application for adoption of reliabilty standards for electric power transmission in Québec and for approval of the registries identifying

Transcription

1 ç;i Aeumen Engineere Solutions International Ine. CIIIJ/UlIl Off~ 775 Main Si. Easl, Suite IR Millon, Ontario, Canada L9T 3Z3 Offce: (905) Fax: (905) Uiiiled Slles Offce 7(88) Central Par\way_ Suik 1475 Atlunta, Georgia, USA, Ollee: (678) Fax: (770) acsì(itj:aesí~jnc.com website: ",ww.aesi-inc,coln January 8,2010 Mtre Paule Hamelin Gowling Lafleur Henderson LLP Barristers & Solicitors 1 Patent & Trade Mark Agents 1 Place Vile Marie, 37lh Floor Montréal (Québec), H3B 3P4, Canada Re:. Hydro-Québec Direction- Contrôle des mouvements d'énergie's application for adoption of reliabilty standards for electric power transmission in Québec and for approval of the registries identifying entities and installations subject to reliabilty standards and sanction guidelines. Régie de l'énergie: R Dear Madam: This letter and attached report is to be submitted to the Régie de l énergie (the "Régie") on behalf of Énergie La Lièvre S.Ec. ("Lièvre") in connection with its High Falls, Dufferin and Masson hydro-electric facilities and related installations! (the "Installations"). The attached report conveys our findings, positions and opinions regarding installations that are similar to Lièvre; those of Rio Tinto Alcan lnc.'s ("RTA"), which is a joint party to this filng and has agreed to share our findings with Lièvre. Lièvre has throughout the Régie proceedings, been a strong advocate of the concerns conveyed within the report and shares the same views as RTA. More specifically, this letter is to convey Lièvre' s continuing concerns with' 1 Refer ta section (a) of AtLachment A. Page 1

2 a) the proposed definition of "Main Transmission System" (Réseau de transport principalf ("RTP") that is to be used to establish the registries of entities and installations subject to reliabilty standards and sanction guidelines3 (the "Registry") as currently proposed ; and b) the appropriateness of the proposed assignment of NERC4 functional model entities with respect to Lièvre Installations, as proposed in HQCMÉ's application. The author of this letter and accompanying report is an Associate of AESI Acumen Engineered Solutions International Inc. (" AESI"). AESI has, with respect to HQCMÉ's application currently before the Régie, been retained by Lièvre and RTA, individually and jointly, to review applicable documentation pertaining to fie R and to submit our findings, positions and opinions on three major aspects of HQCMÉ's application: i) the appropriateness of HQCME' s proposai for the use of RTP to establish the Registry rather th an "Bulk Power System" (Réseau (( bulk,,)5 ("BPS"), which is used by Northeast Power Coordinating Council, Ine. ("NPCC")6; ii) a comparison of this proposed reliability model to those used in other jurisdictions; and iii) an evaluation of the reliability standards which would be applicable to Lièvre's Installations and the assessment of their applicability. Issues that are crimm to both parties Installations. ln furtherance of Lièvre' s endorsement of the attached report, AESI was requested to i) review Lièvre's Installations to establish if a commonality regarding impact on BPS reliability between the Installations exits and ii) if so, prepare this letler that is to be filed with the Régie in support of our findings, positions and conclusions outlined in the RT A report to be applicable to Lièvre' s Installations as weil. 2 R , HQCMÉ-2, Document 4, Revised , Section 2.1, at page 3; R , HQCMÉ -2, Document 10, Revised , at page R , HQCMÉ -2, Document 4, Revised , "Registre des entités visées par les normes de jiabili té" 4 North American Electric Reliability Corporation ("NERC"). 5 HQCMÉ -2, Document 10, Revised , at page Northeast Power Coordination Council ("NPCC") is one of the eight (8) Regional Entities in North America and consists of the jurisdictions of Québec, Ontario, Maritimes, New York and New England. Page 2

3 Our review has concluded that the Lièvre Installations are clearly not, and cannot be construed as being part of, the bulk power system ("BPS") of Québee. Therefore the opinions and positions articulated in the attached report, created initially for RT A, equally apply to Lièvre' s Installations with the necessary adaptations. More precisely and without limitation, the sections of the report pertaining to the analysis of the use of BPS as opposed to RTP and the question of the application of NERC reliability standards to the Installations equally apply to Lièvre, again with the required adaptations. While HQCMÉ does not disagree with the fact that Lièvre's and RT A' s Installations are not BPS, it is proposing to the Régie to extend the reach of the NERC/NPCC CMEP umbrella to all facilities encompassed by its RTP definition. As concluded in the report, HQCMÉ' s assertion that RTP facilities such as these Installations be required to be subjected to QCMEP cannot be supported both on a technical analysis and a comparative basis with the other NPCC Canadian jurisdictions. We are concerned and support the view that extending the immensely administratively burdensome program requirements under the NERC/NPCC CMEP umbrella, and its related sanctions, to facilities that have NO impact to the BPS wil be costly, wil serve little benefit to improving reliability and wil needlessly increase risks. ln addition, it wil tie up limited resources that are already in short supply; these resources would be better served if focussed on reliabilty matters that do have a direct impact to the reliability of the BPS. Lièvre fully appreciates and understands the importance of, and remains committed to, helping assure the reliability of its network and its interconnections with HQT and Ontario. It continues to be our opinion that Québec and its customers would be better served if local area reliability matters remained with HQCMÉ and was managed locally as per the existing practise. ln conclusion, it is our view that extending the reach of NPCC and NERC enforcement programs (CMEP) to RTP facilities, such as the Installations of Lièvre and RT A, is a substantial expansion of scope and unwarranted departure from the original intent of the reliabilty standards and the ERO's mandate, which is to main tain the reliabilty of the interconnected BPS. Therefore, we respectfully submit to the Régie that: Page 3

4 i) the defimtion of RTP should not be used for establishing the Registry; ii) Lièvre and its Installations should not be designated as NERC functional model entities, for purposes of monitoring and auditing by NPCC under QCMEP. iii) The entities and their BPS installations that would be subject to the Québec reliability standards and NPCC criteria should be distinguished, in the Registry, from the entities and their non-bps installations that would be subject to non-bps reliability related requirements and managed locally by HQCMÉ; and iv) a two (2) tier QCMEP approach be implemented similar to other NPCC Canadian jurisdictions (Ontario and New Brunswick). Respectfully: 08/01/2010 x ~J :f/.1fi Ronald J. Falsetti, P.Eng. Associate Senior Consultant AESI Acumen Engineered Solutions International Inc. 775 Main Street East, Suite 1 B, Milton, Ontario, L9T 323 AESI-US Inc Central Parkway, Suite 1475, Atlanta, Georgia, rjf alsetti (!cogeco. ca Phone: (905) Mobile: (289) Page 4

5 Attachmenl A (a) Lièvre' s Installations Lièvre's electricity generation in the Gatineau region consists of four (4) power plants, one (1) at High Falls (109 MW), one at Masson (105 MW) one (1) at Dufferin (40 MW) and a small embedded power plant, Rapide-des-Cèdres (9 MW), with a total capacity to produce, a coincident peak of about 254 MW, excluding Rapide-des-Cèdres. The largest individual unit at the power plants representing just over 28 MW. ln addition, Lièvre owns and operates a modest transmission system, operated at 120 kv, in the Gatineau region that was initially designed to transport power from Lièvre's three (3) larger power plants in the region to service local area load and, subsequently permit ex port of energy through interconnections with HQT's network. Additionally, Lièvre's Installations have the capacity to periodically export energy to Ontario by segregating its' Installations from HQT's system7 or alternatively import energy from Ontario in a segregated mode of Operation ("SMO")8, by directly connecting generators in Ontario to the Lièvre system. At no time is the Ontario IESO-controlled grid ("ICG") and HQT's power system in this area operated interconnected to each other during normal operation. Notwithstanding the voltage level of the Installations' network, any faults and disturbances on Lièvre network, as in RTA's circumstances, continue to have local impact implications only. The same can be said when importing energy from Ontario in SMO (Ontario generators connected to Lièvre system). While, operating connected to the ICG segregated from the HQT system9 Brookfield Energy Marketing L.P. JO, as a registered market participant of the IAM (IESO - administered markets), is bound by and subject to the Ontario market mles11. 7 To export energy into Ontario, Lièvre's Installation must first separate from the HQT system before connecting to the Ontario IESO-controlled grid ("ICG") via the two (2) interties with Ontario, H9A and D5A, which are operated at 120 kv and 230 KV respectively. At no times, with the exception of providing assistance during emergencies, are the systems (HQT's and ICG) to be connected together through these interties. 8 Segregated mode of operation (Ch.7 App Radial lntertie Transilctions of the Market mies), at page 89, refers to a mode of operations whereby the Lièvre installations is physically interconnected ta the Ontario integrated power system and separated from the HQT's network. That is totally separated from the Québec integrated power system. 9 It is recognized by the IESO and Lièvre that the 230kV line D5A and the MTB3 Transformer is deemed BPS when connected radial to Ontario segregated from the HQT system. 10 The Lièvre output is sold to Brookfield Energy Marketing L.P which is the registered market participant with the IESO. 11 Ontario Market Rules h/pubs/marketri,,/mr markptrulps.pdf Page 5

6 (b) List of additional Sources and Documents Reviewed: To achieve the stated objectives of this letter and formulate our opinions and positions regarding the commonality between the Installations, the information and documentation listed below, in addition to those listed in Appendix B of the attached report, were reviewed. i) The authors comprehensive knowledge of segregated mode of operation with Québec interconnections and the interconnection agreement between the Independent Electricity System Operator of Ontario and Hydro-Québec TransÉnergie; with respect to: a) Line D5A (230 kv), between the Masson substation in Québec and the Hawthorne transformer station in Ontario; and b) Line H9A (120 kv), between the Masson Substation ID Québec and Cumberland Junction in Ontario: ii) Detailed review with Lièvre's representatives of the Installations as well as their planning, operational and facility data including its connections to Hydro-Québec's transmission system; iii) Review with Lièvre' s representatives of the operation al arrangements between Lièvre and Hydro Québec; iv) Detailed review with Lièvre' s representatives of the current activities in support of system reliability; v) R , Decision D and R , Decision D vi) R , HQCMÉ-3, Document 2, "Réponses du Coordonnateur de fiabilité à la demande de renseignements numéro 1 de ELL et EBMI" vii) R Pièces ELL-l "Schémas unifilaires préparés par la firme d'ingénieursconseils Breton, Banvile & Associés s.e.n.e. démontrant l'évolution du système d'énergie La Lièvre s.e.c. de 1930 à 2007, en liasse" and ELL-2: "Graphique démontrant les installations du système d'énergie La Lièvre s.e.c. Page 6

7 viii) Ontario market rule chapter 7; appendix Radial Intertie Transactions, at page 8912 (c) Affirmation and Statement of Independence The information contained in this letter and attached report is based on information provided by Lièvre and RT A and information contained in the list of sources and documents referred to in Attachment A sub-section (b) (some documents were translated to English), and the knowledge and extensive expertise of the author on the subject. This information is, to the best of my knowledge, factually correct. Further, AESI and the undersigned have no ties or associations with Lièvre, and have provided these paid professional services at the request of Lièvre, as independent consultants with established expertise in the electricity industry. AESI Acumen Engineered Solutions International Inc. ~J ~~~ By: Ronald J. Falsetti, P.Eng. Title: Associate Senior Consultant 12 chapter7appx.pdf. Page 7

8 i Aeumen Engineere Solutions International Ine. CiilJilill Offce 775 Main Si. Easi. Suile lb Milton. Ontario, Canad L9T 3Z3 Offce: (905) Fax: (90S) IJii/Jed Sltn OJl 700 Centrl Parkway, Suite 1475 Atlanta, Geoia, USA, Offce: (678) Fax: (770) i 5 e~mail: aesi(gaesi~inc.com website: WVt"W,aei-inc,com January 7, 2010 Mtre Pierre Grenier FRASER MILNER CAS GRAIN UP 1 Place Vile Marie, 39th Floor Montréal QC H3B 4M7 Re:. Hydro-Québec Direction - Contrôle des mouvements d'énergie's application for adoption of reliabilty standards for electric power transmission in Québec and for approval of the registries identifying entities and installations subject to reliability standards and sanction guidelines. Régie de l'énergie: R Dear Sir: The attached report is to be submitted to the Régie de l'énergie (the "Régie") on behalf of Rio Tinto Alcan Ine. ("RT A") in connection with its Saguenay-Lac-Saint-Jean hydroelectric facilities and related installations (the "Installations"). The report conveys our findings, positions and opinions based on: i) our knowledge and expertise regarding the implementation and application of reliability standards in the electrical industry; ii) our knowledge and understanding of the Installations (facilities, configuration and electrical system), including its connections to Hydro- Quebec's transmission system; and iii) our review and understanding of Hydro-Québec Direction Contrôle des mouvements d'énergie's (" HQCMÉ,,) application to the Régie under fie R More specifically, the report is intended to: i) assess the rationality of HQCMÉ's proposai, in its application, to qualify RTA as an entity subject to reliability standards and sanction guidelines, and

9 Page 2 its Installations to Québec's proposed Compliance Monitoring & Enforcement Program ("QCMEP"); ii) convey RTA's continuing concerns and provide arguments regarding the consequences of HQCMÉ's proposai; and iii) provide an assessment of comparability of HQCMÉ' s proposed reliability model with other jurisdictions, primarily those within the Northeast Power Coordinating Council, Inc. ("NPCC"), regarding: (a) the proposed definition of "Main Transmission System" (Réseau de transport principal)l ("RTP") that is to be used to establish the Registries of entities and installations subject to reli ab ilt y standards and sanction guidelines2 (the "Registry"); and (b) the appropriateness of the proposed assignment of NERC3 functional model entities with respect to the Installations, as proposed in HQCMÉ's application; and i) offer possible alternatives or enhancements where warranted to better align with other NPCC Canadian jurisdictions. For the reasons set out in our report, we do not support HQCMÉ' s assertion to the Régie, as proposed in its application and related filings, that RT A should qualify as an entity subject to reliability standards and sanction guidelines and that the Installations should be subjected to the QCMEP. Implementation of HQCMÉ's proposai wou Id subject the Installations, which are clearly not part of the "Bulk Power System" (Réseau (( bulk,,)4 ("BPS"), to significant and unjustified administrative constraints and costs as well as sanctions proposed by NPCC for facilities that are not part of the BPS, i.e. those facilities for which the reliabilty standards were truly intended for. Moreover, we are concerned that extending the immensely administratively burdensome program requirements under the NERC/NPCC Compliance Monitoring & Enforcement Program (the "CMEP") umbrella to facilities that have NO impact to the BPS wil be costly, wil serve little benefit to improving reliability, and wil needlessly increase risks by tying up limited resources that are in short supply. R , HQCMÉ-2, Document 4, Revised , Section 2.1, at page 3; R , HQCMÉ -2, Document 10, Revised , at page 35. R , HQCMÉ -2, Document 4, Revised , "Registre des entités visées par les normes de fiabilité" North American Electric Reliability Corporation ("NERe"). R , HQCMÉ -2, Document 10, Revised , at page 34.

10 Page 3 It is our expert opinion that the Province of Québec and its customers wou Id be better served if local area reliabilty matters remained within HQCMÉ and were managed locally, similar to the other Canadian jurisdictions within NPCC. Extending the reach of the CMEP to facilities such as the Installations, as proposed by HQCMÉ in its application, is, in our view, a substantial and unwarranted departure from the original intent of the reliabilty standards and the Electric Reliability Organization' s mandate, which is to maintain the reliabilty of the interconnected BPS. Therefore, we respectfully submit to the Régie in our report that: i) the definition of RTP should not be used for establishing the Registry; ii) RTA and the Installations should not be designated as NERC functional model entities for the purposes of monitoring and auditing by NPCC under the QCMEP; iii) the entities and their BPS installations that would be subject to the Québec reliabilty standards and NPCC criteria should be distinguished, in the Registry, from the entities and their non-bps installations that would be subject to non-bps reliability related requirements and managed locally by HQCMÉ; and iv) a two (2) tier QCMEP approach be implemented similar to other NPCC Canadian jurisdictions (Ontario and New Brunswick). Respectfully, x ~ j t -'"--.a;l 07/01/2010 Ronald J. Falsetti, P.Eng. Associate Senior Consultant AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC. 775 Main Street East, Suite 1 B, Milton ON L9T 323 rjfalsettil1)cogeco.ca Phone: (90S) Mobile: (289)

11 REVIEW OF THE QUÉBEC RELIABILITY STANDARDS AND THE PROPOSED REGISTRIES OF ENTITIES AND INSTALLATIONS SUBJECT TO THE STANDARDS ln THE CONTEXT OF RIO TINTO ALCAN INC.'S SAGUENA Y- LAC-SAINT-JEAN HYDRO-ELECTRIC FACILITIES AND RELA TED INSTALLATIONS RÉGIE DE L'ÉNERGIE R Re: Hydro-Québec Direction Contrôle des mouvements d'énergie's application for adoption of reliabilty standards for electric power transmission in Québec and for approval of the registries identifying entities and installations subject to reliabilty standards and the sanction guidelines BY: Ronald J. Falsetti, P.Eng. AssocIate Senior Consultant AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC. JANUARY 7, 2010

12 T ABLE OF CONTENTS AR TI CLE 1. TERMS OF REFERENCE...1 Section 1.02 List of Sources and Documents Reviewed to Develop Opinions... 3 Section 1.03 Background (a) HQCMÉ's application...3 (b) RTA's Installahons ARTICLE II. ANAL YSIS AND GENERAL COMMENTS...5 ARTICLE III. BULK POWER SYSTEM (BPS) VS. MAIN TRANSMISSION SYSTEM (R TP) ARTICLE IV. APPLICATION OF NERC RELIABILITY STANDARDS TO THE ln S T A L LA TI 0 N S ARTICLE V. CON CL USIONS AR TI CL E VI. APPEND 1 CE S Section 6.01 Appendix A - Affirmation and Statement of Independence Section 6.02 Appendix B List of Sources and Documents Reviewed...25 Section 6.03 Appendix C - Experts Background, Qualifications, Training and Experience Section 6.04 Appendix D About AESI Acumen Engineered Solutions International Ine. and AESI-US Ine. (" AESI") Section 6.05 Appendix E - AESI's NERC Standards Qualifications (a) NERC CLP Reliability Standards (b) NERC non-clp Reliabilty Standards AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page i

13 Article 1. Terms of Reference The following report is submitted to the Régie de l'énergie (the "Régie") on behalf of Rio Tinto Alcan lnc. ("RT A"). It conveys our findings, positions and opinions based on. i) our knowledge and expertisel regarding the implementation and application of reliability standards in the electrical industry; ii) our knowledge and understanding of RTA's Saguenay-Lac-Saint-Jean hydroelectric facilities and related installations (the "Installations")2 as well as its facilities, configuration and electrical system, including its connections to Hydro-Québec's transmission system; and iii) our review and understanding of Hydro-Québec Direction Contrôle des mouvements d'énergie's ("HQCMÉ") application to the Régie under file R for the adoption of the reliability standards and approval of the registries identifying the entities and the installations that wil be subject to the reliability standards and the sanctions guidelines in Québec. This report is intended to: i) assess the rationality of HQCMÉ's proposai, in its application, to qualify RTA as an entity subject to reliability standards and sanction guidelines, and its Installations to Québec proposed Compliance Monitoring & Enforcement Program ("QCMEP"); 11 See Appendix C - Experts Background, Qualifications, Training and Experience. See Section Section 1.03(b) RTA'~ Installations. R , B-1- HQCMÉ's Application. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC. Page 1

14 ii) convey RTA's continuing concerns and pro vide arguments regarding the consequences of HQCMÉ' s proposai; iii) provide an assessment of comparability of HQCMÉ's proposed reliability model with other jurisdictions, primarily those within the Northeast Power Coordinating Council, lnc. ("NPCC"), regarding: a) the proposed definition of "Main Transmission System" (Réseau de transport principal)4 ("RTP") that is to be used to establish the registries of entities and installations subject to reliability standards and sanction guidelines5 (the "Registry"); and b) the appropriateness of the proposed assignment of NERC6 functional model entities with respect to the Installations, as proposed in HQCMÉ' s application; and iv) offer possible alternatives or enhancements to better align with other NPCC Canadian jurisdictions. The author of this report is an Associate of AESI Acumen Engineered Solutions International Inc. (" AESI"). ln connection with HQCMÉ's application before the Régie, AESI was retained by RT A to review applicable documentation pertaining to fie R and to submit our findings, positions and opinions on three major aspects of HQCMÉ' s application: 6 HQCMÉ-2, Document 4, Revised , Section 2.1, at page 3; HQCMÉ-2, Document 10, Revised , at page 35. HQCMÉ-2, Document 4, Revised , entitled Registre des entités visées par les normes de fiabilité. North American Electric Reliability Corporation ("NERC"). AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 2

15 i) the appropriateness of HQCME's proposai for the use of RTP to establish the Registry rather than "Bulk Power System" (Réseau (( bulk "V ("BPS"), which is used by Northeast Power Coordinating CounciI, Inc. ("NPCC"); ii) the comparison of this proposed reliabilty model to those used in other jurisdictions; and iii) the evaluation of the reliabilty standards which wou Id be applicable to the Installations and the assessment of their applicability. Section 1.02 Opinions List of Sources and Documents Reviewed to Develop To achieve the stated objectives of this report and formulate our opimons and positions, the information and documentation listed in Appendix Section 6.02 herein were reviewed. Section 1.03 Background (a) HQCMÉ's application On May 28, 2009, HQCMÉ, in its capacity as Reliability Coordinator for electric power transmission in Québec, fied an application to the Régie seeking, amongst other things: i) the adoption of reliability standards; and ii) the approval of the Registry in the Province of Québee. HQCMÉ's application was submitted under sections 31(5), 85.2, 85.6, 85.7, 85.8 and of the Act respecting the Régie de l'énergie (the "Act"). 7 HQCMÉ -2, Document 10, Revised , at page 34. AESI ACUMEN ENG1NEERED SOLUTIONS INTERNATIONAL INe. Page 3

16 ln its submissions to the Régie, HQCMÉ identifies RTA as an entity8 likely to be subjected to the reliability standards and sanction guidelines. On September 22, 20099, the Régie invited interested parties to submit comments to HQCMÉ's application by November 20, This deadline was subsequently extended by the Régie to January 8, at the request of the interveners. (b) RT A's Installations RTA owns and operates an extensive distribution system, albeit at high tension voltagesll, in the Saguenay-Lac-Saint-Jean region that was exclusively designed to transport power from RTA's six (6) power plants in the region to service RTA's load. Additionally, pursuant to agreements entered into between RTA and Hydro-Québec TransÉnergie ("HQT"), RT A' s distribution system transports energy from HQT' s network to service Hydro Québec's ("HQ") area load totallng some 200 MW on average (530 MW peak). RTA's electricity generation in the Saguenay region consists of six (6) power plants, three (3) on the Péribonka River and three (3) on the Saguenay River. These installations have the capacity to produce, on average, about 2000 MW representing approximately 90% of RT As aluminum production power requirements for the region. The balance of RTA's electrical needs is provided by HQ, through three (3) interconnects with HQT. Occasionally, pursuant to the aforementioned agreements, RT A wil sell energy to HQ during freshet and high water level periods, when R , HQCMÉ-2, Document 3, Revised: , at page 10 of IL. R , Decision D , dated September 22,2009. R , (A-12) Letter from the Régie dated December 11, RTA's distribution network consists primarily of an array of 161 kv facilities, with the exception of the 345 ky transformer station between Chute-Des-Passes generation facility and the vilage of Delisle. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 4

17 generation availability from the SiX (6) power plants exceeds RTA's own load requirements. Article II. Analysis and General Comments AESI acknowledges the Régie' s affrmative action in establishing a meaningful and mandatory "reliability" framework in the Province of Québec, within the context of Québec's le gai and regulatory environment. It also supports the Régie's consultative approach with affected parties in determining the appropriate framework for Québec. Moreover, AESI commends the Régie in taking a deliberate and cautious approach, soliciting input from affected parties and weighing the various options accordingly prior to making its final decision on HQCMÉ' s application, the Québec' s future Rules of Procedure (QROP) for compliance services by the NERe, and the associated QCMEP for implementation by NPCC. Given the configuration of the Installations, we strongly believe that they should be viewed no differently than a large indus trial customer with load displacement generation utilizing its own distribution network, irrespective of the voltage level of its distribution system. Furthermore, in its previous filngs to the Régiel2, HQCMÉ has been an advocate supporting the view that the Installations have local area reliability impact only and, for the most part, should not be subject to the NERC' s reliability standards. We understand that RTA is concerned with the broad brush approach HQCMÉ has now taken its planned Registry. HQCMÉ's proposed definition of "Main Transmission System" (Réseau de transport principal) ("RTP")3 used to establish the R , HQT-6, Document 1, dated , at R.21 page 5 of 11. R , HQCMÉ-2, Document 4, Revised , at page 3, section 2.1. R , HQCMÉ-2, Document 10, Revised , at page 35. AESI ACUMEN ENGINEERED SOLUT!O:'S INTERNATIONAL INe. Page 5

18 Registry goes far beyond any other Canadian jurisdictions within NPCC14 and is, in our opinion, inconsistent with the NERC Statement of Compliance Registry Criteria15 that all other jurisdictions in North America are subject to. The term RTP is defined as follows: "Main Transmission System" (Réseau de transport principal) (RTP)16 (internai translation) Grid system made up of facilities and lines generally transporting large quantities of energy and the generating stations of 50 MY A or more that are important for ensuring control of the following reliability parameters:. Maintaining load-generation - balance (Balance of the demands/offers); Frequency adjustment; Maintaining operating reserves; Y oltage adjustment of the network and of the interconnections; Maintaining transit stability within the limits of operation; Supervision and coordination of interchange transactions (exports/imports ); Supervision of the network' s automatic operations; Managing overloads on the network The principal grid system is under the supervision of the Quebec Reliability Coordinator (Direction Contrôle des mouvements d'énergie (CMÉ), Hydro- Quebec TransÉnergie). (Main Transmission System) Source: Direction Contrôle des mouvements d'énergie More specifically, the proposed RTP definition is inconsistent with respect to the NERC criteria for registering generation assets connected to non Bulk ElectrIcal System ("Réseau de transport principal") ("BES")17 transmission facilities With respect to the application of NERC and NPCC standards under the Federal Energy Regulatory Commission (FERC) approved Uniform Compliance Monitoring & Enforcement Programs (CMEP). NPCC represents the jurisdictions of New York, New England, Ontario, Québec, New Brunswick and Nova Scotia. Statement of Compliance Registry Criteria, Rev. 5, Sections m.c.1 and m.c.2; v;/statemf'--np1pliance Registry Criteria-V5-0.pdf R , HQCMÉ-2, Document 10, Revised , at page 35. R , HQCMÉ-2, Document 10, Revised , at page 35. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 6

19 Further, the use of the proposed RTP definition to establish the Registry, wil result in certain reliability standards being applicable to facilities well beyond the scope of NPCC's definition of Bulk Power System (Réseau (( bulk,,) (BPS)18, which are enforceable through sanctions under a compliance program that is inconsistent with the Uniform Compliance Monitoring & Enforcement Program ("CMEP") approved by the Electric Reliability Organization (lfero") and the Federal Energy Regulatory Commission ("FERC") for the rest of North America.. The term BPS is defined as follows: "Bulk Power System" (Réseau (( Imlk ))) ("BPS") Termsl9) as: the NPCC Glossary of A-IO, (C-I) Bulk power system - The interconnected electrical systems within northeastern North America comprised of system elements on which faults or disturbances can have a significant adverse impact outside of the local area.jemphasis added) However, for a specifie set of reliability standards, HQCMÉ is proposing to use the BPS definition, rather than the definition for RTP, to establish their applicability to installations and facilities owned by HQ (see examples of same at page 20 of this report). ln effect, HQCMÉ is selectively applying different criterion for determining which reliability standards are applicable to the RTP. This wil essentially affect how non BPS facilties are treated for different reliability standardsi including a vast assortrent of HQT's own facilities, under the QCMEP. ln addition, the proposed RTP definition is, in our view, contrary to the agreement entered into between the Régie, NERC and NPCC20 with respect to the application of R , HQCMÉ-2, Document 0, Revised , at page 34. NPCC Glossary of Terms, Document A-07, at page 5; org/ docu ments/regstandards/cri teria. aspx. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 7

20 reliability standards, which are specifically developed for BES facilties. More specifically, as per Sections 3.2 and 4.3 of the agreement, the Régie is to retain the services of NPCC and NERC as "experts in the application of the NERC reliability standards" and requires them to implement a compliance program that is consistent with NPCC's uniform compliance program and NERC rules of procedure. It is our view that the QCMEP and the HQCMÉ application before the Régie proposing the use of RTP to establish applicability is inconsistent with those stated objectives. BES is defined as follows in the NERC Glossary of Terms Used in Reliability Standards21 (the "NERC Glossary"): As defined by the Regional Reliabilty Organization, the electrical generation resources, transmission line s, interconnections with neighbouring systems, and associated equipment, generally operated at voltages of 100 ky or higher. Radial transmission facilities serving only load with one transmission source are generally not included in trus definition. (emphasis added) This definition has been accepted by the FERC in its Order issued in March 2007 and applied throughout North America through the implementation of each of the Regional Entities' CMEP. ln the case of the NPCC, in its capacity as Regional Entity for the North-East, the program is implemented in accordance with the NPCC Implementation of the NERC CMEP (CP-01) Agreement on the development of electric power transmission reliability standards and of procedures and pro gram for the monitoring of the application for these standards for Québec entered into between the Régie de l'énergie, North American Electric Reliability Corporation and Northeast Power Coordinating Council, lne. on May 8, 2009, at Sections 3.2 and Feb08. pdf. United State of America, Federal Energy Regulatory Commission, 18 CFR Part 40 (Docket No. RM ; FERC Order No. 693), Mandatory Reliability Standards for the Bulk- Power System, lssued March 16, 2007, at par. 6, 20, 50 and 51; /comm-meet/2007 / le-a pdf. NPCC Implementation of the NERC Compliance Monitoring and Enforcement Program; AEsr ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC Page 8

21 ln its final determination under Order the FERC agreed to retain the existing NERC Glossary definition for the initial implementation of mandatory and enforceable reliability standards. Specifically, in Order 693, the FERC concluded as follows: b. Commission Determination 75. The Commission agrees with commenters that, at least initially, expanding the scope of facilities subject to the Reliability Standards could create uncertainty and might di vert resources as the ERO and Regional Entities implement the newly created enforcement and compliance regime. Further, we agree with commenters that unilaterally modifying the definition of the term bulk electrie system is not an effective means to achieve our goal. For these reasons, the Commission is not adopting the proposed interpretation contained in the NOPR. Rather, for at least an initial period, the Commission wil rely on the NERC definition of bulk electric system25 and NERC's registration process to provide as much certainty as possible regarding the applicability to and the responsibility of specifie entities to comply with the Reliability Standards in the start-up phase of a mandatory Reliability Standard regime. (underline added) For the purposes of monitoring and enforcing NERC reliability standards and NPCC criteria, NPCC, as the Regional Entity for the North-East, de "bulk power system or BPS" in the NPCC Glossary of Terms26) as. fines BES (referred to as documents/ compliance/progdoc.aspx. See note 22, at par. 75 (FERC Order No. 693). "As defined by the Regional Reliability Organization, the electrical generation resources, transmission line s, interconnections with neighbouring systems, and associated equipment, generally operated at voltages of 100 kv or h1gher. Radial transmission facilities serving only load with one transmission source are generally not included in this definition." 26 NPCC Glossary of Terms, Document A-07, at page 5; org/ documents/regst;mdards/cri teria. aspx. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 9

22 A-10, (C-l) Bulk power system - The interconnected electrical systems within northeastern North America comprised of system elements on which faults or disturbances can have a significant adverse impact outside of the local area.jemphasis added) More importantly, in the recent NPCC-NERC joint filing with the FERC further to it's Order Directing the Submission of Data (Docket No. RC )27, the Canadian NPCC members, which include HQCMÉ, have taken a position to continue to use the NPCC BPS definition for facilities within the Canadian portion of NPCC. ln that filing dated September 21, , NPCC and NERC have asserted to the FERC that: D. BES Definition Among the Canadian Members The Canadian members of NPCC believe that enforcing mandatory reliability standards is essential for designing, maintaining and operating a reliable and secure interconnected electricity grid. However, the application of NERC reliability shndar-is should be limited to wide-area reliability without expanding its scope to coyer local area reliability. The Canadian members further believe a bright line, voltage-based definition of BES, such as that being reviewed for the U.S. members of NPCC, would result in NERC reliability standards being applied to facilities, 100 kv and ab ove, which wil only impact local areas. Thp~"cilitie" do not have widearea impact and would not result in cascading outages. The Canadian members of NPCC remain resolute in their belief that the impact-based approach currently used by NPCC to determine the applicability of NERC standards is the most efficient manner in which to maintain reliability of the Bulk Electric System. The Canadian members of NPCC strongly believe that significant additional costs wil be incurred without identified reliability benefits if a bright line voltage-based definition 27 FERC Docket No. RC ; FERC's Order Directing the Submission of Data, lssued December 18, 2008; 28 ta- NPCC N ERC pdf. FERC Docket No. RC ; Compliance Filing and assessment of Bulk Electric System definition report of the North American Electric Reliability Corporation and Northeast Power Coordination Council, me. in response to the December 18, 2008 Commission or der; dated September 21,2009, at page 13; NERC-NPCC BES Report Camp Filing pdf. AESI ACUMEN ENGINEERED SOLUTIONS INTERNA T10NAL INC Page 10

23 were adopted across Canadian NPCC. Moreover. fuis exercise would result in diverting funds and key expert resources from other higher value reliabilty projects and activities. The Canadian members do not expect Canadian provincial regulators to support expenditures by their regulated entities to expand the applicability of the NERC reliability standards if they are unable to demonstrate benefits to reliability. NPCC's Canadian entities further believe that there is no identified reliability concem associated with maintaining a separa te definition of BES elements for Canadian and U.S. NPCC systems because the transmission facilities participating in international power transfers that would be identified under the developed NPCC BES bright line definition are already identified as BES elements under the NPCC A-10 Criteria. (underline added) Furthermore, in the same joint fiing, NPCC and NERC have asserted to the FERC that29. NPCC wil continue to utilize the methodology established under the A-lO criteria for application of NERC Reliability Standards in the Cana di an portion of NPCC. (underline added) Although NPCC has developed and presented in its joint filing a definition for U.s. only registered entities within the NPCC footprint to be consistent with other U.s. regions that have adopted a voltage-based BES definition30, it continues to believe that the functional reliability impact-based approach provides an "Adequate Level of Reliability"31: NPCC continues to believe that its impact-based approach documented in the A-lO Criteria document provides an "adequate level of reliability" assurance on those elements that affect the reliability of the international, interconnected system in the Northeast by identifying those elements that could cause widespread outages. Ths approach also enables NPCC to focus its reliability Ibid, at page Il. Ibid, at pages 9 to Il FERC Docket RR07-14, NERC informai filing to FERC, See NERC definition of "adequate level of reliability", dated May 5, 2008; Level of Reliability Defintion pdf. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page Il

24 assurance efforts on these elements. Therefore, NPCC intends to continue its utilzation of the A-lO Criteria in identifying those key facilities in both the U.S and Canadian portions of NPCC to WhlCh the more stringent NPCC Criteria wil apply and for identifying BES elements in the Canadian portion of NPCC.32 (underline added) This is a view equally shared by NPCC members, currently and in the past, which has been articulated to the FERC on numerous occasions. For ex ample, the New York State Reliability Council ("NYSRC"), in a 2007 filing to the FERe, stated33: The NYSRC strongly recommends that the application of ERO standards be determined by a functional reliability impact approach. Under the current NERC definition of bulk electric system, NPCC has used a functional reliability impact approach to determine the bulk-power system facilities to which NERC standards should apply. The functional reliability impact approach identifies those facilities that materially impact the reliable operation of the bulk power system, while recognizing that some facilities have little impact of bulk power system reliability. More recently, NYSRC took the same position in a filing to the FERC dated October 28, 2009 on the use of Topological and Impedance Element Ranking ("TIER") as an alternative method for establishing facilities that need to be registered. The NYSRC continues to defend the use of the functional reliabilty impact-based approach, as defined by NPCC, to establish entities that ought to be subject to the reliabilty standards, stating34: 32 See note 28, at page See Page 6, 1 paragrapli COMMENTS OF THE NEW YORK ST A TE RELIABILITY COUNCIL LLC on; FERC Docket No. RM Mandatory Reliability Standards for the Bulk-Power System and Docket No. RM Facilities Design, Connections and Maintenance Reliability Standards); dated january 3, 2007; ferc. goy /idmws/n ycommon/nv intf.asp?slcfile list= :0; /idm ws/5carch/fercad ysearch.asp, Accession Number: FERC Docket RM , Mandatory Reliability Standards for the Bulk Power System, Comments of the New York State Reliability Council, L.L.c., Dated October 28, 2009, at page 5; genda 125/Comme nts%20of%20the%20nysrc%20under%20rm pdf. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 12

25 The NYSRC supports the development of a methodology for defining BPS facilities that is performance-based and directly related to the fundamental components of BPS reliability. ln its joint filing with NERC filed with the Commission on September 21, 2009, the Northeast Power Coordinating Council ("NPCC") stated that it "continues to believe that its impact-based approach documented in the A-10 Criteria document provides an adequate level of reliability assurance on those elements that affect the reliability of the international, interconnected system in the Northeast by identifying those elements that could cause widespread outages. NPCC also states that "application of the developed BES ((Bulk Electric System)) bright-line definition within NPCC would increase the number of facilities for which NERC compliance would be required, resulting in economic and resource impacts without identified increases in the overall reliability of the NPCC international, interconnected power system. The NYSRC agrees with these assessments by NPCC. The NYSRC also agrees with the conclusion of Canadian members of NPCC that adoption of a bright-line test "would result in diverting funds and key expert resources from other higher value reliability projects and activities. We urge the Commission, therefore, not to order the adoption of a bright-line voltage based definition of BPS facilities, but to continue to allow the use of performance-based methodologies, such as the A-JO criteria developed by NPCC. However, in its application, HQCMÉ, owing to its proposai to use RTP rather than BPS to establish the Québec entities that would be subjected to the reliability standards, is in effect expanding the sc ope of coverage well beyond what it has recently agreed to with the NERC and the NPCC in their joint filing to FERC35. An approach that HQCMÉ has clearly acknowledged is not used by any other jurisdictions throughout North-America. ln its response to the Régie36 HQCMÉ states: (internai translation) The "RTP" network as proposed by the Reliability Coordinator is being considered for the application of the obligatory Quebec reliability standards. It includes the network "Bulk", as defined by the NPCC, which Hydro-Quebec TransÉnergie is member of. To the See note 28, at page 13. R , HQCMÉ-3, Document 1 1, Dated 2009-))-04 "Réponses du Coordonnateur de la fiabilité à la demande de renseignements iiuméro 2 de la Régie de l'éiiergie", Section 1.1 AESI ACUMEN ENGINEERED Sm UTIONS INTERNATIONAL INe. Page 13

26 knowledge of the reliability coordinator, the expression "RTP" as proposed is not used in any other jurisdiction. AESI supports the notion that comparability with the approach taken by the other NPCC Canadian jurisdictions (Ontario and the Maritimes), and the FERC's approved NERC registration criteria is paramount in establishing a level playing field. For example, this approach brings consistency to the QCMEP with that of Ontario's, which has been in place since , and the compliance program for New Brunswick38. Both compliance programs utilze a two (2) tier approach for monitoring and enforcing compliance to NERC reliability standards and NPCC criteria39 One process of the se compliance programs is specific for entities having installations and facilities that are deemed to be BPS; these installations and facilities are monitored and enforced essentially in accordance with the NPCC CMEP. The other process of these two (2) tier compliance programs is specific for entities having installations and facilities that are deemed to be non BPS; these installations and facilities are managed internally (locally) within the IESO and NBSO respectively independent Electricity System Operator ("IESO") Reliability Compliance Program ("IRCP"); pdf; The IRCP was managed by the author of this report from 1999 to September Memorandum of Understanding Between the New Brunswick System Operator and The Northeast Power Coordination Council Inc. and The North American Electric Reliability Corporation; blic/ private/mou%20(nbso-%20n PCC - %20NERO.pdf; - Market Procedure 8 - New Brunswick System Operator ("NBSO")'s compliance program, Sections and 3.1.2; private/mp -08. pdf. IESO and NBSO are acting as Reliability Coordinat Transmission Operator for their respective jurisdictions. or, Balancing Authority and AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 14

27 Based on the Ontario compliance program's successful experience, this two (2) tier approach could be implemented as follows: i) The QCMEP would need to explicitly limit the reach of the NERC reliability standards and the NPCC criteria to monitor and audit compliance to Québec reliability standards for entities and their installations that are clearly defined as BPS or assets connected to BPS as per Section 85.3 of the Act; ii) The QCMEP wou Id need to articulate that for all other non-bps reliabilty related requirements that would be suggested by HQCMÉ, the latter would have the mandate to monitor compliance, and if necessary, seek enforcement actions with the Régie, for failure to do so; iii) The list of "other non-bps reliability related requirements" for local area reliability and the processes by which they would be achieved would be jointly established between HQCMÉ and the impacted entities. Impacted entities would be those established by the definition of RTP. As a result of this consultation between HQCMÉ and the said entities, HQCMÉ would submit to the Régie those non-bps reliability standards related requirements for approval; iv) The entities and their BPS installations that would be subject to the Québec reliability standards and NPCC criteria should be distinguished, in the Registry, from the entities and their non-bps installations that would be subject to non-bps reliability related requirements and managed locally by HQCMÉ; v) HQCMÉ would issue notifications to each affected entity identifying those obligations. AESI ACUMEN ENGINEERED SOLUTONS INTERNATIONAL INe. Page 15

28 AESI and RTA are Ully aware of and support the notion that a subset of reliabilty standard requirements has and wil continue to apply to generation and transmission facilties, such as the Installations, to main tain local area reliabilty These reliability standard requirements would continue to remain important to perform for local reliability and include, namely: i) transmission protection systems maintenance; ii) generator under-frequency (U/F) protection maintenance4o; iii) automatic voltage regulation (A VR) mode of operation; iv) transmission and generation system modeling data; and v) transmission line vegetation management41. While this is not an exhaustive list, AESI and RTA recognize that these requirements are important for local area reliability, with the exception of generator underfrequency protection maintenance, which is deemed to be for the "bulk" (BPS) system. Further, they represent a sampling of those requirements for which RTA already has policies, procedures, protocols and processes in place with HQT and HQCMÉ to achieve the "intent" of the associated reliability standards. 40 Generator UjF protection for units within NPCC greater than 20 MY A and facilities greater than 75 MY A, when installed, are deemed BPS, irrespective of connection ta BPS. The Installations do not have generator UjF protections. 41 While the NERC vegetation management standard is applicable ta lines 200 ky and above, it is intended explicitly for the protection of the BPS transmission lines. We understand that RT A has a protocol for vegetation management, which is also appropriate for local area reliability. RTA is therefore supportive of including this standard within the scope of the QCMEP. Ths is similar to several other reliability standards that shouldjcould be added on a case by case basis, through co-operative discussion between HQCMÉ and its customers, and be approved by the Régie. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe Page 16

29 Nonetheless, we respectfully disagree with HQCMÉ's current view that, for local are a reliabilty, this subset of standards needs to be incorporated into the QCMEP that is to be managed and implemented by the NPCC. It is our view that local area reliability should rather continue to be managed by the Reliability Coordinator - HQCMÉ as it has in the past, similar to the approach taken in the other Canadian jurisdictions within NPCC. Article III. Bulk Power System (BPS) ys. Main Transmission System (RTP) ln HQCMÉ' s responses to the Régie42, HQCMÉ argues that the use of the Main Transmission System (Réseau de transport principal) (RTP) is necessary due to the "influence" the se facilities have on real time operations. HQCMÉ submits that: (internai translation) ll1e "RTP" network is the network under the jurisdiction of the Load Dispatching Center which performs and is responsible for, in real-time, the Reliability Coordinator functions, the Balancing Authority's and of the grid system's (Transmission Operator) functions, for the Transmission Operator' s functions, as owner, and the inter change transactions (Interchange Authority) pursuant to the NERC functional model. Facilities belonging to "RTP" network have an influence on the reliability of the network, maintaining a balance of imports and exports on the interconnections, which constitutes, in the opinion of the Reliability Coordinator, the network which should be subjected to the obligatory of reliability standards in Québec. (underline added) While HQCMÉ's response provides an accurate account of its accountabilities under the NERC functional model, it fails to provide a technically sound basis for the need to expand the reach of the QCEMP to non-bps facilities, other than to say it has an "influence" on reliabihty and on load/generation balance of the interconnections with its neighbours. This is a position, we respectfully submit, which cannot be supported 42 R , HQCMÉ-3, Document 1.1, Dated "Réponses du Coordonnateur de la fiabilité à la demande de renseignements numéro 2 de la Régie de l'énergie" Sections 1.2 and 1.3. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAl INe. Page 17

30 given that the Installations have local area impact only, as previously articulated by HQCMÉ in its submissions to the Régie in fie R We further note that HQCMÉ, in its response to RT A in the Régie fie R , confirmed that faults or disturbances on RT A' s network system wil not have significant adverse impact on the reliability of the bulk system. Further, we would argue that the most severe contingency, I.e. the worst case scenario on the Installations, is the loss of a single 345 kv circuit between Chute-des- Passes and Delisle, resulting in the loss of about 400 MW supply capability to the region. This contingency would require the three (3) HQT interconnects to suddenly increase its supply to the area to make up for the loss of local generation capabilty, while RTA operators readjusted generation at other plants and/or shed load as necessary. This scenario IS substantially less than the worst loss of generation contingency HQCMÉ must plan for. It has also been modeled and analyzed, jointly by HQT and RTA and determined to have local impact only. ln fact, it is our expert view that HQ's spinning reserves, which are required by the reliability standards to be maintained for its first contingency, its automatic generation control (AGq requirements and the normal generation frequency response to deviations from the vast array of other generators on the HQT system, including those of RT A, wil more than adequately restore the system frequency to normal, in very short order. More importantly, HQCMÉ goes on to further argue that certain reliabilty standards should only apply to BPS. Specifically, in response to the Régie's Information R , HQT-6, Document 1, dated , at R1.2 and R2.1. R , HQT-6, Document 1, dated , at R2.1 AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 18

31 Request #245, HQCMÉ notes that the following NERC reliabilty standards should only apply to BPS, as defined by NPCC:. PRC Disturbance Monitoring;. PRC Protection System Maintenance; and. TPL-OOl to TPL-004 System Performance Standards. This position results in the exclusion of these requirements in the QCMEP for all transmission facilities that are non "bulk" (BPS), including HQT's extensive network of transmission facilities. We submit that these excluded requirements for non bulk (BPS) transmission facilities have a greater "influence" on the reliability of the RTP system than those that are listed in the Simplified Reliabilty Application Matrix46 (the "Registry of Applicable Standards"). ln its response, HQCMÉ states that: (internai translation) The NPCC has developed design plannng criteria that applies to the "Bulk" network. HQ in its raie as Planng Coordinator and Transmission Planer, within the meanng of the NERC functional model, has planned its grid system to respect these criteria, which also makes it possible to respect the requirements of the standards PRC-005 and TPL-001 to TPL While we fully agree with the position HQCMÉ has taken with respect to the applicability of the reliabilty standards PRC-004, PRC-005, and TPL-OOl to TPL-004 to the BPS only, we would equally argue that the same holds true for the other 45 R , HQCMÉ-3, Document 1., Dated "Réponses du Coordonnateur de la fiabilité à la demande de renseignements numéro 2 de la Régie de l'énergie", Section 1.3. R , HQCMÉ-2, Document 5, "Registre des installations visées par les normes de fiabilité" , at pages 14 and R , HQCMÉ-2, Document 7.1, Revised , "Sirnplified Reliabilty Application Matrix, dated October 6, 2009"; Ths matrix presents a registry of applicable NERC reliability standards that would otherwise be applicable to the entities subject to reliabilty standards and sanction guidelines. 47 See note 45 above. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 19

32 standards listed in the Registry of Applicable Standards, with respect to their inclusion in the QCMEP that are to be monitored by NPCC. Given the reasons and concerns raised above, we submit that HQCMÉ' s proposai to expand the applicability of "certain" reliability standards for Québec over and above that of the other NPCC Canadian jurisdictions, within the context of the QCMEP, cannot be supported or justified. Article iv. Application of NERe reliabilty standards to the Installations While we are of the view that HQCMÉ's expanded scope of coverage of the NERC reliability standards to non BPS facilities under the proposed QCMEP is unjustified and unwarranted, it is our understanding that RTA is fully aware of, recognizes the importance of and supports the need to main tain system reliability, including local area reliability. Furthermore, it is our understanding that RTA accepts that many of the requirements of the NERC reliability standards are equally important to maintaining "local are a" reliability. Further, given the importance of system reliability to RTA, RTA already performs many of the listed standards requirements to various degrees and wil continue to do so in order to enhance local area reliabilty. Nonetheless, these requirements should not be subject to the rigorous, administratively burdensome QCMEP and its related sanctions that are to be managed by NPCC. These requirements should rather be managed internally within Québec as they have successfully been in the pasto It is therefore, in our view, unjustified and unwarranted to expand the scope of the NERC's Rules of Procedures (RoP) and the CMEP to non bulk (BPS) transmission facilties, su ch as the Installations, solely for the Province of Québec. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe Page 20

33 Article V. Conclusions The Installations should be viewed no differently than a large industrial customer with load dis placement generation and an extensive distribution system, albeit a very large industrial customer with significant generation for its installed load carried over a "high tension" distribution network. Notwithstanding the size and the voltage of the Installations' distribution network, any faults and disturbances on this network continue to have local impact implications only. Therefore, the Installations are clearly not, and cannot be construed as being part of, the bulk power system (BPS). While HQCMÉ does not disagree with that statement, it is proposing to the Régie to extend the reach of the NERC/NPCC CMEP umbrella to RTPs. HQCMÉ's assertion that RTP facilities such as the Installations be required to be subjected to QCMEP cannot be supported both on a technical analysis and a comparative basis with the other NPCC Canadian jurisdictions. Su ch action would subject RT A to sanctions, proposed by NPCC, for facilities that are clearly not part of the BPS. RTA understands the importance of, and remains committed to, helping assure the reliability of its distribution network and three interconnections with HQT. RT A further recognizes that it is in its best interest to do so and has a long standing history and proven track record of maintaining a reliable system in the Saguenay- Lac-Saint-Jean region. However, we remain concerned that extending the immensely administratively burdensome program requirements under the NERC/NPCC CMEP umbrella, and its related sanctions, to facilities that have NO impact to the BPS wil be costly, will serve AESI ACU~EN ENGINEERED SOLUTIONS INTERNATIONAL Ne. Page 21

34 little bene fit to improving reliability and wil needlessly increase risks. ln addition, it wil tie up limited resources that are already in short supply; the se resources would be better served if focussed on reliability matters that do have a direct impact to the reliability of the BPS. It is our opinion that Québec and its customers would be better served if local area reliabilty matters remained with HQCMÉ and was managed locally. A two (2) tier approach, as described on page 15 of this report, such as those implemented ID Ontario and New Brunswick, have been successful in addressing the concerns of owners and opera tors of non-bps facilities relating to the implementation of NERC reliabilty standards. Extending the reach of NPCC and NERC enforcement programs (CMEP) to RTP facilities, su ch as the Installations, is a substantial step and unwarranted departure from the original intent of the reliability standards and the ERO' s mandate, which is to main tain the reliability of the interconnected BPS. Therefore, we respectfully submit to the Régie that: i) the definition of RTP should not be used for establishing the Registry; ii) RTA and the Installations should not be designated as NERC functional model entities for the purposes of monitoring and auditing by NPCC under the QCMEP; iii) The entities and their BPS installations that would be subject to the Québec reliability standards and NPCC criteria should be distinguished, in the Registry, from the entities and their non-bps installations that would be subject to non-bps reliability related requirements and managed locally by HQCMÉ, and AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 22

35 iv) a two (2) tier QCMEP approach be implemented similar to other NPCC Canadian jurisdictions (Ontario and New Brunswick). Respectfully: 9\) ~ Ronald J. Falsetti, P.Eng. AssocIate - Senior Consultant AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC. 775 Main Street East, Suite 1B, Milton, Ontario, L9T 3Z3 AESI-US INC Central Parkway, Suite 1475, Atlanta, Georgia, rj falsettii?pcogeco.ca Phone' (905) Mobile: (289) AESI ACUMEN ENCINEERED SOLUTIONS INTERNATIONAL INe. Page 23

36 Article VI. Appendices Section 6.01 Appendix A Independence Affirmation and Statement of The information contained in this report is based on information provided by RTA and information contained in the list of sources and documents referred to in Appendix Section 6.02 (some documents were translated to English), and the knowledge and extensive expertise of the author on the subject. This information is, to the best of my knowledge, factually correct. Further, AESI and the undersigned have no relationship or association with RT A, and have provided these paid profession al services at the request of RTA, as independent consultants with established expertise in the electricity industry. AESI Acumen Engineered Solutions International Inc. ~J g-~. ( l -I l By: Ronald J Falsetti, P.Eng. Title: Associate Senior Consultant AESI ACUMEN ENGINEERED SOLUTIDNS INTERNATIONAl INC. Page 24

37 Section 6.02 Appendix B - List of Sources and Documents Reviewed 1. Our comprehensive knowledge of (i) compliance programs within NPCC; (ii) ISOIRTO Council (IRC) council members; (iii) registration requirements and associated known issue with the NERC registration criterion, specifically within the context of the BPS52; 2. Our comprehensive knowledge of NPCC's long standing history of defending the application of reliability standards to the BPS only; 3. Detailed review with RT As representatives of the Installations as well as their planning, operation al and facility data; 4. Detailed review with RT A' s representatives of the operational agreements/arrangements between RTA and Hydro-Québec and current activities in support of system reliability; 5. R , B-l - HQCMÉ's application, Dated ; 6. R , HQCMÉ-2, Document 11, Dated , "Liste des rencontres avec les entités visées ", 7. R , HQCMÉ-2, Document 3, Revised , "Liste des entités siisceptibles d'être soumises aux normes de fiabili téff. 8. R , HQCMÉ-2, Document 4, Revised , "Registre des entités visées par les normes de fiabilité", See Resume attached. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INC. Page 25

38 9. R , HQCMÉ-2, Document 5, "Registre des installations visées par les normes de fiabilité )), Dated ; 10. R , HQCMÉ-2, Document 10, "Glossaire des termes et des acronymes relatifs aux normes de fiabilité" Revised R , Decision D , dated September 22, 2009; 12. R , Decision D , dated November 6, 2009; 13. R , HQCMÉ-3, Document 1.1, Dated , "Réponses du Coordonnateur de la fiabilité à la demande de renseignements numéro 2 de la Régie de l'énergie" ; 14. R , HQCMÉ-2, Document 71, Revised , "Simplified NERC Reliability application Matrix", 15. R , HQCMÉ-3, Document 4, Dated , Page 13 of 16, "Réponses du Coordonnateur de la fiabilité à la demande de renseignements numéro 1 de Rio Tinto Alcan nc." 16. R , HQCMÉ-3, Document 4.1, Dated , Page 1 of 10, "Réponses du Coordonnateur de la fiabilité à la demande de renseignements numéro 2 de Rio Tinto Alcan nc. ". 17. R , HQT-6, Document 1, Dated , "Réponses à la demande de renseignements numéro 1 de Alcan Énergie Électrique'" 18. NPCC's Uniform Compliance Monitoring & Enforcement Programs (CMEP) implementation Procedure; NPCC Document - CP-l, 19. NERC's Statement of Compliance - Registry - Criteria - v5; AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 26

39 20. Agreement on the development of electric power transmission reliabilty standards and of procedures and a program for the monitoring of the application for these standards for Québec entered into between the Régie de l'énergie, North American Electric Reliability Corporation and Northeast Power Coordinating CouncIl, Inc. on May 8, 2009; 21. Proposed Quebec Compliance Monitoring and Enforcement Program (QCMEP) for Implementation by Northeast Power Coordinating Council, mc; 22. Proposed Quebec Rules of procedure (QROP) for Compliance Services by the North American Electric Reliability Corporation; 23. United States of America, Federal Energy Regulatory Commission, 18 CFR Part 40 (Docket No. RM ; Or der No. 693), Mandatory Reliability Standards for the Bulk-Power System (Issued March 16, 2007)53; 24. NPCC Document A- NPCC Glossary of Terms54; 25. United States of America, Federal Energy Regulatory Commission, Docket No. RC , Compliance fiing and assessment of bulk electric System definition report of the North American Electric Reliability Corporation and Northeast Power Coordination Council, me., in response to the December 18, 2008 Commission order (Issued September 21, 2009) 55; 26. NERC - Definition of "Adequate Level of Reliabilty" 56; /whats-new/comm-meet/2007 / /e-13.pdf. genda98/ A -07. pdf NERC-NPCC BES Report Camp Filing pdf Complete Agenda Package 0208.pdfAgendItem8. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 27

40 27. Federal Energy Regulatory Commission, InformaI Filing by North American Electric Reliability Corporation on Adequate level of reliabilty, Docket RR07-14, dated May 5,200857; 28. BPS vs. BES, Comments of the New York State Reliability Council LLC FERC Docket No. RM Mandatory Reliability Standards for the Bulk-Power System and Docket No. RM Facilities Design, Connections and Maintenance Reliabilty Standards), Dated January 3, ; 29. Comments of the New York State Public Service Commission on Mandatory Reliability Standards for the Bulk-Power System, Docket RM , Dated January 3, ; 30. Performance Based Methodology - Comments of the New York State Reliabilty COUNCII, LLC on an alternative approach to establish facilities to register, Topological and Impedance Element Ranking (TIER), dated October 28, ; 31. IESO Reliability Compliance Program (IRCP) (Part 2.6 Treatment of Compliance Issues); The Ontario compliance monitoring program managed by the author of this document from late 1999 to September ; 57 Leve) of Reliab lity Defintion pdf 58 goy / dm ws/nvcommon/nv ntf.asp?slcfilelist= : pdf pdf goy /idm ws/nvcommon/nv ntf.asp?s)dilelist= : /Commen.?I)thpo/~?() NYSR C%20undpr0l2QRNl0f1 1J,_(1l\l). pdf n/ma CompIssues. pdf AESI ACUMEN ENCINEERED SOLUTIONS INTERNATIONAL INC. Page 28

41 32. IESO Reliabilty Compliance Program (IRCP) (Part 7.9 Reliability Compliance Program) Memorandum of Understanding (MOU) between the New Brunswick System Operator (NBSO) and Northeast Power Coordination Council (NPCC) and North American Electric Reliabilty Corporation (NERC) dated November 19, ; 34. Market Procedure 8 - New Brunswick System Operator (NBSO)'s compliance program ReliabilityCompProgram. pdf 63 private/mou%20(nbso- 'Yo20N PCC- %20N ERC). pdf 64 htt:// private/mp-os.pdf. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL Ne. Page 29

42 Section 6.03 Appendix C Experts Background, Qualifications, Training and Experience Ronald J. Falsett, P.Eng Glengrove Cres Oakvile, Ontario, L6M 3X5 Business (905) Mobile (289) EDUCATION BESc in Electrical Engineering, UNIVERSITY of WESTERN ONTARIO EMPLOYMENT HISTORY Nov Current ASSOCIATE - SENIOR CONSULTANT AESI Acumen Engineered Solutions International Inc Sept 2008 INDEPENDENT ELECTRICITY SYSTEM OPERATOR TEAM LEADER / SENIOR EXCHANGE ENGINEER. Responsible for managing IESO Reliability Compliance Program (IRCP); monitoring, assessing and reporting Ontario marker participant and its compliance to North American Electric Reliability Corporation (NERC) standards and Northeast Power Coordinating Council (NPCC) Inc. criteria. Managed IESO reliability standards and criteria review program providing consolidated comments to NERC and NPCC standards and criteria under development. Managed IESO readiness for NERC compliance audits and readiness reviews. Chair of IESO Reliability Standards Standing Committee (RSSC); a stakeholder forum designed to: i) Notify stakeholders of reliability related information on new and developing reliability standards, NPCC criteria and Electric Reliability Organization (ERO) matters ii) Discuss, provide advice and to the extent possible, develop consensus comments on new and developing reliability standards and criteria iii) Engage stakeholders in the standard development process of NPCC Inc. and NERC. IESO representative and Vice-Chair ( ) of NPCC Compliance Committee (formerly Compliance Monitoring and Assessment (CMAS) Committee) charged with providing objective stakeholder policy input 10 1he NPCC Compliance Monitoring and Enforcement Program (CMEP); with notable responsibility to: i) Review and approve of NPCC Compliance Staff procedures for implementing the CMEP ii) Review and endorse processes used, by NPCC Compliance Staff, for noncompliance assessments and determination of sanctions AESI ACUMEN ENCINEERED SOLUTIONS INTERNATIONAL INe. Page 30

43 iii) Provide final approval of compliance assessments done by NPCC Compliance Staff related to NPCC Reliability Criteria, including approval of non-monetary sanction recommendations iv) Provide a pre-hearing forum for the resolution of contested compliance and lor sanction determinations v) Conduct annual evaluations of the NPCC Compliance Staffs CMEP implementation Chair ofnpcc Registration Sub-Committee, responsible for providing direction to the Compliance Committee and NPCC Compliance staff on entity registration. Specifically with respect to developing the strategy and registration methodology for generator owners/operators and transmission owners/operators as it pertains to NPCC definition of bulk power system. IESO representative on the Regional Standards Committee. A committee of the NPCC Board, charged with: i) Management and maintenance of the NPCC Standards Development Procedure and processes; ii) Providing consolidated NPCC Regional review and comment to the existing and proposed NERC standards; and participate in the NERC Reliability Standards Development Process; and iii) Identification of upcoming issues associated with new NERC reliability standards and their potential impact to the NPCC Region, (i.e. Regional difference). Proposing solutions or guide the development of the standards through effective and timely comments and soliciting NPCC participation on the standard authorization requests (SAR) and reliability standards drafting teams. ISO/RTO Council (IRC) representative on NERC Compliance and Certification Committee; a committee of the NERC Board with a mandate to engage, support and advise the Board and NERC Compliance staff regarding ail facets of the NERC Compliance Monitoring and Enforcement Program (Compliance program), Organization Registration program (Registration program) and Organization Certification program (Certification program). Specifically: i) Provides comments to NERC Board and Compliance staff with respect to stakeholders' perception of the policies, practices and effectiveness of the Compliance program, Registration program, and Certification program. ii) Recommends revisions of the ERO Rules of Procedure related to the Compliance program, Registration program, and Certification program to the NERC Board iii) Establishes and implements programs to monitor NERC's compliance with the reliability standards that apply to NERe, the Compliance program' s adherence to applicable NERC's Rules of Procedure and its compliance with the Section 306 of the Rules of Procedure regarding the Reliability Standards development pro cess iv) Serves as the hearing body for any contest regarding findings of or penalties or sanctions for violation(s) of reliability standard(s) where NERC is directly monitoring the entity for compliance with those sian dards (Registered Entity by agreement with an Regional Entity or absent a delegation agreement; the Region AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 31

44 itself where approved standards are applicable to the region) as described in the NERC Rules of Procedure v) Serves as the mediator for any disagreements between NERC and the Regional Entities concerning NERC performance audits of Regional Entities compliance programs vi) Provide assistance to NERC and the Regional Entities to implement the Compliance and Organization Registration and Certification programs. Responsible for coordinating System Operation' s strategie reliability and business risk management process. Account Manager (7-month rotation) accountable for managing and facilitating market participants registration and market entry prior to market opening. Project coordinator for NERC's Electronic lnterchange Transaction (e-tags) implementation ONTARIO HYDRO ACCOUNT MANAGER! ADVISOR - Wholesale Power Division, Western Region. Responsible for key industrial & municipal utility accounts, providing regulatory, financial and technical guidance to plant managers and utility Commissions and for managing ove rail customer relationship Identified, developed and facilitated implementation of innovative energy solutions and energy supply contracts with key Industrial & municipal utility accounts. Responsible for developing municipal utility rates cases for Ontario Hydro Board approval SITE ENERGY COORDINATOR, ELECTRICAL SYSTEMS & PROCESS CONTROL ENGINEER, - BRUCE NUCLEAR POWER COMPLEX Responsible for HV AC & electrical systems commissioning, diagnostic and maintenance programs for emergency power combustion turbine units, HP steam system controls and site electrical protection system Chair -"BNPD Strategie Operating Planning Committee" responsible for developing optimum short & long-term energy production deployment objectives, strategies, guidelines, plans and software applications to maximize site electrical output based on bulk electrical system limitations impacting Bruce flows (Iocked in energy and spring freshet) TRAINING. Coaching Skills and Cooperative Coordination Slra1egic Account Management Training Major Account Management Training 1 &II and Problem Solving. Relay Protection, Control and Metering Training. Combustion Turbine Control Logic; Industrial Application of Gas Turbines AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INc. Page 32

45 . Sales Certification and Integrity Selling Training. Effective Negotiating Ski Ils; Key Account Business Relations and Effective Team Building. Financial & Transactional Analysis Training. Developing Potential Supervisors; Presentation Techniques; Time Management AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INe. Page 33

46 Section 6.04 Appendix D - About AESI Acumen Engineered Solutions International Inc. and AESI-US Inc. ('/ AESI") AESI is a well-established engineering firm (founded in 1984) with its head office in Milton, Ontario, Canada and with a wholly owned US. subsidiary based in Atlanta, Georgia, USA. Its professional staff and associates offer a full range of engineering and consulting services to Electrical Utilities, Industry and Governments. Since its inception in 1984, AESI has met the needs of both domestic and international (i.e. offshore) clientele through a portfolio of capabilties in five distinct areas:. Power System Operations and Planning. Distribution Utility Services. Information & Communication Technology & System Automation Services. Power System Facilities Design, Construction, Operations & Maintenance. Regulatory Compliance Services The bulk of AESI's engagements have been focussed on electrical utilities at the Generation, Transmission, System Operations and the Distribution level. AESI's cliente le includes government owned utilities, Co-operatives, Municipal utility organizations, Independent Power Producers (IPPs) and Investor Owned Utilities (IOUs). Over the years, AESI has successfully completed over 600 projects, primarily in the electrical utility sector. AESI ACUMEN ENCINEERED SOLUTIONS INTERNATIO:'AL INe. Page 34

47 AESI's engagements span the following key service areas:. Creation of a control areas. Audits of power contracts. NERC Reliabilitij. Definition, selection and. l mplemen ta tion/refurbishm Standards reviews NERCimplementation of ent of Control Centres CI? Audits assessments EMS/SCADA systems and action plans for. Power supply planning compliance. Communications systems studies planning and. Cyber security assessments Audits of power system. implementa tion operation. Project management. Power con tract negotiation. Strategic planning. Utilitij engineering. Training services AESI' s profession areas: al staff and associates have extensive experience ln the following. NERC Reliabilitij Standards. Operational Auditing.. IT-Strategic Planning and. NERC -CIP. Distribution Utility Implementation Assessmen tsl Audi ts Management. Information Management. IPP Analysis & Power. Distribution Utility Systems, Customer Billing, Supply Contracting Planning Work Management and Material Management. Inter-Utilitij Operations.. Distribution Utility... Electric Power System Engineering & Operations. Application Software Development Planning,. Engineering Operations, Power System Protection Co- Design and Implementation. Industrial Plant Automation ordination.. Corpora te Utility Restructuring (Open Plan nin g/insti tu tional. Telecom/Network Communications Access and Deregulation of. Supervisonj Control and Power Exchanges) Data Acquisition. Instrumentation. North American Regulatonj. Distribution Automation. Training Services and Competitive Issues in the. Energy Management areas of Generation, Transmission and Distribution of Electricitij. Power System Facilities Design Construction and Operations & Maintenance.. Systems (EMS) Smart Grid AMI Systems A more detailed profie on AESI is available on its web site at AESI ACLJMEN ENGINEERED SOLUTIONS INTERNATIO:\AL INe. Page 35

48 AESI's four key senior staff members have over 120 years experience working in the Electric Utility Industry. AESI knows the industry and have the credentials. AESI has done extensive work in the area of NERC compliance readiness assessments, mock audits throughout the U.S. and Canada and assisting Utilties in their Compliance readiness efforts. AESI's methodology and approach for performing NERC Reliabilty Standards assessments is among the leading/best practices in the industry. AESI has successfully completed 35 NERC Reliability compliance readiness assessments (NERC non-cip and NERC CIP Standards) for its clients in the generation, transmission and distribution business. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL INl Page 36

49 Section 6.05 Appendix E Qualifications AESI's NERC Standards Sin ce the introduction of the NERC Reliabilty Standards, AESI has assisted a number of clients, which include Government owned Utilities, G&T Cooperatives, IPPs, IOUs, Distribution Utilities, Member Cooperative associations, Transmission Companies, Generation Companies and System Operating Companies with the following activities to assess their readiness for NERC Compliance and for improving their related infrastructure mate rial and systems to support NERC Compliance (a) NERC CIP Reliability Standards. Developing Risk Based Assessment Methodology for assisting in determining Critical Assets and Critical Cyber Assets;. Conducting Risk Based Assessment to identify Critical Assets and associated Critical Cyber Assets,. NERC CIP GAP Analysis reviews of Transmission, Generation and Control System Facilities for: o Generating Facilties o Transmission Facilities o Energy Management Systems o SCADA Systems o Conduct Vulnerability Assessments of the clients cyber assets located at the clients generating facilities, transmission facilities and control centers and the interconnection between these facihties and external networks e.g : Corporate, Internet, Vendors, etc o Prepare Compliance Action Plan based on Gap Analysis to establish Time Schedule and Budget estimate to bring facilities into compliance. o Implement Solutions to bring Facilities into CIP Compliance AESI AClJMEN ENGINEERED SOLUIlONS INTERNATIONAL INe. Page 37

50 o Develop the required documentation to demonstrate CIP compliance o Delivering Cyber Security Workshops and Seminars on CIP Compliance Readiness Process o Providing on-going annual professional services to assist Utilities with their NERC CIP Compliance sustainment program (b) NERC non-cip Reliabilty Standards. Creating and upgrading documentation to demonstrate NERC compliance;. Readiness reviews (and mock audits) for NERC compliance for ail types of NERC Functional Entities (GO, GOP, TO, TOP, DP, LSE, PSE, BA, etc);. Providing support to client during actual NERC compliance review;. Development of Utility Compliance Plan to help Utility manage their Compliance Program;. Development of Training Programs to meet NERC requirements;. Development of training material and delivering NERC Compliance Training;. Helping generation owners with fulfillng Power System Equipment Modelling and Data Requirements and Verification of Equipment Capabilities;. Help establish NERC Compliance Tracking System;. Providing on-going annual professional services to assist Utilities with their NERC Compliance sustainment pro gram, AESI can provide a complete range of compliance services to the Electric Utility Industry and is able to effectively provide support in this critical new topic because of its in-depth knowledge of, and the direct experience of its staff in, electric utility planning and operations. AESI and its associates have provided NERC Reliability Standards consulting services in all of the NERC Regions. AESI ACUMEN ENGINEERED SOLUTIONS INTERNATIONAL Ne. Page 38