Network Integration Service MPS PAG Meeting November 21, 2013
Network Service The Transmission Provider will provide firm transmission service over its Transmission System to the Network Customer for the delivery of capacity and energy from its designated Network Resources to service its Network Loads on a basis that is comparable to any Transmitter s use of the Transmission System to reliably serve its Native Load Customers. Source: NBTO OATT 2
Principles of Network Service Network Transmission Service (Network Integration Transmission Service) is used for the transmission of capacity and energy from network generating resources (can be external resources) to network loads. Network transmission service enables network customers to use their generation resources to serve their network loads. Network customers also can use the service to deliver economy energy purchases to their network loads. Source: FERC Pro Forma 3
Network Customers All Retail Customers of MPS Houlton Water Company Van Buren Light & Power District Bangor Hydro Electric All Transmission Owners in the ISO-NE Balancing Area 4
Why Network Service Now? Network Service has been considered in the past and dismissed. ISA north load (MPS) - 660,000 MWh Historically imports - 26% Retirement of in region generation increases imports significantly Network resources supplying energy - Tinker and Mars Hill Constrained interface locked up by two suppliers Enable firm transactions from NB, PEI, NS, HQ and NE Increase Access to Suppliers 5
Advantages Solves emerging constraint Solves market liquidity issues Increase price transparency Lower prices Reduces seams with other markets Allows existing NMMR to relieve capacity obligations Allows existing NMMR to encourage more suppliers Implement Reciprocity with ISO-NE (Forgiveness of Out Charges) 6
NB Transmission System HQ MPS PEI ISO-NE NSPI EMEC 7
Wholesale Costs in NoMe Market Pricing Of Electric Supply Energy based on ISO-NE Forward LMP Market Capacity based on ISO- NE Forward Capacity Auction Ancillary Services based on NBTO Capacity Based Ancillary Services Balancing Energy based on NB Power marginal costs Transmission based on NB Tariff + ISO-NE Tariff (13 $/MWh) ISA Self Funding Tariff Reliability Charges 8
Network Service Costs NMISA North NB Power Network Service 1.771 $/kw month Schedules 1 & 2 0.319 $/kw month 12 NCP 112,100 kw Annual Cost (cdn) 2,800,000 $ $/MWh 4.24 $/kwh.00424 Average kwh 500 2.12 ISO-NE Network Service 7.833 $/kw month 12 CP 101,384 kw Annual Cost 9,529,000 $ $/MWh 14.44 $/kwh.01444 Average kwh 500 7.22 9
NBTO Attachment K Transmission Expansion Policy The principles for cost sharing are as follows: If the additional transmission tariff revenues associated with the increased use of the Transmission System is more than or equal to the increase in the Transmission System revenue requirement there will be no costs incurred by the Transmission Customer. If the additional transmission tariff revenues associated with the increased use of the Transmission System are less than the increase in the Transmission System revenue requirement, the Transmission Customer will make a contribution to capital of an amount that will allow the Transmission Provider to continue to collect the full revenue requirement. To the extent that the Transmission Provider identifies system benefits, the requirement of the Transmission Customer to make a contribution to capital is diminished by the net present value of the system benefits. 10
Estimated Interface Expansion Costs Project Cost Tinker Upgrade 2,000,000 Perth Transfer 750,000 New 138 kv tie 12,500,000 Total 15,250,000 NB Power Transmission Carrying Cost 15% Annual Revenue Requirement Upgrade (NB) 2,287,500 $/kwyr 20.41 11
Estimated Reciprocity Savings MPS Transmission Revenue Credits = $2,100,000 3.15 $/MWh 2014 ISO-NE RNS 94 $/kwyr 10.73 $/MWh Savings Break Even Purchases 7.58 $/MWh 277,000 MWh Expected Standard Offer Reduction From Network Service & Reciprocity: ISO + NBTO -> 10.73 + 4.24 = 14.97 $/MWh 12
Challenges NB Interface 74 MW of Existing Reservations (grandfather?) Queue Position (Expansion) In-Region Generation becomes available Multi-jurisdictional ISO-NE Connection Costs Governance Feasibility (Pending Stability Studies) 13