Wyoming Infrastructure Authority’s

Energy Trends

Marie Jordan, President & CEO

Peak Reliability

Laramie, WY

April 5, 2018

Peak RC Update on Activities

Peak/PJM Connext West-wide Market – Design and Business Case

Agenda

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The West – A Complex Machine

• ~260 Remedial Action Schemes (RAS)

• 110,129 miles of transmission

• 2,157 miles of 500kV or higher

• 1,000 miles between operations centers

• 1.6 million sq. miles of service territory

• 74 million people

• 38 Balancing Authority Areas (BAA)

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• Reliability in the Coordination in the West will be

delivered by multiple RCs

– Cost is a key driver

The Landscape has Evolved

Fee-based Reliability Services

Interconnection Provided Services

Core RC Function

•Hosted Advanced Applications

•CIP 14 Service

•Enhanced Curtailment Calculator

•WECC Interchange Tool

•Reliability Messaging Tool

•Compliance with NERC Standards

Core RC Function and Reliability

Support tools included annual

contract with Funding Members

Cost billed directly to entity receiving

additional services

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• Restructuring cost and services

• Transition to providing cost effective, sustainable core RC function

and enhanced Reliability Services

• Fundamental change in how services are structured and priced

• RC function

• Compliant with NERC standards

• Basic level Reliability Coordination service

• Fee-based Services based on value and market demand

• Existing: Hosted Advanced Applications (HAA), WECC

Interchange Tool (WIT), Reliability Messaging Tool (RMT),

Enhanced Curtailment Calculator (ECC)

Peak’s Strategy

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• Critical wide area reliability tools retained

– West-wide System Model

– RAS coordination, models, and simulation

– Advanced apps – reliability and economic value

• Continue to provide coordinated reliability

improvements

– What’s important for the Interconnection?

– RCs work together to drive reliability in the West

Peak’s Reliability Coordination Vision

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Restructuring Peak’s Costs and Services

Fee Based Reliability Services

Support Tools

Core RC Services

•Hosted Advanced Applications

•CIP 14 Service

•Enhanced Curtailment Calculator

•WECC Interchange Tool

•Reliability Messaging Tool

•Compliance with NERC Standards Core RC Services included annual

fee to Funders

Cost billed directly to entity receiving

additional services

Potential shared costs coordinated

with other RCs in the Western

Interconnection

Fee-based Reliability Services

Interconnection Provided Services

Core RC Function

•Hosted Advanced Applications

•CIP 14 Service

•Enhanced Curtailment Calculator

•WECC Interchange Tool

•Reliability Messaging Tool

•Compliance with NERC Standards

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• Responsive and flexible governance – by and for the West

• Brings together the combined knowledge, relationships

and capabilities of PJM and Peak

• Ability to promptly deliver the market stakeholders want

• Track record of timely and effective delivery

• Cost effective and value conscious

• Multi-state, public policy balance

Peak/PJM Connext Value Proposition

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The Case for Markets

• Drives reliable operations

• Unlock value of diversity – geography, weather, fleet

attributes, timing

• More efficient use of overall transmission system

• Markets offer signals for investment and retirement,

basis for trade and new construction/upgrades

• Provide new economic opportunities for participants

and savings for customers

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Market Design Philosophy • Market prices should reflect actual

operating conditions and encourage the

right behaviors

• Participants are partners with the grid

operator in maintaining reliability through

price signals

• The bulk of trading activity will rightly take

place in the forward markets, but this

requires reliable underlying reference

pricing

• Proper hedging mechanism (FTRs) to

provide financial assurance to Firm

Transmission customers when

transmission constraints exist

Market Operations

• Energy

• Ancillary Services

•Capacity

Reliability

•Grid Operations

•Supply/Demand Balance

•Transmission Monitoring

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Business Case Fundamentals

• Currently – PJM and Peak have completed their business case and are sharing

the results with the interested entities in the West

• The framework of the business case, its assumptions and the resultant model

provides:

‒ Peak and PJM Connext assurance that a viable reliability and market entity, customer set and

geography exists for sustainable operations

‒ Sets expectations for what will be included within the Day 1 RC and Market, the respective

audiences (stakeholders, buyers, sellers, regulators, etc.)

‒ Perspective to market participants as to the necessary costs to implement and operate the new

entity and that value is attainable

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Current Case – Markets Day 1Based on current feedback – Peak & PJM Connext Core Services

• Reliability Coordination services (participants may select RC, Market or RC + Market services)

• Day-ahead (DA) energy market that supports Bilateral contracts, Self Supply, Interchange scheduling and

Virtual transactions

• Financial Transmission Rights Allocation and optional reconfiguration Auctions

• Full credit monitoring & administration and Centralized Counterparty Settlements

• Balancing Authority services i) Voluntary consolidation and ii) Voluntary transfer of BA responsibilities to

Peak/PJM Connext

‒ Available Real-time (RT) energy market with Co-optimized Ancillary Services and Interchange scheduling under

consolidated circumstances

• Fundamental Market Monitoring Unit

• Formal pre-launch instruction, education, testing and market simulation

• Sustainable self-governance model for market rules (Rules Committee by and for market participants)

• Roadmap of the “Pathway to a RTO” on the timing and terms of Western participants

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Service Features NOT included on Day 1

Based on current stakeholder feedback, Core Services on Day 1 will not include:

‒ A Capacity/Resource Adequacy Market Construct

‒ Consolidation of Transmission Open Access Transmission Tariffs (OATT), or

• Collection and disbursement of transmission revenue requirements

• Transmission Service Provider (TSP) functions

‒ Regional or sub-regional system planning for;

• reliability,

• operational performance,

• public policy,

• market efficiency, or

• Interconnection

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Our Focus:

• Governance – Market Rules by and for western participants

• Reliability Coordination foundation for Day 1 Energy Market Launch

• A Roadmap for the “Pathway to a RTO”

• A long-term, sustainable view that properly values each asset in the supply chain

What’s Next?

• Share details of completed business plan with market participant principals

• Non-binding MOUs with interested entities

Recap/Wrap up

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To stay informed, please subscribe to the Peak/PJM Connext webpage

at https://www.peakrc.com/whatwedo/PeakPJM/Pages/default.aspx

• Announcements

• Calendar of webinars

• Webinar recordings and material

• Documents including Q&A

• Discussion Board

• FAQs

Staying Informed

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