# 1.0 Executive Summary

This reference paper identifies and reviews Grid West\'s services and
processes that directly or indirectly manage congestion in the Grid West
Managed Transmission System (GWT). Grid West, in contrast to other RTOs
and ISOs, manages transmission congestion largely in advance of the
energy transactions (energy scheduling). For example, Grid West\'s
physical scheduling requirement ensures that no party can schedule an
energy transaction on GWT without physical transmission rights, whether
an Existing Transmission Right (ETR) or an Injection/Withdrawal Right
(IWR). At the same time, Grid West\'s transmission rights administration
services and functions ensure that flow based transmission rights that
are issued and used fall within GWT\'s capacity limits.

To facilitate the presentation of this paper we separate the three
principal functions of congestion management process as follows:

A.  Congestion Detection: Forecast/analyze/measure potential or existing
    violation of operating constraints and contractual rights in
    GWT;[^1]

B.  Congestion Relief and Capacity Allocation: Determine, through
    analysis or other means,[^2] effective measures to relieve the
    forecasted or existing operating constraints and contractual rights
    violations; and allocate scarce transmission resources among GWT
    users; and

C.  Congestion Pricing: Allocate the cost of relieving congestion, if
    any, to GWT subscribers[^3] according to a consistent, efficient and
    equitable \"cost allocation\" methodology. One of the most important
    attributes of pricing is sending proper economic signals to GWT
    subscribers so as to shape their long run and short run use pattern
    of GWT.

Various Grid West services and processes impact congestion management in
various time frames as follows:

i.  Long-term congestion management (three years or longer before system
    operation):

    a.  Long-term regional expansion planning service

ii. Mid-term congestion management (one to three years before system
    operation):

    a.  Transmission access administration

iii. Short-term congestion management (two days to one year before
     system operation):

     a.  Annual, monthly and intra-monthly reconfiguration service

     b.  Outage management

     c.  Market Information System (MIS) service

iv. Day Ahead congestion management (one day before system operation):

    a.  Day-Ahead reconfiguration service (DA-RCS)

    b.  Redispatch service, if and when implemented

    c.  Day-ahead schedule adjustment/rejection service

v.  Adjustment period congestion management (day of operation up to
    operating hour):

    a.  Schedule adjustment/rejection service

vi. Real-time congestion management (during system operation):

    a.  Real-time operation (including outage management)

    b.  Real-time balancing energy service

The paper concludes that Grid West services and functions, as designed
by TSLG, should adequately address congestion management within GWT. The
paper also concludes that, although the fundamental congestion
management approach by Grid West is different from that of other RTOs
and ISOs, Grid West can essentially use the same commercial technology
solutions that are in use by other RTOs and ISOs (with modest
modifications) for conducting its congestion management functions.

# 2.0 Problem Statement

Managing congestion is arguably the most important responsibility of
Regional Transmission Organizations (RTOs) and Independent System
Operators (ISOs) worldwide. Failure to effectively manage congestion can
readily lead to unreliable and inefficient system operation - blackouts
and high energy costs that can wipe out all gains of creating
competitive electricity markets.

Currently congestion in GWT is managed by a group of private and public
utilities, each of which focuses on managing congestion in their own
portion of GWT. At the same time, these utilities work collectively
through the Western Electricity Coordinating Council (WECC) and Pacific
Northwest Security Coordinator (PNSC) to regionally coordinate their
congestion management efforts in recognition that congestion can only be
effectively and efficiently managed on a region wide basis. However,
there exists no central mandate to ensure consistent coordination or
seamless outcome from these efforts.

Grid West, as the regional transmission administrator and the CCA real
time operator, will be in a unique position to perform congestion
management across entire GWT and CCAT[^4] seamlessly and more
efficiently than the current localized practices. At the same time, the
broad design of Grid West services and processes requires that
congestion within GWT be managed in advance of the actual energy
transactions (energy scheduling). These opportunities and challenges
place special requirements on all of the services and processes that
Grid West uses for managing congestion within Grid West and CCA
footprints in both long- and short-terms.

# 3.0 Analysis Goal

The goal of our analysis is to identify and review all Grid West
services and functions that directly or indirectly impact congestion
management in GWT and CCAT and qualitatively analyze the extent and
effectiveness of such impacts. Our analysis may be modified as the
design of the additional elements of Grid West become complete.

# 4.0 Analysis of Services and Processes

In this section, we present our analysis of the impact of various Grid
West services and functions on the three principal functions of
congestion management. This analysis is qualitative and is not intended
to be comprehensive. Grid West congestion management related services
and functions perform the three functions of congestion management
either sequentially or simultaneously. For example, as presented below,
long-term regional expansion planning first detects congestion and then
relieves and prices for congestion as part of three distinct and
sequential processes while Grid West\'s real-time balancing energy
service detects, relieves and prices congestion in a single step.

## 4.1 Long-term Congestion Management

### 4.1.1 Long-term Regional Expansion Planning Service

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> Grid West studies GWT operation over the planning horizon as part of
> this service. As a result of these studies, Grid West will identify
> conditions where potential violation of system operating and
> contractual constraints can materialize, if any, for all the future
> operating scenarios studied.[^5]
>
> **B. Congestion Relief and Capacity Allocation:**
>
> If congestion is detected as part of the planning studies, regional
> solutions, either in the form of capacity expansion, such as adding
> new transmission facilities or upgrading existing ones, or in the form
> of modified long-term operating practices will be identified and
> recommended by Grid West for WECC level reviews. The most cost
> effective alternative for relieving an operating constraint violation
> is selected at that time. Determination and allocation of new
> transmission capacity will be made on a case by case basis and closely
> as part of congestion pricing process. By and large, new transmission
> capacity, if added by a new project, will be allocated mainly in the
> form of long-term IWRs to those who have paid for the project, whether
> a transmission owner, a transmission customer, or a private investor.
>
> **C. Congestion Pricing:**
>
> Congestion pricing will depend on the commercial arrangement made when
> implementing the solutions as described in the previous stage. In
> general, development of identified projects will lead into a
> combination of direct cost recovery (subject to rate-of-return) and
> long-term transmission rights ownership (e.g. multi-year
> Injection/Withdrawal Rights (IWR) commensurate with the developed
> projects[^6]). A cost recovery component is normally built into a
> tariff and assigned to all Grid West participants to be recovered via
> Grid West or one or more TOs. IWRs will generate revenue from the
> Reconfiguration Service (RCS) and bilateral markets[^7] for the
> project developer to use to pay down revenue recovery and use as a
> revenue source beyond recovery of its revenue requirements.[^8]

## 4.2 Mid-term Congestion Management

### 4.2.1 Transmission Access Administration

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> As part of studying any new access request to GWT (supply and demand
> additions), Grid West will study the impact of supply/demand additions
> on GWT in both long- and short-run and identifies potential operating
> constraints and contractual violation situations.[^9]
>
> **B. Congestion Relief and Capacity Allocation:**
>
> Grid West, in cooperation with the impacted TO, will determine
> interconnection as well as \"network\" expansion requirements to
> address operating constraints and contractual violations associated by
> the access request. Interconnection capacity is normally allocated to
> the entity requesting access and paying for the interconnection
> capacity. Added transmission capacity due to network upgrades, if any,
> is normally allocated to the entity(ies) that pays for such upgrades.
>
> **C. Congestion Pricing:**
>
> All interconnection costs, including the cost of studies and
> project(s), are normally directly assigned to the party gaining access
> to GWT. Network upgrade costs are normally partially assigned to the
> party gaining access to GWT and partially embedded into the impacted
> TO\'s tariff.

## 4.3 Short-term Congestion Management

### 4.3.1 Annual, Monthly and Intra-monthly Reconfiguration Service

> RCS uses a centralized optimization process (and an underlying
> computer algorithm) that \"simultaneously\" performs all three
> functions of congestion management for the relevant IWR auction
> scenarios. The process identifies all oversubscribed transmission
> flowgates, identifies the most economic IWR awards (based on IWR
> offers and bids) to resolve the identified network over-subscriptions
> and finally prices awarded IWRs using marginal prices at the
> scheduling points at the two ends of the awarded IWRs.

### 4.3.2 Outage Management

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> All information related to long- and short-term outages are studied by
> Grid West for potential operating constraints and contractual
> violation situations.
>
> **B. Congestion Relief and Capacity Allocation:**
>
> If violations of operating constraints are detected for one or more
> outage requests, either Grid West will identify remedial actions (e.g.
> reconfiguration of existing transmission system)[^10] or postpone the
> planned outage(s) to other time periods when congestion can be
> avoided.
>
> **C. Congestion Pricing:**
>
> Direct costs associated with transmission system reconfiguration or
> postponement of a planned outage that are incurred by Grid West
> participants are not expected to be significant for longer-term outage
> management given the time lag between congestion relief instructions
> and actual time of outage. As we get closer to actual outage date any
> change in outage plan, as prescribed by Grid West, may have
> significant costs associated with it that can be evaluated by the
> impacted TO and Grid West. An allocation scheme for such a cost needs
> to be developed.

### 4.3.3 MIS Service

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> One of the main functions of Grid West\'s MIS service is to identify
> and post all congested transmission flowgates (those with zero and
> near zero Available Flow Capacities or AFCs) based on study of the GWT
> operation. This allows Grid West participants to predict potential
> congestion for scheduling and real-time operation.
>
> **B. Congestion Relief and Capacity Allocation:**
>
> Grid West Participants can use MIS information to indirectly manage
> congestion through their IWR offers and bids, energy offers and bids,
> bilateral trades and energy schedules.
>
> **C. Congestion Pricing:**
>
> Congestion pricing due to MIS service is reflected through indirect
> and bilateral \"congestion management\" activities of the Grid West
> participants.

## 4.4 Day-Ahead Congestion Management

### 4.4.1 Day-Ahead Reconfiguration Service (DA-RCS)

> Similar to short-term RCS processes DA-RCS uses a centralized
> optimization process (and underlying computer algorithm) that
> \"simultaneously\" performs all three functions of congestion
> management for the hourly IWR auction scenarios. The process
> identifies all oversubscribed transmission flowgates; identifies the
> most economic IWR awards (based on IWR offers and bids) and scheduling
> flexibilities, as specified through intended retained rights by Grid
> West participants, to resolve the identified network
> over-subscriptions; and finally prices awarded IWRs and scheduling
> flexibility releases using marginal prices at the scheduling points at
> the two ends of the awarded IWRs or at the shadow price of the AFC
> made available through scheduling flexibility releases.

### 4.4.2 Redispatch Service (if implemented)

> Similar to DA-RCS, Redispatch service uses a centralized optimization
> process (and an underlying computer algorithm) that \"simultaneously\"
> performs all three functions of congestion management. It identifies
> all oversubscribed transmission flowgates; identifies the most
> economic IWR and energy awards to resolve network over-subscriptions
> and over-schedules; and finally prices awarded IWRs using marginal
> prices at the scheduling points at the two ends of the awarded IWRs
> and energy awards based on the marginal cost of energy at the location
> where energy offer/bid is awarded.

### 4.4.3 Day-Ahead Schedule Adjustment/Curtailment Service

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> Grid West\'s principal goal in providing the scheduling service is to
> identify potential in system operating constraints and contractual
> violations due to Grid West participants\' submitted schedules during
> the scheduling period.
>
> **B. Congestion Relief and Capacity Allocation:**
>
> Once congestion is detected, Grid West will use an involuntary
> adjustment/curtailment process to resolve violation of system
> operating constraints on a pro-rata basis. Alternatively, or in
> conjunction with this involuntary schedule adjustment, Grid West could
> use economic Increment (Incs) and Decrement (Decs) bids, specifically
> submitted by Grid West participants to resolve the violation of system
> operating constraints and to manage congestion. For involuntary
> congestion relief, capacity on the oversubscribed flowgate is
> allocated to schedules using it on a pro-rata basis based in initial
> schedule values. For economic congestion relief, schedules are kept
> whole to the extent possible.
>
> **C. Congestion Pricing:**
>
> All costs related to involuntary schedule adjustments/curtailments are
> absorbed by the impacted Grid West participants. The costs associated
> with an economic congestion relief solution, if adopted, will be
> allocated to individual Grid West participants based on a variety of
> cost allocation mechanisms that reflect the contribution of that
> participant\'s schedule to violation of system operating constraints.

## 4.5 Adjustment Period Congestion Management

### 4.5.1 Adjustment Period Schedule Adjustment/Curtailment Service

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> During the adjustment period, Grid West will study and identify the
> impact of schedule adjustments on system operating constraints and
> contractual violations.
>
> **B. Congestion Relief and Capacity Allocation:**
>
> Once congestion is detected, Grid West will reject the schedule
> adjustment as a way of providing congestion relief.
>
> **C. Congestion Pricing:**
>
> All costs related to schedule rejection are absorbed by the impacted
> Grid West participant.

## 4.6 Real-time Congestion Management

### 4.6.1 Real-time operation 

> The three steps of congestion management are performed sequentially as
> follows:
>
> **A. Congestion Detection:**
>
> Data telemetry from SCADA (Supervisory Control And Data Acquisition)
> followed by the State Estimation (SE) model runs will identify and
> measure all operating constraint violations for the current or
> imminently occurring operating condition.
>
> **B. Congestion Relief and Capacity Allocation:**
>
> The operator will take all the necessary measures, such as out of
> merit dispatch of resources, load shedding, or line switching, to
> resolve operating constraint violations.
>
> **C. Congestion Pricing:**
>
> The costs for resolving operating constraint violations in such a
> fashion will be added to Grid West fees and charged either uniformly
> or based on some form of cost causation methodology among GWT
> subscribers.

### 4.6.1 Real-time Energy Balancing Energy Service

> The Real-Time Balancing Energy Service (RBES) uses a centralized
> process (and underlying computer algorithm) that \"simultaneously\"
> performs all three functions of congestion management for the next
> dispatch cycle. It identifies all the potential operating constraint
> violations (including with supply/demand mismatch), identifies the
> most economic energy awards (based on energy offers and bids) to
> resolve the network operating constraint violations and finally price
> energy awards using marginal prices for the location of these energy
> resources.

# 5.0 Market Benchmarks

Despite fundamental differences in many aspects of Grid West services
and processes and those of other RTOs and ISOs in North America, there
are many similarities in the way congestion management is addressed in
all RTOs and ISOs, including Grid West. As a result many of the
commercially available technology solutions that are used by other RTOs
and ISOs (with modest modifications to account for special Grid West
needs) can also be used by Grid West for all its congestion management
needs. Table 5.0 compares and contrasts these services.

Table 5.0 Comparison of services impacting congestion management

  -----------------------------------------------------------------------------
  Services Impacting CM  PJM               ERCOT              MISO
  ---------------------- ----------------- ------------------ -----------------
  Long-term regional     Offers very                          
  expansion planning     similar service                      
  service                with similar                         
                         congestion                           
                         management impact                    

  Transmission access    Offers very                          
  administration         similar service                      
                         with similar                         
                         congestion                           
                         management impact                    

  Outage management      Offer very                           
                         similar service                      
                         with similar                         
                         congestion                           
                         management impact                    

  Reconfiguration        Similar services  Similar service    Similar services
  service                offered in the    offered in the     will be offered
                         form of Financial form of            in the form of
                         Transmission      Transmission       Financial
                         Rights (FTR) and  Congestion Right   Transmission
                         Auction Revenue   (TCR) auctions for Rights (FTR) and
                         Rights (ARR)      financial flowgate Auction Revenue
                         auctions. The     rights.            Rights (ARR)
                         Auctions accounts                    auctions. The
                         for system                           Auctions accounts
                         operating                            for system
                         constraints.                         operating
                                                              constraints.

  Redispatch service, if Similar service   No equivalent      Similar service
  implemented            offered in the    service.           will be offered
                         form of day-ahead                    in the form of DA
                         (DA) energy                          energy market
                         market                               

  MIS operation          Offer very                           
                         similar service                      
                         with similar                         
                         congestion                           
                         management impact                    

  Schedule               Similar           Similar procedures Similar
  adjustment/rejection   procedures for    for submitting     procedures for
  service                submitting        schedules.         submitting
                         schedules but no  Schedules must be  schedules but no
                         requirements for  balanced. TCRs are requirements for
                         balanced          required for       balanced
                         schedules or for  inter-zonal        schedules or for
                         transmission      transactions.      transmission
                         rights. Schedules                    rights. Schedules
                         are adjusted in                      are adjusted in
                         the DA energy                        the DA energy
                         market and based                     market and based
                         only on system                       only on system
                         operating                            operating
                         constraints.                         constraints.

  Real-time operation    Offer very                           
                         similar service                      
                         with similar                         
                         congestion                           
                         management impact                    

  Real-time balancing    Offers very       Offers very        Offers very
  energy service (RBES)  similar service   similar service    similar service
                         with ex-post      with ex-ante       with ex-post
                         pricing and       pricing and        pricing and
                         similar           similar congestion similar
                         congestion        management impact  congestion
                         management impact                    management impact
  -----------------------------------------------------------------------------

[^1]: By \"Detecting Congestion,\" we actually mean detecting violation
    of system operating and, where applicable, contractual (due to
    existing or granted rights) constraints. The same rule applies to
    \"Relieving Congestion\" which refers to relieving system operating
    and contractual constraints violation. Operating and contractual
    constraints are normally translated into flow constraints on GWT
    flowgates in order to make it possible, among other reasons, to use
    a linearized (DC type) power flow analysis for congestion detection
    and relief. Once the conversion is done, congestion management
    processes will focus on monitoring flows on flowgates and ensuring
    that none of these flows exceeds the prevailing capacity of those
    flowgates for the operating condition under study - prevailing
    flowgate capacity can be due to thermal, voltage stability or
    transient stability considerations.

[^2]: Among other solutions that are based on operator experience.

[^3]: Subscriber refers to an entity who owns financial and/or physical
    rights on the transmission system, whether this entity uses the
    system or not. Hence subscribers encompass Grid West participants
    including participating transmission owners (PTOs).

[^4]: CCAT refers to the transmission system of the Consolidated Control
    Area (CCA).

[^5]: Long-term system studies can be based on studying a number of
    future specific operating scenarios, e.g., 2010 Winter Peak
    condition, where transmission system is represented in great detail
    but supply/demand is only studied for the specific operating
    scenario, and/or based on long-term production simulation models
    that accounts for supply and demand variations over the entire
    planning horizon on hour by hour basis but account for transmission
    model with some level of approximation (e.g., GE-MAPS). The latter
    approach can also be performed on a stochastic basis to account for
    probabilistic changes in supply and demand availability and values
    and transmission system configuration.

[^6]: The subject of rights allocation due to transmission expansion
    projects will be covered in the accompanying \"Rights Translation
    White Paper.\"

[^7]: Normally revenues from trading such IWRs are used to pay down the
    revenue recovery portion of the payment to the project developer.
    Once the cost recovery is complete as a result of the transmission
    tariff and IWR revenue, the tariff revenue for the project developer
    is halted but trading revenue from long-term IWRs can continue.

[^8]: Given the planned ex-ante nature of congestion management in GWT,
    the added transmission capacity will retain its value and will
    generate revenue for its developers after the project is built or
    even after additional capacity is added to the system. In financial
    transmission rights (SMD) markets where congestion and energy are
    simultaneously traded and priced, the value of capacity diminishes
    after it is added to the system which can be a significant
    disincentive for market based transmission development. Grid West
    design does not suffer from this major shortcoming.

[^9]: The studies, especially those related to interconnection
    requirements, are normally conducted by the impacted TOs. However,
    Grid West will coordinate TOs efforts in performing these studies.

[^10]: This evaluation is performed in coordination of the
    requesting/impacted PTOs.