FAP Agenda Number 3.a. - cap-az.com FAP... · MEETING DATE: May 19, 2011 ... Committee present the...

FAP Agenda Number 3.a. CONTACT: Gary Ijams Tom McCann (623) 869-2362 (623) 869-2343 [email protected] [email protected] MEETING DATE: May 19, 2011 AGENDA ITEM: Consideration of Action to Recommend that the Board Approve a

Balancing Authority Agreement (Operating Agreement) between Western Area Power Administration and CAWCD

RECOMMENDATION: Staff recommends that the Finance Audit and Power Committee present the Operating Agreement (Balancing Authority) with Western Area Power Administration for Board approval at the June 2, 2011, Board Meeting.

FINANCIAL IMPLICATIONS:

Impact on Budget:

Budget Budget Year

Funds Requested

Funds Included in the Budget

(Over) / Under Budget

2011 $150,000 $407,056* $257,056 * Includes implementation fee and 3 months of services (Oct, Nov and Dec)

Additional spending authority requested: $0

Impact on Reserves: None Impact on Rates: None

RELEVANT POLICY, STATUTE OR GUIDING PRINCIPLE: Board of Directors 2010 CAWCD Strategic Plan Migrate to post-2011 power regime.

PREVIOUS BOARD ACTION/ACTIVITY: June 16, 2004 4 Party Agreement & Navajo Marketing Plan discussion April 21, 2005 Continued discussion for Navajo Power Marketing Plan October 19, 2006 Discussion of Post-2011 strategy January 18, 2007 Continued discussion of Post-2011 strategy October 23, 2008 Discussion of Post-2011 Issues March 19, 2009 Continued discussion of Post-2011 Issues June 25, 2009 Discussion of Post-2011 Issues & Progress in selection of

energy scheduling agent and balancing authority October 1, 2009 Update on selection of energy scheduling agent &

balancing authority providers for Post-2011 operations October 22, 2009 Brief recommending selection of AEPCo as electricity

scheduling agent and Western as balancing authority January 21, 2010 Update on negotiations of scheduling agent & balancing

authority agreements September 23, 2010 Discussion of supplemental material about balancing

authority February 17, 2011 Discussion of term sheet for balancing authority services ISSUE SUMMARY/DESCRIPTION: Today, electricity scheduling and balancing authority activities for CAP loads and resources are provided by Salt River Project pursuant to the terms of the Four-Party Agreement. The Four-Party Agreement terminates on September 30, 2011. In the summer of 2009, CAWCD began a purchasing process to replace these services, which are universally required by the electric industry. In October 2009, Staff recommended continuing the process to replace these services by working with Arizona Electric Power Cooperative (AEPCo) for electricity scheduling services and Western Area Power Administration (Western) for balancing authority services. Today, Staff is presenting an Operating Agreement (Balancing Authority) with Western for consideration. With this Agreement, CAWCD will be prepared to fulfill its responsibilities for balancing authority services for CAP loads and CAWCD electricity transactions in the electricity market. A balancing authority (formerly referred to as a control area) is an entity that maintains scheduled power interchanges between other balancing authority areas and makes sure all operators within its defined area match their loads to resources. In CAWCD's case, AEPCo, as CAWCD's scheduling agent beginning October 1, 2011, provides and accounts for the energy necessary to match CAP's loads and resources, such that the amount of energy being consumed within the balancing authority is always equal to the amount of energy that CAWCD is putting into the balancing authority. The balancing authority must establish and maintain metering of CAP loads and telemetry (real-time communication between CAWCD, the scheduling agent and the balancing authority). The balancing authority must also deal with system emergencies in accordance with procedures developed in conjunction with CAWCD.

Southwest Transmission Cooperative operates a smaller control area within Western's balancing authority area. Meters for CAP pump loads will be located within Southwest's control area, and AEPCo, as CAWCD's scheduling agent, will insure that sufficient generation resources are provided to Southwest to match CAP's pump loads, which will also keep Western's balancing authority whole. Thus, CAWCD's Operating Agreement (balancing authority services) with Western will principally address metering, telemetry, ancillary services and system emergency procedures. SUGGESTED MOTION: I move that the Finance, Audit and Power Committee recommend that the Board approve the Operating Agreement (Balancing Authority) with Western Area Power Administration and authorize the President of the Board of Directors to sign the Operating Agreement (Balancing Authority) in substantially the form in which it was presented today.

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AGREEMENT NO. 11-DSR-12251

BETWEEN

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION DESERT SOUTHWEST REGION

Parker-Davis Project

AND

CENTRAL ARIZONA WATER CONSERVATION DISTRICT

FOR

OPERATING AGREEMENT

Table of Contents Section Title Page No.(not final) 1 Preamble ............................................................................................... 1 2 Explanatory Recitals ............................................................................. 2 3 Agreement ............................................................................................. 3 4 Term of Agreement .............................................................................. 3 5 Definitions ............................................................................................ 3 6 Compensation ...................................................................................... 4 7 Operation of Contractor’s Loads …………………….. ....................... 4 8 Communication Requirements ............................................................. 5 9 Ancillary Services ................................................................................ 6 10 Schedule of Rates ................................................................................. 7 11 Transmission Loss Scheduling ............................................................. 7 12 Load Shedding, Restoration and Pump Operation ............................... 7 13 Outage Coordination and Continuity of Service ................................... 7 14 Resource Provisions …………………………………………………. 8 15 NERC/WECC Responsibilities ............................................................. 9 16 Notices ................................................................................................. 9 17 Existing Agreements Preserved ............................................................ 10 18 No Third Party Rights ........................................................................... 10 19 Authorized Representatives …………………………………………. 10 20 Exhibits ……………………………………………………………… 11 21 Amendments and Modifications …………………………………… .. 11 22 Default................................................................................................... 11 23 General Power Contract Provisions …………………………………. 11 24 Authority to Execute ………………………………………………… 11 Signature Clause ........................................................................................................ 12 Exhibit A, Contractor Loads Exhibit B, Ancillary Services Exhibit C, Transmission Loss Scheduling Exhibit D Load Shedding, Restoration and Pump Operation Exhibit E, Regulation, Ramping and Reserves DSW Ancillary Services Rate Schedules General Power Contract Provisions

FAP Agenda Number 3.a.Attachment.

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AGREEMENT NO. 11-DSR-12251

BETWEEN

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION DESERT SOUTHWEST REGION

Parker-Davis Project

AND

CENTRAL ARIZONA WATER CONSERVATION DISTRICT

FOR

OPERATING AGREEMENT

1. PREAMBLE: This Operating Agreement, hereinafter called Agreement, is made this

day of , 2010, pursuant to the Acts of Congress approved

June 17, 1902 (32 Stat. 388, 43 U.S.C. 391); December 21, 1928 (45 Stat. 1057);

August 4, 1939 (53 Stat. 1187); July 19, 1940 (54 Stat. 774); May 28, 1954

(68 Stat. 143); April 11, 1956 (70 Stat. 105); September 2, 1958 (72 Stat. 1726);

September 30, 1968 (82 Stat. 885); August 4, 1977 (91 Stat. 565); and Acts amendatory

or supplementary to the foregoing Acts; between the United States of America,

Department of Energy, acting by and through the Administrator, WESTERN AREA

POWER ADMINISTRATION, represented by the officer executing this Agreement or a

duly appointed successor, hereinafter called Western; and CENTRAL ARIZONA

WATER CONSERVATION DISTRICT, a municipal corporation organized and

existing under and by virtue of the laws of the State of Arizona, hereinafter called

Contractor, its successors and assigns; each sometimes individually called Party and

collectively called Parties.

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2. EXPLANATORY RECITALS:

2.1 Western is engaged in the marketing and transmission of electric power and

operates the Western Area Lower Colorado (WALC) Balancing Authority (BA)

in the Desert Southwest Region

2.2 The Contractor is the operating agent for the Central Arizona Project (CAP)

which is connected to and is supplied power through Western’s transmission

system.

2.3 Western and Contractor are parties to a contract for the operations and

maintenance of facilities of the Central Arizona Project Transmission System.

2.4 Western and the Arizona Power Authority (APA) are parties to a contract for

power deliveries from the Boulder Canyon Project Contract

No. DE-MS65-86WP39574 (BCP Contract), Implementation Agreement

No. 95-PAO-10616, and Metering Scheduling Instructions.

2.5 The Contractor is party to a contract with the APA to receive an allocation of

power from Boulder Canyon Project (BCP).

2.6 Pursuant to Western agreement number 06-DSR-11688, Western provides

Balancing Authority and Ancillary Services to the Southwest Transmission

Cooperative Inc. (SWTC).

2.7 Contractor has requested to become part of SWTC’s Metered Sub-system within

the WALC BA, with Contractor self-providing Regulation, Energy Imbalance,

and Operating Reserves.

2.8 Arizona Electric Power Cooperative (AEPCO) is currently the scheduling agent

for the Contractor and will schedule capacity and energy to the Contractor’s loads

within the WALC BA.

2.9 The Contractor and Western are both members of the Western Electricity

Coordinating Council and both are subject to reliability standards and audit

requirements of the North American Electric Reliability Corporation.

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2.10 The Parties now desire to enter into this agreement to document certain

responsibilities of the Parties with respect to operation of the CAP facilities within

the WALC BA.

3. AGREEMENT: The Parties hereby agree to the terms and conditions set forth herein.

4. TERM OF AGREEMENT: This Agreement shall become effective October 1, 2011,

and shall remain in effect until the earlier of: (1) one hundred eighty (180) days from

receipt of advance written termination notice by either Party to the other Party, provided,

that no such termination shall become effective until all outstanding funding obligations

reasonably attributable to work performed and costs incurred by Western or Western's

subcontractors have been satisfied; or (2) transfer of Contractor’s metered loads out of

SWTC’s metered sub-system or out of Western’s Balancing Authority; or (3) upon

termination of Western contract number 06-DSR-11688 between Western and SWTC; or

(4) October 31, 2030.

5. DEFINITIONS: For purposes of this Agreement, capitalized terms defined in this

Section shall have the meaning set forth below whether used in the singular or plural:

5.1 Automatic Generation Control (AGC): Equipment that automatically adjusts a

Balancing Authority’s generation to maintain its interchange schedule.

5.2 Balancing Authority: A Balancing Authority is an electric system or systems,

bound by interconnection metering and telemetry, to which a common AGC

scheme is applied in order to: (i) match, at all times, the power output of the

generators within the Balancing Authority and energy and capacity imported from

resources outside the Balancing Authority with the load within the Balancing

Authority and exports from the Balancing Authority; (ii) maintain scheduled

interchange of energy and capacity with other balancing authorities, in accordance

with WECC control performance criteria and scheduling guidelines; (iii) maintain

the frequency of the WECC interconnection within reasonable limits in

accordance with WECC guidelines; and (iv) provide sufficient generating

capacity to maintain operating reserves in accordance with WECC requirements.

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5.3 FERC: The Federal Energy Regulatory Commission, or successor(s).

5.4 Metered Subsystem: A subsystem within a Balancing Authority that balances its

resources and loads through generation, capacity, and energy schedules and is

defined by meters that measure net energy transfers between its electric system

and that of others. The Contractor’s Metered Subsystem shall be as set forth in

Exhibit A hereto.

5.5 NERC: The North American Electric Reliability Council, or successor(s).

5.6 SCADA: Supervisory Control and Data Acquisition.

5.7 SRSG: The Southwest Reserve Sharing Group, or successor(s).

5.8 WALC: The Western Area Lower Colorado Balancing Authority, which is a

Balancing Authority operated by Western. WALC includes portions of Arizona,

California, Colorado, Nevada, New Mexico, and Utah.

5.9 WECC: The Western Electricity Coordinating Council, or successor

organization(s).

6. COMPENSATION: Where applicable, compensation, billing, and payment, for

services provided to the Contractor shall be set forth in an Exhibit.

7. OPERATION OF CONTRACTOR’S LOADS:

7.1 Western, as operator of the WALC BA, subscribes to the operating standards of

NERC and WECC, in addition to Western's own standards. The Contractor

agrees and shall be obligated to meet the operating standards and requirements of

NERC, WECC, SRSG, and FERC applicable to the Contractor, as these standards

and requirements may be modified from time to time.

7.2 Operating procedures for balancing and scheduling of CAP loads and resources

will be set forth in Metering, Operating, and Scheduling Instructions (MOSI) as

agreed to in SWTC Agreement No. 06-DSR-11688 by SWTC and Western.

Other operating procedures for the physical and safe operation of the

interconnection equipment between the Contractor and Western may be provided

by Western as the Transmission Operator.

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7.3 In the event costs are incurred by Western for modifications to control and/or

accounting equipment solely for the benefit of the Contractor, or as needed as a

result of NERC or WECC Standard changes to the Contractor's interconnection

control and/or accounting equipment, the Contractor is responsible for all

documented costs invoiced to Contractor.

7.4 Energy generated and/or wheeled as well as schedules into, through, within, or

from the WALC BA will be scheduled and dispatched by WALC.

7.5 At the points of interconnection with the Contractor's loads, each Contractor load

shall be measured with meters of revenue quality and which are capable of remote

interrogation, as determined by Western and as set forth in Exhibit A.

7.6 It is the Contractor’s responsibility to effectuate agreement(s) with any third party

or parties, which may be necessary to enable the Contractor to utilize the load

connections hereunder.

7.7 The Contractor shall notify Western in advance of changes to the Contractor

Loads as described in Exhibit and provide any additional metering required in

accordance with subsection 7.4 herein.

7.8 Each Party shall advise its personnel of the extent of their responsibility and

authority under this Agreement.

8. COMMUNICATION REQUIREMENTS:

8.1 The Contractor shall provide dedicated communication links or other

communications facilities to Contractor’s loads, which are reasonably requested

by WALC to facilitate automatic data transfers and allow the WALC BA to be

operated in accordance with WECC and NERC policies and guidelines. The

Contractor shall be responsible at their sole expense for communications costs

incurred to maintain current and future NERC/WECC compliance.

8.2 Telemetered data from meters at points of interconnection(s) shall be made

available to the Party requesting the interconnection data at the Party’s sole

expense. WALC, as Balancing Authority, shall be the sole judge in determining

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what telemetered data is required to meet operational requirements including but

not limited to back-up metering and generation within the Contractor’s loads.

Communication channels for telemetered data may be exchanged between the

Parties; however, the party requesting the connection(s) shall be obligated to

furnish communication channels for data required by either Party from the

connection(s).

9. ANCILLARY SERVICES:

9.1 The Contractor is responsible for obtaining Ancillary Services as identified in

Exhibit B.

9.2 The Contractor may provide for Ancillary Services as identified in Exhibit B by:

(i) self-providing; (ii) purchasing through Western if available; or (iii) purchasing

from a third party verified by Western as capable of providing the Ancillary

Services.

9.3 Western will monitor and evaluate the Contractor’s self provision of Ancillary

Services to determine if adequate Ancillary Services are being provided. With

advance notice to Contractor, evaluations of Contractor’s Ancillary Services will

be performed. Costs to perform evaluations of the Contractor’s Ancillary

Services will be the financial responsibility of the Contractor.

9.4 In the event Western determines the Contractor is unable to provide Ancillary

Services or has provided inadequate Ancillary Services, Western will take the

actions necessary to acquire the deficient Ancillary Services and these costs shall

be passed on to the Contractor.

9.5 The Parties agree that neither Party shall subsidize the other Party’s services, as a

result of this Agreement. If it is found that subsidization is occurring under this

Agreement, the Parties shall develop and implement a method for eliminating

such subsidies.

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9.6 Upon determining subsidization of Ancillaries has occurred, the Contractor will

be assessed for the Ancillaries provided and will be invoiced based upon

Western’s Ancillary Services Rate Schedules then in effect.

10. SCHEDULE OF RATES: Ancillary Services provided by Western, as set forth in

Exhibit B, shall be paid for monthly in accordance with rates, charges, and conditions set

forth in Western’s Ancillary Services Rate Schedules (Rate Schedule), attached hereto as

may be superseded from time to time.

11. TRANSMISSION LOSS SCHEDULING: The Contractor shall be responsible for

electrical losses incurred by Contractor loads as shown in Exhibit C.

12. LOAD SHEDDING, RESTORATION AND PUMP OPERATION: The Parties shall

implement manual and under-frequency load shedding, load restoration and pump

operation programs to maintain the reliability and integrity of the Balancing Authority, as

provided for in Exhibit D.

13. OUTAGE COORDINATION AND CONTINUITY OF SERVICE:

13.1 Contractor recognizes the dispatch authority of Western as the Balancing

Authority and Transmission Operator and agrees to operate CAP facilities in

accordance with Western’s instructions when such operation is necessary for the

reliable and secure operation of the interconnected electric system. Operational

responsibilities performed by Western include, but are not limited to dispatch,

switching, outage coordination, and maintaining standard operating procedures.

13.2 Continuity of Service as defined in the General Power Contract Provisions

(GPCP), dated September 1, 2007, is a high priority for Contractor. In order to

facilitate Continuity of Service, the Parties agree to establish procedures and to

meet quarterly or as mutually agreed, to coordinate scheduled outages with the

other Parties, receive notice of occurrence of operating emergencies, review

occurrences of operating emergencies, and coordinate planned outages for

appropriate transmission facilities operated by WALC, and Contractor load and

generation facilities.

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13.3 Contractor and Western recognize that coordinated or planned outages will be

allowed to clear or de-energize transmission system elements in order to comply

with NERC Standards for maintenance and to adequately maintain the reliability

of the transmission system. Such scheduled maintenance that is required by

NERC Standards may not be unilaterally rejected, denied or unreasonably

shortened in duration, due to inconvenience or added cost to the Contractor or

Western.

14. RESOURCE PROVISIONS

14.1 BCP Capacity and Energy Entitlement

Contractor’s BCP capacity and energy entitlement will be scheduled and

delivered in accordance with the APA's Scheduling Entity Agreement and

Metering and Scheduling Instructions pursuant to Western's BCP Contract.

14.2 Navajo Resource: Navajo Capacity and Energy Entitlements will be delivered in

accordance with the Navajo Project’s Operating Agreements and Procedures.

14.3 Supplemental and Excess Resources: Supplemental and excess resources are

scheduled and delivered according to agreements established with third parties for

such services.

14.4 Total Resources: Total resources delivered must equal the Contractor’s load,

plus net interchanges, plus losses.

14.5 Self Provided Ancillary Services

14.5.1 Western’s Ancillary Service requirement is described in Exhibit B,

“Ancillary Services.”

14.5.2 Contractor’s regulation, ramping and reserve requirements are provided in

Exhibit E, “Regulation, Ramping, and Reserves.”

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15. NERC/WECC RESPONSIBILITIES:

15.1 Contractor is currently registered with NERC and WECC as a Purchasing-Selling

Entity and thereby is subject to Reliability Standard Requirements. Western is

registered with NERC and WECC in several categories and thereby is subject to

Reliability Standard Requirements. Contractor and Western will exchange data as

needed so that Western and Contractor may meet NERC/WECC compliance

reporting requirements. Contractor and Western shall not be responsible for

maintaining compliance evidence on the other party’s behalf with respect to

Reliability Standard Requirements.

15.2 The Parties shall coordinate data as needed for use in reporting net energy for

load in the WALC BA to WECC on an annual basis.

15.3 The Contractor shall be responsible for assessments by WECC based upon

reporting by Western of the Contractor's net energy for load.

16. NOTICES:

16.1 Any notice, demand, or request required or permitted under this Agreement shall

be in writing and shall be deemed properly served, given, or made to the address

of the receiving Party: (i) upon delivery if delivered in person; (ii) upon receipt if

sent by certified mail, return receipt requested; (iii) upon receipt of confirmation

by return electronic facsimile if sent by facsimile; or (iv) upon delivery if

delivered by prepaid commercial courier service, email, or recorded phone line, or

overnight mail service, or prepaid telegram addressed to such Party at the

following addresses.

16.2 To the Contractor: Central Arizona Water Conservation District Attn: General Manager 23636 North 7th Street Phoenix, AZ 85024 Telephone: (623) 869-2333 Facsimile: (623) 869-2211

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16.3 To Western:

Regular Mail Overnight Delivery Department of Energy Department of Energy Western Area Power Administration Western Area Power Administration Desert Southwest Region Desert Southwest Region Attention: G6000 Attention: G6000 P.O. Box 6457 615 South 43rd Avenue Phoenix, AZ 85005-6457 Phoenix, AZ 85009 Telephone: (602) 605-2525 Facsimile: (602) 605-2490

16.4 Either Party may at any time, by notice to the other Party in the manner set forth

above, change the designation, address, or fax number of the person specified to

receive notice on its behalf.

16.5 Despite the requirements of this Section, where any provision of this Agreement

requires a Party to furnish any particular data, information, or notice in a specific

manner or within a specific time period, such provision shall control.

17. EXISTING AGREEMENTS PRESERVED: Nothing in this Agreement shall be

interpreted to supersede the requirements of any existing agreement unless otherwise

expressly stated herein.

18. NO THIRD PARTY RIGHTS: Except as otherwise specifically provided in this

Agreement, the Parties do not intend to create rights in, or to grant remedies to, any third

party as a beneficiary of this Agreement or of any duty, covenant, obligation, or

undertaking established herein.

19. AUTHORIZED REPRESENTATIVES: Each Party shall, by written notice to the

other Party, designate the representative(s) who is authorized to act on its behalf with

respect to those matters contained herein which are the functions and responsibilities of

its authorized representative(s). Either Party may change the designation of its

authorized representative(s) upon notice to the other Party.

20. EXHIBITS: The initial exhibits to this Agreement, as they may be amended or revised

from time to time, are attached to this Agreement and are incorporated by reference as if

herein fully set forth. Each exhibit may be terminated upon 90 days advance written

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notice to the other Party and upon retirement of all obligations incurred thereunder prior

to termination under such exhibit. New exhibits may be added in the future, as required,

and shall be made part of this Agreement by mutual written agreement of the Parties.

21. AMENDMENTS AND MODIFICATIONS: This Agreement may not be amended or

modified by either Party except by subsequent mutual written Agreement or amendment

duly executed by the Parties.

22. DEFAULT: The failure of either Party to perform any of its respective obligations under

this Agreement shall constitute a default under this Agreement; provided, however, that

the Party against whom the default is asserted shall not be deemed in default if (1) it

cures the asserted default by rendering the necessary performance within sixty (60) days

following written notice from the other Party, or (2) it is proceeding with reasonable

diligence to cure such default or contest in an appropriate forum and in good faith the

assertion that a default has occurred.

23. GENERAL POWER CONTRACT PROVISIONS: The General Power Contract

Provisions (GPCP), effective September 1, 2007, attached hereto, as they may apply, are

hereby made a part of this Agreement the same as if they had been expressly set forth

herein; provided, that if the provisions in the GPCP are in conflict with this Agreement,

the terms of this Agreement shall control.

24. AUTHORITY TO EXECUTE: Each individual signing this Agreement certifies that

the Party represented has duly authorized such individual to execute this Agreement that

binds and obligates the Party.

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The Parties have caused this Agreement No. 11-DSR-12251 to be executed on the date

first written above. DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION By Darren Buck Title RMR Operations Manager Address Rocky Mountain Region P.O. Box 3700 Loveland, CO 80539-3003 CENTRAL ARIZONA WATER

CONSERVATION DISTRICT By Title Address

Exhibit A Agreement No. 11-DSR-12251

Operating Agreement Central Arizona Water Conservation District

Page 1 of 1

CONTRACTOR LOADS

1. This Exhibit A made this day of , 2011, to be effective under and as a

part of Agreement No. 11-DSR-12251, dated ___________, 2011, hereinafter called

Agreement, shall remain in effect until superseded by another Exhibit A; provided this

Exhibit A or any superseding Exhibit A shall terminate by the termination or expiration

of the Agreement.

2. The point(s) of connection of the Contractor’s Loads are defined by the following

boundaries:

VOLTAGE METER SUBSTATION (KV) NUMBER

Parker (Havasu Pumping Plant) PAD534

Havasu Tap Station Service HAV530

Harcuvar HCR532

Hassayampa HAP528

Waddell RWY930

Spook Hill SPH499

ED-2 ED2191

Saguaro SRG874

Rattlesnake RSK116

RSK117

Del Bac DLB130

3. This Exhibit A to Agreement No. 11-DSR-12251 may be modified in accordance with

Section 20 of this Agreement.

Exhibit B Agreement No. 11-DSR-12251


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ANCILLARY SERVICES 1. This Exhibit B made this day of , 2011, to be effective under and as

a part of Agreement No. 11-DSR-12251, dated ____________, 2011, hereinafter called

Agreement, shall remain in effect until superseded by another Exhibit B; provided this

Exhibit B or any superseding Exhibit B shall terminate by the termination or expiration of

the Agreement.

2. ANCILLARY SERVICES:

2.1 The Contractor must comply with NERC and WECC requirements for

transactions requiring Ancillary Services. The Contractor may obtain the required

Ancillary Services by self-providing, purchasing through Western, or purchasing

from a third party.

2.2 Scheduling, System Control, and Dispatch Service (Scheduling) is the primary

method of communicating interchange scheduling information between

scheduling entities through electronic-tags (e-Tags), as required by NERC and

WECC. Scheduling provides for the movement of energy through, out of, within,

or into WALC and will be provided by Western.

2.2.1 The Rate Schedule for Scheduling is included in the transmission rates

with Western as the Transmission Provider. Currently this rate is

applicable only to e-Tags on schedules for which Western is not the

Transmission Provider.

2.3 Reactive Supply and Voltage Control Service (Reactive Service) maintains the

voltage level on the transmission system and will be provided by Western to the

point(s) of Interconnection. Equipment used to provide voltage support could be

static var support and generating units. The Contractor is responsible for

supporting the NERC required voltage schedule as provided by Western as the

Transmission Operator. The Contractor voltage support obligation extends from

the Contractor’s load to the Western point of Interconnection. The Rate Schedule



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for Reactive Service is applicable to transmission contracts with provisions that

allow for such charges and to Open Access Same-Time Information System

(OASIS) transactions.

2.4 Regulation and Frequency Response Service (Regulation Service) is the

raising or lowering of on-line generation units that are equipped with AGC and

that can change output quickly (MW/minute) to track moment-to-moment

fluctuations in load. In doing so, regulation helps to: (i) maintain interconnection

frequency; (ii) minimize differences between actual and scheduled power flows

between balancing authorities; and (iii) match generation to load within the

WALC BA. This service, which is provided under Contract No. 06-DSR-11688

as part of the SWTC metered sub-system load, utilizes a portion of generation

resources that are spinning as well as AGC and SCADA equipment. The

Contractor has no contract with Western for this service and is responsible for

making the necessary provisions for Regulation and Frequency Response Services

to meet the Contractor’s requirements described in Exhibit E.

2.5 Energy Imbalance Service is the difference between the Contractor’s scheduled

and actual delivery of energy located within WALC and is provided under

Contract No. 06-DSR-11688 as part of the SWTC metered sub-system load. The

Contractor has no contract with Western for this service and is responsible for

maintaining the necessary provisions for Energy Imbalance Service to meet the

Contractor’s requirements as determined by Western.

2.6 Operating Reserves Services are used for contingencies for generation and/or

transmission outages. These services are provided under Contract

No. 06-DSR-11688 as part of the SWTC metered sub-system load. These

services may be available from Western on a short-term basis, but are not

normally available on a long-term basis. The Contractor has no contract with

Western for this service and is responsible for maintaining the necessary



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provisions for Operating Reserve Services to meet the Contractor’s requirements

as determined by Western.

2.6.1 Spinning Reserve Service is provided by unloaded generation that is on-

line, frequency responsive, and fully available within ten (10) minutes.

2.6.2 Supplemental Reserve Service is provided by the following: on-line or

off-line generation, interruptible loads, or schedules that can be fully

available within ten (10) minutes.

2.6.3 Either Party may purchase Operating Reserve Service from the other Party

on a short-term basis as mutually agreed.

3. This Exhibit B to Agreement No. 11-DSR-12251 may be modified in accordance with


Exhibit C Agreement No. 11-DSR-12251


Page 1 of 1

TRANSMISSION LOSS SCHEDULING

1. This Exhibit C made this day of , 2011, to be effective under and as a


Agreement, shall remain in effect until superseded by another Exhibit C; provided this

Exhibit C or any superseding Exhibit C shall terminate by the termination or expiration of

the Agreement.

2. Over the Term, Contractor will be creating and executing hourly power schedules for

energy delivery to CAP Facilities within the WALC BA. Determination of losses and

scheduling return of such losses in the WALC BA occurs pursuant to the following

contracts:

Contract No. 93-PAO-10537, Firm and Non-Firm Transmission Service

between Contractor and Western; and

Contract No. ______, Navajo Project Arrangements among Western Area

Power Administration, United States Bureau of Reclamation and

Contractor (Navajo Agreement).

3. In the event the Navajo Agreement governing this Exhibit C is terminated, Western will

issue a procedure to re-establish the Contractors loss return or loss payment obligation to

Western to be attached to this Exhibit C.

4. This Exhibit C to Agreement No. 11-DSR-12251 may be modified in accordance with


Exhibit D Agreement No. 11-DSR-12251


Page 1 of 4

LOAD SHEDDING, RESTORATION AND PUMP OPERATION

1. This Exhibit D made this day of , 2011, to be effective under and as a


Agreement, shall remain in effect until superseded by another Exhibit D; provided this

Exhibit D or any superseding Exhibit D shall terminate by the termination or expiration

of the Agreement.

2. LOAD SHEDDING AND RESTORATION

2.1 Load Shedding: In order to respond to System Operating Limit violations, to

avoid a System Operation Limit violation, or to return the Power System to a

normal state of operations in accordance with NERC or WECC Standards,

Western shall have the capability to manually shed CAP pump load via SCADA

without notice at Mark Wilmer Pumping Plant, Bouse Hills Pumping Plant, Little

Harquahala Pumping Plant, Hassayampa Pumping Plant and New Waddell

Pumping/Generating Plant. Western will use available means and time to notify

the Contractor’s water operators of the required action, as practicable and as

determined by Western. If operating conditions permit, the Contractor should be

provided the opportunity to select the pumps to be interrupted, unless the

operating condition requires otherwise. Contractor shall comply with such

request and will interrupt the necessary pumps within the time specified by the

Transmission System Operator. Western shall notify the Contractor of the reason

for the load shedding as time permits, and will advise the Contractor or the

Contractor’s Scheduling representative of the expected duration of the

interruption if known.

2. 2 Load Restoration: As soon as practicable following a load shedding event,

Western shall inform Contractor of the timing, location and the amount of

pumping load that can be restored. Contractor will coordinate with Western



Page 2 of 4

during the restoration of CAP pump loads following system emergencies.

2.3 Under-Frequency Load Shedding: Contractor shall, at its own expense,

provide, operate, and maintain in service under-frequency load shedding

equipment. Contractor’s equipment shall be:

(i) compatible and coordinated with Western’s load shedding equipment, and

(ii) set for the amount of load to be shed with frequency trips and tripping

times as coordinated in the regional reliability council.

In the event that Western modifies the load shedding system, the Contractor shall,

at its own expense, make changes to the equipment and setting of such equipment,

as required. The Contractor shall test and inspect the load shedding equipment

within ninety (90) days of taking Network Integration Transmission Service under

the Tariff and at least once each year thereafter, and provide a written report to

the Transmission Provider. The Transmission Provider may request a test of the

load shedding equipment with reasonable notice.

3. PUMP OPERATION: The Contractor shall use best efforts to follow the following

guidelines for CAP operation:

3.1 WALC Standard Ramp - WALC follows the WECC Standard Ramp for

Interchange Schedules and requires normal type e-Tags submitted for approval to

follow the WECC Standard Ramp. Currently the WECC Standard Ramp period

begins at 10 minutes before each hour and ends at 10 minutes after the hour, for a

total ramp duration of 20 minutes (for example, 07:50 to 08:10 hours).

Interchange schedules are ramped linearly across the 20 minute ramp.

3.2 CAP Pump Starts and Stops - Pump starts and stops must occur within the

WECC Standard Ramp period. Significant ramps of CAP Pumps can cause

voltage sag and create a significant Area Control Error for the WALC BA. To

more closely match resources to pump loads, multiple pumps should not be



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started or stopped simultaneously. When pump times permit, CAP will schedule

pump starts at different pumping plants at one hour intervals to ensure staggered

starts. Multiple pump starts (or stops) should be staggered evenly across the ramp

and be at full load (or no load) by the end of the ramp. For example 2 pumps

would be started 10 minutes apart 08:55 and 09:05; 4 pumps would be started

every 5 minutes at 08:53, 08:58, 09:03, and 09:08 (see charts below).

2 Staggered



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4. This Exhibit D to Agreement No. 11-DSR-12251 may be modified in accordance with Section 20 of this Agreement.

4 Staggered

Exhibit E Agreement No. 11-DSR-12251


Page 1 of 2

REGULATION, RAMPING AND RESERVES

1. This Exhibit E made this day of , 2011, to be effective under and as a


Agreement, shall remain in effect until superseded by another Exhibit E; provided this

Exhibit E or any superseding Exhibit E shall terminate by the termination or expiration of

the Agreement.

2. Regulating reserves must be sufficient to respond to the Contractor’s greatest load change

that has a significant probability of re-occurring over time. Based on the Contractor’s

historical load changes, Western’s regulating reserve requirement for the Contractor to

self provide regulation is +/- 50 MW, updating every 2 to 4 seconds, with a minimum

ramp rate of 15 MW/minute.

3. Contingency reserves are required for the loss of a deliverable Contractor resource.

Western’s contingency reserve requirement for the Contractor must meet the

requirements specified in WECC Standard BAL-002-WECC-1, and any subsequent

revisions to the Standard.

4. Western will monitor and evaluate the Contractor’s regulating, ramping, and reserve

requirements to determine if changes are needed to the Ancillary Services that the

Contractor is self providing.

5. If Western determines that a change is needed to the regulating, ramping, or reserve

requirements, an e-mail notice will be provided to Contractor of the change needed. The

change must be implemented by Contractor in a reasonable amount of time as determined

by Western.

Exhibit E Agreement No. 11-DSR-12251


Page 2 of 2

6. If additional regulating reserves are required, Contractor may make firm capacity and/or

energy purchases as directed by Western that sink into WALC. To the extent that

purchases are scheduled for CAP regulation, Contractor’s scheduling entity may be

directed by the WALC System Operator to implement real-time counter sales to alleviate

minimum generation conditions. Purchases to meet regulation requirements must not

exceed sixty (60) days.

7. Contractor’s Agreements enabling CAP to self provide regulation, ramping, and reserves

is attached.

8. This Exhibit E to Agreement No. 11-DSR-12251 may be modified in accordance with


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