Download Damages Survey - Western Systems Power Pool

Western Systems Power Pool, Inc.
Survey Respecting WSPP Agreement Damages Provisions
Introduction
At a meeting of the Contract Subcommittee of the Operating Committee, it was decided to form a
working group to evaluate the current WSPP Agreement for inadequacies of certain provisions that
relate to curtailments and adjustments, liquidated damages and remedies. The Contract
Subcommittee addresses potential changes to the WSPP Agreement. The Contract Subcommittee
(and WSPP broadly) does not seek to develop any standard other than contractual standards as may
become stated in the WSPP Agreement.
The following survey is intended to elicit information to assist the Contract Subcommittee in
addressing whether existing provisions (see e.g., WSPP Agreement § 21.3) are adequate in light of
existing industry practice, and how revised damages provisions might better serve WSPP members.
The survey is divided into four categories: (1) General; (2) Curtailments, Adjustments and
Uncontrollable Force; (3) Remedies; and (4) Curtailments and Adjustments Impacting Multiple
Transactions or Occurring Intra-Hour.
The survey results will be tabulated by the Chair of the Operating Committee, assisted by WSPP legal
counsel as the Chair may determine. Results will be provided in summary form. The purpose of this
procedure is to avoid disclosure by any company to other members of its particular practices. The
summary results will be made available to the Contract Subcommittee for consideration as: (i) a tool
to prioritize consideration of possible amendments to WSPP Agreement provisions; and (ii) an
indicator of which items have sufficient support to justify Subcommittee resources.
For purposes of this survey, the following terms have the meanings specified:
“Book-out” also termed B/O within this survey, means an alternative to liquidated damages in which
the parties impacted by a curtailment or adjustment may agree on a new transaction, in which the
volume of such new transaction would be booked-out or netted against the original transaction
which was curtailed or adjusted.
“Cut” means a curtailment or adjustment to a schedule as a result of a failure to physically deliver or
receive due to a transmission cut, a loss of generation, Uncontrollable Force or in order to meet load
requirements.
“Damages” shall mean damages calculated under Section 21.3 of the WSPP Agreement.
Each WSPP Member may only return one survey response If you are submitting a response on behalf
of your company, please discuss the responses internally prior to submittal, so that the responses are
accurate. These discussions should include your settlements, contracts and scheduling/trading staff.
This survey seeks information only pertaining to WSPP Schedule C products your company has
traded in the last year. The survey is informational only and does not bind your company in any
way.
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Please submit your responses to Winnie Howard no later than Friday, April 13th at:
Winnie Howard
Wright & Talisman
1200 G Street, NW
Washington, DC 20005
[email protected]
1. General
The questions in this section provide necessary background for the working group to
determine if the responses in this survey are impacted by (i) the region in which you primarily
transact, (ii) internal procedures and (iii) the volume of Cuts your company manages each
month. Additionally, the results of this section give the working group a general
understanding of your company’s view of the necessity to amend the WSPP Agreement.
1.
Per month, specify the average number of Cuts your company typically experiences in which
the delivery obligation is not kept whole physically.
a. 0-9
b. 10-40
c. In excess of 40
2.
In which region does your company primarily transact?
a. ERCOT
b. SPP
c. CAISO
d. NWPP
e. Other-Describe
3.
Does the region in which you are transacting impact your company’s decision on how to
remedy a Cut?
a. Yes
b. No
2. Curtailments, Adjustments and Uncontrollable Force
The section will be used to evaluate the aspects of the WSPP Agreement in its currently
effective form. It will ask probing questions to elicit the common response by market
participants to a Cut, and it contains questions on how to best address Cuts in the WSPP
Agreement.
4.
When a schedule is curtailed or adjusted for reasons other than Uncontrollable Force, does
your company normally:
a. Redirect/Resupply?
b. Book-out?
c. Calculate Damages after the fact?
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5. Are you aware of a circumstance in which a counterparty curtailed or adjusted a Schedule C
product in a manner that was contrary to the WSPP Agreement?
a. Yes
b. No
6. Do you have counterparties that use third party contractual language (e.g. tariff, etc.) to
govern a Cut, Damages, Uncontrollable Force, etc. under the WSPP Agreement?
a. Yes
b. No
7. Do you believe that Uncontrollable Force is adequately defined in the WSPP Agreement?
a. Yes
b. No
8.
If not, why?
9. How does your company determine if a cut is due to an Uncontrollable Force (select all that
apply)?
a. System wide message such as from WECC Messages or SI System Messages Display
b. Local balancing authority determines after-the-fact
c. Notice from the Transmission Provider
d. Other -Describe
10. Have you had a counterparty state that no Cut has occurred when the tag or balancing
authority is showing that a Cut did occur?
a. Yes
b. No
3. Remedies
This topic will examine the current remedies available under the WSPP Agreement and
discuss the practice of Book-Outs. The results from this section will provide the working
group with the direction necessary to draft new language, if necessary, surrounding the
calculations of Damages.
11. Do you feel there are discrepancies in how the WSPP Agreement is interpreted by members
when calculating Damages?
a. Yes
b. No
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12. If you answered yes to the prior question, please give an example (optional).
13. How often do you use the Damages (excluding Book-outs) remedy available under the
WSPP Agreement?
a. Monthly
b. Yearly
c. Rarely but the remedy impacts my risk evaluations
d. WSPP has a Damages remedy?
14. If the WSPP Agreement provided a remedy for a Cut that could not be replaced with
physical supply, which remedy would you prefer?
a. B/O on real time
b. B/O after the fact
c. B/O either on real time or after the fact
d. After-the-fact Damages
e. Other – Describe
f. Any/All of the above
15. Do you have any concerns with any of the remedies listed in #14 above?
a. Yes
b. No
16. If yes, what are they?
17. Should the WSPP Agreement add a definition of market price as such term is used in the
definition of Replacement Price and Resale Price?
a. Yes
b. No
18. If yes, market price should be defined as:
a. A daily index price?
b. An hourly index price?
c. A fixed price based on the hourly market?
d. A fixed price including any potential imbalance penalties you may incur?
e. The original contract price?
f. Zero price?
g. Other – describe.
19. Do you think that the WSPP Agreement should include a provision for B/O’s?
a. Yes
b. No
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20. Do you think the WSPP Agreement should include a provision for Source/Sink B/O’s?
a. Yes
b. No
21. If a B/O provision is included in the WSPP Agreement, how would you like to see the
calculation of the price for the B/O structured?
a. Use a daily index price
b. Use an hourly index price
c. Use a fixed price based on the hourly market
e. Use a fixed price including any potential imbalance charges you may incur [from
your balancing authority]
f. Use original contract price
h. Use zero price
i. Other
22. If a B/O provision is included in the WSPP Agreement, would you like to see a consistent
approach to the calculations of Damages and B/O’s?
a. Yes
b. No
4. Curtailments and Adjustments Impacting Multiple Transactions
Or
Occurring Intra-Hour
This topic has been a source of much debate at the Contracting Committee meetings over the
last few years. The WSPP Agreement currently does not have specific provisions to address
this topic. This section will attempt to discover if additional language is needed and how best
to approach these concerns.
23. Should the WSPP Agreement contain a provision that provides direction to identify which
contract prices are impacted when multiple transactions are Cut with the same counterparty?
a. Yes
b. No
24. If yes, what process would you like to see WSPP adopt for Cuts that impact multiple
transactions with a single counterparty?
a. A process that prorates between schedules
b. A process that allows the flexibility for the performing party to choose
c. A process that Cuts the last schedule in first, second to last next, etc.
d. A process that allows the flexibility for any system limitations you might have
e. Other- Describe
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25. Do you feel that in-hour Cuts or Cuts that occur past the applicable scheduling deadline,
should have a different calculation of market price under the WSPP Agreement than other Cuts?
a. Yes
b. No
26. If yes, market price for in-hour Cuts or Cuts that occur past the applicable scheduling
deadline, should be calculated using:
a. A daily index price?
b. An hourly index price?
c. A fixed price based on the hourly market?
d. A fixed price including any potential imbalance penalties you may incur?
e. The original contract price?
f. Zero price?
g. Other – describe.
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