on the next agenda.Mr.Agi commented more information will be known within a couple of weeks regarding the amended contract,the change order,commitments and the additional surety placed on the contractor.Mr. Griffith requested a current and complete status of the hardware for all three of the sites and a current and complete status of the software. Chair Evans requested Mr.Warren give a project manager's report,including scope,budget, schedule and quality.Chair Evans stated there were other locations to perform the same kind of function and new ones should have been built. 7C.Generation and Transmission Operations post Chugach/Homer Electric Power Sales Agreement Chair Evans asked Mr.Warner if there is anything needed from the Committee regarding this item.Mr.Warner requested updates on the process of addressing the assignments.Chair Evans stated it was strongly suggested at the last Bradley Lake Project Management Committee (BPMC)meeting that the IMC technical people are coordinating with the Bradley Lake people regarding proper custody transfer and Railbelt Reliability Council (RRC)issues.He requested Mr.Warner come up with the list of things that are necessary to incorporate a new load- balancing authority.Chair Evans also requested Mr.Warner give him evidence and clarity on project manager reports to ensure the deadline is being met.He strongly suggested Mr.Warner use the operating guidelines as a structure to create the technical list of what has to happen and what has to be accommodated in the software. Mr.Griffith requested an update on the status of the Soldotna and Dave's Creek SVCs.Chair Evans stated he will take care of that request. 7D.Open Access Language Chair Evans stated he has talked to all members regarding the activity on open access and expects to have the draft language within the next 10 days.Chair Evans stated the areas that need IMC Meeting Minutes-May 23 2013 Page 4 of 6 full attention and critical thinking are preexisting rights,definition of congestion,recognition of congestion in a pool,operational cures for congestion,and the pre-usage cure process. Mr.Therriault asked if the draft language will be on the agenda at the next meeting.Chair Evans stated the draft language will be an item on the next agenda with the hope of getting the language out prior to that meeting date.Mr.Therriault commented the state will have some comments and is looking forward to starting that dialog.Mr.Therriault asked if there could be interim language that everybody agreed on.Chair Evans said that would have to be discussed after the product comes out. Mr.Griffith encouraged everyone read Article 6 and Article 16 of the amended and restated agreement,which directly influences this issue.He stated the draft language should be for the operational criteria and the good of the whole system,not just the segment the state owns.Chair Evans fully agrees. Mr.Burns stated GVEA is satisfied with the progress.Mr.Warner state ML&P is looking forward to the draft language and believes the comments made by Chair Evans and Mr.Griffith are valid. 7E.Reliability Standards Mr.Griffith encouraged everyone to read the Operating &Reliability Standards the RRC has prepared.Mr.Griffith stated the document addresses both reliability standards and reserve criteria which the IMC must endorse for the entire railbelt. Chair Evans asked for comments from members.Mr.Warner believes the IMC is the appropriate body to adopt reliability language for the entire Railbelt. Chair Evans requested the appropriate technical people from the IMC look at and clean up the matrix of information Mr.Griffith provided in the email associated with his proposed resolution. He stated it can't be adopted the way it is because there's overlap,repetition,old information from groups that are not functional,which would create a great deal of confusion. Mr.Griffith stated he doesn't suggest the document be adopted as is,but believes all of the nodes of importance and the reliability of the railbelt have been addressed in the document.Mr.Griffith offered to begin cleaning up the document and will get somebody to act as an editor and come back to the Committee. Chair Evans stated it is a membership task to refresh the thinking on these standards and as the document gets cleaned up,which should happen well in advance of the meeting,they will be sent out and move for action at the next meeting.Chair Evans stated it is important to stabilize the platform because it has been awkward for the Railbelt to accommodate change with the RRC that is buried into an asset management agreement.He believes this step is a necessary interim solution,but the vehicle doesn't exist to make a natural transfer of responsibility.Chair Evans is supportive of getting the reliability standards fully out in the open and believes there is an obligation to firm up the RRC's ways and means of operating the system. IMC Meeting Minutes-May 23 2013 Page 5 of 6 Mr.Griffith stated one of the issues discussed in another forum was acceptance by the individual utilities of the process and the reserve and reliability criteria.Mr.Griffith said his own utility has approved it formally,but does not recall if anybody else has.Chair Evans stated the IMC is signatory and doesn't know if that is necessary. Mr.Warner asked Mr.Griffith what it means to clean up the document.Mr.Griffith wants to make the document publishable,but doesn't know if he can totally deconflict some of the language.Chair Evans suggested to sit down with each member's technical representative and go through the document to determine what is and isn't going to be included in the resolution.Mr. Warner asked if this should be done by committee.Chair Evans stated Mr.Warner's group would be the ones coordinating with all the members and making sure they participate fully. 8.NEXT MEETING DATE The next meeting date is Tuesday,June 11,2013,at 9:00 a.m. 9.ADJOURNMENT There being no further business of the IMC,the meeting adjourned at 11:44 am. Gene Therfiault,Secretary IMC Meeting Minutes-May 23 2013 Page 6 of 6 Alaska Intertie Management Committee MEETING MINUTES Tuesday,June 11,2013 Anchorage,Alaska 1.CALL TO ORDER Chair Brad Evans called the meeting of the Alaska Intertie Management Committee to order on June 11,2013 at 9:10 a.m.A quorum was established. 2.ROLL CALL Members present:Brad Evans (Chugach Electric);Jim Posey -Anchorage Municipal Light & Power (ML&P);Joe Griffith -Matanuska Electric Association (MEA);and Gene Therriault - Alaska Energy Authority (AEA). 3.PUBLIC ROLL CALL Public participating:Sara Fisher-Goad,Kirk Warren,Kelli Veech and Sandie Hayes (AEA); Louis Agi and Jeff Warner (ML&P);Burke Wick and Brian Hickey (Chugach Electric);Denali Daniels (MEA);Bernie Smith -Regulatory Commission of Alaska (RCA);David Burlingame and Doug Hall (Electric Power Systems);John Burns -Golden Valley Electric Association (GVEA); Brian Bjorkquist (Department of Law);Kirk Gibson (McDowell Rackner &Gibson);and Sunny Morrison (Accu-Type Depositions). 4.PUBLIC COMMENT There was no public comment. 5.AGENDA COMMENTS/MOTION FOR APPROVAL MOTION:Mr.Griffith made a motion to approve the agenda.Motion seconded by Mr. Posey.The motion was approved unanimously. 6.NEW BUSINESS 6A.Approval on FY14 Budget MOTION:Mr.Griffith made a motion to approve the FY14 Budget.Motion seconded by Mr.Posey.The motion was approved unanimously. 6B.Update from Project Managers on Static Var Compensator (SVC)Project Mr.Hall and Mr.Burlingame gave a PowerPoint presentation regarding the Static Var Compensator Replacement Project. Chair Evans asked if the battery can perform the function of the static var compensator and if there was a problem taking it out.Mr.Burlingame stated the battery can perform the function AIMC Meeting Minutes-June 11,2013 Page 1 of 4 and there wasn't a problem taking it out electrically,but there was a problem with the physical work due to cold weather issues.Chair Evans asked for the scope of the replacement.Mr. Burlingame stated all the power electronics,thyristors and controls will be replaced.Chair Evans asked if there wasn't enough space in the current building.Mr.Burlingame stated there are issues with getting things in and out of the building. Mr.Hall stated Healy was scheduled after Gold Hill for March and the building needs to be sealed.Chair Evans commented Gold Hill would be the best one to start with because it is the least problematic to have out of service.Mr.Burlingame said they had the same opinion. Chair Evans stated he understood the contractor Alstom wanted to migrate their control platform and this project got caught in that transition.Mr.Hall stated the contractor knew this project would use the newest platform,but they lost three of their specialized programmers.Chair Evans asked if Alstom can recover from that loss.Mr.Hall stated Alstom has placed other programmers on this project already and the hardware is ready to be tested.He feels very strongly they can complete this project. Chair Evans asked Mr.Burlingame to explain how the thyristors are sized.Mr.Burlingame stated they are sized to the full rating of the SVC and to the current reactors and the capacitors. He said the control equipment has increased capability.Mr.Burlingame stated if there are upgrades up north,a new SVC is required because of the range of the physical equipment. Mr.Griffith asked what kind of software documentation Alstom will provide.Mr.Burlingame believes the program will always be proprietary and the core platform will not be able to be changed,but the implementation can be changed.Mr.Griffith asked if there is a maintenance plan for the system.Mr.Burlingame stated this system should have significantly less maintenance problems than the existing system because it is digitally controlled.Chair Evans asked if there was a training requirement in the contract.Mr.Burlingame stated there are three extensive training requirements;one in Anchorage,Healy,and Fairbanks. Mr.Griffith asked if this delay in the project will cost additional money.Mr.Posey said it would not cost more money.Mr.Hall stated there will be an additional charge on insurance and Alstom has been advised they are expected to cover that increased cost. Mr.Hall stated it is about a $400,000 cost if the legacy system has to be installed before the winter at Teeland.Alstom has indicated they would want financial help for that and Mr.Hall stated no financial assistance would be given to Alstom.Mr.Hall stated the legacy system would then be replaced next year.Chair Evans asked if there is a firm schedule on the completion of the software package.Mr.Hall stated Alstom has given a verbal schedule of completion for the end of September,which would allow for the installation of Teeland to occur at the end of this year. Mr.Griffith asked Chair Evans regarding the status of the update on the SVCs at Soldotna and Dave's Creek.Chair Evans does not have the update yet. 6C._Railbelt Reliability and Reserves Criteria Resolution Mr.Therriault stated AEA requests more time to work through the document before voting on the resolution.He commented on the concerns regarding any authority the Railbelt Reliability Committee (RRC)has been given in the document.Chair Evans stated all references to the AIMC Meeting Minutes-June 11,2013 Page 2 of 4 RRC need to be purged from the resolution.Chair Evans commented the reliability standards need to be in place before the open access language can be determined. Mr.Griffith objected to postponing the vote of this resolution.He believes it meets the standards for guidelines.Mr.Posey wants to know who else is interested in participating in the intertie and wants to know the details of their involvement. MOTION:Mr.Therriault made a motion to table the vote on the Railbelt Reliability and Reserves Criteria Resolution until 9:00 a.m.on July 9,2013.Motion seconded by Mr. Posey.MEA voted against the motion but the motion was approved by majority. Ms.Fisher-Goad commented the additional 30 days is also to ensure the integrity of the rules were appropriately and publicly vetted and any comments received will come to the IMC.Chair Evans respectfully does not agree it is a public process to vet technical operating rules and believes the public process is appropriate for the framework of open access. 6D.Open Access Dialogue Chair Evans commented all the operators in the system have to adhere to the rules and realizes there are disagreements regarding reserves that have to be addressed,but does not believe the issues are complex.Chair Evans believes congestion will be the hardest issue to address. Mr.Griffith asked who the filter is for the open access needs that these other parties have.He believes it has to be the IMC.Chair Evans commented there is a good framework with standardized programs which provides a mathematical way of determining congestion.He stated the agreement would stipulate this process that has to take place and everyone has to abide by the outcome. Mr.Posey stated some of these types of issues were resolved when they worked with the RCA on the metering rules.Mr.Hickey commented there is no mystery on how independent power producers would pay for open access,but he believes their perception is different than what really happens.Mr.Hickey stated the existing open access language throughout the United States and mandated by FERC can be condensed into a document that works for Alaska. Mr.Hall commented open access is a joke because there is no transmission to have open access to and from a practical point of view,it is open access on paper only.Chair Evans doesn't think it is fair to say it is a joke,but believes there could be congestion right away.Mr. Hall stated until improvements are made to the transmission system,it doesn't do any good to have open access tariffs because they can't use the system.He said the word "over-subscribed" is a better description than the word "joke." Chair Evans suggested acknowledging in the open access preamble language that congestion currently exists in the railbelt.Mr.Burlingame agreed a statement like that should be included in any type of tariff or agreement. Mr.Therriault stated he now has a better understanding of the complications and frailty of the current system and believes part of AEA's role is educating the policy makers,including Board members and legislators.He stated Alaska does not have a system as robust as the Lower 48 and is not likely to have one any time soon. AIMC Meeting Minutes-June 11,2013 Page 3 of 4 Chair Evans requested a framework for the language of open access be provided at the July 9th meeting.Mr.Griffith asked what happens if they pass the July 1 deadline.Mr.Bjorkquist stated the process would have to be followed to amend the amended Alaska Intertie agreement regarding the July 1 deadline for having the alternative open access and push that date out. Chair Evans requested Mr.Bjorkquist and Mr.Gibson draft a one-paragraph amendment and signature page with five days'notice and hold a meeting before the end of the month to provide a 30-day extension in case approval on July 9th does not happen. 8.NEXT MEETING DATE The next meeting date is Wednesday,June 26,2013,at 9:00 a.m. 9.ADJOURNMENT | There being no further business of the AIMC,the meeting adjourned at 10:27 am. Bradley Evans, Gene Theriault,Secretary AIMC Meeting Minutes-June 11,2013 Page 4 of 4 na CK oes Vv"SN INTERTIE MANAGEMENT COMMITTEE \yes Resolution No.13-2 WHEREAS,Section 3.1 of the Amended and Restated Alaska Intertie Agreement provides that the Intertie Management Committee ("IMC”)shall determine Reserve Capacity and Operating Reserves for the Intertie,and the IMC has the authority to adopt operating policies and procedures,reliability standards,and enforcement mechanisms,for the Intertie. WHEREAS,on November 18,2011,the Intertie Management Committee ("IMC”)approved Resolution 11-1 which resolved that all then-currently existing contracts,customs,and operating policies and procedures associated with the Alaska Intertie and recognized by the Alaska Energy Authority ("AEA”)and the Intertie Operating Committee ("IOC”)were to remain in effect and be maintained by the IMC until such time as the IMC expressly addresses such contracts and operating policies and procedures relating to the operation of the Alaska Intertie (Intertie). WHEREAS,on September 13,2012,the IMC formally addressed and establish the Reserve Capacity and Operating Reserve responsibilities for all users of the Intertie by adopting Exhibit H of the Amended and Restated Alaska Intertie Agreement,but Exhibit H is a 1985 document that does not reflect the current configuration of the Railbelt system nor current operating protocols. WHEREAS,it is in the best interests of the Railbelt system to establish operating standards and reliability criteria applicable to the entire interconnected Railbelt system,and to have those standards and criteria apply to the Intertie,rather than to adopt standards and criteria solely for the Intertie. WHEREAS,the only entity that has established reliability criteria for the interconnected Railbelt system is the Alaska System Coordinating Council (ASCC)that has been defunct for 15 years. WHEREAS,in 2005 the Railbelt Utilities formed the "Ad-Hoc Railbelt Reliability Committee ("RRC”),to work with the Alaska Energy Authority ("AEA)in an open public process to review the substantial NERC operating,reserve capacity,and reliability standards,and to adapt those standards to meet Railbelt conditions and practices. WHEREAS,the RRC-prepared the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated June 7,2013.” WHEREAS,the IMC is the entity with authority to adopt policies,criteria and standards for the Intertie related to reserve capacity,operating reserves,operating policies,reliability,and enforcement mechanisms. WHEREAS,the IMC is willing to work with other interested parties to establish and implement Railbelt wide policies,criteria and standards related to reserve capacity,operating reserves, operating policies,reliability,and enforcement mechanisms. WHEREAS,the purpose of this Resolution No.13-2 is to adopt the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated June 7,2013”as a guideline INTERTIE MANAGEMENT COMMITTEE Resolution No.13-2 (Continued) for the IMC working with other interested parties to establish and implement Railbelt wide policies,criteria and standards related to reserve capacity,operating reserves,operating policies,reliability,and enforcement mechanisms. WHEREAS,to ensure that the Intertie and the Railbelt system have the same criteria and standards applied related to reserve capacity,operating reserves,operating policies,reliability, and enforcement mechanisms,this Resolution shall sunset on July 9,2014 unless extended by the IMC to allow for monitoring of progress,and the "sanctions”enforcement mechanisms shall not become effective until separately approved by the IMC. BE IT RESOLVED THAT the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated June 7,2013.”prepared by the RRC is hereby accepted as the Reserve Capacity and Operating Reserves for the Intertie,Exhibit H of the Amended and Restated Alaska Intertie Agreement,and is accepted as the operating policies and procedures, reliability standards,and enforcement mechanisms,for the Intertie,with two modifications. First,this resolution shall sunset on July 9,2014 unless extended by the IMC to enable the IMC to monitor progress on establishing Railbelt system wide standards and criteria and ensure uniformity with Intertie standards and criteria.If the sunset is implemented, the currently existing Exhibit H and standards and criteria for reserve capacity,operating reserves,operating policies,reliability,and enforcement mechanisms shall become effective. Second,the "sanctions”portions of the enforcement mechanisms in the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated June 7, 2013”shall not become effective until separately approved by the IMC. BE IT FURTHER RESOLVED THAT this resolution and the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated June 7,2013.”prepared by the RRC shall be submitted as an informational filing to the Regulatory Commission of Alaska (RCA). The Secretary hereby certifies that this is a true and correct copy of Resolution No.13-2 and Resolution No.13-2 was approved by the IMC on July 9,2013. Bradley Evans,Chairman Gene Therriault,Secretary Page 2 of 2-IMC Resolution 13-2 MEMORANDUM TO:IMC Members DATE:August 9,2013 SUBJECT:Alaska Intertie Open Access A.The attached comments from AEA regarding the draft Open Access Rules generally reflect three areas of potential concern: 1.Barriers to open access. 2.Whether IMC is prepared to provide the substantial services contemplated by Rules. 3.Completion of schedules and fee structures so that Rules become complete. B.Barriers to Open Access. The proposed open access rules establish potential barriers to new users,or the appearance of potential barriers,because of IMC controls.Many of these barriers are intended to accomplish worthy goals.Rule 888 allows reserved rights until energy markets develop to avoid disruptions.Studies are required at the new users'expense to help insure proposed uses are not disruptive to the Railbelt system.But,the proposed rules appear to go a bit too far by being too restrictive to new Intertie uses. Provisions in the proposed rules impair the ability of any potential new user to obtain firm, reliable,long-term (or future)access to use the intertie.It appears that a new user wanting such access would need to either (1)pay to upgrade transmission facilities,or (2)purchase capacityfromanIMCmember.'Absent paying for upgrades or purchasing capacity,potential users are basically limited to Intertie capacity derived from Postbacks and Counterflows.Neither of these derived sources may be even known meaningfully in advance,e.g.,Postbacks are not required until either one or two days before the day of the proposed use.The proposed rules will not permit new users to reliably plan for future transmission needs without incurring costs. The barriers to open access (and the costs to new users to avoid)appear to be excessive, particularly in light of facts that currently use of the Alaska Intertie is limited to only 56%of the capacity to move power north,and 0%of the capacity to move power south.Making unused capacity more readily available without additional cost will not only support Railbelt economic development,it will also reduce the cost of IMC member that use the Intertie.The Intertie is operated on a cost based system.Most of the annual costs are fixed.If more power is transmitted over the line in any year,the energy cost per MWh transmitted will be reduced. Providing for more use would make the Intertie more economic for both IMC and other users. 'Establishing open access rules that could rely for success upon new users purchasing capacity from IMC members is problematic. A few examples: IMC_Utility Grandfather rights.The proposed rules give IMC utilities (Legacy Utility Participants)virtually absolute priority rights to use the Intertie.The extent of these rights is a primary barrier to new users.These proposed rights extend beyond the rights IMC utilities currently possess,or possessed,under either the original or amended Intertie Agreement. Under those two versions of the Agreement,MITCR rights were subject to recalculation if new users became participants.The "grandfather”rights of Participants/IMC members has always been time limited -4 years under the original Agreement,2 years under the amended Agreement. Making grandfather rights absolute reduces access,and appears inconsistent with the open access provisions of the Amended Alaska Intertie Agreement (Sec.16).Alternatives might include implementing time limits on grandfather rights;giving IMC utilities rights of first refusal instead of absolute rights;giving IMC more authority to contract with new users for firm,longer- term use (potentially with clear criteria);and/or adjust pricing to encourage IMC utilities making more capacity available to others. IMC Requiring Studies,at New User's Expense.Before a new use of the Intertie is allowed, the new user must pay the IMC to conduct a variety of studies intended to assess how the new use might impact the Intertie (or perhaps,the Railbelt system).While the goal is worthy (to protect against power disruptions),the approach by which the IMC requires studies and then decides whether to grant access could,at minimum,create an appearance the IMC utilities are creating,implementing and enforcing barriers to use of the Intertie,and entry into Railbelt energy markets. The proposed rules attempt to address this concern by providing some dispute resolution mechanisms.Two concems arise -(1)the rules do not establish clear standards for IMC to follow and to be enforced if IMC does not follow,and (2)a lack of meaningful independent enforcement.Regarding clear standards,the rules are written to require several studies,but do not establish specific criteria for when studies must be conducted,and for when results require/do not require action before a new use will be granted.Regarding meaningful independent enforcement,in many cases,the question posed in the rules is whether the IMC violated the agreement (a vague standard).The process also provides no assured result.A new user can go to the IMC chair,and then the AEA Executive Director.But,both only appear to have authority to negotiate or mediate disputes.There is no real enforcement power -meaning no independent review of disputes to assure the IMC does not simply stonewall.After clearer standards are established,options will arise.One alternative could be to use the Agreement's dispute resolution mechanism (IMC administers,with AEA can step-in rights if IMC does not abide by the standards). IMC Requiring Additional Services,at New User's Expense.Again,a worthy goal to have all users of the Intertie pay a fair share for services necessary for intertie operations.With IMC control,an appearance of conflict of interest can arise.Establishing clear standards and an independent dispute resolution mechanism can help avoid conflict problems.Also,the list of services to be required should be reviewed as to whether they apply to operation of the AlaskaIntertie,rather than to the Railbelt system? 2 Ancillary services include (i)Scheduling,System Control and Dispatch,(ii)Reactive Supply and Voltage Control from Generation Sources,(iii)Regulation and Frequency Response,(iv)Energy Imbalance,(v) With each of these issues,multiple viable options exist.AEA would like to discuss. C.Whether IMC is prepared to provide the substantial services contemplated by Rules. The proposed rules list a number of services or actions that the Transmission Provider (i.e., the IMC)must or is expected to provide.Before the proposed rules are finally adopted,those obligations must be accommodated.Is the IMC ready to provide each service or action?If no, what is plan?(Would it be prudent to implement the Open Access rules incrementally?)Is AEA expected to provide any of the services or actions?If yes,what? D.Completion of schedules and fee structures so that Rules become complete. The proposed rules are to have incorporated schedules and fees structures.These do not yet exist.Similar to C above,before the proposed rules are finally adopted,those schedules and fee structures must be incorporated.What is plan?(Would it be prudent to implement the Open Access rules incrementally?) E.Incremental implantation of certain provisions. In adopting Reliability Rules under Resolution 13-2,the IMC delayed the implementation of sanctions and remedies.This approach should enable the IMC to avoid unintended consequences by testing the application of the rules to practical circumstances.Does the IMC desire to implement any open access rules under that approach? Operating Reserve -Spinning Reserve Service,and (vi)Operating Reserve -Supplemental Reserve Service. f=ALASKA-@=-_ENERGY AUTHORITY INTERTIE MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Tuesday,July 9,2013 -9:00 a.m. 813 W Northern Lights Blvd Anchorage,Alaska 1.CALL TO ORDER 2.ROLL CALL (for committee members) 3.PUBLIC ROLL CALL (for all others present) 4,PUBLIC COMMENT 5.AGENDA COMMENTS/MOTION FOR APPROVAL 6.APPROVAL OF PRIOR MEETING MINUTES --May 23,2013;June 11,2013 7.UNFINISHED BUSINESS A.Railbelt Reliability and Reserves Criteria discussion (Action Item) 8 NEW BUSINESS B.Election of Officers --Chairman and Vice Chairman C.Review draft of Open Access document D.Homer Energy Banking &Transmission Lease Agreement 9.NEXT MEETING DATE 10.ADJOURNMENT To participate via teleconference,dial 1-800-315-6338,enter code 3065# Wake nesrgyauthorityrrg} 813 West Northern Lights Boulevard Anchorage,Alaska 99503 T 907.771.3000 Toll Free (Alaska Only)888.300.8534 F 907.771.3044