Extended Reserve Selection Methodology

Transcription

1 Extended Reserve Selection Methodology Extended Reserve Manager Version February 2017

2 Revision history Version Date Description Author August 2016 Draft presented to the Authority and System Operator for comment as per 5(2), Part 2, Schedule 8.5, of the Code September 2016 Incorporating feedback from Authority staff received 9-13 September October 2016 Incorporating changes in response to comments from the system operator received 20 September December 2016 Incorporating consultation feedback Extended Reserve Manager Extended Reserve Manager Extended Reserve Manager Extended Reserve Manager January 2017 Incorporating Authority staff and SO comments on the postconsultation draft Extended Reserve Manager February 2017 Edits as requested by Authority. Extended Reserve Manager February 2017 Finalised after approval by the Authority Extended Reserve Manager Extended reserve manager Extended Reserve Selection Methodology v February of 31

3 CONTENTS CONTENTS... 3 Purpose of this document... 4 Interpretation... 4 Asset owners that are required to provide information... 5 Information that asset owners are required to provide... 6 Timeframe within which information must be provided... 6 Basis on which extended reserve is selected... 6 Default terms and conditions... 9 Payments for extended reserve provision... 9 Schedule 1 Information each asset owner must provide Part 1 Information for an extended reserve selection process Part 2 Information definition Schedule 2 Default terms and conditions for extended reserve providers Interpretation Provision of extended reserve Permanent loss of capability Provision of information for periodic performance reporting Management of change during implementation Schedule 3 Values used for selection Part 1: Expected interruption hours per year by AUFLS block Part 2: Expected interruption cost of 2 hour unanticipated outage by customer class Part 3: Standard AUFLS provision cost compensation rates Part 4: Model parameters Schedule 4 Model formulation Schedule 5 Extended Reserve Procurement Schedule template Schedule 6 Payment calculation Extended reserve manager Extended Reserve Selection Methodology v February of 31

4 Purpose of this document This is the extended reserve selection methodology (methodology) published by the extended reserve manager under clause 8.54G of the Electricity Industry Participation Code 2010 (Code) on [insert date]. It specifies how the extended reserve manager will procure extended reserve to meet the requirements set out in the extended reserve technical requirements schedule. Interpretation 1. Terms in bold font not listed in clause 2 have the meaning given to them by the Electricity Industry Act 2010, the Electricity Industry Participation Code 2010 (Code), or the extended reserve technical requirements schedule. 2. In this methodology, unless the context otherwise requires, AUFLS means automatic under-frequency load shedding AUFLS region means the group of grid exit points in the North Island AUFLS relay means a control device capable of measuring system frequency and initiating a trip signal to switchgear in compliance with the AUFLS system requirements set out in the extended reserve technical requirements schedule average annual offtake means the gross annual average of the flow of electricity from the grid at the grid exit points relevant to an asset owner as recorded by the reconciliation manager, measured in megawatts change request means a request from an extended reserve provider to the system operator to alter a date proposed in its approved implementation plan data specification means the extended reserve manager s published document specifying the requirements that asset owners must adhere to when providing information to the extended reserve manager including formatting and information transfer requirements demand unit means a distribution circuit feeder or group of feeders that is capable of being automatically disconnected as a discrete unit within an AUFLS system ERM calendar means the operations calendar in which the periodic information deadlines are published, as updated from time to time by the extended reserve manager to provide at least 6 months of forward dates at all times existing demand unit means a demand unit that is providing AUFLS under the requirements existing at the start of an extended reserve selection process Extended reserve manager Extended Reserve Selection Methodology v February of 31

5 existing relay means an AUFLS relay that is already installed on a demand unit at the deadline date for information provision for an extended reserve selection process flexible AUFLS supply means the group of flexible demand units selected in a selection process flexible demand unit means a demand unit that has been selected for flexible service as identified in the extended reserve procurement schedule net demand means the total demand on a demand unit excluding the estimated interruptible load new relay means an AUFLS relay that is not an existing relay periodic information deadlines means the deadlines for extended reserve providers to provide information to the extended reserve manager for each reporting period, which shall be 10 business days for information provision and 25 business days for information revision after each reporting period. periodic performance report means a report prepared by the extended reserve manager to assess the performance of extended reserve under Code clause 8.54TC permanent loss of capability means, in relation to a demand unit, that the demand unit can no longer perform its extended reserve function, where such change is brought about by a permanent reconfiguration of the extended reserve provider s network relevant historical period means the period that the extended reserve manager notifies at the start of an extended reserve selection process, likely to be four years ending on a recently completed month reporting period means a period of time usually expressed in consecutive calendar months covered by a periodic performance report prepared by the extended reserve manager to assess the performance of the selected AUFLS supply against the AUFLS block requirements standby AUFLS supply means flexible AUFLS supply that is not armed standby demand unit means a flexible demand unit that is not armed Asset owners that are required to provide information 3. Each North Island asset owner that has an average annual offtake greater than 1 megawatt (MW) in the relevant historical period must provide information to the extended reserve manager according to the terms in this methodology. Extended reserve manager Extended Reserve Selection Methodology v February of 31

6 4. This methodology does not apply to the South Island. Information that asset owners are required to provide 5. During an extended reserve selection process, each asset owner (identified in clause 3) must provide the information set out in Schedule 1 to the extended reserve manager. Timeframe within which information must be provided 6. An asset owner must provide the information set out in clause 5 on or before the selection deadline dates notified by the extended reserve manager. The deadline dates are set (a) (b) at least 50 business days after the extended reserve manager s request; and at least 20 business days following a data revision request. Basis on which extended reserve is selected 7. The aim of the methodology is to select the most suitable set of demand units for extended reserve that meets the extended reserve technical requirements schedule and Code as follows (a) To meet the AUFLS block requirements with adequate confidence over a period of up to 60 future months, this methodology aims to select demand units (i) (ii) (iii) that in aggregate have supplied more load than the minimum and less load than the maximum AUFLS block percentages in each AUFLS region in the latest 2 years of the relevant historical period; that in aggregate have an annual mean armed AUFLS block supply in each AUFLS region of no less than the target AUFLS block percentage in the latest year of the relevant historical period; and that reflect a preference for AUFLS systems that are capable of faster total AUFLS operating times over AUFLS systems that have slower total AUFLS operating times. (b) (c) To respond to the system operator s advice regarding the requirement in clause 16(b) of the extended reserve technical requirements schedule, the methodology has the option of applying a GXP constraint to limit the quantity of load (MW) selected from one or more GXPs. To reflect a balance of interests between potential extended reserve providers as required by clause 8.54H(2)(a) of the Code, this methodology will select no more than Extended reserve manager Extended Reserve Selection Methodology v February of 31

7 60% of the average annual offtake of each asset owner measured against the most recent year in the relevant historical period. (d) During the consultation period on the draft extended reserve procurement schedule each selected extended reserve provider is required to raise and resolve with the system operator any foreseeable difficulty in meeting their participant rolling outage plan (PROP) obligations alongside their selected quantity of extended reserve. If the system operator submits to the extended reserve manager that the resulting adjustment that would be required to PROPs does not support efficient operation or system security, then the extended reserve manager may adjust the extended reserve procurement schedule to resolve or reduce the problem. When adjusting the procurement schedule the extended reserve manager must aim for the least impact on extended reserve providers. The extended reserve manager will reconsult with affected parties on the changed selection result, providing an explanation of the problem that had to be resolved and the selection adjustment that was made to resolve it. The extended reserve manager may use one of these methods or a similar method to adjust the procurement schedule: (i) withdraw one or more selected demand units and/or switch the armed status of a flexible demand unit; or (ii) withdraw one or more demand units and then re-run the selection process without the demand unit; or (iii) re-run the selection process with a lower selection cap. (e) (f) To procure extended reserve cost-effectively as required by clause 8.54H(2)(b) of the Code, this methodology takes into account the values set out in Schedule 3 and seeks to minimise the objective function in the model formulation in Part 1 of Schedule 4. To seek an appropriate balance between certainty in the provision of extended reserve and flexibility to accommodate changes in circumstances and technologies as required by clause 8.54H(2)(c) of the Code, the methodology aims to (i) (ii) select at least 10% of the annual average target level for each AUFLS block from the latest year of the relevant historical period to be initially set as armed flexible AUFLS supply, ensuring that the quantity selected can cover the removal of the largest selected demand unit in each AUFLS block; select at least an additional 10% of the annual average target level for each AUFLS block from the latest year of the relevant historical period to be Extended reserve manager Extended Reserve Selection Methodology v February of 31

8 initially set as standby AUFLS supply, ensuring that the quantity selected can cover the removal of the largest selected demand unit in each AUFLS block; (iii) (iv) (v) (vi) select flexible demand units from demand units that are identified by the asset owner as flexible-capable using SCADA remote control to achieve faster arming and disarming response times; require each asset owner to configure each demand unit with the AUFLS settings for as many AUFLS blocks for which the demand unit is capable of meeting the AUFLS system requirements 1 ; reduce the risk of a violation of a minimum AUFLS block threshold due to a temporary outage of any selected demand unit by applying a load buffer to the minimum threshold that is equivalent to the largest proportion of any one demand unit s load to the region load in any trading period in all AUFLS blocks in the latest 2 years of the relevant historical period; and to reduce risk arising from input data imperfections, apply an additional safety margin of up to 0.5% of North Island load to each lower and/or upper AUFLS block threshold to select within a tighter range than technically required. 8. In a selection process the extended reserve manager will use demand unit data from samples of trading periods in the relevant historical period and will estimate years of demand unit load information not provided by asset owners. 9. To meet the objectives set out in clause 8, the extended reserve manager will select extended reserve in each AUFLS region by allocating demand units to AUFLS blocks including some for flexible service while seeking to minimise procurement costs as set out in the model formulation in Part 1 of Schedule During each periodic review of selected demand unit performance after publication of an extended reserve procurement schedule, the extended reserve manager will run a flexible solve (as set out in the model formulation in Part 2 of Schedule 4) to determine which of the flexible demand units should be armed or disarmed to maintain the best available AUFLS block performance. 11. If called upon by the Electricity Authority to undertake a limited selection process under clause 8.54J(3) of the Code, the extended reserve manager will select additional 1 Noting that a demand unit with an existing relay can only be tested for AUFLS block 4 where the existing relay has df/dt functionality. Extended reserve manager Extended Reserve Selection Methodology v February of 31

9 extended reserve by seeking to minimise selection costs as set out in the model formulation in Part 3 of Schedule 4. Default terms and conditions 12. For the purpose of clause 8.54G(3)(g) of the Code, the default terms and conditions set out in Schedule 2 of this methodology apply to each extended reserve provider. Payments for extended reserve provision 13. Payments to asset owners for providing extended reserve are set to $0. Extended reserve manager Extended Reserve Selection Methodology v February of 31

10 Schedule 1 Information each asset owner must provide Part 1 Information for an extended reserve selection process 1. In an extended reserve selection process each asset owner must provide the information described in Part 2 of this Schedule for at least 60% of its average annual offtake (as measured against the most recent year), for the relevant historical period, noting that (a) if an asset owner s available offtake after the subtraction of interruptible load is less than 60% of its average annual offtake then the target amount for that asset owner to provide is the remaining amount of offtake unless the asset owner can provide the extended reserve manager with sufficient evidence that it should further exclude load on the basis that for a demand unit: (i) the load is highly unlikely to be durable over the 5-year period that applies to an extended reserve procurement; or (ii) the interruption cost is more than $100,000 per MWh; or (iii) the load within a half-hour trading period routinely exhibits significant variability such that the average load for a half hour is a poor predictor of the instantaneous load within the half hour; or (iv) the asset owner cannot derive half hourly demand information from available metered demand information;or (v) the demand unit's load serves an industrial process which is strongly linked to one or more embedded generators and - this linkage is such that the electrical output from the embedded generator(s) is dependent on the continued operation of the industrial process, and - this dependency is not adequately accounted for in the available historic demand unit load. (b) if during a selection process the extended reserve manager notifies asset owners that additional information is required, an asset owner must provide the additional information within 20 business days of the request. 2. In providing the information in clause 1 of this Schedule, each asset owner must adhere to the data specification and is advised to be familiar with their obligations under clause 8.1A of the Code, which is in force from 19 January Extended reserve manager Extended Reserve Selection Methodology v February of 31

11 3. The following provisos apply to the asset owner when providing the information in clause 1 of this Schedule (a) (b) (c) (d) (e) the asset owner must use reasonable endeavours to subtract any interruptible load supplied by the demand unit from the load profile information supplied (item 24 of Part 2 of the Schedule); any demand unit that contains 100% of the public health and safety customer type (item 24 of Part 2 of this Schedule) is not eligible for submission; the asset owner must exercise discretion to not provide a demand unit supplying power to any customer that in the asset owner s view is unsuitable for extended reserve; the asset owner must in good faith where possible not submit demand units that are likely to be reconfigured within the next five years; and an asset owner cannot withdraw a submitted demand unit from a selection process after the closing date for data provision for that selection process. 4. In a limited selection process under clause 8.54J(3) of the Code, the extended reserve manager will issue a request for information to one or more asset owners and specify in the request the information needed for the limited selection process and the deadlines. Extended reserve manager Extended Reserve Selection Methodology v February of 31

12 Part 2 Information definition This table provides a description of the information required for each demand unit. The detailed requirements are set out in the data specification. Item Attributes Description 1 Demand unit identifier 2 Participant identifier Valid demand unit identifier. Valid participant identifier issued by the Electricity Authority of the asset owner who owns the demand unit. 3 GXP Valid grid exit point code. 4 Owner of relay Specify if owned by the asset owner or by Transpower. 5 Number of existing relays Number of existing relays in the demand unit. 6 Relay ID A unique relay identifier. 7 Number of new relays Number of new relays the asset owner would require in the demand unit if it is selected. (New relays must be installed with df/dt functionality as well as under frequency functionality.) 8 Feeders Asset owners may choose to list the feeders that comprise the demand unit. This is optional, field may be left blank. 9 Zone substation The zone substation identifier at which the switchgear that controls the demand unit is located, if any. 10 Currently allocated block The AUFLS block the demand unit is currently allocated to (if any), including current allocation to any AUFLS block under the AUFLS obligations in force before the first extended reserve selection process. 12 df/dt functionality Whether the AUFLS relay(s) on the demand unit will have df/dt as well as under frequency (u/f) functionality when in service. 13 Fast response capable Whether the submitted demand unit is reasonably expected to be capable of responding within 250 milliseconds (ms) (fast) or between 250 ms and 400 ms (standard). 14 Flexible capable Whether the demand unit can be armed and disarmed via SCADA remote control within 1 business day of request. 15 Embedded generation The aggregate maximum capacity (in megawatts) of embedded generation that is connected to the demand unit. Embedded generation is any form of generating plant connected to, and with the capability to inject electricity into, the demand unit. 16 Interruptible load The annual average quantity (in megawatts) of interruptible load that has been subtracted from each half hour of the demand unit load under item Residential The proportion of the demand unit s load that is residential. 18 Light industrial & primary industry The proportion of this demand unit s load that is light industrial and primary industry. Extended reserve manager Extended Reserve Selection Methodology v February of 31

13 19 Heavy industrial The proportion of this demand unit s load that is heavy industrial. 20 Commercial The proportion of this demand unit s load that is commercial. 21 Public health and safety The proportion of this demand unit s load that is public health and safety. 22 Large user The proportion of the demand unit s load that is large user load. A large user is a distributor s customer who consumes more than 25 GWh/yr or is a direct consumer. 23 Expected interruption cost 24 Half hourly demand data in MW 25 Configuration to AUFLS blocks The expected interruption cost ($/MWh) for a 2-hour outage by a large user or a direct consumer (or the aggregated average if there are several large users on the same demand unit). Half-hourly information (in MW) for each demand unit identified against each trading period in the relevant historical period (for a selection process), and in the reporting period (for the periodic monitoring process). The information is defined as the average active power, minus any interruptible load, in the relevant trading period. The information must be calculated where SCADA data is used using the maximum number of available data samples within the trading period. Where historical data is not available for a trading period an estimate must be provided. The information provided for each trading period must be identified as metered or estimated. The AUFLS block settings to which the demand unit is configured and tested. Not relevant to the initial selection process. Extended reserve manager Extended Reserve Selection Methodology v February of 31

14 Schedule 2 Default terms and conditions for extended reserve providers In accordance with clause 8.54G(3)(g) of the Code, this Schedule sets out the default terms and conditions specifying the basis on which extended reserve must be provided. Interpretation 1. Terms in bold font have the meaning given to them by the Electricity Industry Act 2010, the Electricity Industry Participation Code 2010 (Code), the extended reserve technical requirements schedule and the extended reserve selection methodology. Provision of extended reserve 2. The extended reserve provider must comply with all clauses relevant to an extended reserve provider in the extended reserve technical requirements schedule. 3. The extended reserve provider must prepare for service each demand unit identified in an extended reserve procurement schedule. 4. In preparing the demand unit, the extended reserve provider must (a) (b) (c) (d) (e) (f) configure and test each demand unit with the AUFLS settings to which the demand unit has been allocated; configure and test each demand unit with the AUFLS settings for as many other AUFLS blocks for which settings are available on the AUFLS relay and that the AUFLS relay on that demand unit is capable of holding while meeting the AUFLS system requirements; ensure a demand unit selected for flexible service is capable of remote control by SCADA; install each new relay that is identified on the demand unit in the extended reserve procurement schedule. Each new relay must have under frequency and df/dt functionality; install df/dt functionality on any existing relay that is selected for AUFLS block 4 and that does not already have df/dt functionality; and ensure each demand unit meets the required performance standards and testing requirements in the extended reserve technical requirements schedule on or before the start date for that demand unit in the extended reserve schedule. Extended reserve manager Extended Reserve Selection Methodology v February of 31

15 5. The extended reserve provider must (a) (b) (c) (d) (e) (f) arm each demand unit that is designated to be armed by 16:00 hours on the start date specified in the extended reserve schedule; ensure each standby demand unit is available for service by the start date specified in the extended reserve schedule; endeavour in accordance with good electricity industry practice to maintain the ability of each demand unit to perform its AUFLS function at all times, restoring any temporary loss as soon as practicable; arm or disarm a flexible demand unit upon receipt of an arming or disarming date in an updated statement of extended reserve obligations by 16:00 hours on the business day stated in the extended reserve schedule, which may be one business day after the statement of extended reserve obligations is reissued; arm a flexible demand unit to a different AUFLS block setting by the start date specified in the extended reserve schedule for the different AUFLS block, by 16:00 hours on the business day stated in the extended reserve schedule, which may be 5 business days after the statement of extended reserve obligations is reissued; and disarm a demand unit by 16:00 hours on a stop date for that demand unit specified in the extended reserve schedule. 6. As soon as practicable after an extended reserve provider discovers any demand unit status is not compliant with its statement of extended reserve obligation (reflected in the extended reserve schedule), the extended reserve provider must provide the system operator with the date when the non-compliant situation started and the date by which the non-compliant situation will be rectified. 7. For the avoidance of doubt, while a demand unit is on standby (i.e. not armed to supply AUFLS) it may be utilised for energy shortage events and considered for participant rolling outage plans. 8. For the avoidance of doubt, selection for extended reserve does not prevent or inhibit load entering or leaving the instantaneous reserve market. An extended reserve provider must reflect any change to the quantity of interruptible load on a demand unit in the load profile submitted for each reporting period. Extended reserve manager Extended Reserve Selection Methodology v February of 31

16 Permanent loss of capability 9. The extended reserve provider may withdraw a demand unit due to its permanent loss of capability. 10. In respect to a permanent loss of capability of a demand unit (whether armed or on standby), the extended reserve provider must (a) notify the system operator of the stop date and the identity of the demand unit (i) (ii) at the time the change is planned, where the change resulting in the permanent loss of capability is planned; or as soon as practicable, where the cause is unplanned. (b) continue to provide load profile information to the extended reserve manager on the demand unit until the end of the reporting period in which the demand unit ceases to contribute to extended reserve. Provision of information for periodic performance reporting 11. The extended reserve provider must provide the extended reserve manager with load information (as described in item 24 of Part 2 of Schedule 1) for each demand unit for each reporting period in accordance with the data specification. 12. The reporting period length is four months. The information described in clause 10 of this Schedule must be supplied on or before the periodic information deadlines published in the ERM calendar, noting that (a) (b) the initial reporting period will be for a longer period from the end of the relevant historical period to the end of a recently completed month as specified in the ERM calendar; and the information must be supplied for every selected demand unit, in each reporting period, regardless of the start date for the demand unit set out in the extended reserve schedule. Management of change during implementation 13. The extended reserve provider must submit a change request to the system operator for any proposed changes to the stop and start dates published in the extended reserve schedule where the variation affects one or more demand units whose aggregated average annual offtake is greater than 1 MW or where the date varies by more than 5 business days from the date agreed in the implementation plan. Extended reserve manager Extended Reserve Selection Methodology v February of 31

17 14. The extended reserve provider must provide the following information within a change request (a) (b) (c) (d) (e) the name of each demand unit associated with the request; agreed start/stop dates as published in the extended reserve schedule; proposed new start/stop dates; the point of contact for managing the request; and the updated implementation plan. 15. The extended reserve provider must submit each change request as soon as practicable after the extended reserve provider becomes aware of the need. 16. The extended reserve provider must comply with any updates from the system operator to the extended reserve schedule including alterations to agreed implementation plan dates, where other changes occur or are proposed to occur. Extended reserve manager Extended Reserve Selection Methodology v February of 31

18 Schedule 3 Values used for selection Part 1: Expected interruption hours per year by AUFLS block b AUFLS block EIH(b) = Expected hours of interruption per year 1 AUFLS block AUFLS block AUFLS block AUFLS block Part 2: Expected interruption cost of 2 hour unanticipated outage by customer class k Customer class IC(k) = Expected Interruption Cost ($/MWh) 1 Residential 15,900 2 Light industrial & primary industry 8,200 3 Heavy industrial 19,500 4 Commercial 37,200 5 Public health and safety 100,000 6 User submitted (>25 GWh/yr) Unique value provided in response to Schedule 1, Part 2, Item 23 Extended reserve manager Extended Reserve Selection Methodology v February of 31

19 Part 3: Standard AUFLS provision cost compensation rates Each payment item is applied per AUFLS relay unless otherwise stated. Item Payment item Annual cost 1 AUFLS system administration cost (per extended reserve provider) $10,080/yr 2 Test maintenance cost $99.50/yr = net present value of $1130 in 10 years assuming a nominal interest rate of 6% and an average rate of inflation of 1.5%. 3 Relay configuring cost $1,533.39/yr = $6,470*CRF 4 Relay initial testing cost $2,931.69/yr = $12,370*CRF 5 Base relay capital cost $5,133.42/yr = $21,660*CRF 6 Additional df/dt cost $4,064.55/yr = $17,150*CRF 7 Fast response cost $0/yr 8 Flexible service cost $0/yr Where: CRF = capital recovery factor = 1/USPVF(6%,5) = USPVF(i, n) is the uniform series present value factor for n years at rate i % per annum = ((1+i) n -1)/(i*(1+i) n ) Part 4: Model parameters These model parameters are applied in the selection process. Item Description Parameter 1 Relay fast response benefit: the system benefit applied to each AUFLS relay that is capable of responding within 250 ms (as submitted under item 13, Part 2, Schedule 1) -$200/yr 2 Flexible demand unit size limit requirement 2 MW Extended reserve manager Extended Reserve Selection Methodology v February of 31

20 Schedule 4 Model formulation Extended reserve manager Extended Reserve Selection Methodology v February of 31

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28 Schedule 5 Extended Reserve Procurement Schedule template Variable Units Description Run ID Unique code Run identifier Participant_ID Unique code Extended reserve provider identifier as per Schedule 1, item 2 Demand_Unit_ID Unique code Demand unit identifier as per Schedule 1, item 1 Region_num [1 to 3] AUFLS region number GXP Unique code Valid GXP code ANL MW Average net demand calculated as per Schedule 6 Block_num [1 to 4] Allocated AUFLS block Selected_flag [0,1] 1 if selected, 0 otherwise Flexible_flag [0,1] 1 if selected as flexible AUFLS supply, 0 otherwise Armed_flag [0,1] 1 if selected to be armed initially, 0 otherwise Reconfig_flag [0,1] 1 if selection requires AUFLS relay to be reconfigured, 0 otherwise Test_flag [0,1] 1 if selection requires AUFLS relay to be tested, 0 otherwise New_flag [0,1] 1 if selection requires a new AUFLS relay, 0 otherwise ROP $/year Relay Operating Payment calculated as per Schedule 6 RFP $/year Relay Flexibility Payment calculated as per Schedule 6 RFRP $/year Relay Fast Response Payment calculated as per Schedule 6 ASAP $/year AUFLS System Administration Payment, calculated as per Schedule 6 Extended reserve manager Extended Reserve Selection Methodology v February of 31

29 Schedule 6 Payment calculation 1. The standard annual payment applied to each extended reserve provider in the selection process is the sum of the AUFLS System Administration Payment ASAP; the Relay Operating Payment ROP(j); the Relay Fast Response Payment RFRP(j); the Relay Flexibility Payment RFP(j); the Demand Unit Interruption Payment DUIP(j); and the Relay Capital Payment RCP(j) over all selected demand units j belonging to that extended reserve provider that are in service. The AUFLS System Administration Payment for each extended reserve provider selected to provide one or more demand units is given by: ASAP = RC(1) where: RC(1) = AUFLS system administration cost in $/yr from Schedule 3 Part 3 item 1. The Relay Operating Payment for selected demand unit j is given by: ROP(j) = (RC(2)*NR) where: RC(2) = Test maintenance cost in $/yr from Schedule 3 Part 3 item 2; and NR = Total number of AUFLS relays per demand unit. The Relay Fast Response Payment (RFRP) for selected demand unit j is given by: RFRP(j) = RC(7) if j is selected and is capable of operating within 250ms as advised by the asset owner in Schedule 1 Part 2 item 13, or = 0 otherwise. where: RC(7) = Fast Response Cost in $/yr from Schedule 3 Part 3 item 7. The Relay Flexibility Payment (RFP) for selected demand unit j is given by: RFP(j) = RC(8) if j is selected for flexible AUFLS service, or Extended reserve manager Extended Reserve Selection Methodology v February of 31

30 = 0 otherwise. where: RC(8) = Flexible Service Cost in $/yr from Schedule 3 Part 3 item 8. The Demand Unit Interruption Payment for selected demand unit j is given by: DUIP(j) = (IC(j) * EIH(block(j)) * ANL(j)) where: 6 IC(j) = k=1 LS(k, j) IC(k) ; where: IC(j) = the expected demand unit interruption cost $/MWh for j; IC(k) = the generic expected interruption cost for customer class k from Schedule 3 Part 2 and Schedule 1, Part 2 item 23; LS(k,j) = the estimated proportion of demand unit j s load for customer class k. Customer class k is as per Schedule 3 Part 2. Estimated proportions are from Schedule 1, Part 2 items 17 through 22; block(j) = the AUFLS block number assigned to j in the selection process; EIH(block(j)) = the expected interruption hours /yr for block(j) from Schedule 3 Part 1; and ANL(j) = the average net demand in MW for j = the sum over all half hours, h, in the most recent 12 months of the relevant historical period of MW(j,h) as defined in Schedule 4 divided by the total number of half hours in the most recent 12 months of the relevant historical period. The Relay Capital Payment for selected demand unit j is given by: RCP(j) = { relays on demand unit j RC(3) if the AUFLS relay is required to be configured to a new AUFLS block setting; + RC(4) if the AUFLS relay is required to be tested as a result of selection for extended reserve; + RC(5) if a new AUFLS relay is required to be installed on j; and + RC(6) if the AUFLS relay is required to have df/dt functionality for the AUFLS block} = 0 if the number of whole months between the commencement of providing extended reserve under the extended reserve schedule and the payment month is greater than 60 Extended reserve manager Extended Reserve Selection Methodology v February of 31

31 where: RC(3) = Relay Configuring Cost in $/yr, per AUFLS relay, from Schedule 3 Part 3 item 3; RC(4) = Relay Initial Testing Cost in $/yr, per AUFLS relay, from Schedule 3 Part 3 item 4; RC(5) = Base Relay Capital Cost in $/yr, per AUFLS relay, from Schedule 3 Part 3 item 5; and RC(6) = Additional df/dt relay cost in $/yr, per AUFLS relay, from Schedule 3 Part 3 item The extended reserve manager uses the characteristics of the demand unit submitted by the asset owner in the selection process as follows (a) (b) (c) (d) (e) (f) (a) for each existing relay a demand unit will attract the configuring cost if selected for an AUFLS block that it was not allocated to when entering the selection process; for each existing relay a demand unit will attract the initial testing cost for the first time it is selected for extended reserve; for each existing relay a previously selected demand unit will attract the initial testing cost in a subsequent selection round if it is required to move to an AUFLS block for which the relay setting has not previously been tested; for each existing relay a demand unit that is submitted without df/dt functionality will attract the additional df/dt cost when selected for AUFLS block 4, for each new relay a demand unit will attract the base relay installation cost and the initial testing cost; the pool of flexible demand units will be selected from those that the asset owner submits will be capable of being armed and disarmed via SCADA remote control; and the AUFLS system administration cost will be applied only to the first demand unit selected from an asset owner. Extended reserve manager Extended Reserve Selection Methodology v February of 31