SE-89 Constrained-Off CMSC for
Dispatchable Loads
Standing Committee/Working Group name
Session Notes
______________________________
Date held: October 14, 2010
Invited/Attended
Time held: 2:00 pm
Company Name
Location held: Tembec Offices
Attendance Status
(A)ttended; (R)egrets; (S)ubstitute
Abdelnour, Francois
Ivaco Rolling Mills
Via Teleconferencing
Degelman, Cara
AbitibiBowater
A
Forsyth, Dave
Gerdau Ameristeel Corporation
Via Teleconferencing
Laflamme, Serge
Tembec
A
Rimano, Laurent
Air Liquide
Via Teleconferencing
Smith, Paul
Dofasco
Via Teleconferencing
Viljakainen, Bert
AbitibiBowater
A
Chung, Jo
IESO
A
Doyle, Declan
IESO
A
Finkbeiner, Darren
IESO
A
Misner, Brad
IESO
A
Savage, Jessica
IESO
A
Thomas, Doug
IESO
A
Scribe: Jo Chung Please report any corrections, additions or deletions by e-mail to [email protected]
All meeting material is available on the IESO web site at:
http://www.ieso.ca/imoweb/consult/consult_se89.asp
Meeting Objectives:
To continue discussions on the solution proposed by the dispatchable loads (if an MP changes any price
or quantity component of their bid from hour to hour, not eligible for ramp related CMSC).
Agenda Item 1 & 2
Welcome and agenda review, summary of September 29th session
Darren Finkbeiner of the IESO welcomed the group, and invited members and IESO staff to introduce
themselves. Introductory remarks were made including a brief summary of the Sept 29th session.
Agenda Items 3 & 4 Presentation by the IESO on the proposed solution and discussion
Jo Chung of the IESO described enhancements to the decision rules discussed on Sept 29th (four
additional clawback exemptions), presented preliminary results of the proposed decision matrix for the
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90-day period July 10th to October 6th, and outlined timelines for IESO Board approval of the proposed
amendments and implementation.
Cara Degelman asked whether the IESO would consider increasing the proposed materiality exemption
of $4,000. Darren Finkbeiner of the IESO responded that based on the preliminary results, the filters
appeared to be appropriately targeting the ramp related CMSC referenced in the MSP report, and that
there did not appear to be a valid rationale to increase the materiality. Furthermore, the $4,000 level was
consistent with existing decision rules within the IESO’s settlements system. Cara asked how the $4,000
level was determined, and Darren responded the business rules were stakeholdered in 2006. Cara asked
if a higher limit would result in less work for the IESO. Darren responded that a higher limit would
have no impact on the effort to implement the proposed solution and noted that a higher materiality
limit would simply allow more of the targeted ramp related CMSC to flow. Brad Misner of the IESO
confirmed that there would be no change in IESO workload from a settlements perspective if the limit
was increased or decreased. Cara asked if the materiality threshold was non-negotiable. Doug Thomas
of the IESO suggested that the group work through the entire presentation, and determine if the decision
rules addressed the vast majority of the ramp related CMSC issue prior to the urgent amendment,
reiterating that the $4,000 limit was previously extensively stakeholdered. Darren noted that if the
decision rules were capturing the CMSC that was the subject of the MSP report, one could argue a
materiality threshold was not required because all of that CMSC should be clawed back. Darren also
asked Cara to support why she believed a different materiality threshold was warranted.
Darren noted that for the Tembec example given at the last session, that if a facility was constrained-off
for reliability reasons, the additional exemption for manual constraints for reliability would allow the
facility to keep the CMSC. He also elaborated on the economically constrained-off exemption stating
that if the facility is dispatched-off and the nodal price is greater than or equal to the bid price, the
dispatch instruction was related to grid conditions and that the load would keep the CMSC. Darren
stated that the economically constrained-off exemption was a very good filter for allowing appropriate
CMSC to flow, while capturing the ramp related CMSC noted in the MSP report.
Serge Laflamme asked for clarification on the summary decision tree, and Darren clarified that the ramp
test, market schedule test, PQ change test (items 2, 3, and 4 on the decision tree), and no triggering of the
exemption filters must all be met for a claw back to occur. Bert Viljakainen asked about the remainder of
the dispatchable loads, stating that if a load does not change their bid, that they should receive 100% of
their CMSC. Darren responded that in the MSP report, no comments were made on the CMSC earned
by the remainder of the dispatchable loads. He added that the 8% clawed-back for the remainder of the
loads for the preliminary results for the last 90 days should be ramp-related. He noted that with the
proposed filters, the results appeared to accurately capture ramp related CMSC while allowing other
CMSC to flow.
Serge asked whether the proposed solution could be applied retroactively to the date of the suspension
and whether the proposed solution could be implemented sooner than the proposed date of December
3rd. Darren replied that it was his understanding that statutory requirements prohibited retroactivity
noting that similar rules in the past for generators could not be applied retroactively either. Darren also
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noted that the proposed solution must be approved by the IESO Board and Jessica added that any
general rule amendment approved by the IESO Board must be posted for at least 22 days before the rule
can go into effect. Francois requested confirmation that the solution could not be applied retroactively to
the date of suspension. Darren added that if the IESO could implement the proposed solution
tomorrow, that it would, and committed to confirm his answers with IESO legal counsel. Francois asked
that implementation not be delayed, and to respond to stakeholders the reason why the solution could
not be applied retroactively.
IESO Staff Note: The IESO confirmed with IESO legal counsel that this amendment does not qualify as urgent
and that it cannot be applied retroactively. The reasons for this determination are attached.
Francois asked whether the preliminary results for the last 90 days ($1.4M to the two facilities, $1M to
the remainder of DLs) were in line with historic values. Darren responded that he was comfortable with
the numbers. Francois asked whether there would be any issues with gaming when the proposed
solution was in place. Darren responded that new issues could arise and that he could not guarantee
this fix would address new issues. Francois noted that the numbers made sense, and asked the group if
the solution was acceptable. Darren responded that from an IESO staff perspective, it was the right
solution. He added that he didn’t know other issues related to price impact, etc., but that the solution
addressed the CMSC payments in the MSP report. Francois asked what the Market Assessment Unit
thought of the proposed solution. Darren noted that IESO staff plans to discuss the proposal with the
MAU but has not yet had the time to do so.
On behalf of Mark Passi who was unable to attend the meeting, Serge noted that the proposed solution
was just an interim solution, and the group was looking for a bigger review of CMSC in the future.
Darren reiterated his comments from the previous session that a market review/assessment would be
performed in the long term. For the proposed solution on the ramp issue, he believes it captures the
CMSC it is intending to capture while allowing appropriate CMSC to flow. He proposed that a period
after implementation be monitored to ensure the tool appropriately claws-back CMSC related to ramp,
and in the longer term as part of the IESO’s “market road map” initiative, review the broader issue of
CMSC.
Serge summarized that the proposed solution seemed appropriate and urged the IESO to implement it
as soon as possible. However, he noted that the dispatchable load community was looking for a longer
term solution that must apply to all market participants, not just dispatchable loads. Darren replied that
for the long term solution, both generators and dispatchable loads would be considered. However, he
added that dispatchable loads were different from quick-start and non-quick-start generators. Quickstarts generally had high ramp rates and, therefore, little to no ramp-related CMSC. To date, and in the
short term, the IESO has and will continue to address CMSC issues on a case by case basis. Serge noted
he was fine with the proposed solution, and asked that something similar be applied to generators.
Darren noted that different opportunity costs and the fact that the market structure is different for loads
and generators (i.e. bids vs. offers) also necessitate different solutions. For example, a replacement offer
price of $0 is used for calculating constrained-off CMSC for generators with negative offer prices while
it’s proposed that -$50 would be the replacement bid price used for constrained-on dispatchable loads
with negative bid prices.
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Cara added that if the IESO could not apply the proposed solution retroactively, whether another
strategy would allow the IESO to use that date (i.e. the August 28th date when the temporary suspension
became effective). Darren committed to investigate. Bert asked for confirmation whether the worst case
scenario would be a December 3rd effective date. Darren confirmed this. Francois stated that he recalled
a retroactive adjustment/application a year or two after the occurrence of a metering error. Darren
responded the payments were based on existing rules at the time which allowed the adjustment, noting
the urgent amendment for the dispatchable loads was clear that there would be no constrained off
CMSC for dispatchable loads. To try for retroactive application would over-step prevailing regulation.
He provided the analogy of receiving a ticket for exceeding a 200km/h speed limit. If in the next month
the speed limit was increased to 300km/h, the speeding ticket received in the prior month would still
require payment. Bert asked whether the word “suspend” meant the IESO could apply the proposal
retroactively. Darren again committed to check with IESO legal – see answers attached.
Agenda Item 5 Next steps
Darren noted the proposed timelines were tight and that the IESO and the dispatchable loads were all
working together to expedite the proposed solution. He indicated he did not expect any issues with the
December 3rd implementation target date, noting that December 3rd was likely the earliest possible
implementation date. He stated that the Technical Panel was aware of the importance of this
amendment and that the IESO and the dispatchable loads were working together to arrive at a solution
as quickly as possible.
Cara asked how important dispatchable loads were to the market. Darren responded that dispatchable
loads have always been and will continue to be important, by providing services and flexibility when
they are efficient/cost effective relative to other choices for that service.
Jessica noted the amendment submission and proposal would be presented to the Technical Panel on
October 19th, and would likely be posted for a seven day comment period. Serge asked whether the
amendment would only be an interim solution. Darren replied that similar to any other rule
amendments, the rules would have no specified end date or deadline. He added that the rules would
point to market manuals for details, such that small tweaks would not require subsequent rule
amendments. Francois asked how long it took to put the urgent amendment in place. Jessica replied the
urgent rule amendment went into effect the day after Board approval, noting that the 22-day posting
period does not apply to urgent rule amendments. She also noted that the proposed amendment does
not meet the criteria for an urgent amendment, as specified in the Electricity Act, 1998.
In summary, it was agreed that the dispatchable loads were generally satisfied that the proposal
addressed the specific CMSC identified by the MSP, while allowing other constrained-off CMSC to flow.
Their key concern was how quickly the IESO could make this rule effective, and whether the IESO could
make the new rule retroactive to the date of the urgent rule amendment in order to recover lost CMSC
revenue.
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Serge noted that the proposed solution seemed appropriate and urged the IESO to implement it as soon
as possible. However, he reitereated that the dispatchable load community was looking for a longer term
solution that must apply to all market participants, not just dispatchable loads.
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Attachment
At the September 29th meeting, stakeholders requested that the IESO consider treating the current
amendment as an urgent rule amendment, or implementing the amendment retroactively. The
stakeholders further asked what their recourse would be if they received a negative response from the
IESO to their two requests.
The IESO has determined that the rule amendment to limit constrained off CMSC for dispatchable loads
does not qualify as urgent and that the IESO does not have the authority to apply rule amendments
retroactively.
An urgent amendment to the market rules can be required for one or more of the following reasons:
1. To avoid, reduce the risk of or mitigate the effects of conditions that affect the ability of the
integrated power system to function normally.
2. To avoid, reduce the risk of or mitigate the effects of the abuse of market power.
3. To implement standards or criteria of a standards authority.
4. To avoid, reduce the risk of or mitigate the effects of an unintended adverse effect of a market
rule.
5. A reason prescribed by the regulations.
The IESO has determined that none of these apply to the rule which removed CMSC payment from
constrained off dispatchable loads. This rule has not affected ability of the power system to function
normally, nor did it introduce any unintended adverse effects. As set out in the Electricity Act, 1998 and
the market rules, only the IESO has the authority to determine that an amendment to the rules is
required urgently.
It is the IESO’s determination that market rule amendments cannot be applied retroactively. The rule
making power given to the IESO under the Electricity Act, 1998 does not authorize the market rules to
have retroactive application.
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