# Presentation: 302618

## NW Delegation Staff BriefingGrid West/TIG

- Bonneville Power Administration  November 23, 2004

## Why Does the Region Need to Act?

- There is broad regional agreement that we have significant problems to address regarding the regional transmission grid
- Concerns fall into the following main areas:
- Adequate infrastructure
- Reliability
- Efficiencies
- There is significant alignment within the Grid West and TIG communities on these problems

**Why Does the Region Need to Act?**

- Bonneville Power Administration  November 23, 2004

**Notes:**
Additional Borrowing Authority Will Allow Completion of Transmission Infrastructure Additions to Accomplish 3 Main Objectives:

	1 - Assures Service for Existing Firm Transmission Contracts & Reduces Bottlenecks.

- Reinforcements to Assure Minimal Conformance with Reliability Standards for Major Load Centers 
New Reliability Standards  have reduced the available transmission capacity on certain paths in our interconnected systems (BPA-SCL, BPA-Avista, BPA-PGE/PacifiCorp) (analogous to introducing a restriction in a pipeline).
Adding transmission lines to these interconnected systems increases reliability (decreases probability of blackouts) and allows maintenance without interruption to service.
- Interconnects New Generators into BPA Grid

## Two Potential Solutions

- BPA believes work should continue on both the Grid West and TIG proposals
- But considerably more work is needed on both before we can determine if either is a viable solution to regionally identified problems
- The Grid West proposal needs more work to effectively deal with the FERC jurisdictional issues and assure cost effectiveness
- The TIG proposal doesn’t go far enough.  It needs to address serious governance issues embedded in its recommendations   such as the lack of effective decision making and dispute resolution processes.

**Two Potential Solutions**

- Bonneville Power Administration  November 23, 2004

**Notes:**
Additional Borrowing Authority Will Allow Completion of Transmission Infrastructure Additions to Accomplish 3 Main Objectives:

	1 - Assures Service for Existing Firm Transmission Contracts & Reduces Bottlenecks.

- Reinforcements to Assure Minimal Conformance with Reliability Standards for Major Load Centers 
New Reliability Standards  have reduced the available transmission capacity on certain paths in our interconnected systems (BPA-SCL, BPA-Avista, BPA-PGE/PacifiCorp) (analogous to introducing a restriction in a pipeline).
Adding transmission lines to these interconnected systems increases reliability (decreases probability of blackouts) and allows maintenance without interruption to service.
- Interconnects New Generators into BPA Grid

## Where is the Region?

- We are in the early stages of Grid West formation
- No decisions have been made to go operational
- No decision to activate a Developmental Board
- The upcoming Decision Point #1 (scheduled for December 9th) is only to approve the proposed Developmental and Operational Bylaws.
- This doesn’t commit BPA to anything more than to keep developing the proposal
- The RRG will also take steps to get ready to elect the Developmental Board, if we decide to move forward at Decision Point #2.

**Where is the Region?**

- Bonneville Power Administration  November 23, 2004

**Notes:**
Additional Borrowing Authority Will Allow Completion of Transmission Infrastructure Additions to Accomplish 3 Main Objectives:

	1 - Assures Service for Existing Firm Transmission Contracts & Reduces Bottlenecks.

- Reinforcements to Assure Minimal Conformance with Reliability Standards for Major Load Centers 
New Reliability Standards  have reduced the available transmission capacity on certain paths in our interconnected systems (BPA-SCL, BPA-Avista, BPA-PGE/PacifiCorp) (analogous to introducing a restriction in a pipeline).
Adding transmission lines to these interconnected systems increases reliability (decreases probability of blackouts) and allows maintenance without interruption to service.
- Interconnects New Generators into BPA Grid

## RRG Process Diagram

**RRG Process Diagram**

*** ******Revised 24Feb04***

- Bonneville Power Administration  November 23, 2004

## It is:
A “bottoms up” solution developed in the region 
An independent entity – its board has no financial interest in any member or market participant but this does not mean it is unaccountable to the region’s interests
A proposal that garnered significant support for its “Day 1” initial operations (received during the BPA open public comment period on the bylaws)
Voluntary
It is not:
A full blown RTO (or the Stage 2 filing)
FERC driven
A proposal to convert or modify existing transmission service

**It is:**
- A “bottoms up” solution developed in the region
- An independent entity – its board has no financial interest in any member or market participant but this does not mean it is unaccountable to the region’s interests
- A proposal that garnered significant support for its “Day 1” initial operations (received during the BPA open public comment period on the bylaws)
- Voluntary
**It is not:**
- A full blown RTO (or the Stage 2 filing)
- FERC driven
- A proposal to convert or modify existing transmission service

**What is the Grid West Proposal?**

- Bonneville Power Administration  November 23, 2004

## Significant changes have been made to the bylaws to address regional concerns:

Changed the number of votes to elect and remove board members from 24 to 20 (out of 31)
Added binding member vote on whether to move to operational stage
Added members right to require board supermajority vote on any scope issue
Removed the required 2-year periodic review of adopting financial rights
Removed all references and exhibits relating to Financial Rights
Adds requirement that budget increases of 15% over projections in 3-year budget forecasts subject to special voting requirements
Added budget committee comprised of up to 3 trustees and 5 members
Clarified that third party agreements for coordination of generating resources are protected
Added other member advisory committees: Planning, Tariff, Operations
Incorporated 27 of the 34 bylaws issues BPA recommended be addressed, following regional review of earlier proposed bylaws

- Significant changes have been made to the bylaws to address regional concerns:
- Changed the number of votes to elect and remove board members from 24 to 20 (out of 31)
- Added binding member vote on whether to move to operational stage
- Added members right to require board supermajority vote on any scope issue
- Removed the required 2-year periodic review of adopting financial rights
- Removed all references and exhibits relating to Financial Rights
- Adds requirement that budget increases of 15% over projections in 3-year budget forecasts subject to special voting requirements
- Added budget committee comprised of up to 3 trustees and 5 members
- Clarified that third party agreements for coordination of generating resources are protected
- Added other member advisory committees: Planning, Tariff, Operations
- Incorporated 27 of the 34 bylaws issues BPA recommended be addressed, following regional review of earlier proposed bylaws

**How Has the Grid West Proposal Evolved?**

- Bonneville Power Administration  November 23, 2004

## BPA had NAPA review the bylaws and they concluded:

The operational bylaws strike a reasonable balance between regional accountability and independence 
A number of features should be added to improve the workability 
With respect to whether creating Grid West will effectively increase FERC control over BPA, NAPA noted that, in their opinion, BPA’s joining Grid West is not likely to change FERC’s control over BPA 

- BPA had NAPA review the bylaws and they concluded:
- The operational bylaws strike a reasonable balance between regional accountability and independence
- A number of features should be added to improve the workability
- With respect to whether creating Grid West will effectively increase FERC control over BPA, NAPA noted that, in their opinion, BPA’s joining Grid West is not likely to change FERC’s control over BPA

**How Has the Grid West Proposal Evolved?**

- Bonneville Power Administration  November 23, 2004

## Need to finish the technical development of Grid West’s proposed operations
Need to determine the cost effectiveness of Grid West’s proposed operations
The TA must properly address BPA’s sub-delegation issues and other issues related to its federal status
Resolve Issues surrounding the consolidation of control areas
Additional assurances are needed that FERC will not push the region beyond where region wants to go

- Need to finish the technical development of Grid West’s proposed operations
- Need to determine the cost effectiveness of Grid West’s proposed operations
- The TA must properly address BPA’s sub-delegation issues and other issues related to its federal status
- Resolve Issues surrounding the consolidation of control areas
- Additional assurances are needed that FERC will not push the region beyond where region wants to go

**Areas That Need Further Work in the Grid West Proposal**

- Bonneville Power Administration  November 23, 2004

## Focused on discrete, incremental steps (short of forming an independent entity) toward a single OASIS, expanded NTAC function, strengthening of the PNSC, and a new market monitoring unit
The major difference between the TIG proposal and the Grid West proposal is governance and the decision-making structure.  BPA does not believe that the voluntary approach can work (e.g., NTAC). 
It lacks an effective decision-making and dispute resolution process  
More regional stakeholders need to be involved in its development
It does not provide the reliability benefits from consolidating control areas.

- Focused on discrete, incremental steps (short of forming an independent entity) toward a single OASIS, expanded NTAC function, strengthening of the PNSC, and a new market monitoring unit
- The major difference between the TIG proposal and the Grid West proposal is governance and the decision-making structure.  BPA does not believe that the voluntary approach can work (e.g., NTAC).
- It lacks an effective decision-making and dispute resolution process
- More regional stakeholders need to be involved in its development
- It does not provide the reliability benefits from consolidating control areas.

**The TIG Proposal**

- Bonneville Power Administration  November 23, 2004

## Grid West/TIG Collaborative

- BPA participated in the TIG process early on when it was sponsored by PNUCC, which led to the creation of the NTAC planning effort.
- BPA initiated a Grid West/TIG collaborative and encouraged additional discussions between the parties.
- The good news is there is strong agreement between the problems and opportunities identified in the TIG proposal and those identified in the RRG process.
- But we think the sponsors of the TIG proposal need to move more expeditiously to modify their proposal to work for the region and effectively deal with the governance issues, amongst other things.

- Bonneville Power Administration  November 23, 2004