Regulation Compensation Liaison Kickoff Meeting

September 11, 2014

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INTRODUCTION REGULATION COMPENSATION – FERC ORDER 755

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FERC Order 755

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• Frequency Regulation Compensation in the Organized Wholesale Power Markets Docket Nos. RM11-7-000 and AD10-11-000

• Primary provisions directed by FERC in the Order: Compensation for Regulation Capacity reserved

• Availability payment for regulation must include opportunity cost

o Compensation for Regulation deployment • Payment for “mileage” provided through deployment of

regulation Ensure Compensation is based on actual performance

• requirement for performance monitoring Market Mitigation

FERC Order 755 –Compliance Activity

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• October 20, 2011 – FERC Issues Order 755

• Late 2012: SPP requests and receives ruling to comply with Order 755 by March 1, 2015 - a year after Marketplace go-live

• June 21, 2013 – SPP files original design (MPRR102) • March 7, 2014 – FERC issues Deficiency Letter • April 7, 2014 – SPP files deficiency response

• June 19, 2014 – FERC conditionally accepts the 6/21/13 filing

• July 21, 2014 – SPP files compliance response (MPRR204) • August 1, 2014 – SPP files Amendment to 7/21/14 filing

OVERVIEW OF MARKETPLACE CHANGES

REGULATION COMPENSATION – FERC ORDER 755

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FERC Order 755 – Regulation Compensation

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Key Design Components: • Two-Part Regulation Offers

• Regulation – offer for reserving capability • Mileage – offer for expected performance

• Offers are combined to make the Regulation Service Offer • Mileage Factor is applied • Regulation Service Offer is used for Regulation clearing

• Regulation Compensation • MPs are paid MCPs for cleared regulation (no change) • MPs receive credits/charges for Mileage (performance) in

Real-Time • Uses Mileage MCP

• Unused Mileage Make Whole Payment

FERC Order 755 – Regulation Compensation

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What’s New? • Today:

• MPs submit one offer for each Regulation product • That offer is called the Regulation (up or down) Offer

• Future: After Reg Comp Implementation (3/1/15) • MPs submit two-part offer for each regulation product

• Regulation Offer – price for regulation provided

• Mileage Offer – price for “expected performance” during deployment in Real-Time

• Regulation Offer + (Mileage Offer x Mileage Factor) = Regulation Service Offer

• Regulation Service Offer is used for Regulation clearing

FERC Order 755 – Regulation Compensation

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What’s New? • Today:

• SPP computes and publishes two Market Clearing Prices (MCPs) for Regulation: • Regulation Up MCP • Regulation Down MCP

• Future: After Reg Comp Implementation (3/1/15) • SPP computes and publishes four MCPs for Regulation:

• Regulation Up MCP

• Regulation Down MCP

• Regulation Up Mileage MCP (RTBM only)

• Regulation Down Mileage MCP (RTBM only)

FERC Order 755 – Regulation Compensation

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What’s New? • Today:

• MPs receive charges/credits in Marketplace Settlements for Regulation clearing

• Future: After Reg Comp Implementation (3/1/15) • MPs receive charges/credits in Marketplace Settlements for

Regulation clearing and for Unused or Excess Mileage in Real-Time

• An Unused Mileage Make Whole Payment (MWP) is included to make MPs whole to their Mileage Offer

SETTLEMENTS REGULATION COMPENSATION – FERC ORDER 755

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Regulation Compensation Bill Determinants - 5-Minute Interval

• RtRegDnMile5minQty & RtRegUpMile5minQty

• RtRegMileOpTolPct

Instructed:

• RtRegDnInstrMile5minQty & RtRegUpInstrMile5minQty

Actual:

• RtRegDnActMile5minQty & RtRegUpActMile5minQty

Regulation Compensation Bill Determinants - 5-Minute Interval • RtRegDnMile5minFct Excess: • RtRegDnExcessMile5minAmt & RtRegUpExcessMile5minAmt • RtRegDnExcessMile5minQty & RtRegUpExcessMile5minQty Unused: • DaRegDnUnusedMile5minQty & DaRegUpUnusedMile5minQty • DaRegDnUnusedMileMwp5minAmt &

DaRegUpUnusedMileMwp5minAmt • RegDnUnusedMileMwp5minAmt & RegUpUnusedMileMwp5minAmt • RtRegDnUnusedMile5minAmt & RtRegUpUnusedMile5minAmt • RtRegDnUnusedMile5minQty • RtRegDnUnusedMileMwp5minAmt

Regulation Compensation Bill Determinants - 5-Minute Interval Margin: • DaRegDnMargin5minAmt & DaRegUpMargin5minAmt • RtRegDnMargin5minAmt & RtRegUpMargin5minAmt Potential: • PotDaRegDnMileMwp5minAmt &

PotDaRegUpMileMwp5minAmt • PotRtRegDnMileMwp5minAmt & PotRtRegUpMileMwp5minAmt Offer: • DaRegDnMileOffer5minPrc & DaRegUpMileOffer5minPrc • DaRegDnOffer & DaRegUpOffer • RtRegDnMileOffer5minPrc & RtRegUpMileOffer5minPrc

Regulation Compensation Bill Determinants - Hourly/Daily Interval Reflected on Bill Determinant Report – Hourly Interval

• RegUpUnusedMileMwpHrlyAmt

• RegDnUnusedMileMwpHrlyAmt

• DaFixedRegUpHrlyQty

• DaFixedRegDnHrlyQty

Reflected on Bill Determinant Report – Daily Interval

• RegUpUnusedMileMwpDlyAmt

• RegDnUnusedMileMwpDlyAmt

Regulation Compensation Charge Types Reflected on Statement

• RegUpUnusedMileMwpMpAmt

• RegDnUnusedMileMwpMpAmt

Regulation Compensation EQR Report

• EqrRegUpUnusedMileMwp5minQty & EqrRegDnUnusedMileMwp5minQty

• EqrRegUpUnusedMileMwp5minPrc & EqrRegDnUnusedMileMwp5minPrc

• EqrRtRegUpExcessMile5minPrc & EqrRtRegDnExcessMile5minPrc

• EqrRtRegUpUnusedMile5minPrc & EqrRtRegDnUnusedMile5minPrc

• EqrRtRegUpExcessMile5minQty & EqrRtRegDnExcessMile5minQty

• EqrRtRegUpUnusedMile5minQty & EqrRtRegDnUnusedMile5minQty

TRAINING REGULATION COMPENSATION – FERC ORDER 755

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Regulation Compensation Training

Schedule:

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Date Time Seats Taken*

Tuesday, November 4 9:00 a.m. — 11:00 a.m. CPT 29

Tuesday, November 11 2:00 p.m. — 4:00 p.m. CPT 13 Wednesday, December 3 9:00 a.m. — 11:00 a.m. CPT 3

Audience: Asset Owning MPs with Reg-Qualified Resources Content:

• Components of the Regulation Compensation Process (from Two-Part Offer Submission through Settlements) • Updates to the Markets User Interface

Register: SPP Learning Center

* Note: A minimum of 5 seats is required for a training session.

TESTING REGULATION COMPENSATION – FERC ORDER 755

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Regulation Compensation Testing • Logistics and Upcoming Dates

– Regulation Compensation Market Participant Testing occurs in MTE

– 9/19/14 - Regulation Compensation Market Participant Test Approach

– 10/10/14 – Detailed Test Cases and Scenario documentation

Detailed Test Cases

Scenario documentation

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Test Schedule • Regulation Compensation APIs available in MTE/Early Testing

• 10/7/14 – Regulation Compensation becomes effective in MTE

– API versions supporting Regulation Compensation are active to support connectivity and data entry in MTE

– UI screens supporting Regulation Compensation are active to support data entry in MTE

• 10/14/14 – Regulation Compensation is processed in Market studies

• Market Participant Testing Begins

• 11/10/14 – Market Participant testing begins with submittals of Regulation Compensation offers

• 11/17/14 – First supported Operating Day of Market Participant Testing

• 11/26/14 – First Operating Day supporting Settlements

• 12/03/14 – First Settlements statement posting with Regulation Compensation

• All Resource Owning Entities are impacted with changes to Market UI and Web Services

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Questions

Point of Contact • Marlene Wallace • Project Manager • Contractor-mwallace@spp.org • 501 688-8319

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Submit questions through RMS Quick pick- Project Pinnacle: Regulation Compensation