Congestion Hedging Process

Transmission Planning SummitSeptember 21-22, 2011

Agenda Topics

• Integrated Marketplace Overview

• Congestion Hedging Process

• Impact of TCR/IM on Engineering Processes

• TCR Time line- Next Steps

Overview of Integrated Marketplace Functions

3

T- 12 months T- 1 day T T+ 7 days

Day Ahead Reliability Unit Commitment

Intra-Day RUC

Real-Time Balancing

Market

Settlement Day Ahead

Market

• Performs unit commitment

• Sets DA prices• TCRs cleared

Makes sure enough capacity committed for next operating time frame

Real-Time dispatch much like today’s EIS Market (5 min)

ARR/TCR Auction

Why hedging is needed in Integrated Marketplace?

• In the DA Market, price separation of MP’s resource to load may occur due to congestion leaving the MP exposed to high prices

• TCRs allow for an efficient market – The TCR can be used as hedge against congestion that allows

MPs to reduce their exposure to high market prices

4

ARR-TCR Process Overview

SPP Transmission System Capability

ARR HoldersAuction Revenue

ARRs Allocated (MWs)

TCR Auction (MWs w/ Price)

Auction Revenue Rights

Participate in TCR Auction

Congestion rights TCR Holders

Annual vs. Monthly TCR Auctions

6

  Annual TCR Auction Monthly TCR Auction

Capability Auctioned

100% for June90% for July-September60% for Fall, Winter, Spring

No June Auction100% July-May

Auction Format Single Round July- September (single round )October- April (two rounds)

TCR Products Monthly and Seasonally Monthly

TCR Periods On Peak Off Peak

On Peak Off Peak

Credit Check Yes Yes

TCR Terms 4 Months and 3 Seasons One Month

Modeling & Steady State Planning

7

Under IM, SPP will have centralized generation dispatch for the entire SPP footprint (vs. individual BA dispatch)

SPP is using a centralized balancing approach to long term planning

Market ImplementationMarket Implementation

CBA

Transmission Service and TCR

8

SPP is conducting Transmission Service Studies as described in SPP OATT

Studied on aggregate basis

Relationship between TCR and TSS

Firm Transmission Service (NITS, PTP) will provide ARR Entitlement to Eligible Entities

The value of TCR (Sink LMP- Source LMP) would depend on the transmission improvements committed through TSS studies

GI and TCR/Integrated Marketplace

9

SPP is conducting GI studies according to SPP OATT

Grant Energy Resource Interconnection Service (ERIS) and Network Resource Interconnection Service (NRIS)

Relationship between GI and TCR/ Integrated Marketplace

No hedging rights (ARR/TCR) associated with ERIS and NRIS

Compliance, Seams and IM/TCR

10

Compliance

Compliance studies need to be performed in support of NERC/ Regulatory Standards

Seams and Inter-Regional Coordination

Various Trading Hubs will be defined as a part of TCR and Day Ahead market Process

Loop flows (Parallel flows) and outage coordination will be critical for revenue adequacy in TCR market

TCR Work in Progress!

System design and customization is underway Nexant is our vendor

Plan to use offline module (Hedge) to perform test runs, MP training

Overall “Congestion Hedging” Implementation Timeline

Upcoming Key Dates for Mock TCR Auction

• October 5th 2011: TCR Mock Auction Kickoff meeting

• November 9, 2011 : Preparing for Mock TCR auction*

• December 12, 2011: Preparing for Mock TCR auction*

• January 11, 2012: Preparing for Mock TCR auction*

• January 16th 2012: TCR Mock Auction Phase I- Start

• February 22nd , 2012: Preparing for Mock TCR auction*

• March 12, 2012: Preparing for Mock TCR auction*

• April 2nd , 2012: TCR Mock Auction Phase I- Start

* Offered through Learning Management Service (LMS)