PacifiCorp believes interchange should be excluded from the capacity critical hours completely, in conjunction with the exclusion of resources that are not contracted to WRAP participants, to eliminate the chance of double counting resources that are sold into California. Stated another way, it would be more appropriate for capacity critical hours to be calculated from the WRAP region’s gross load and each WRAP participant’s variable energy resource performance rather than including CAISO’s excess solar or any other non-WRAP load and resources as part of the WRAP calculation.

1.  Do real-time prices and resulting flows of energy across interchanges in the operational window belong in the calculation of CCH used in the FS workbook requirements?  Would like to see the impact of removing Regional Interchange from the calculus of CCH.   Our thinking is that Regional Interchange may be appropriately shifting/extending the CCH given interchange flows are a function of RT price.   Shifting/extending the CCH affects resource QCC values and entities ability to meet PRM.     

Also worth considering that interchange flow values are BAA flows (page 7).  They are not necessarily reflective of WRAP LRE loads w/in the BAA.   Interchange flows could be driven by price arbitrage in the EIM or generator imbalance w/in the BAA that has nothing to do with loads in WRAP. 

2.  Section 3.5 doesn’t describe a methodology of how the program should look at the 10 years of historical data, identifying specific drivers and how they affect the overall period.  There is not a methodology to address adjustments to loads/resources based on that overall assessment, rather it discusses a specific period of time and the exact drivers that go into a set of years, as compared to another specific set of years.  It then says those drivers will not change for the next 5 years as a result of using this calculation, with these specific adjustments based on hour 19 regardless of what new data says.  This BPM should describe what drivers should be looked for that warrant adjustments.  The calculations for the data should be made each year that new data is submitted, and not tie the programs hands to a methodology outlined in this BPM for the next 5 years based on a historical assumption of change.  The loads and resources are changing rapidly (why WRAP was developed) and BPA feels the BPMs should not tie the hands of the program by only considering the current state.

3. Section 3.5.2 specifically calls out year 2018 through 2027, but what happens after 2027? Does that require updates to the BPM?  The BPM should discuss the methodology employed and not give specific periods except when using examples.  2023-2027 are future periods that current analysis doesn’t account for and we need to consider what happens if it shows significant change? We already know that the most recent period of time has significant interchange into the MidC region for a long period, that will change the assumptions described.  The BPM unecessarily locks down how the calculation is not based on assumptions and drivers but based on years, which feels shortsighted.  BPA suggests reconsideration/discussion of a better methodolgy.

4. Section 3.5.3 BPA notes the following:

• Historical Scarcity prices: RT scarcity prices most often are a function of outages or Force Majeaure (unpredictable/random). Folding them into routine CCH calculations (as capacity that is not available) is likely to skew the resulting CCH and PRM. Suggest removing Scarcity event availability assumptions b/c they are likely random.
• BPM states that it is using CAISO market clearing heat rates (price of energy/price of natural gas). BPM should indicate which price index/node is used in the calculations.
• BPM indicates that it is including a 2013 carbon adjustment of $6 applied to California market price before determining the market clearing heat rate. BPA suggests makign provisions in the BPM that allow this value to be updated annually.

3.5 Regional Interchange

PNM questions the necessity to include Net Regional Capacity Need, i.e., Regional Interchange.  PNM agrees with PacifiCorp “… it would be more appropriate for capacity critical hours to be calculated from the WRAP region’s gross load and each WRAP participant’s variable energy resource performance…”

And also with BPA, “Our thinking is that Regional Interchange may be appropriately shifting/extending the CCH given interchange flows are a function of RT price.   Shifting/extending the CCH affects resource QCC values and entities ability to meet PRM.”

Could it be argued potential interchange is already captured in the “Contracts” section of the Forward Showing?

Lastly, reading the BPM it states, “Consequently, the Program Operator uses the previous ten Years of regional interchange data from the Northwest Power Pool Reserve Sharing Group (RSG)…”.  Is there any data being used for determining the SWEDE interchange, as many SW entities were not participants in the NWPP RSG?

Regarding Section 3.5.3 Further Modifications to Interchange, Powerex notes that the $6 carbon adjustment used to modify the California market price represents a rough average of actual carbon costs, and that the carbon costs will continue to change over time. Powerex suggests that the BPM be modified such that the carbon adjustment applied to each year should be the actual California Carbon Allowance cost for the applicable vintage year ($ per MTCO2e), multiplied by the prevailing California Air Resources Board unspecified emissions rate for that year (presently 0.428 MTCO2e/MWh).

Does the calculation of interchange include EIM transactions or only DA and RT bilateral transactions?  Including EIM transactions could distort capacity positions on both sides of those transactions. In general, APS would like to request a re-look at the section since we are not sure why we use WPP RSG and not what Participants submitted in the Advance Assessment as non-WRAP interchange? It could also be beneficial to incorporate information from non-WPP RSG members of WRAP, or with external resource adequacy programs (CPUC) to get a more complete understanding of Regional Interchange in both terms of economic opportunities and interchange that remains during times of scarcity.

At the end of Section 3.5.1 it says there is a new hourly interchange profile created for the entire 10-year period. APS wonders if this interchange profile would be better represented on monthly basis rather than a seasonal basis?

APS also would like to note the assumption regarding imports to the WRAP Region, these are considered imports no matter the market prices at the time, with changes in export priority in surrounding markets this may be necessary to re-visit.

SRP request clarity on the inclusion of the regional interchange in the calculation of Net Regional Capacity Need. Recent revisions to the LOLE modeling methodology removed interchange from simulations and the calculation of PRM.