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ISO New England System Operations

2017/2018 Winter Generator Readiness Seminar

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Welcome

• ISO New England is here to work with you as partners ensuring reliable and efficient operations of the Bulk Electric System for this coming winter and beyond

• ISO New England recognizes that we CAN NOT do this with out a coordinated response to expected conditions this winter

• If we can’t get answers today, we will take back questions and get answers and publish on line

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Agenda

Topic Presenter Opening Remarks

New England Winter Operations Summary John Norden

Director, Operations Winter Preparedness Review Review of 2016/17 Winter Ops, Weather, and Winter Reliability Solutions Program

Capacity Outlook

2017/18 Winter Capacity, Natural Gas Pipeline Outlook, Offer Flexibility,

Control Room’s Role during Normal, Abnormal, and Emergency

Conditions, FERC Pipeline Communication & Information Policy Mike Knowland

Supervisor, Forecasting and Scheduling

Winter Outlook Weather and Loads

NERC Lessons Learned and Generator Freeze Protection Readiness

John Norden

Winter Reliability Solutions Stephen George

Manager, Operational Performance, Training & Integration

Dual Fuel Testing Jim Nichols

Lead Analyst, Asset Registration & Auditing

Demand Response Service Chad Nelson

Manager, Asset Registration & Auditing

OP-21 Actions During an Energy Emergency John Norden

Review of OP-21 Fuel Survey Process Josh Lenzen

Supervisor, Operations Analysis & Integration

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WINTER PREPAREDNESS REVIEW WINTER 2016/17 WEATHER, ENERGY, AND PEAK LOADS John Norden

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Winter 2016/17 Weather, Energy and Peak Loads* • December 2016: Colder than previous December

– Energy demand of 10,884 GWh is 6.8% higher than December 2015 – Peak load of 19,647 MW is 7.9% higher than December 2015 – Peak occurred on December 15, 2016 at HE 18:00 at 18O F

• January 2017: Milder than previous January – Energy demand of 10,724 GWh is -2.6% lower than January 2016 – Peak load of 19,592 MW is 0.7% higher than January 2016 – Peak occurred on January 9, 2017 at HE 18:00 at 17O F

• February 2017: Milder than previous February – Energy demand of 9,440 GWh is -6.8% lower than February 2016 – Peak load of 18,165 MW is -7.1% lower than February 2016 – Peak occurred on February 9, 2017 at HE 19:00 at 18O F

• March 2017: Colder than previous March

– Energy demand of 10,439 GWh is 6.3% greater than March 2016 – Peak load of 17,502 MW is 0.9% higher than March 2016 – Peak occurred on March 15, 2017 at HE 20:00 at 23O F

(*) – All data obtained from the ISO-NE Net Energy and Peak Load Report located at: https://www.iso-ne.com/isoexpress/web/reports/load-and-demand/-/tree/net-ener-peak-load

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New England Winter Daily Average Temperature

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New England Winter Average Daily Temperature (ᴼF): 12/1 - 2/29 Each Month Sorted Low to High

Winter 2014/15 Winter 2015/16 Winter 2016/17

Colder Milder Milder

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New England Winter Daily Average Temperature

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New England Winter Average Daily Temperature (ᴼF): 12/1 - 2/29

Winter 2014/15 Winter 2015/16 Winter 2016/17

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WINTER RELIABILITY SOLUTIONS PROGRAM

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Winter 2016/17 Reliability Program (As of the Start of the Program on December 1, 2016)

• Oil Program – Participation from 84 units – 3.052 million barrels of the total inventory on December 1 were eligible

for compensation per the winter reliability program rules – Total oil program cost was $30.3M

• LNG Program – Participation from 2 units, representing 171,000 MMBTU – Total LNG program cost was approximately $277,868

• DR Program – Participation from 6 assets providing 23.0 MW of interruption capability – Total DR program cost was $126,480

Ref: https://www.iso-ne.com/markets-operations/markets/winter-program-payment-rate

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Winter 2016/17 Reliability Program Usage

• Winter Program Oil Inventory Use • Dec 2016: 121,091 bbl

• Jan 2017: 52,010 bbl

• Feb 2017: 72,401 bbl

• Mar 2017: 3,797 bbl

• Winter Program LNG Use: • December 2016 through March 2017 = None

• Winter Program DR Use (Events): – December 2016, February & March 2017 = None – January 10, 2017: 1 event - 6:39 AM – 9:04 AM, all assets dispatched

(Pre-OP4 real-time-only cuts due to transmission/generation outages)

• Final Program Ending Oil Eligible Inventory

– 3,034,668 BBLs

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Winter Power Plant Oil Inventories (All Units)

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Winter LNG Utilization

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WINTER 2016/17 ELECTRIC OPERATIONS REVIEW

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Winter 2016/17 Electric Operations Review

Event Type

December 2016

January 2017

February 2017

March 2017

OP4 None None None None

MLCC2 (Reason)

December 16 (Cap. Def. – All N.E.)

None February 9 (Severe Weather)

March 13-14 (Severe Weather)

Peak Load Date (H.E.)

19,647 MW Dec 15 (18:00)

19,592 MW Jan 9

(18:00)

18,165 MW Feb 9

(19:00)

17,502 MW Mar 15 (20:00)

Minimum Generation Warning/Event

None None None None

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Winter Electric Operations Summary

• While system operations this past winter were relatively uneventful, challenges remain for future winters with fuel security and pending and actual retirements

• World LNG prices and contracts have an impact on how much fuel shows up in New England – Increased LNG injections are very helpful in maintaining grid reliability

• The Winter Reliability Program was instrumental in augmenting liquid fuel security for the region – This winter will be the last Winter Reliability Solutions Program – Pay-For-Performance market design becomes effective in June 2018

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WINTER 2016/17 NATURAL GAS SECTOR HIGHLIGHTS

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Winter 2016/17 Gas Operations Review

• Over the winter 2016/17, regional natural gas pipelines declared: – 6 Unplanned Outages – All related to partial or full compressor station

outages – 15 - 20 Critical Notices (CNs) or Operational Flow Orders (OFOs) – All

related to extreme weather

• The Critical Notices/OFOs posted during this winter were typical for natural gas pipeline operations during most winters

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Winter 2016/17 Natural Gas Use

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Winter 2016/17 Natural Gas Sector Highlights

• Spectra Energy put the majority of the AIM project (245,000 Dth/d) into service on November 1, 2016, and subsequently put the final piece (Hudson River crossing = all 342,000 Dth/d) into service on January 7, 2017

• Spectra Energy put the Salem Lateral into service on November 1, 2016

• February 27, 2017 – The Spectra Energy – Enbridge company merger was completed

• The Connecticut Expansion project (72,000 Dth/d) on Tennessee Pipeline was delayed until 2018

• March 27, 2017, FERC gave Algonquin Transmission LLC permission to begin building its Atlantic Bridge gas project connecting points in New Jersey and New York with New England and Canada’s Maritime provinces. Approval was for Connecticut facilities only.

• Several open seasons took place for gas pipeline capacity releases (for the off- peak season of April - November)

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CAPACITY OUTLOOK Mike Knowland

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Capacity Outlook

• Forecasted loads are similar to last year – 50/50 forecast is 21,197 MW – 90/10 forecast is 21,895 MW – All-time winter peak load was 22,818 MW on January 15, 2004

• Forecasted loads from last year (mild winter) – 50/50 forecast was 21,340 MW – 90/10 forecast was 22,029 MW – Actual peak was 19,673 MW on December 16, 2016

• Winter energy and peak loads have been decreasing over the past few years due to an increase in energy efficiency and distributed, behind-the-meter generation, primarily solar

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Peak Load Trend

Source: Forecast Data 2017 | https://www.iso-ne.com/static-assets/documents/2017/05/forecast_data_2017.xlsx

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Capacity Outlook

• Operable Capacity surplus on the 50/50 forecast and the 90/10 forecast, using Capacity Supply Obligation – Includes CSO from OP 4 Actions

• 50/50: surplus 1,448 MW (1,060 MW Surplus, pre-OP 4) • 90/10: surplus 347 MW (41 MW Deficiency, pre-OP 4)

– Eco Max offers are consistently above CSO • Can range from 1,500 to 4,000 MW • Approximately 2,500 MW difference between SCC and CSO

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Operational Capacity Analysis

• (+) Total Supply (CSO) – Generators – Demand Resources dispatchable within OP-4 – external capacity transactions

• (–) Demands and Supply Reductions – Planned and unplanned outages – Gas related outages (also unplanned) – Peak load and reserve requirements

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Long Term Op Cap Analysis | 50/50

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Long Term Op Cap Analysis | 90/10

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Where to find this information

• Most recently available data is in the COO report every month – Posted to the ISO New England website

• Committees and Groups > Participants Committee

• Look for COO Report from each month

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Abnormal / Emergency Situations OP 4 Actions

• Notifications • Begin to allow depletion

of 30 min Reserve • Power Caution

5% Voltage Reduction < 10min

• Request all customer generation not contractually available to MP.

• Request voluntary load curtailments.

Dispatch Real-Time Demand Response

as necessary.

Request Generating Resources not subject to

a CSO to voluntarily supply energy for reliability.

• Radio and Television Appeals

• Power Warning

Voluntary Load Curtailment by Participants

• 5% Voltage Reduction > 10 min.

• Dispatch Real-Time Emergency Generation Resources.

Governor Appeals

Power Watch Arrange to purchase

emergency power and capacity

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29 Demand Response Voltage Reduction Appeals

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NATURAL GAS / PIPELINE OUTLOOK

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New England Natural Gas Infrastructure Overview Map

Source: U.S. Energy Information Administration based on Ventyx’s Energy Velocity Suite

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New England Gas Flow Estimates – Peak Days

• Western supply at capacity every day – Southeast Compressor Station (Algonquin) – Station 254 (Tennessee)

• Additional Pipeline Supply (when available) – Waddington (Iroquois) supply to NY – Pittsburg (PNGTS) depending on Montreal Temperature / gas demand

• Deep Panuke – Expecting approximately 50,000 MMBtu per day on average

• Sable Island (volumes per the National Energy Board) – Last Winter: Approximately 125,000 MMBtu per day – This Winter: Projecting 85,000 MMBtu per day on average

• Northeast Gateway Deepwater Port – Cargoes are possible at the Excelerate hub line connection for injection

into the Algonquin Pipeline, up to 400,000 MMBtu per day

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Pipeline Expansion Projects

• Algonquin Incremental Market (AIM) – 342,000 MMBtu/d expansion of the Algonquin pipeline – In service in 2016 – Fully subscribed

• Atlantic Bridge – 132,700 MMBtu/d expansion of Algonquin pipeline

• Pipeline expansion • Compressor upgrades: replacement and new construction

– Expected in-service date: November 2017 – Fully subscribed

• Connecticut Expansion – Approximately 72,000 MMBtu/d expansion of the Tennessee pipeline – In service by 11/1/2016 Delayed

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New England Gas Flow Estimates

• Sable Island Production – Source: Canada-Nova Scotia Offshore Petroleum Board

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New England Gas Flow Estimates

• Deep Panuke Production – Source: Canada-Nova Scotia Offshore Petroleum Board

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Canaport Send Out Last Two Winters

• Expect facility to deliver on peak days similar to last winter

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OFFER FLEXIBILITY AND TIMELINE

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Fuel Price Volatility and Offer Flexibility

• Offer Flexibility allows for Generators to update offers intraday as fuel prices fluctuate on spot market

• For a more detailed overview of the Energy Market Offer Flexibility (EMOF) project, visit http://www.iso-ne.com/static-assets/documents/support/training/courses/energy_mkt_ancil_serv_top/energy_market_offer_flexibility_06_2014.pdf

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Offer Parameter Flexibility

• Most parameters can be offered on an hourly granularity and re-offered or redeclared throughout the course of the day – Generator limits can be redeclared – Prices and Fees can be re-offered

• Gives Market Participants ability to proactively adjust offer parameters in response to changes in fuel prices

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Timeline – Daily Routine

ISO New England Activity Time Gas Procurement Schedule

Final Load Forecast Published ≤ 09:30

DAM bidding window closes 10:00

DAM results published Re-offer period opens

≤ 13:30

Re-offer period closes RAA Process begins

14:00 Timely Cycle Nomination Deadline

RAA Process completed ≤ 17:00

Intraday Re-offer window opens 18:30

19:00 Evening Cycle Nomination Deadline

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Commitment Decisions (review)

• Hourly Reoffers makes it possible for changing supply offers intraday

• Increases complexity of commitment process

• NCPC calculations based on offers in place at time of commitment and dispatch

• Necessitates the concept of a Commitment Decision (CD) – Identify the components of the supply offer in place at the time of

commitment – Ensure proper cost allocation through Settlements – Snapshots the offer price at the time of commitment

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CD Components

• A CD consists of the following – Start and End hours for a Generator commitment – Supply offer data in effect at the time of commitment – Commitment Reason (e.g. Capacity, Voltage Support, RMR, etc…) – Reliability Region (if applicable)

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CONTROL ROOM’S ROLE DURING NORMAL, ABNORMAL, OR EMERGENCY CONDITIONS

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Normal Operating Conditions

• Collect Pipeline Bulletin Board Data – After the RAA process is completed, run (2) Nominations Reports for

the overlapping gas day and electric day • DE for every Generator that has not nominated and scheduled adequate

gas to their meter will be contacted and requested to confirm if gas will be scheduled

• The information provided in the reports, the information from the Generator, and all known interstate pipeline conditions will be used to determine if supplemental Generator commitments are required to ensure reliability

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Normal Operating Conditions, cont Forecaster Calls Plants showing Deficiency from Midnight to 10:00 am (Steps 4 through 8 in Attachment D) Collect Pipeline Bulletin Board Data, cont

Plant MWh Burned So Far MWh Before

Midnight MWh After Midnight MWh Scheduled MWh Surplus Gas Scheduled

1 2201 169 1932 4493 191 34600 2 777 0 663 0 (1440) 0 3 1910 0 901 2849 38 20700 4 2131 0 0 2736 605 20028 5 5903 403 0 7706 1400 53800 6 2369 0 798 3097 (70) 22500 7 1253 0 350 93 (1510) 1000 8 2402 185 1850 5129 692 45500 9 0 0 0 28 28 300

10 3 0 525 0 (528) 0 11 0 0 0 0 0 0 12 1 0 0 0 (1) 0 13 4 0 0 0 (4) 0 14 5077 389 2864 9591 1261 65621 15 3394 215 0 3347 (262) 25048 16 3554 550 6017 221 (9900) 1500 17 10639 797 4157 17418 1825 126540 18 7249 545 3892 11096 (590) 80813 19 972 45 1066 9 (2074) 100 20 0 0 0 0 0 0 21 0 0 0 0 0 0 22 6294 0 2476 1643 (7127) 17471 23 2758 0 1209 3944 (23) 30000 24 2400 250 1250 579 (3321) 5000 25 4998 0 2317 6917 (398) 52595 26 3208 250 1189 0 (4647) 0 27 2434 0 0 2747 313 23512 28 4222 0 0 5634 1412 42963 29 2121 0 0 2343 222 20000 30 0 0 0 0 0 0 31 1141 86 860 2344 257 27000 32 0 0 0 0 0 0 33 1071 0 3490 5037 476 38325 48

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Follow Up

• If sufficient gas has not been nominated and scheduled to the Generator meter – Assessments will be done to determine the impact on system

operations – ISO Control Room will call to inquire as to whether the Generator

intends to secure the requisite gas supply to match its dispatch

• It is always the responsibility of the DE to communicate any changes in Generator capability.

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Cold Weather Terminology and Criteria

• When Cold Weather conditions are met, public notifications are issued independent of M/LCC 2 notifications for Cold Weather Watch, Cold Weather Warning or Cold Weather Event.

• Cold Weather conditions are met when both of the following conditions are true simultaneously: The “Effective Temperature” is forecast to be < 0 F for any single on-peak hour and the “Effective Heating Degree Days” for the day are forecast to be > 65. This temperature and degree day criteria are based on a New England, eight city, load weighted average – Peak hours are considered: HE 08 through HE 23

• Effective Heating Degree Days = 68 – (avg of max and min Effective Temperature of the day)

• Effective Temperature = DryBulb – [ WindSpeed x ( 65 - DryBulb ) / 100

• Cold Weather Watch – Capacity forecast indicates a capacity margin greater than or equal to 1,000 MW.

• Cold Weather Warning – Capacity forecast indicates a capacity margin less than 1,000 MW.

• Cold Weather Event – Capacity forecast indicates a capacity margin less than or equal to 0 MW.

http://www.iso-ne.com/rules_proceds/operating/mast_satllte/mlcc2.pdf

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FERC Pipeline Communication/Info Policy (Review)

• January 11, 2014 FERC approval

• ISO-NE changed the Information Policy effective January 11, 2014

• Provides explicit authority to interstate natural gas pipelines and ISOs to share non-public, operational information with each other for the purpose of promoting reliable service or operational planning

• Permits transmission operators to share the information that they deem necessary to promote the reliability and integrity of their systems with each other.

• Parties are subject to a No-Conduit Rule that prohibits subsequent disclosure of that information to an affiliate or third party.

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Currently Sharing Fuel Burn Expectations Pipeline Specific/Plant Specific

A) Each evening after the RAA process is complete, the on-shift Forecaster 1) Prepares the Generator specific hourly fuel burns to each pipeline report to the

following pipeline contacts: a) Algonquin (AGT) b) Iroquois c) Maritimes and Northeast (M&N) d) Portland Natural Gas Transmission System (PNGTS) e) Tennessee Gas (TGP)

•Plant Specific Fuel Burn Expectation to Interstate Gas Pipelines •Determine the Generator Fuel Schedules

PIPELINE NAME Date: 7/21/2014 Note: Hourly Values Are in Dekatherms

Meter Name Meter # LDC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Total

Plant A 700 N 562 1,748 2,372 2,541 2,541 3,458 3,458 3,458 3,458 3,458 3,458 3,458 3,458 3,458 3,458 3,458 1,178 48,978

Plant B 701 N 1,007 1,007 1,007 1,007 1,007 1,007 1,007 1,250 1,242 1,233 1,233 1,225 1,225 1,217 1,217 1,217 1,217 1,225 1,225 1,233 1,242 1,242 1,250 1,007 27,749

Plant C 702 N 5,122 5,122 5,122 5,122 5,122 5,122 5,122 3,698 5,122 4,352 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 5,122 120,730

Plant D 703 N 2,367 2,367 2,367 2,579 3,257 3,852 4,789 3,681 4,078 3,729 4,789 4,789 4,789 5,090 5,090 5,090 5,090 5,090 5,090 4,803 4,803 4,803 4,803 4,789 101,980

Plant E 704 N 71 212 354 495 637 707 707 707 707 707 1,061 1,061 1,061 1,061 859 859 707 11,973

Plant F 705 N 2,180 2,180 2,180 2,180 2,180 2,180 2,180 3,487 3,444 3,400 3,371 3,327 3,327 3,313 3,298 3,284 3,298 3,327 3,342 3,385 3,429 3,444 3,458 2,180 71,371

Plant G 706 N 1,489 1,489 1,489 1,489 1,489 1,498 1,489 1,064 1,064 1,064 1,454 1,445 1,436 1,427 1,427 1,427 1,427 1,427 1,436 1,445 1,454 1,462 1,471 1,480 33,839

Plant H 707 N 171 342 513 1,256 1,922 1,922 1,922 2,033 2,025 2,042 2,042 2,059 2,067 2,084 2,102 1,948 2,110 1,922 30,481

Plant I 708 N 3,689 3,689 3,689 3,689 3,689 3,689 3,689 3,683 3,689 3,683 3,689 4,205 4,205 4,205 4,205 4,205 4,205 4,205 4,205 4,205 4,205 2,096 2,096 2,096 88,905

Plant J 709 N 206 412 412 412 412 497 497 497 532 532 497 446 412 412 6,175

Total 15,854 15,854 15,854 16,066 16,814 17,560 19,363 19,447 22,365 22,376 25,241 26,612 26,603 27,069 27,400 27,402 27,451 27,506 27,301 27,040 26,933 23,986 21,489 18,596 542,183

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Currently Sharing Generator Planned Outages Pipeline Specific/Plant Specific

• Provide ISO-NE unit specific outage information to individual pipelines associated with those units. This information is shared on a 6 month forward looking basis in the interest of outage coordination between all parties concerned.

• ISO is actively coordinating pipeline and generator outages on a real-time and forward looking basis

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WINTER OUTLOOK Mike Knowland

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Anticipated Winter Highlights

• Above-normal probability of warmer than normal winter

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Anticipated Winter Highlights

• Normal snowfall forecast for the northeast

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Weak La Nina Forecasted

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Weak La Nina Forecasted

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Normal and Record Temperatures

• Always the potential for very low temperatures

• Winter Ready?

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GENERAL PREPAREDNESS, NERC LESSONS LEARNED, & GENERATOR FREEZE PROTECTION READINESS

John Norden

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Review Previous Rule Changes

In preparation for winter, New England continues:

• Winter Reliability Solutions Program-Last Winter

• Accelerated Day-Ahead Market timing to better coordinate with gas day timing

• Increased reserve requirements and added Replacement Reserve requirements (120% of Largest, 50% of Second, 180 MW RR or as determined)

• Increased RCPFs ($250 RR, $1000 TMOR, and $1500 Ten plus $50 Spin)

• Tightened the FCM Shortage Event trigger to create better incentives for performance

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Previous Rule Change Review

• “Offer Flexibility” Hourly Markets

• The Commission clarification on generator obligations – For units, this includes the obligation to have inventory to meet

obligations: • Under Good Utility Practice, cost-of-service oil units keep sufficient inventory

to meet load

• The order confirms that capacity resources have a higher performance

obligation

• As oil cannot be procured “just in time,” oil-fired generators must make

arrangements in advance to ensure that they will have oil inventory sufficient

to produce energy when dispatched this winter

• On most days Natural Gas is available in the east from LNG suppliers

• Limited Energy Option should only be used when no fuel is available and not

as an economic option and consultation with the Market Monitor is

encouraged

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Other Preparations for Winter – Coordination and Communication

ISO-NE continues to step up communications through:

• Regular conference calls with NPCC Reliability Coordinators

• Pre-winter conference calls with the Northeast Gas Association – Emphasized importance of maintaining close coordination regarding

outages

• Regular communications with gas pipelines – Information Policy changes were made to improve gas-electric

coordination per FERC Order 787

• Winter generation readiness seminar – That’s why we are here

• Fuel surveys – Initially monthly; can become twice-weekly and daily at different points in

the winter

• New NERC Guideline on Gas and Electric Coordination should be approved by Operating Committee in December 2017

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Transmission & Distribution

Load shed plans consider

• Electric generators

• Gas wellheads

• Gas pipeline compressors

• Gas gathering facility

• Hospitals

• Other critical / essential loads

Voltage Reductions tested 10/26/17

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ISO-NE Actions & Plans

Identify critical NG supply facilities – don’t shed loads like: – Compressor stations – Gathering facilities – Processing plants

MLCC 16 – Seasonal Preparations

• Assess generator outages

• Gas pipeline communications

• Transmission System Preparedness – GIS Readiness – ACB Readiness – Voltage Reduction Test – Infrared Testing – Maintenance – Aerial and Foot Patrols

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New England Actions

• Generator audits

• Dual fuel testing

• Black start resource testing

• Monthly, Weekly, Daily generator fuel surveys

• Daily calls to dual-fuel generators

• Increased monitoring of gas pipeline maintenance

• Direct communication with pipeline operators

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ISO-New England Communications

• Expedited updates to government and news media

• Media Affairs

• Press releases

• Web site: – Power system conditions – Notices – ISO Express

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Normal and Record Temperatures R U Ready

• Always the potential for very low temperatures

• Winter Ready?

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Generator Planning

• Plant-specific Winter Readiness Plan

• Ensure adequate winter supplies of fuel

• Freeze protection per guidelines

• Access to primary and secondary fuel

• Verify fuel switching capability

• Environmental Permits In Place

• Notify the ISO when constraints arise

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Generator Planning (continued)

• Monitor heat tracing

• Consider increased staffing during severe weather

• Develop plant-specific operating plans

• Wind barriers to protect instrument cabinets & sensing lines

These recommendations are consistent with NERC’s Winter Preparedness Guidance – These are things all generators can do to get ready for severe weather.

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Further Resources

• The industry has reached a level of understanding of winter operations that prepares us for what may happen

• NERC.COM – Report on February 1-5, 2011 Southwest Cold Weather – Lessons Learned -Southwest Cold Weather Event – Polar Vortex Review – Previous Cold Weather Event Analysis – Reliability Guideline: Generating Unit Winter Weather Readiness – NERC Cold Weather Training Packet Refresher

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WINTER RELIABILITY SOLUTIONS Stephen George

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Winter Reliability Solutions 2017/2018

Winter Reliability Solutions program is: • Documented in Market Rule 1, Appendix K • Appendix K is unchanged from last winter • Current program effective through 3/15/2018 • Bridge to Pay for Performance

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Winter Reliability Solutions Program Services

The program is made up of 4 services:

1) Oil Fuel Service 2) Liquefied Natural Gas Service 3) Dual Fuel Commissioning Service 4) Demand Response Service

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Winter Reliability Solutions Eligibility Requirements For Oil & LNG Service

• Participating Generator Assets must: – Be located in New England – Be modeled in the EMS – Be dispatchable per OP-14 or Self-Scheduled for the entire winter

period – offer into the Day-Ahead and Real-Time Energy Markets at EcoMax for

each hour of the Operating Day during the obligation period

• Participants may not sell the fuel (or fuel rights) during the obligation period

• Generator Assets must have notified ISO of intent to participate by October 1

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Winter Reliability Solutions Oil Fuel Service

Purpose

• Incent oil-fired Generator Assets to secure a fuel supply as of December 1 and to provide compensation to mitigate a portion of the costs related to unused fuel at the end of winter

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Winter Reliability Solutions Oil Fuel Service

• Generators with a shared fuel supply must participate in aggregate – Inventory of all shared fuel tanks will be aggregated

• Tanks OOS for the winter period may be excluded

• Generators OOS for the winter period may be excluded

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Winter Reliability Solutions Oil Fuel Service

• Generator Assets will report inventory levels on December 1, January 1, February 1, March 1, and March 15

• ISO will assess December 1 inventory for eligibility – Minimum eligible inventory is lesser of 85% of usable fuel storage

capability or supply needed for 10 days continuous operation at WSCC – Maximum eligible inventory is lesser of 95% of usable fuel storage

capability or supply needed for 10 days continuous operation at WSCC

• Oil burned from November 15 will be credited to December 1 level

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Winter Reliability Solutions Oil Fuel Service Compensation

• Formula for compensation = (Eligible Inventory * Set Rate) * Performance Adjustment

• Eligible Inventory is the lesser of:

• Actual December 1 Inventory • Maximum December 1 Inventory (95%/10 days) • March 15 Inventory (less oil added after Feb 1 that is sold before

Nov 30 2018)

• Performance adjustment is the percentage of winter hours where the asset is fully or partially available or unavailable due to a transmission outage

• Set Rate is $10.33/Barrel

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Winter Program Payment Rate Reference: https://www.iso-ne.com/markets-operations/markets/winter-program-payment-rate

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Winter Reliability Solutions Liquefied Natural Gas Service

Purpose

• Incent gas-fired Generator Assets to secure a fuel supply from an LNG provider as of December 1 and to provide compensation to mitigate a portion of the costs related to unused fuel at the end of winter

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Winter Reliability Solutions LNG Service Contracts

• Proposed contract submitted to ISO by October 1

• Specify parties , volume and commitment to meet Appendix K requirements

• ISO provisionally accepts up to 6 BCF on a first come/first served basis

• Assets would be notified of acceptance by October 15

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Winter Reliability Solutions LNG Service Contracts

• Finalized contracts submitted to ISO by December 1 specifying

• Take or pay construct

• Volume and ability to call entire volume between December 1 and February 28

• Delivery point , gas meter number and pipeline transport

• Failure to meet all of these results in ISO acceptance withdrawal

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Winter Reliability Solutions LNG Service Measurement

• Remaining available volume must be reported to ISO Customer Service on the first of December, January, February, March and as otherwise requested.

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Winter Reliability Solutions LNG Service Compensation

• Formula for compensation = (Unused Quantity* Set Rate) * Performance Adjustment

• Unused Quantity is the lesser of December 1 and March 1 contract

volumes capped at amount of fuel need to operate continuously for 4 days at WSCC

• Performance adjustment is the percentage of winter hours where the asset is fully or partially available or unavailable due to a transmission outage

• Set Rate is $1.72/MMBTU

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Winter Reliability Solutions Qualified Inventories*

– Oil Service participation 84 units – 2.848 M Barrels

– LNG participation 0 units

– Actual qualifying inventories will be determined on December 1

*Note that these are preliminary numbers subject to review and revision Source: http://isonewswire.com/updates/2017/10/27/update-on-the-20172018-winter-reliability-program.html

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Shortage Event Triggers Summary

• System wide • 30 or more contiguous minutes of Ten Minute Non Spinning Reserve

constraint pricing • 30 or more contiguous minutes of both Thirty Minute Operating

Reserve constraint pricing and implementation of OP-4 Action 2 (RTDR activation)

• Shortage events are not triggered by deficiencies in Replacement Reserves

• Import Constrained Capacity Zone • For an Import Constrained Capacity Zone (CT, SWCT, NEMA/Boston),

30 or more contiguous minutes of both Local TMOR constraint pricing and OP-4 Action 2 implementation or any OP-7 event that is not declared for the rest of the system

• Under Pay for Performance, effective 6/1/18, a Capacity Scarcity Condition will occur with the first five minute deficiency interval

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Shortage Event Triggers

• Current triggers have been effective since November 3, 2013

• Last Shortage Event occurred on August 11, 2016 based on violation of the TMOR RCPF for over thirty contiguous minutes when Action 2 of OP-4 was implemented for a capacity zone.

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DUAL FUEL TESTING Jim Nichols

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The Asset Registration and Auditing department is available to help. Contact information can be found

at the end of this presentation.

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Auditing of Dual Fuel Resources Background

• Market Rule 1, Section III.1.5.2 – ISO-Initiated Parameter Auditing allows for ISO to initiate audits of

operating parameters and dual fuel capability – Audits for dual fuel capability are announced and scheduled in

advance

• Dual Fuel Audits: – Confirm operational readiness of the Generating Asset on a specific

fuel – Verify the maximum capability on a specific fuel – Verify fuel switching information (switch time, on-line capable)

• ISO has chosen generators to perform dual fuel audits in the fall as part of winter readiness

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• Generators required to audit – Those chosen by ISO as part of winter readiness – Those required to audit annually as part of the Dual Fuel

Commissioning Service (Appendix K)

• Market Rule 1, Appendix K (Dual Fuel Commissioning Service): – Per MR 1.III.K.5, commissioned generators shall audit each year

through 2018 pursuant to Section III.1.5.2 of Market Rule to confirm capability to operate on oil and switch fuels within 8 hours

– Compensation shall not be received for more than one audit per year

Auditing of Dual Fuel Resources Fall 2017

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Auditing of Dual Fuel Resources Fall 2017

• Notifications were sent out in late September for generators requested to audit prior to December 1st

• Notifications included: – Instructions for scheduling an audit – Real time communication needs – Guidance for supply offers – Demonstration requirements

• Fuel or fuels on which generator must operate (typically start on gas, swap to oil and run 1 hour at EcoMax)

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Auditing of Dual Fuel Resources Scheduling the Audit

• Requests must be made via a CROW application with a follow-up call to the Short Term Outage Group no later than 9AM on the business day prior to the test

• CROW application – Must clearly indicate Dual Fuel Audit

• State that it is a Dual Fuel Audit in External Comments • Outages Cause Code = “615-Dual Fuel Audit Request” • Outage Priority = “Owner Testing”

– A test plan must be included with the application – Requests are subject to approval

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Auditing of Dual Fuel Resources Communications

• The generator’s Designated Entity must notify the ISO control room in real time of the following actions/times (as applicable): – Test Start – Fuel Swap Start – Stable on Oil at ECOMIN (End of Fuel Swap) – Completed 1 Hour at Max Output – Test Completion

• Notify the ISO NE control room of any changes to the auditing schedule ASAP and please realize that a generator may be dispatched up or down if system security conditions warrant or an emergency situation occurs.

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Auditing of Dual Fuel Resources

• A demonstration that meets the audit requirements may be submitted for consideration if the generator was otherwise committed without previously scheduling the testing – The generator would not be eligible for back-dated NCPC

compensation

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Auditing of Dual Fuel Resources Compensation/Offers

• Resources will be compensated through real time NCPC pursuant to Market Rule 1, Section III.F.3.2.1

• Offers – For the Real time Market, hourly offers in eMarket should reflect the fuel

and fuel blend percentages appropriately – Any supply offers made in the Day Ahead Market should reflect the

primary fuel

• A Market Rule revision took affect last fall allowing Day-Ahead committed generation to be eligible for real time NCPC for dual fuel audits.

• Failure to provide timely notification, a clear indication of the purpose of the test, and other required information including supply offers as described above may jeopardize proper compensation.

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Auditing of Dual Fuel Resources Results

• If audit was not successful: – Generator may be required to audit again – Provide a plan with actions and timelines to resolve issues – May elect to remove dual fuel capability from NX-12

• Generators commissioned via Dual Fuel Commissioning Service : – Subject to pay back of compensation as described in MR 1.III.K.5(g)

Failure to Meet Obligations

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DEMAND RESPONSE SERVICE Chad Nelson

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Review

• On September 11, 2015 FERC approved the NEPOOL proposal for a Winter Reliability Program for the next three winter seasons (2015-2018)

• The DR opportunity is essentially identical to 2016-17 program, with a slightly higher payment rate for 2017-18

• Payment rate is determined annually and posted by July 15

• The Winter Reliability program is Appendix K of Market Rule 1, linked Here.

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Notice (deadline passed for 2017-18)

• Notice of Participation for each season is required by October 1 preceding the relevant season

• Notice includes: – Asset Name & Address or aggregation details – Electrical Location (p-node or dispatch zone for aggregations) – MW Quantity of demand reduction and any net supply – Methodology for load reduction/net supply – If details are not known on Oct. 1, a minimum of the MW, dispatch

zone, and how requirements will be met is required

• ISO may reject a registration based on deliverability or other grounds

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Eligibility and Operational Parameters

• Real-time Demand Response Assets with a demand response baseline reflecting load at the Retail Delivery Point – can have behind the meter generation capable of producing net

supply, so long as normal operation reflects load

• Not required to be part of a capacity resource – If part of capacity resource, performance must be incremental to CSO

• Available for dispatch 0500-2300 every day from December through February – minimum 100 kW, aggregations allowed within dispatch zone – performance cannot be from the incremental use of natural gas – able to respond to dispatch Instructions within 30 minutes

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• Must have a DDE, baseline built and ready to respond by December 1 – 5 minute metering at the Retail Delivery Point and at DG output

• Maximum 30 dispatches/season – Maximum 6 hours/dispatch – Maximum 2 dispatch/day with at least 4 hours in between

dispatches

• Dispatched in advance of or concurrent to OP4

• Metering for assets not mapped to capacity resources: – 5 minute interval meter data due within 2.5 days of operating day – Delivered via the Demand Response Market User Interface

(DRMUI)

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Operational Parameters (Cont.)

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Weekly Capacity Forecast

• In addition to existing forecasting requirements for all FCM RTDR Resources, ISO requires a weekly forecast of – each asset’s estimated availability for the peak hour each week – incremental availability for an FCM resource with winter program

asset(s) mapped post winter program dispatch

• The form is provided by ISO to participating DDE’s

• Due by the first business day of each week December through February

• Any updates are also requested if local conditions change

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Sample: Winter Dema nd Response Reliability Program

Estimated Availability

OPERATING WEEK BEGIN :

Demand Designated Entity: A acme, Inc.

Asset / Resource ID

Winter Obligation MW

Asset Forecast Availability

Winter Program MW Peak Hour

Resource Forecast Incremental *

Availability OP 4 Action 2

MW Peak Hour

Asset 1 2.5

Asset 2 1.5

Resource A

Asset 3 10.0

* This i s the estimated additional MW available for an OP4 dispatch after a Winter Reliability event has

been called.

Sample dispatch instruction is as follows: “This is ISO New England (Insert Name), we are manually

dispatching Asset ID xxxx, yyyy and zzzzz under the “Winter Reliability Program”. The ISO New

England Operator receives a repeat back and then acknowledge if the repeat back is correct to complete

the three part communication. The return to service should use the same t hree part communication

process.

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Dispatch Instructions

• Dispatch is from ISO control room to DDE via recorded voice line using standard three part communication

• Three-part dispatch instruction: ”This is ISO New England (Insert Name), we are manually

dispatching Asset ID’s xxxxx, yyyyy, and zzzzz under the “Winter Reliability Program”.

– The ISO New England Operator receives a repeat back then – acknowledge if the repeat back is correct to complete the

three part communication

• The return to service should use the same three part communication process

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Auditing

• Audits are required in the event that there are no dispatches to establish performance levels

• If the participating winter asset is participating in the FCM as part of an RTDR Resource, the dispatch of the associated FCM Resource is also effectively an audit of the mapped winter program assets – this could be an OP4 based dispatch or a seasonal audit – Note that there is no separate dispatch of the Winter Program assets

when the associated FCM Resource is audited – DDE’s must know to dispatch both

– any simultaneous FCM/winter dispatch periods are used to determine the ‘Performance Factor’, which may reduce program payments if performance is not incremental to FCM obligations

• If the participating winter asset is not mapped to an RTDR Resource, auditing will be used to establish performance in the absence of sufficient dispatch intervals

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• Monthly payment Rate for 2017-18 is $1,033 per MW-month for each of the three months per season – Payment rates for each winter season posted by the prior July 15 on ISO

website (latest is here.)

• Monthly payment is forfeit if performance is under 75% of commitment

• Energy payment rate is higher of ($250 or real time zonal LMP) times 1.065 per MWh – 1.065 factor applies only to the demand reduction portion of MWh

Delivered and not to the net supply portion

• Energy payments are reduced by: – payments to generators located behind the same retail delivery point – transitional demand response payments – energy payments from FCM dispatch or audit

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Program Compensation

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Settlement Timing

• Initial Winter Program monthly payments are made one month after normal FCM settlement – The costs are collected in the month following the delivery month – The payments are made the month after that

• Resettlement of the monthly payments is not delayed from FCM settlement timeline

• Winter Program initial energy based payments also occur on a 1 month delay, for the same reason (costs must be received prior to being paid)

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OP-21 ACTIONS DURING AND ENERGY EMERGENCY John Norden

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Response to Abnormal and Emergency Conditions Involving Energy

• Assess Severity of Issues on Region within NPCC and New England as well as Gas Pipeline Operations and Liquid Fuels

• In order of severity implement the following: – Dispatch additional resources in economic order to replace any

generation curtailed or expected to be curtailed as a result of the loss – Implement MLCC-2 Abnormal Conditions Alert – Implement OP-4 Action During a Capacity Deficiency – Implement OP-7 Action in Emergency – Implement OP-21 Action During an Energy Emergency

• This implementation includes actions of OP-4 and up to and including firm load-shedding under OP-7 Action in Emergency

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OP-4 Overview Action During a Capacity Deficiency

• Implemented when: – The resources available to the New England Reliability Coordinator Area/ Balancing

Authority Area (RCA/BAA) outside of OP-4 are insufficient to meet the anticipated load plus Operating Reserve Requirements. It will not be utilized to maintain Replacement Reserve Requirements.

– One or more contingencies have occurred resulting in an immediate deficiency in the New England RCA/BAA available capacity resources required to meet the load plus Operating Reserve Requirements.

– Transmission facilities into a sub area of the New England RCA/BAA are loaded beyond established transfer capabilities.

– A sub area of the New England RCA/BAA is experiencing abnormal voltage and/or reactive conditions.

– The need to implement manual load shedding as required by ISO New England Operating Procedure No. 7 - Action in an Emergency (OP-7) is imminent but load shedding may be avoided, or reduced in magnitude, by application of this procedure.

– Another Northeast Power Coordinating Council (NPCC) RCA/BAA, or a remote system or pool, is experiencing a capacity deficiency and has requested assistance from ISO, which, if provided, will reduce the New England RCA/BAA actual Operating Reserve below the required levels.

– Any other serious threat to the integrity of the Bulk Electric System (BES) for which ISO determines that this procedure will mitigate the impact.

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OP-7 Action in an Emergency

• Implemented when: – Experiencing an acute Operating Emergency involving unusually low

frequency, equipment overload, capacity or energy deficiency, unacceptable voltage levels, or any other emergency that ISO deems appropriate in an isolated or widespread area of New England.

– The objectives in establishing these emergency actions are: 1) To protect reliable operation of the Eastern Interconnection. 2) To restore balance between customers' load and available generation in

the shortest practicable time. 3) To minimize risk of damage to equipment. 4) To minimize interruption of customer service.

– Actions involve the ability of the ISO New England Control Room to order the New England Local Control Centers to disconnect up to 50% of the firm load in New England within 10 minutes of the order • This procedure is tested and practiced monthly

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OP-21 Action During an Energy Emergency

• Potential Initiating Conditions Any of the conditions listed below or a combination of these conditions can lead to an Energy Emergency Condition: – One or more pipeline Operational Flow Orders (OFOs) have been declared – Significant reductions of generation resource capability due to natural gas related

issues – Weather forecast for a extended period of cold or hot weather – Fuel delivery to a significant number of fossil fuel-fired generating resources is, or

may be impaired – Prolonged drought – Adverse weather conditions within the Gulf of Mexico, Western Canada, or

regional shale gas basins – Abnormal conditions at regional LNG import, satellite storage, or LNG trucking

facilities – Extreme cold weather conditions in Ontario, New Brunswick and Quebec – Extreme storm conditions off shore in the Maritimes – Any viable threat to one or more of the pipelines or LDCs supplying New England – Any other serious threat to the integrity of the BES for which ISO determines that

this procedure may mitigate the impact.

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OP-21 Action During an Energy Emergency

• When analysis indicates that an Energy Emergency Condition should be implemented, the ISO will perform the following: – Promptly alert the LCCs and MPs, Federal and State Governments . – Alert the surrounding Reliability Coordinators (RCs) and coordinate with

these Reliability Coordinator Areas (RCAs) – Request that each dual-fuel Generator, that is scheduled to operate,

voluntarily switch to operation on the fuel source that is not in short supply.

– Implement specific capacity and load relief measures available through Actions of OP-4, excluding requesting New England Governor’s to reinforce appeals for voluntary load curtailment.

– Implement a New England Governor’s appeal in accordance with OP-4: Request New England State Governors to reinforce appeals for voluntary electrical load curtailment and the declaration of a Power Warning.

– Under extreme conditions, ISO will seek reliability relief through load shedding actions available through implementation of OP-7.

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REVIEW OF OP-21 FUEL SURVEY PROCESS Josh Lenzen

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OP-21 Appendix A Generator Fuel Inventory Survey

• Purpose of Generator Fuel Inventory Survey – Current Inventory of fuel reserves within the region – Assess available and maximum volumes of fuel

• Data Collection and Evaluations: – ISO distributes OP-21 Appendix A to LMPs of oil and coal-

fired generators

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OP-21 Appendix A Generator Fuel Inventory Survey

• Frequency: – Monthly during normal conditions – Fuel surveys will be distributed more frequently during Energy

Emergency conditions (as frequent as daily if needed)

• Responsibilities: – Lead Market Participant:

- Complete periodic fuel surveys accurately and return to the ISO as soon as possible - Communicate to the ISO (Must be through the DE):

- Any anticipated or actual reductions in Generator availability, including but not limited to the ability to procure fuel for the Operating Day

- Any knowledge of changes to real-time fuel deliverability

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SUMMARY, CONTACT INFO & QUESTIONS

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Contact Information

• John Norden Phone: 413-535-4353 Email: jnorden@iso-ne.com

• Mike Knowland Phone: 413-540-4525 Email: tknowland@iso-ne.com

• Stephen George Phone: 860-683-3299 Email: sgeorge@iso-ne.com

• Josh Lenzen Phone: 860-683-3288 Email: jlenzen@iso-ne.com

• Jim Nichols Phone: 413-540-4678 Email: jnichols@iso-ne.com

• Chad Nelson Phone: 413-540-4508 Email: cnelson@iso-ne.com

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Customer Support

• Ask ISO – Self-service interface for submitting inquires – Accessible through the SMD Applications Homepage – Requires a valid digital certificate with the role of Ask ISO/External User – Contact your Security Administrator for assistance

• Phone: 413-540-4220 – Monday through Friday, 7:30 A.M. to 5:30 P.M. Eastern Time – Recorded/monitored conversations

• Email: custserv@iso-ne.com

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ISO Website References

Rules and Procedures Transmission, Markets & Services Tariff

• Section III of Market Rule 1 » Section III.1.5.2 (ISO-Initiated Parameter Auditing) » Appendix K.5 (Winter Reliability Solutions – Dual Fuel Commissioning Service)

This Webinar will be posted on iso-ne.com, under ISO Training Materials: https://www.iso-ne.com/participate/training/materials/?key-topic=System Operations Training

www.iso-ne.com

ISO-NE PUBLIC

• Subscribe to the ISO Newswire – ISO Newswire is your source for regular news

about ISO New England and the wholesale electricity industry within the six-state region

• Log on to ISO Express – ISO Express provides real-time data on New

England’s wholesale electricity markets and power system operations

• Follow the ISO on Twitter – @isonewengland

• Download the ISO to Go App – ISO to Go is a free mobile application that puts

real-time wholesale electricity pricing and power grid information in the palm of your hand

For More Information…

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Follow Up to Questions from Today’s Webinar

Please see below for items related to questions from today’s webinar:

Question: What is the definition of Capacity Scarcity Condition definition under Pay for Performance (PFP), from Section III.13.7.2.1, effective 6/1/18:

Answer: A Capacity Scarcity Condition shall exist in a Capacity Zone for any five-minute interval in which the Real-Time Reserve Clearing Price for that entire Capacity Zone is set based on the Reserve Constraint Penalty Factor pricing for:

(i)the minimum Thirty-Minute Operating Reserve requirement sub-category of the system-wide Thirty-Minute Operating Reserves requirement; (ii) the system-wide Ten-Minute Non-Spinning Reserve requirement; or (iii) the local Thirty-Minute Operating Reserve requirement,

each as described in Section III.2.7A(c); provided, however, that a Capacity Scarcity Condition shall not exist if the Reserve Constraint Penalty Factor pricing results only because of resource ramping limitations that are not binding on the energy dispatch.

Note: Additional Pay For Performance related information can be found here: https://www.iso-ne.com/committees/key-projects/fcm-performance-incentives

Question: Where is Real-Time price information posted?

Answer: https://www.iso-ne.com/isoexpress/