# Presentation: 797942

## Western Area Power Administration	

- Public Process to Propose a Final Resource Adequacy Plan

## Summary

- Conducting a public process pursuant to the Administrative Procedure Act to propose a Final Resource Adequacy Plan
- Consistent with Section 40 of the California Independent System Operator’s (CAISO) Tariff
- Western’s Current RA Plan can be found at: http://www.wapa.gov/sn/marketing/racapacity.asp

## Dates

- Federal Register Notice published on April 25, 2007
- Public Information Forum held May 2, 2007
- Public Comment Forum will be May 9, 2007
- Comment Period will close May 25, 2007
- Final RA Plan will be effective July 23, 2007
- Western’s final RA Plan must be in place to meet the CAISO’s CY ’08 annual showing

## Comments

- Comments may be sent by May 25, 2007 to:
- 		Ms. Sonja A. Anderson
- 		Acting Power Marketing Manager
- 		Western Area Power Administration
- 		114 Parkshore Drive
- 		Folsom, CA  95630
- 		Email: _[sanderso@wapa.gov](mailto:sanderso@wapa.gov)__ _
- 		Fax: (916) 985-1931

## Background

- February 9, 2006 – CAISO filed its comprehensive market redesign and technology upgrade (MRTU) tariff
- Includes provision where California Public Utilities Commission (CPUC) and other Local Regulatory Authorities (LRA) establish procurement requirements for Load Serving Entities (LSE)

## Background

- March 13, 2006 – CAISO filed its Interim Reliability Requirements Program (IRRP)
- Section 40 provides guidelines for Resource Adequacy
- May 12, 2006 – Federal Energy Regulatory Commission (FERC) accepts the CAISO’s IRRP

## Background

- September 21, 2006 - FERC accepted, in part, CAISO’s proposed MRTU tariff
- LSEs under CPUC jurisdiction are required to maintain a level of capacity of 15% to 17% above LSE’s forecasted customer needs
- Other LSEs must comply with planning reserve margin set by their LRA
- Default margin will be 15%

## Background

- Western is an LRA and submitted two RA Plans to the CAISO
- Initial RA Plan (in response to FERC’s May 12, 2006 Order)
- 5% by October 1, 2006
- 10% by February 1, 2007
- 15% by June 1, 2007
- Current RA Plan (in response to FERC’s September 21, 2006 Order)
- 10% June through September
- 5% all other months

## Background

- Western has procured RA Capacity for calendar year 2007 for:
- Full Load Service Customers
- First Preference Customers
- NASA Ames
- Project Use Customers
- Western plans to continue providing RA Capacity for these customers

## Western’s RA Plans

- Western’s Initial RA Plan
- Section 40 of IRRP and MRTU filings set guidelines
- FERC May 12, 2006 Order:
- Accepted CPUC default criteria of 15-17% RA Capacity for CPUC jurisdictional entities
- Acknowledged other LRAs can develop their own RA Plans

## Western’s RA Plans

- Western’s Initial RA Plan (cont.)
- Phase in its Planning Reserve Margin requirements for RA Capacity as follows:
- October 1, 2006 – 5%
- February 1, 2007 – 10%
- June 1, 2007 – 15%

## Western’s RA Plans

- Western’s Current RA Plan
- FERC’s September 21, 2006 Order allowed for LRAs to set their own criteria for Planning Reserve Margin
- Western revised its Initial RA Plan to modify its Planning Reserve Margin
- June through September – 10%
- All other months – 5%

## Western’s RA Plans

- Western’s Current RA Plan (cont.)
- Designated Central Valley Project hydroelectric facilities in SMUD’s Balancing Authority Area as a system resource with 100% of forecasted capacity considered to be Qualifying Capacity (defined as the maximum capacity of an RA Resource)
- Designated 100% of its contract deliveries (existing and future Liquidated Damages (LD) Contracts) as Qualifying Capacity

## Western’s RA Plans

- Western’s Proposed Final RA Plan
- Contains all procedures and standards in Western’s Current RA Plan
- Proposed modifications
- Western will procure RA Capacity from qualifying resources either inside or outside of the CAISO Control Area
- Western may opt to designate some of its existing and future LD Contracts as RA Capacity

## Western’s RA Plans

- Types of Resources for RA Capacity
- The LRA has discretion on the type of resources to use to provide RA Capacity
- Section 40 of the CAISO Tariff allows LRA to determine qualifying resource types and the Qualifying Capacity from such resources

## Western’s RA Plans

- Types of Resources for RA Capacity (cont.)
- Section 40 of the MRTU Tariff states that LSEs must also consider Local Capacity Area Resources (Local RAR) to be made available to the CAISO
- Given the size of Western’s CAISO loads and limited exposure to Local RAR costs, Western is not anticipating the need to procure local RA Capacity associated with this requirement

## Western’s RA Plans

- Types of Resources for RA Capacity (cont.)
- FERC’s May 12, 2006 Order stated “WAPA, as an LRA can determine the extent to which liquidated damages contracts count toward its resource adequacy requirements.”
- Both Western’s Initial RA Plan and its Current RA Plan were prepared using Western’s own standards for meeting its Qualifying Capacity requirements, including RA Capacity standards

## Western’s RA Plans

- Types of Resources for RA Capacity (cont.)
- Western’s proposed resources to meet RA Capacity
- LD Contracts
- RA Capacity procured from qualifying resources either inside or outside the CAISO Balancing Authority Area

## Western’s RA Plans

- Amount of RA Capacity to be Procured
- Section 40 of both the CAISO’s IRRP and the MRTU tariff allow a non-CPUC jurisdictional LRA to establish its own criteria for establishment of planning reserve margins
- Western’s loads on the CAISO grid are less than 1% of the overall demand of the CAISO transmission grid

## Western’s RA Plans

- Amount of RA Capacity to be Procured (cont.)
- Western’s current procurements:
- 10% in June through September
- 5% in all other months
- Western’s future procurements:
- Continue with the 5% and 10%

## Western’s RA Plans

- Allocation of Costs for RA Capacity
- Costs are allocated on a load ratio share basis to the affected customers based on their projected load levels:
- Full Load Service Customers
- First Preference Customers
- NASA Ames
- Project Use
- Western is proposing to continue to allocate costs in this manner

## Allocation of Costs for RA Capacity (cont.)
Example
Customer A projected load 10 MW
Customer B projected load 15 MW
Customer C projected load 20 MW
Monthly RA Capacity cost $12,000
Customer A’s share of RA Capacity costs is $2,667
Customer B’s share of RA Capacity costs is $4,000
Customer C’s share of RA Capacity costs is $5,333

- Allocation of Costs for RA Capacity (cont.)
- Example
- Customer A projected load 10 MW
- Customer B projected load 15 MW
- Customer C projected load 20 MW
- Monthly RA Capacity cost $12,000
- Customer A’s share of RA Capacity costs is $2,667
- Customer B’s share of RA Capacity costs is $4,000
- Customer C’s share of RA Capacity costs is $5,333

## Dates

- Federal Register Notice published on April 25, 2007
- Public Information Forum held May 2, 2007
- Public Comment Forum will be May 9, 2007
- Comment Period will close May 25, 2007
- Final Rule will be effective July 23, 2007
- Western’s final RA Plan must be in place to meet the CAISO’s CY ’08 annual showing