M E M O R A N D U M
TO: NEPOOL GIS Operating Rules Working Group
FROM: Paul N. Belval, NEPOOL Counsel
DATE: June 6, 2011
RE: Proposed Changes to GIS Operating Rules
The NEPOOL GIS Operating Rules Working Group will meet by teleconference on Monday, June 13 at 2 p.m. to discuss three sets of proposed changes to the NEPOOL Generation Information System (“GIS”) Operating Rules (the “Rules”) that have been referred to the Working Group by the NEPOOL Markets Committee. The call in information for that teleconference is as follows:
800-993-4149
Access Code 860 275 0381
Each set of proposed changes is described below in this memorandum.
1. Changes to Attributes in “System Mix” Certificates
As discussed previously with the Working Group, Rule 2.7(b) provides that Energy imported into the ISO New England control area that does not satisfy the conditions in Rule 2.7(c) for unit-specific Certificates for imported Energy receives Certificates (so-called “System Mix” Certificates) that reflect the average emissions and fuel source data for the source control area (which must be adjacent to the ISO New England control area). That Rule further provides that the emissions and fuel source data for those System Mix Certificates shall be provided to NYSE Blue, the GIS Administrator, by one of the state environmental regulatory agencies identified in the Rules, based on (i) independently audited data for the source control area, (ii) the average of the emissions and fuel source data for the source control area as included in the most recent year’s data in the U.S. Environmental Protection Agency’s E-GRID software or AirData database, adjusted to reflect the latest available imports to and exports from the source control area, or (iii) data obtained by a state environmental regulatory agency from a local environmental regulatory agency for the source control area.
In some instances, the data fields for System Mix Certificates have not been updated in years. H.Q. Energy Services (U.S.) Inc. (“HQUS”) had suggested that adjustments and periodic updates would be appropriate to avoid misrepresentation of attributes in System Mix Certificates. HQUS, working primarily with the Massachusetts Department of Environmental Protection and with us, has proposed changes to Rule 2.7(b) and a new Appendix 2.7B that would provide for periodic updates to that data, and those changes are Attachment 1 to this memorandum. Also attached (in a separate document) is a spreadsheet showing the basis for the calculation of the system mix data fields using the current figures from each proposed data source.
We circulated a version of these proposed changes to the Working Group two weeks ago, and issues were raised in response to that initial draft. Some have expressed a concern that the System Mix Certificates would not reflect the effect of power imported into adjacent control areas or specifically designated as being used to serve retail load within that control area (which, we understand, is not reflected in the current data either) and others have suggested that the fuel source and emissions data should be based on marginal units dispatched in the adjacent control area, rather than on average fuel source and emissions data for all units in the adjacent control area. Finally, we added a sentence to the proposed language noting that the data used for System Mix Certificates would be reviewed at least annually.
2. Aggregating Units for Import Certificates
Brookfield Energy Marketing LP (“Brookfield”) has proposed to modify the GIS registration requirements for renewable facilities in adjacent control areas with a nameplate capacity of 5MW or less so that they can be aggregated into a single GIS asset ID with a single NERC E-Tag. These types of small facilities can be eligible under the renewable portfolio standards of certain New England states, but various administrative hurdles make it less economical to import on an individual basis the Energy from these facilities into New England. If, however, these facilities could be aggregated in the GIS under a single Asset ID and NERC E-Tag, then such modification could support the increased participation of these resources. Brookfield also proposes to provide for each affected asset ID the predetermined and immutable list of generators of which it is comprised. The proposed changes to Rule 2.7(c) to implement Brookfield’s changes are included in Attachment 2 to this memorandum.
3. Changes to Trading Periods
511 Plaza (“511 Plaza”) and a group of 34 co-sponsors listed in Attachment 3 to this memorandum have proposed to expand the quarterly Trading Periods in the GIS and to provide for automatic banking of certain Certificates between Trading Periods. Under the currently effective Rules, each quarterly Trading Period (the period during which active Certificates for that quarter can be transferred) begins on the “Creation Date” (the 15th day of the second calendar quarter following the calendar quarter in which the Energy associated with those Certificates was generated) and ends two months later (i.e., 15 days prior to the end of the calendar quarter in which that Creation Date occurs). For example, the Trading Period for Certificates associated with Energy generated in January, February and March of a year will begin on July 15 of that year and end on September 15 of that year.
511 Plaza and the co-sponsors proposed that the Rules be modified to change the Trading Periods in the GIS. The Creation Date for each quarterly Trading Period would begin two months earlier than in the current Rules for the first three quarters of each calendar year (i.e., May 15, August 15 and November 15), and the Trading Period for the fourth quarter of each calendar year would begin on April 15 of the following year. In addition, Certificates that qualify for a mandatory renewable portfolio standard (“RPS”) or a mandatory alternative energy standard (“APS”) of one of the New England states (“Portfolio Certificates”) would remain eligible for trading until the end of the fourth quarter Trading Period for the calendar year in which the associated energy was generated, without any additional action by the holder of those Portfolio Certificates. The quarterly Trading Periods for Certificates that are not Portfolio Certificates would last for approximately four months for the first three quarters and two months for the fourth quarter. The proposed changes to the Rules are included in Attachment 4 to this memorandum.
NYSE Blue believes that this would be a Cardinal change under the GIS Development and Administration Agreement between NYSE Blue and NEPOOL (the “GIS Agreement”), because it would involve changes to the GIS system logic dictating the deadlines to enter data, create Certificates, close the Trading Periods and create the various reports. NYSE Blue estimated previously that the cost to NEPOOL for this change would be approximately $86,400. Because the proposed changes are Cardinal, Rule 1.5 requires that they be approved by the NEPOOL Participants Committee after review by the Markets Committee in order for them to become effective.
The Working Group previously discussed 511 Plaza's proposed changes at its March 3, 2011 teleconference, and the attached draft of those changes is the same as was discussed on that teleconference. During that discussion, one group of concerns was raised involving regulatory issues relating to the shorter time period regulators would have to approve RPS and APS-related filings as a result of the earlier Creation Dates, and the potential impact on renewable resources subject to regulatory review. A second group of concerns involved the implementation costs for the proposed change, relating to both the cost for the implementation of the Cardinal change and staff training expenses for regulators and market participants who would have to adjust to the new deadlines. After that discussion, a Working Group member raised a concern with the compressed time for meter adjustments to be reflected in the Certificates for the Trading Period to which that adjustment relates. Plaza 511 had asked to defer Markets Committee action on its proposed changes until it could address these concerns with the Working Group members who raised them.
cc: NEPOOL Markets Committee
42345129.1 / -2-Attachment 1
Rule 2.7 Imports
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(b) The fields for emissions and fuel sources for Certificates associated with Energy imported into the New England Control Area (i) prior to the SMD Effective Date, pursuant to a System Contract or pursuant to a Unit Contract not satisfying the requirements of paragraph (c) and (ii) from and after such date, pursuant to an External Transaction purchase not satisfying the requirements of paragraph (c) below (together “Imported System Energy”), shall be provided to the GIS Administrator by one ofcalculated by the GIS Administrator on a quarterly basis using the most current data available from the sources listed on Appendix 2.7B for each adjacent Control Area from which such Energy was imported. At least 15 days before each Creation Date, the GIS Administrator will provide the Certificate fields to be used for emissions and fuel source for the Certificates for Imported System Energy to be created on that Creation Date to the Environmental Regulatory Agencies listed on Appendix 5.3. Such Certificate fields for each adjacent Control Area shall be based (i) on independently audited data for such Control Area, or (ii) on the average of the emissions and fuel source data for such Control Area as included in the most recent year’s data in the EPA’s E-GRID software or AirData database, adjusted to reflect the latest available imports to and exports from such Control Area, or (iii) on data obtained byIn the event that any such Environmental Regulatory Agency from a local environmental regulatory agency for such Control Areaobjects to any such Certificate field, the GIS Administrator will consult with that Environmental Regulatory Agency in an effort to resolve that objection; provided that the GIS Administrator shall have the sole authority to determine the Certificate fields to be used for Imported System Energy. If, as a result of any such consultation, the GIS Administrator uses a source for fuel source and emissions data for any adjacent control area that is different from those listed on Appendix 2.7B, the GIS Administrator will promptly notify the NEPOOL Markets Committee (i) of such deviation and (ii) whether such deviation was a one-time occurrence or a permanent change to Appendix 2.7B is being proposed. The data used for fuel sources and emissions for each adjacent control area will be reviewed for updating by the GIS Administrator at least annually. The Certificate fields for each adjacent Control Area that are in effect forom time to time each Trading Period shall be posted on the GIS website. At such time as a source Control Area for Imported System Energy implements a generation information system that is compatible with the GIS, as determined by the NPC or its delegatee (a “Compatible GIS”), the NPC or its delegatee may amend this Rule 2.7(b) to address the creation of Certificates under this Rule 2.7(b). Each Certificate associated with Imported System Energy will reflect the most recently available overall mix of fuel sources and emissions of the source Control Area, determined as described in this Rule 2.7(b). The Certificate field for location will also be completed for Certificates associated with Imported System Energy. All Certificate fields for Certificates associated with Imported System Energy other than fuel source, emissions and location shall state “not applicable.”
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Appendix 2.7B
Sources for Certificate Fields for Imported System Energy
Fuel Mix / CO2 / NOx / SO2 / CO / Hg / Particulates / Fine Particulates / Organic CompoundsNew Brunswick / NIR / NIR & NPRI
Quebec
New York / eGRID / AirData / TRI / Air Emission Sources
EIA
NIR = Environment Canada, National Inventory Report 1990–20XX: Greenhouse Gas Sources and Sinks in Canada Part 3, Table A13-5 “Electricity Generation and GHG Emission Details for New Brunswick”; Table A13-6 “Electricity Generation and GHG Emission Details for Quebec.”
NPRI = Environment Canada, National Pollutant Release Inventory
eGRID = United States Environmental Protection Agency’s (US EPA) Emissions & Generation Resource Integrated Database
AirData = US EPA website
TRI = US EPA Toxics Release Inventory Program
Air Emission Sources = US EPA website
EIA = US Department of Energy Energy Information Agency
42345129.1 / -10-Attachment 2
Rule 2.7 Imports
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(c) The Certificates for Energy imported into the New England Control Area (i) prior to the SMD Effective Date, pursuant to a Unit Contract and (ii) from and after such date pursuant to an External Transaction for the output of a particular External Resource identified in the MSS for purposes of the GIS (together “Imported Unit Energy”), shall reflect the attributes of the generating unit generating such Energy if:
(v) such generating unit is eligible under one of the RPS fields listed in Part 2 of Appendix 2.4;
(w) such Energy is imported from such generating unit in an adjacent Control Area into the New England Control Area with transmission rights over the ties to the New England Control Area;
(x) such Energy is actually settled in the MSS;
(y) the Importing Account Holder importing such Energy has registered the applicable generating unit in the GIS as contemplated by Rule 2.3 and has provided the data contemplated by Rule 2.5; and
(z) such Importing Account Holder provides the GIS Administrator with (i) evidence, which has been verified by the GIS Administrator, that the generating unit actually generated such Energy, (ii) a NERC tag for such Energy meeting the requirements of the System Rules for External Transactions for Energy and the requirements of the adjacent source Control Area, and (iii) a certification of the seller of such Energy, in the form set forth in Appendix 2.7A, to the effect that the specified attributes have not been and will not be otherwise sold, retired, claimed, represented as part of Energy sold elsewhere or used to satisfy obligations in another jurisdiction.