MFC Power General Partner Ltd.,

Transcription

1 Decision D Preferential Sharing of Records Between, MFC Power Limited Partnership, URICA Energy Real Time Ltd., and URICA Asset Optimization Ltd. October 12, 2016

2 Alberta Utilities Commission Decision D Preferential Sharing of Records Between, MFC Power Limited Partnership, URICA Energy Real Time Ltd., and URICA Asset Optimization Ltd. Proceeding Application A001 October 12, 2016 Published by the: Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: Fax: Website:

3 Contents 1 Decision summary Introduction and background Relevant statutory and regulatory provisions Discussion and findings Fair, efficient and openly competitive operation of the market Reasonably necessary Terms and conditions Decision... 8 Appendix 1 Abbreviations... 9 Decision D (October 12, 2016) i

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5 Alberta Utilities Commission Calgary, Alberta Preferential Sharing of Records Between MFC Power General Partner Ltd., MFC Power Limited Partnership, URICA Energy Real Time Ltd., and URICA Asset Optimization Ltd. Decision D Proceeding Application A001 1 Decision summary 1. In this decision, the Alberta Utilities Commission (AUC or the Commission) must decide, in accordance with Section 3 of the Fair, Efficient and Open Competition Regulation, whether (MFC General Partner) and MFC Power Limited Partnership (MFC) may preferentially share records that are not available to the public with URICA Energy Real Time Ltd. (URICA Real Time), and URICA Asset Optimization Ltd. (URICA Asset Optimization). For the reasons found below the Commission has decided to grant the application for the sharing of records. In the Commission s view, MFC General Partner and MFC have demonstrated that the shared records would not be used for any purpose that will not support the fair, efficient, and openly competitive operation of the electricity market, and that the sharing of records is reasonably necessary for MFC General Partner and MFC to carry out their business. 2 Introduction and background 2. On September 1, 2016, MFC General Partner filed an application 1 with the AUC pursuant to Section 3 of the Fair, Efficient and Open Competition Regulation. The application sought an order from the Commission permitting the sharing of records between MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization that relate to the power generation facility held by MFC General Partner and are not available to the public. 3. On September 6, 2016, the Commission issued notice of the application made by MFC General Partner, in which it advised that the parties granted standing in the proceeding were limited to MFC General Partner and the Market Surveillance Administrator (MSA) in accordance with Section 3(5) of the Fair, Efficient and Open Competition Regulation. The notice of application established a process and schedule for the MSA to determine whether it would intervene in the proceeding and to advise the Commission whether it required an evidentiary process On September 12, 2016, the MSA filed a statement of intent to participate in the proceeding, and advised that it supported the application. The MSA added that it did not require an evidentiary process involving information requests and the filing of evidence In its application, MFC General Partner submitted that the information sharing would be with respect to its Mazeppa Power Plant that has a maximum capability of 16.5 megawatts Application A001. Exhibit X0013, Notice of Application, September 6, Exhibit X0014, MSA Statement of Intent to Participate, September 12, Decision D (October 12, 2016) 1

6 Preferential Sharing of Records between, MFC Power (MW). MFC General Partner added that it is the owner of the Mazeppa Power Generation Facility and that the pool participant associated with the Mazeppa power generation unit is MFC URICA Real Time provides a 24-hour real time dispatch desk service to clients for operational energy market services, ancillary services, 5 dispatch down services and energy restatements for events at generators as required by Independent System Operator rules. URICA Asset Optimization is an organization that works with clients in establishing and optimizing offer strategies. MFC General Partner and MFC both submit that they do not have the personnel or resources to monitor facility operations on a 24-hour basis In its application, MFC General Partner sought an order from the Commission permitting the sharing of non-public records between MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization, relating to the 16.5 MW Mazeppa facility In reaching the determinations contained within this decision, the Commission has considered all relevant materials comprising the record of this proceeding. Accordingly, references in this decision to specific parts of the record are intended to assist the reader in understanding the Commission s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the record with respect to that matter. 3 Relevant statutory and regulatory provisions 9. The relevant statutory provisions respecting the sharing by market participants of records that are not available to the public are found in the Fair, Efficient and Open Competition Regulation, the Alberta Utilities Commission Act, and the Electric Utilities Act, under which that regulation was enacted. 10. Section 5 of the Electric Utilities Act lists some of its purposes as follows: (b) to provide for a competitive power pool so that an efficient market for electricity based on fair and open competition can develop, where all persons wishing to exchange electric energy through the power pool may do so on non-discriminatory terms ; (c) to provide for rules so that an efficient market for electricity based on fair and open competition can develop in which neither the market nor the structure of the Alberta electric industry is distorted by unfair advantages of government-owned participants or any other participant; Exhibit X0008, Preferential sharing of records application registered September 1, 2016, pages 2-3. As defined by the Alberta Electric System Operator (AESO), ancillary services are services that are required to ensure that electricity can be transmitted reliably, efficiently, and securely across Alberta s interconnected transmission system. Ancillary services include operating reserve, transmission must run, black start services, and load shed scheme services. Operating reserves consist of regulating reserves, spinning reserves and supplemental reserves, all products that the AESO s system controller utilizes to ensure that the supply-demand of electricity in Alberta is balanced seamlessly in real-time operations. Exhibit X0008, Preferential sharing of records application registered September 1, 2016, page 3. Ibid. 2 Decision D (October 12, 2016)

7 Preferential Sharing of Records between, MFC Power (e) to enable customers to choose from a range of services in the Alberta electric industry, including a flow-through of pool price and other options developed by a competitive market, and to receive satisfactory service; (h) to provide for a framework so that the Alberta electric industry can, where necessary, be effectively regulated in a manner that minimizes the cost of regulation and provides incentives for efficiency. 11. The Electric Utilities Act further states in Section 6 that [m]arket participants are to conduct themselves in a manner that supports the fair, efficient and openly competitive operation of the market. 12. Section 3(1) of the Fair, Efficient and Open Competition Regulation establishes that a market participant shall not share records that are not available to the public relating to any past, current or future price and quantity offer made to the power pool or for the provision of ancillary services. Section 3(2) establishes instances where records that are not available to the public may be shared and Section 3(3) allows the Commission to issue an order permitting the sharing of records, stating: (3) The Commission may, on application by a market participant that is otherwise prohibited from sharing records referred to under subsection (1), issue an order permitting the sharing of those records on any terms and conditions the Commission considers appropriate where the market participant establishes that (a) the records will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the electricity market, including the conduct referred to in section 2, and (b) the sharing of the records is reasonably necessary for the market participant to carry out its business. 13. Section 2 of the Fair, Efficient and Open Competition Regulation identifies conduct by a market participant that does not support the fair, efficient and openly competitive operation of the market. Relevant to the sharing of records, prohibited conduct would include: (h) restricting or preventing competition, a competitive response or market entry by another person, including (i) a market participant directly or indirectly colluding, conspiring, combining, agreeing or arranging with another market participant to restrict or prevent competition, (j) manipulating market prices, including any price index, away from a competitive market outcome; Decision D (October 12, 2016) 3

8 Preferential Sharing of Records between, MFC Power 4 Discussion and findings 4.1 Fair, efficient and openly competitive operation of the market 14. MFC General Partner demonstrated and submitted that the total market share offer control represented by itself and all associates (as defined in Section 5(1) of the Fair, Efficient and Open Competition Regulation) is 0.1 per cent of the energy market and 1.9 per cent of the ancillary services market. 8 MFC General Partner further demonstrated and submitted that URICA Real Time and URICA Asset Optimization have a combined total of 0.4 per cent offer control of the energy market and 10 per cent offer control of the ancillary services market A senior officer of MFC General Partner provided a written representation which indicated that any preferential records that MFC General Partner or MFC shares with URICA Real Time and URICA Asset Optimization would not be used for any purpose that does not support the fair, efficient and openly competitive operation of the Alberta electricity market, including but not limited to the conduct referred to in Section 2 of the Fair, Efficient and Open Competition Regulation. The representation also stated that there exists a code of business conduct and ethics at MFC General Partner and MFC that serves as a statement of fundamental principles, policies and guidelines that govern directors, officers and employees in the conduct of the company s business. MFC General Partner further submitted that its code of business conduct is in alignment and complies with the Fair, Efficient and Open Competition Regulation MFC General Partner filed a similar representation from senior officers at URICA Real Time and URICA Asset Optimization to confirm that any records subject to preferential information sharing that URICA Real Time and URICA Asset Optimization receives will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the electricity market. The representation also stated that there exists a formal compliance program at URICA Real Time and URICA Asset Optimization that all employees, officers, and its affiliates must read and comply with, and that all officers and employees of URICA Real Time and URICA Asset Optimization must submit signed acknowledgements that they will comply with the compliance program and the Fair, Efficient and Open Competition Regulation MFC General Partnership submitted that URICA s internal compliance program included the following components: (a) An information confidentiality policy 12 that states that URICA Energy Management Corporation, URICA Real Time, URICA Asset Optimization, and any subsidiaries are committed to keeping client information private and confidential, and that the confidentiality of client information is the backbone of their business model to maintain impartial treatment of each URICA Real Time and URICA Asset Optimization client. 13 (b) A Fair, Efficient and Open Competition Regulation Compliance Plan that lists those responsible for compliance at URICA Real Time and URICA Asset Optimization, and Exhibit X0008, Preferential sharing of records application registered September 1, 2016, pages 5-6. Ibid., pages 6-8. Exhibit X0002, MFC preferential sharing of records letter dated August 23, Exhibit X0001, URICA preferential sharing of records letter dated August 12, Exhibit X0003, URICA confidentiality policy dated June 27, Exhibit X0001, URICA preferential sharing of records letter dated August 12, 2016, page 2. 4 Decision D (October 12, 2016)

9 Preferential Sharing of Records between, MFC Power outlines a code of conduct that specifies that URICA Real Time and URICA Asset Optimization will comply with all the provisions and requirements of the Fair, Efficient and Open Competition Regulation. 14 (c) Compliance reporting at URICA Real Time and URICA Asset Optimization that is enforced by the Directors of Compliance at URICA Real Time, URICA Asset Optimization, 15 and URICA Energy Management Corporation, along with voluntary self-reporting to the MSA on compliance issues. 16 (d) That there will be no communication of price, quantity or outage information from URICA Real Time to URICA Asset Optimization, and that URICA Real Time and URICA Asset Optimization have separate staff, separate systems access, and separate office locations. 17 Commission findings 18. In determining whether the records shared will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the electricity market, the Commission has considered the following: (a) The formal program for internal compliance at URICA Real Time and URICA Asset Optimization, and the commitment of URICA Real Time and URICA Asset Optimization to comply with all provisions and requirements of the Fair, Efficient and Open Competition Regulation. (b) The controls over client confidentiality at URICA Real Time and URICA Asset Optimization, along with the assurances from URICA Real Time and URICA Asset Optimization that there will be impartial treatment of each client. (c) The segregation of offer strategy setting and real-time offers between URICA Asset Optimization and URICA Real Time, along with the assurance that there will be no communication of price, quantity or outage information from URICA Real Time to URICA Asset Optimization. (d) The size of the Mazeppa unit as well as the degree of offer control that MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization have in the Alberta energy and operating reserve markets, where all offer control figures are less than the offer control limit of 30 per cent set out in Section 5(5) of the Fair, Efficient and Open Competition Regulation. (e) The representations from MFC, URICA Real Time, and URICA Asset Optimization that the preferential records in respect of the Mazeppa unit will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the market. 19. The Commission accepts and will rely on the representations of URICA Real Time and URICA Asset Optimization regarding its program and existing plans for internal compliance to Exhibit X0005, URICA FEOC compliance plan dated August 4, Ibid., page 8. Exhibit X0008, Preferential sharing of records application registered September 1, 2016, page 9. Ibid., page 2. Decision D (October 12, 2016) 5

10 Preferential Sharing of Records between, MFC Power manage confidential information contemplated by the Fair, Efficient and Open Competition Regulation as sufficient assurances that no confidential information will be shared between MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization for the purposes of price-fixing, price-manipulation or any other conduct proscribed by the Fair, Efficient and Open Competition Regulation. The Commission is further satisfied that the current arrangements should prevent URICA Real Time and URICA Asset Optimization from tacitly colluding by revealing any non-public information to each other that may give them an unfair advantage in the market. 20. Based on the statements and representations of the parties, the Commission finds that MFC General Partner and MFC have demonstrated that the preferential records are not likely to be used for any purpose that does not support the fair, efficient and openly competitive operation of the Alberta electricity market. 4.2 Reasonably necessary 21. MFC General Partner and MFC indicated that they do not have the personnel or ability to manage the dispatching and operational monitoring and restatement requirements of the Mazeppa power generation facilities on a 24-hour basis MFC General Partner and MFC have entered into commercial arrangements with URICA Real Time and URICA Asset Optimization, which, among other things, appoints URICA Real Time and URICA Asset Optimization as an agent of MFC General Partner and MFC to provide a dispatch service and consider different offer strategies for MFC General Partner and MFC. These arrangements will make it necessary for MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization to share with each other certain records which may not otherwise be available to the public. 23. MFC provided representation from a senior officer who submitted that the sharing of preferential records described in the application is reasonably necessary for MFC General Partner and MFC to carry out their business. 19 Commission findings 24. The Commission accepts the statements of MFC General Partner and MFC regarding the nature of the records that will be shared and the purpose in sharing the records. The Commission accepts and will rely upon the representation provided by a senior officer of MFC that the proposed sharing of information is reasonably necessary for MFC General Partner and MFC to carry out their business. 25. For the above reasons, the Commission finds that MFC General Partner and MFC have established that the sharing of the records as described in the application is reasonably necessary for MFC General Partner and MFC to carry out their business. 4.3 Terms and conditions 26. Section 3(3) of the Fair, Efficient and Open Competition Regulation authorizes the Commission to issue an order permitting the sharing of records on any terms and conditions that the Commission considers appropriate Exhibit X0008, Preferential sharing of records application registered September 1, 2016, pages 3 and 11. Exhibit X0002, MFC preferential sharing of records letter dated August 23, Decision D (October 12, 2016)

11 Preferential Sharing of Records between, MFC Power 27. MFC General Partner submitted that the term for the requested order is from November 1, 2016 to June 1, Commission findings 28. The issuance of an order permitting the sharing of records not available to the public pursuant to Section 3 of the Fair, Efficient and Open Competition Regulation is governed by Section 3(3) which reads as follows: Preferential sharing of records that are not available to the public 3(3) The Commission may, on application by a market participant that is otherwise prohibited from sharing records referred to under subsection (1), issue an order permitting the sharing of those records on any terms and conditions the Commission considers appropriate where the market participant establishes that (a) (b) the records will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the electricity market, including the conduct referred to in section 2, and the sharing of the records is reasonably necessary for the market participant to carry out its business. 29. Accordingly, the Commission is prepared to issue an order allowing MFC General Partner and MFC to share records not available to the public with URICA Real Time and URICA Asset Optimization, as referred to in Section 3(1) of the Fair, Efficient and Open Competition Regulation subject to the following terms and conditions: (a) The order only applies to the sharing of information between MFC Power General Partner Ltd., MFC Power Limited Partnership, URICA Energy Real Time Ltd., and URICA Asset Optimization Ltd. relating to price, quantity, and availability information for the 16.5-MW Mazeppa plant with respect to offers in the Alberta electricity and ancillary services markets. (b) must notify the Commission of the termination of the commercial arrangements between, MFC Power Limited Partnership, URICA Energy Real Time Ltd., and URICA Asset Optimization Ltd. within 30 days of the termination of commercial arrangements. (c) must notify the Commission of any material changes to the information and continued applicability of any representations contained within its application that may affect the compliance of, MFC Power Limited Partnership, URICA Energy Real Time Ltd., or URICA Asset Optimization Ltd. with the Fair, Efficient and Open Competition Regulation within 30 days of the material changes. 30. The order shall be effective from the date of this decision until the earlier of June 1, 2029 or the termination of the dispatch service agreement between MFC General Partner, MFC, URICA Real Time, and URICA Asset Optimization. 20 Exhibit X0008, Preferential sharing of records application registered September 1, 2016, page 1. Decision D (October 12, 2016) 7

12 Preferential Sharing of Records between, MFC Power 5 Decision 31. Pursuant to the provisions of Section 3 of the Fair, Efficient and Open Competition Regulation, the Commission grants the application for the sharing of records set out in the following order granted to and MFC Power Limited Partnership, which is a separate disposition in this proceeding: Preferential Sharing of Records Mazeppa Order D Dated on October 12, Alberta Utilities Commission (original signed by) Anne Michaud Panel Chair (original signed by) Bill Lyttle Commission Member 8 Decision D (October 12, 2016)

13 Preferential Sharing of Records between, MFC Power Appendix 1 Abbreviations Abbreviation AESO AUC or the Commission MFC MFC General Partner MSA MW URICA Asset Optimization URICA Real Time Name in Full Alberta Electric System Operator Alberta Utilities Commission MFC Power Limited Partnership Market Surveillance Administrator megawatt(s) URICA Asset Optimization Ltd. URICA Energy Real Time Ltd. Decision D (October 12, 2016) 9