Working Paper on Working Paper on Standardized Transmission Standardized Transmission

Services and Wholesale Services and Wholesale Electric Market Design Electric Market Design

Alice Fernandez, Derek Bandera, Alice Fernandez, Derek Bandera, Connie Caldwell, Jignasa Gadani, Connie Caldwell, Jignasa Gadani, Mark Hegerle, Udi Helman, David Mark Hegerle, Udi Helman, David

Mead, Deborah Ott, Elizabeth Mead, Deborah Ott, Elizabeth Rylander, Roland Wentworth, Rylander, Roland Wentworth,

David Withnell, Andrea WolfmanDavid Withnell, Andrea Wolfman

What the Paper DoesWhat the Paper Does

Policy framework to be used in Policy framework to be used in developing NOPRdeveloping NOPR

Preliminary decisions subject to Preliminary decisions subject to further commentfurther comment

Does not address scope and Does not address scope and governance issuesgovernance issues

Outline of the PaperOutline of the Paper

Updated single transmission tariffUpdated single transmission tariff

New flexible transmission serviceNew flexible transmission service

Energy and operating reserves Energy and operating reserves markets markets

Market power monitoring and Market power monitoring and mitigationmitigation

Updated Single TariffUpdated Single Tariff

All transmission service under one All transmission service under one tarifftariff

New OATT updated for SMD and New OATT updated for SMD and comparabilitycomparability

Phased implementation Phased implementation • First phase-interim changes to improve First phase-interim changes to improve

the OATT the OATT • Second phase- SMDSecond phase- SMD

New Transmission ServiceNew Transmission Service New network service available to all New network service available to all

customerscustomers Access to all sources and sinksAccess to all sources and sinks

• Price certainty with transmission rightsPrice certainty with transmission rights

• Congestion charges w/o transmission Congestion charges w/o transmission rightsrights

Locational marginal pricing (LMP) for Locational marginal pricing (LMP) for congestion managementcongestion management

Transmission service scheduling Transmission service scheduling integrated with energy marketsintegrated with energy markets

Network access charge to recover Network access charge to recover embedded costsembedded costs

Energy MarketsEnergy Markets

Day-ahead marketDay-ahead market• Voluntary, bid-based, security-Voluntary, bid-based, security-

constrainedconstrained• Financially bindingFinancially binding

Real-time marketReal-time market• Bid-based, security constrainedBid-based, security constrained• Used to settle all imbalancesUsed to settle all imbalances

Supply and demand resources Supply and demand resources participateparticipate

Operating ReservesOperating Reserves

Markets for operating reservesMarkets for operating reserves• Bilateral arrangements and self-Bilateral arrangements and self-

schedulesschedules• Bid-based day-ahead and real time Bid-based day-ahead and real time

marketsmarkets

Operated together with energy and Operated together with energy and transmission marketstransmission markets

Monitoring and MitigationMonitoring and Mitigation

Market rules should enhance Market rules should enhance competitioncompetition

Preventative mitigation measures Preventative mitigation measures built into market rules built into market rules

Role of the Market Monitoring UnitRole of the Market Monitoring Unit• Independent of RTO managementIndependent of RTO management• Focus on withholding and market Focus on withholding and market

efficiencyefficiency

State Participation in RTO ActivitiesState Participation in RTO Activities

Formal role for state participation in Formal role for state participation in RTO processRTO process

Advisory committees Advisory committees

Rate issues Rate issues

System SecuritySystem Security

OATT will state requirement to comply OATT will state requirement to comply with appropriate standards for system with appropriate standards for system security and reliabilitysecurity and reliability

Recommendations of President’s Critical Recommendations of President’s Critical Infrastructure Protection Board Infrastructure Protection Board

Standards may be developed by other Standards may be developed by other organizationsorganizations

Next StepsNext Steps

Release working paperRelease working paper Comments on working paper – 3/27Comments on working paper – 3/27 Address allocation of embedded Address allocation of embedded

costs and transmission rightscosts and transmission rights Address implementation issues Address implementation issues Staff strawman SMD tariffStaff strawman SMD tariff NOPR with tariff by summer NOPR with tariff by summer