Sanctioning Guidelines Carm Phillips Compliance and Dispute Resolution Division Market Assessment...
-
date post
18-Dec-2015 -
Category
Documents
-
view
214 -
download
0
Transcript of Sanctioning Guidelines Carm Phillips Compliance and Dispute Resolution Division Market Assessment...
Sanctioning GuidelinesSanctioning Guidelines
Carm PhillipsCompliance and Dispute ResolutionDivision Market Assessment and Compliance Division
2
Agenda
• Stakeholder Plan Changes• Terms of Reference• Guideline Review• Review Action Items and Next Steps
3
Revised Stakeholder Plan
• Timing– Comments requested by April 20, 2007– One follow up session – Broader audience review with comment period– Timing will be tight for manual baseline,
however, guidelines can be in effect for June 1, 2007 and incorporated into next baseline.
5
Background
• Mandatory and enforceable market rules since market opening – May 2002
• Market rule provide little guidance on establishing penalties for egregious behaviour described in Chapter 3, section 6.6.13.– High Risk or System emergency – Market Suspension– Severe impact to market or reliability– High frequency of breaches or past breaches
6
Transitional Issues
• NERC and NPCC have yet to establish risk factors and severity levels for all requirement of a standard. MACD will use severity level and risk factors when available.
7
Proposed Guidelines
Objectives• Applicable to all market rules• Clear & definitive but flexible• Reasonably aligned with NERC
guidelines• Penalty has relationship to seriousness• Criteria must capture egregious
behaviour
8
Proposed MACD Guidelines
• Method is similar to a number of matrices: WECC, Alberta, NERC, NPCC
• Principles differ but similar to NERC guidelines
9
Process Overview
1. Penalty RangeA. Non-compliance LevelB. Impact LevelC. Adders
2. Base PenaltyA. ImpactB. Time Horizon
3. Final Penalty– Case factors
10
$6K $100K
Process Overview
Non-Compliance LevelImpactLevel
Low
Medium
High
Low
HighLow
Moderate
HighLow
High
HighLow
Severe
HighLow
$2K $10K $2K $13K $3K $15K $5K $25K
$2K $30K $4K $100K $10K $335K
$4K $125K $8K $300K $12K $625K $20K $1M
$6K $100K
Apply adders to get final rangeEstablish starting range
$2K $30K $6K
Apply aggravating and mitigating factors to get final penalty
Determine base penalty
$8K
11
Step 1: Initial Penalty Range
Initial penalty range:= Non-compliance Level + Impact Level
A. Non-Compliance Level (across matrix):• Higher of breach history or severity
B. Impact Level (down matrix):• All impacts
12
Step 1: Determining Initial Penalty Range
Non-Compliance LevelImpactLevel
Low
Medium
High
Low
HighLow
Moderate
HighLow
High
HighLow
Severe
HighLow
$2K $10K $2K $13K $3K $15K $5K $25K
$2K $30K $4K $100K $6K $100K $10K $335K
$4K $125K $8K $300K $12K $625K $20K $1M
Establish initial range
$2K $30K
13
Part A: Non-Compliance LevelsNon-Compliance Level:= Higher of breach history or severity
Breach History Contributions:• Combinations of breaches (related or unrelated)
e.g.,– One continuing– One consecutive– Failure to comply with an order– Two repetitive
Severity (as defined by NERC Severity Factor or MACD):
• Extent of breach (may have a duration component)• Frequency of breaches (rate of non-compliance)
14
Determining Non-Compliance Levels
BreachHistory
Non-Compliance LevelLow Moderate High Severe
Severity
1 2 3 4
Low Moderate High Severe
15
Part B: Impact Level
Breaches of Reliability Standards: • Other market participant(s)• Markets• Actual or potential impact on reliability• Caused IESO standards breach• Any other impacts MACD deems appropriate
• If available, NERC risk factor used to establish impact on reliability
• Other impacts may increase Impact Level
16
Part B: Impact Level
All other breaches of market rules: • Other market participant(s)• Potential impact on markets• Actual or potential impact on reliability*• Any other impacts MACD deems
appropriate
*Not all breaches that cause impacts to reliability are breaches of reliability standards
18
Step 1: Determining Final Penalty Range
Final Penalty Range:= Initial penalty range + Adders
C. Adders (across matrix):• One or more of:
– Benefit– Corporate Intent– Duration
19
Step 1: Determining Final Penalty Range
Non-Compliance LevelImpactLevel
Low
Medium
High
Low
HighLow
Moderate
HighLow
High
HighLow
Severe
HighLow
$2K $10K $2K $13K $3K $15K $5K $25K
$2K $30K $4K $100K $6K $100K $10K $335K
$4K $125K $8K $300K $12K $625K $20K $1M
Apply adders to get final range
$6K $100K
20
Part C: Adders
• Any of the following may result in an increase in penalty range from the initial assessment of non-compliance level and impact:– Duration (when serious)– Benefit obtained or could have obtained either
as a result of lack of due diligence or deliberate; not disgorgement
– Corporate intent
21
Step 2: Base Amount
• Once final penalty range is determined, the base penalty amount within that range is assessed
• Base amount considers the impact of the breach and the time horizon of the impact
Base Amount = Impacts +/- Time Horizon
22
Step 2: Base Amount (Impact)
Impacts to:• Other market participant(s)• Potential impact on markets• Actual or potential impact on reliability• Sanction that may be imposed on IESO
as a result of reliability standard• Any other impacts MACD deems
appropriate
23
Step 2: Base Amount (Time Horizon)
Time Horizon • Considers whether or not the breach
would cause immediate impact
Example• Planning requirements do not cause an
immediate impact to reliability whereas real time requirements do.
24
Step 2: Determining Base Amount
Non-Compliance LevelImpactLevel
Low
Medium
High
Low
HighLow
Moderate
HighLow
High
HighLow
Severe
HighLow
$2K $10K $2K $13K $3K $15K $5K $25K
$2K $30K $4K $100K $6K $100K $10K $335K
$4K $125K $8K $300K $12K $625K $20K $1M
Assess impact and time horizon to find base penalty within the final range
$8K
25
Step 3:Final Penalty (Case Factors)
Final Penalty = Base Amount +/- Case Factor Adjustments
• Case factors can be added (aggravating) or subtracted (mitigating) from base amount
• Final penalty must be within the previously determined final range
• Factors used exclude those used to fix base penalty amount (impact factors and time horizon)
• List of factors are the same as those used to fix penalties for less serious breaches (market rules section 6.6.7), with the addition of one factor: Quality and Presence of Compliance Program
26
$4K $100K
ImpactLevel
Non-Compliance Level
Low
Medium
High
Low
HighLow
Moderate
HighLow
High
HighLow
Severe
HighLow
$2K $10K $2K $13K $3K $15K $5K $25K
$2K $30K $6K $100K $10K $335K
$4K $125K $8K $300K $12K $625K $20K $1M
Base penalty
$8K
Step 3: Determining Final Amount
$6K $100K
$8KBase Aggravating
Range
Mitigating Final $6K
27
Example 1 – ORA Failure
Failure to activate 10 min operating reserve
• collapse of local electrical island containing 300 MW occurred during cold winter days
• 48 hours to restore all load loss• disclosure of incident was timely and voluntary correction
taken to address the cause of the operator error• actual severe impact to reliability as confirmed by IESO
Board • first breach of same or related rules and no other breach
history of unrelated rules• Reason for breach: operator error that could have been
avoided by the exercise of due diligence• Activation did not occur by 30 minutes after request when
island collapsed
28
Step 1- Penalty Range
Part A Non-compliance Level = “low”• Severity and Breach History does not qualify for
any level
Part BImpact Level = High• small volume of load loss, however, significant
duration of load loss during cold winter
Range: $ 4,000 - $ 125,000
29
Step 1- Penalty Range – Part C -Adders
• Adders to Non-Compliance Level = None– No corporate intent– Duration- increase to level not required– No benefit gained by the breach
Range selection = $4,000 to $125,000
30
Step 2- Base Amount
Part A - Impact Assessment• Impact is at the lower third of the range due to
small volume of load loss, however, the duration of the load loss and cold weather moves the base just above the lower third.
Part B- Time Horizon• Real time requirement - immediate correction
of the ORA failure was required and posed an immediate impact. This will increase the base amount further into the middle third of the range
Base Penalty Amount = $50,000
31
Step 3 - Final Penalty - Case Factors
Cases Factors:• Mitigating: self disclosure, voluntary
correction, breach history• Aggravating: duration; activation not
accomplished by 30 minutesMitigating factors outweigh the aggravating
factor. Breach history has contributed mainly to the reduction
Final Penalty Amount: $ 30,000