# Presentation: 496382

## 
Key Features of RTO West
Market Design as
Proposed in March 29, 2002
Stage 2 Filing

- Key Features of RTO West
- Market Design as
- Proposed in March 29, 2002
- Stage 2 Filing

- Presented by Sarah Dennison-Leonard, Krogh & Leonard
- Consultant to RTO West
- Meeting of the Energy Bar Association, Washington, D.C.   May 2, 2003

## RTO West Market Design

**Key Objectives of Market Design Approach**
- Operational Workability – Managing Outage Risks
- Business Workability – Managing Financial Risks
- Regulatory and Political Workability – Fairness, Order 2000 Compliance, Preservation of Pre-existing Rights and Obligations
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## RTO West Market Design

**Operational Workability**
- RTO West operational responsibilities:
- operate a control area – interchange schedules, reserves, frequency control
- act as provider-of-last-resort for ancillary services
- RTO West must fulfill its operational responsibilities without owning generators or rights to generation output
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## RTO West Market Design

**Operational Workability (continued)**
- RTO West will meet its operational responsibilities by:
- running a voluntary, bid-based market for supply of Interconnected Operations Services (“IOS”)
- IOS will allow RTO West to provide regulation, load following, contingency reserves, and congestion redispatch
- If problems occur during real-time operations, RTO West will have emergency authority (acting as reliability coordinator)
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## RTO West Market Design

**Business Workability**
- RTO West will provide pre-schedule forecasts of expected load and reserve requirements
- RTO West will accept all schedule submissions, and will execute the submitted schedules so long as they can be implemented within security constraints using voluntarily bid-in congestion redispatch (and “Congestion Management Assets” from Participating Transmission Owners)
- Using voluntarily submitted bid prices for IOS (including congestion redispatch), RTO West will generate locational prices that will determine charges for transmission and for ancillary services
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## RTO West Market Design

**Business Workability (continued)**
- RTO West will offer two forms of (financial) hedges in RTO West to cover congestion charges:  Financial Transmission Options (“FTOs”) and Catalogued Transmission Rights (“CTRs”)
- _FTOs_ – RTO West will issue these “new” transmission rights based on available physical capacity on the system (after accounting for previously committed uses) – value determined by positive price spread between specified withdrawal and injection locations
- _CTRs_ – RTO West will issue CTRs to correspond to rights and obligations of Participating Transmission Owners under pre-existing contracts and load service obligations
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## RTO West Market Design

**Business Workability (continued)**
- FTOs:
- flexible and tradable - their value can be applied against congestion charges for any schedule
- defined by specified injection and withdrawal points on the RTO West transmission system
- FTOs do not pay cash - only scheduling coordinators can “redeem” FTOs; they have value only if the scheduling coordinator has congestion charges in the applicable hour
- can also be obtained through converting pre-existing contract rights
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## RTO West Market Design

**Business Workability (continued)**
- CTRs:
- limited to terms permitted in underlying transmission rights or load service obligation (not allowed to trade and value cannot be applied to other uses)
- will enable RTO West to aggregate pre-existing claims on the system and to manage the system by taking advantage of netting and diversity across different customers and transmission owners’ systems
- early schedule “lock-in” option
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## RTO West Market Design

**Regulatory and Political Workability**
- Fairness
- stakeholder confidence (transmission customers, end users, regulators, participating transmission owners, market participants)
- reliable price information
- minimize complexity
- market monitoring
- old and new rights treated comparably
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## RTO West Market Design

**Regulatory and Political Workability (cont’d)**
- Order 2000 compliance
- tariff administration
- short-term reliability
- operational authority
- ancillary services (including option to self-supply)
-  congestion management
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## RTO West Market Design

**Regulatory and Political Workability (cont’d)**
- Preserving pre-existing rights and obligations
- contract and load service obligations
- netting and diversity
- Congestion Management Assets contributed by Participating Transmission Owners
-  sufficiency testing
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## RTO West Market Design

**Next Steps**
- work on details of scheduling and settlement process, including procurement and charging for ancillary services
- develop proposed initial RTO West tariff
- follow up on open issues from “Stage 2” FERC filing
- coordinate with other western RTOs through Seams Steering Group – Western Interconnection
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