Decision D Balancing Pool

Transcription

1 Decision D Application for an Order Permitting the Sharing of Records Not Available to the Public Between the, TransAlta Generation Partnership, and Capital Power Generation Services Inc. December 15, 2017

2 Alberta Utilities Commission Decision D Application for an Order Permitting the Sharing of Records Not Available to the Public Between the, TransAlta Generation Partnership and Capital Power Generation Services Inc. Application A001 Proceeding December 15, 2017 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 Introduction Background The s November 2016 application The s request to share records relating to the Keephills PPA The Commission s authority to allow record sharing Views of the parties Is the proposed sharing of records reasonably necessary? Fair, efficient and openly competitive operation of the market Commission findings Decision Decision D (December 15, 2017) i

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5 Alberta Utilities Commission Calgary, Alberta Application for an Order Permitting the Sharing of Records Not Available to the Public Between the, TransAlta Generation Partnership, and Capital Power Generation Services Inc. Decision D Application A001 Proceeding Introduction 1. In this decision, the Alberta Utilities Commission decides whether to approve a request by the under Section 3 of the Fair, Efficient and Open Competition Regulation to share information not available to the public with respect to the Power Purchase Arrangement (PPA) for Keephills generating units #1 and #2 (the Keephills PPA) between the, Capital Power Generation Services Inc. (CPGSI), and TransAlta Generation Partnership (TransAlta) The Commission previously approved related requests by the, albeit under the Regulation, with respect to the Sundance A generating units #1 and #2 PPA (the Sundance A PPA), the Sundance B generating units #3 and #4 PPA (the Sundance B PPA), the Sundance C generating units #5 and #6 PPA (the Sundance C PPA) in AUC Orders D , D and D The Commission grants the s request relating to the Keephills PPA for the reasons set out below. 2 Background 2.1 The s November 2016 application 4. ENMAX Energy Corporation (ENMAX) notified the of its intent to terminate the Keephills PPA on May 6, The s initial application, which related to the Sundance A, B and C PPAs as well as the Keephills PPA, was filed on November 18, Application A001. Order D : Preferential Sharing of Records Sundance A PPA Order D , issued June 2, Order D : Preferential Sharing of Records Sundance B PPA Order D , issued June 2, Order D : Preferential Sharing of Records Sundance C PPA Order D , issued June 2, PDF page 1. Decision D (December 15, 2017) 1

6 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. 5. The Commission issued a notice of the application on November 22, 2016, in which it specified that the only parties with standing in the proceeding were the and the Market Surveillance Administrator (MSA). 6 The MSA later advised that it supported the application. 6. On December 16, 2016, the Commission issued interim orders allowing the sharing of records relating to the Sundance A, B and C PPAs and the Keephills PPA between the Balancing Pool, CPGSI and TransAlta. The interim orders were issued pursuant to Section 3 of the Fair, Efficient and Open Competition Regulation and Section 8 of the Alberta Utilities Commission Act, and had an expiry date of June 30, On April 3, 2017, the amended its application as it related to the Sundance A, B and C PPAs, by filing draft orders to that end, in accordance with Section 3.1(3) of the Regulation. The MSA did not object to the draft orders and the Commission issued final orders for the Sundance A, B and C PPAs on June 2, 2017, under Section 3.1 of the Regulation On April 17, 2017, the filed a draft form of a final order for the Keephills PPA in accordance with Section 3 of the Fair, Efficient and Open Competition Regulation. The Commission subsequently published a notice of application for that filing. The MSA subsequently submitted a statement of intent to participate, in which it indicated its support for the application. 9. On July 4, 2017, the Commission renewed the interim order previously granted for the sharing of Keephills PPA records between the, CPGSI and TransAlta with an expiry date of December 31, On November 1, 2017, the Commission issued an information request to the MSA, largely seeking clarification on its views on the combined offer control of the parties requesting to share information in this proceeding. The MSA filed its response to the information request 8 on November 22, 2017, and reiterated its support for the application. 2.2 The s request to share records relating to the Keephills PPA 11. The submitted that it was necessary to share records relating to the Keephills PPA with CPGSI because: (a) due to the high costs associated with the start-up and operation of a real time desk, establishing its own 24-hour real time offer desk would be contrary to its statutory obligation to be responsible and efficient, and (b) there is considerable uncertainty Exhibit X0005, Notice of Application, November 22, Sundance A PPA Order (22184-D ), Sundance B PPA Order (22184-D ), Sundance C PPA Order (22184-D ). Exhibit X0020, MSA response to AUC information request, November 22, Decision D (December 15, 2017)

7 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. associated with the timing of when a 24-hour, real time offer desk would be required, as well as the continuing need for such a desk The seeks an order that will become effective upon meeting any one of the following three conditions (Conditions): 1) the valid and effective termination of ENMAX s position as buyer under the Keephills PPA, as determined by the 2) any lawful enactment, direction, finding, decision, determination or such other conclusion with the result being the effective termination of ENMAX s position as buyer under the Keephills PPA 3) an agreement entered into by the relating to (a) or (b) above, or to otherwise assume offer control under the Keephills PPA The requests that the term of the order, if granted, be from as soon as one of the Conditions is met, until the later of: 1) the expiry of the Keephills PPA in accordance with its own terms 2) the early termination of the Keephills PPA by the, pursuant to Section 97 of the Electric Utilities Act 3) the termination of a preferential information sharing agreement to be entered into between the, TransAlta and CPGSI relating to the Keephills PPA The explained that, as the owner of the Keephills units, TransAlta has the right to benefit from excess energy and increased capacity, as applicable. Accordingly, if TransAlta wishes to sell excess energy from the Keephills PPA when any one of the Conditions described above is fulfilled, it must do so through the. Therefore, the Balancing Pool submitted that it will be reasonably necessary for TransAlta to share information that may not otherwise be available to the public with the and CPGSI. 12 Throughout its application, the describes its proposed sharing of information with CPGSI and TransAlta as a Preferential Information Sharing Agreement PDF pages 3-4. PDF pages 1-2. PDF page 2. PDF page 4. Decision D (December 15, 2017) 3

8 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. 3 The Commission s authority to allow record sharing 15. 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. 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 16. Another factor that the Commission must take into account when considering an application to share records is market share offer control. Section 5(5) of the Fair, Efficient and Open Competition Regulation states that a market participant shall not hold offer control in excess of 30 per cent of the total maximum capability of generating units in Alberta. 17. The Commission is also cognizant of the requirement in Section 6 of the Electric Utilities Act, where it states that [m]arket participants are to conduct themselves in a manner that supports the fair, efficient and openly competitive operation of the market. 4 Views of the parties 4.1 Is the proposed sharing of records reasonably necessary? 18. In its application, the provided a representation from a senior officer that stated the sharing of preferential records described in the application is reasonably necessary for the to carry out its business The, TransAlta and CPGSI have entered into commercial arrangements, which, among other things, appoint CPGSI as an agent to provide a dispatch service for the for units whose offer control is shared between the and TransAlta. These arrangements will make it necessary for the, TransAlta and CPGSI to share certain records with each other that may not otherwise be available to the public. 13 PDF page Decision D (December 15, 2017)

9 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. 4.2 Fair, efficient and openly competitive operation of the market 20. The confirmed that as of July 13, 2016, the total market share offer control represented by it was 7.1 per cent, which is less than the offer control limit of 30 per cent set out in Section 5(5) of the Fair, Efficient and Open Competition Regulation. 14 It added that upon the effective termination of, or its assumption of offer control relative to the PPAs for Sundance A, Sundance B, Sundance C, Sheerness, and Keephills, it will have offer control for up to 4,683 megawatts, which represents 29.4 per cent of total Alberta generating capacity The submitted calculations demonstrating that, as of July 13, 2016, the offer control of Capital Power Corporation was 10.8 per cent and the offer control of TransAlta and its affiliates was 12.1 per cent. In summary, the submitted that none of the, TransAlta or CPGSI, together with any respective affiliates, exceed or will exceed the offer control limit of 30 per cent as specified in Section 5(5) of the Fair, Efficient and Open Competition Regulation In an information response, the MSA submitted that as of November 1, 2017, the s offer control was 24.1 per cent, TransAlta s offer control was 11.4 per cent, and Capital Power Corporation s offer control was 6.3 per cent The s application included a written representation 18 from one of its senior officers indicating that the records subject to preferential information sharing will 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 the has a formal program in place that includes internal processes and/or controls, internal compliance training and internal audits, thus ensuring internal compliance with the information sharing requirements under the Fair, Efficient and Open Competition Regulation The filed similar separate representations from senior officers of TransAlta and CPGSI. 25. The representation from TransAlta indicated that the records subject to preferential information sharing will 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 PDF page 9. PDF pages PDF pages Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF pages 2-3. PDF page 68. PDF page 68. Decision D (December 15, 2017) 5

10 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. representation also stated that TransAlta maintains a Corporate Code of Conduct that is endorsed by senior management and is applicable to all directors, officers, and employees of TransAlta, and is designed to ensure that all of TransAlta s operations and activities are undertaken in compliance with applicable laws and regulations, including the Fair, Efficient and Open Competition Regulation The representation from CPGSI indicated that the records subject to preferential information sharing will 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 CPGSI has a formal program in place, composed of internal processes and/or controls, internal compliance training and internal audits, the purpose of which is to ensure internal compliance with the information sharing requirements under the Fair, Efficient and Open Competition Regulation In a series of information requests to the MSA on November 1, 2017, the Commission asked the MSA to comment on the combined offer control of the, TransAlta, Capital Power Corporation and CPGSI. 28. The MSA explained that it expects the offer control figures for the to decrease over time as the PPAs are terminated or expire. 22 It noted that the Sundance A PPA expires on December 31, It also observed that the announced its intention to terminate the Sundance B and Sundance C PPAs by March 31, The MSA stated that these expiries and terminations will reduce the s offer control to approximately 11.7 per cent The MSA acknowledged that the cumulative offer control figures for all entities involved is 52.3 per cent (as of the November 18, 2016 application date). However, it observed as follows: the parties cannot share information with respect to 52.3 [per cent] of the market. The preferential information sharing orders only permit the sharing of price quantity offer information between parties and units as specified in the Application. The Parties cannot share information in relation to units that do not have a preferential information sharing order and may only share offer information in strict adherence to the AUC orders. Any sharing of information outside the terms of the orders is a violation of the FEOC Regulation and the MSA can pursue enforcement action against any such violation The Commission also asked the MSA the following: PDF page 65. PDF page 70. Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 3. Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 3. Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 4. 6 Decision D (December 15, 2017)

11 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. Legislatively, the combined offer control of the parties who are sharing information is not prescribed; however, is there a point or threshold for combined offer control at which the MSA, having regard for the fair, efficient and openly competitive operation of the market, would be concerned about parties, or even forestall parties from having the opportunity to share confidential information? In its response, the MSA did not describe any point or threshold that would be a concern; however, the MSA indicated that each case of record sharing is considered on a case-by-case basis. 32. The MSA stated that in determining whether to support an application for a preferential information sharing order, it takes into account the parties compliance programs, controls and a need for a preferential information sharing order. The MSA stated that in its opinion, this particular application outlines a substantial compliance framework for the sharing of preferential information. 26 Accordingly, the MSA confirmed that it continues to support this application. 5 Commission findings 33. The Commission finds that, as a market participant, the has demonstrated that the sharing of records is reasonably necessary for it to carry out its business because it lacks the necessary personnel and capability to offer the generation from the Keephills PPA on a real time basis and that establishing its own 24-hour real time offer desk would be contrary to its statutory obligation to be responsible and efficient. 34. The Commission recognizes that with the addition of the Keephills PPA, the Balancing Pool s offer control is just below the 30 per cent limit provided in the Fair, Efficient and Open Competition Regulation. However, the Commission finds that the expected near term reduction in the s offer control to 11.7 per cent reinforces the s reasons for not hiring the necessary personnel and maintaining a trading desk and, instead, outsourcing this work to CPGSI to manage these units as its agent. 35. Although the cumulative offer control of the, TransAlta and CPGSI is 35.5 per cent as of November 1, 2017, 27 the Commission is satisfied that there are sufficient mechanisms in place to ensure that this does not compromise the fair, efficient and openly competitive operation of the electricity market. First, the order requested would only permit the limited sharing of price and quantity information between the parties and units specified in each order. Second, the Commission accepts that the, TransAlta and CPGSI each have formal policies regarding the sharing of records and how such records can and cannot be used. The Commission understands that all officers and employees of each company are required to comply with these policies. Third, the Commission finds that the terms of any order it may issue Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 4. Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 4. Exhibit X0020, MSA response to AUC information request, November 22, 2017, PDF page 3. CPGSI has 0 per cent offer control, but Capital Power Corporation, of which CPGSI is a subsidiary, had 6.3 per cent offer control on November 1, 2017 through some of its other subsidiaries. Decision D (December 15, 2017) 7

12 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. will mandate any party receiving preferential information to self-report any contraventions of the Fair, Efficient and Open Competition Regulation. Fourth, CPGSI has committed to engage a third party auditor to conduct annual compliance audits with respect to CPGSI s record sharing obligations and has also agreed to share those audits with the MSA. 36. The Commission agrees with the MSA that the mechanisms described above are necessary and will promote the continued operation of the market in a manner that is fair, efficient and openly competitive. Specifically, the Commission takes comfort from the expert assessment of the MSA with respect to offer control and the sworn assurances from the parties sharing records that the principles of the Fair, Efficient and Open Competition Regulation will be upheld. 37. Based on the information submitted in support of the application, the Commission is satisfied that the records shared between the, TransAlta and CPGSI will not be used for any purpose that does not support the fair, efficient and openly competitive operation of the electricity market, including conduct referred to in Section 2 of the Fair, Efficient and Open Competition Regulation. 38. Having regard to the foregoing, including the expert assessment of the MSA with respect to offer control and its continued support for the application, the Commission is prepared to issue an order allowing the, TransAlta and CPGSI to share records not available to the public, subject to the following terms and conditions: a) The order issued by the Commission relating to the Keephills PPA will apply to: (i) (ii) The sharing of information between the and Capital Power Generation Services Inc. relating to price, quantity, and availability information for the committed capacity of Keephills #1 and Keephills #2, with respect to offers in the Alberta electricity and ancillary services markets. The sharing of information between the, Capital Power Generation Services Inc. and TransAlta Generation Partnership relating to price, quantity and availability information for any excess energy from Keephills #1 and Keephills #2, with respect to offers in the Alberta electricity and ancillary services markets, as described by and defined in the application. b) The term of this order commences on the earlier of the date of this order or the date upon which the Keephills PPA is under the control of the, and ends at the earlier of: (i) December 31, 2020 (ii) the early termination of the Keephills PPA on its terms or by the, pursuant to Section 97 of the Electric Utilities Act 8 Decision D (December 15, 2017)

13 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. (iii) the expiry or early termination of the Preferential Information Sharing Agreement made effective January 10, 2017 between the, Capital Power Generation Services Inc. and TransAlta Generation Partnership c) The, Capital Power Generation Services Inc. and TransAlta Generation Partnership entered into the Preferential Information Sharing Agreement, which outlines the terms under which records are being shared, and a copy of which shall be provided to the Market Surveillance Administrator in confidence. The must notify the Commission of the termination of the Preferential Information Sharing Agreement between the, Capital Power Generation Services Inc. and TransAlta Generation Partnership as soon as reasonably practicable, and no later than 30 days following the termination of the Preferential Information Sharing Agreement. d) The must notify the Commission of any material changes to the information contained within the application relating to its own internal compliance plans and/or programs, including the continued applicability of any representations contained within the application that may affect the compliance of the with the Fair, Efficient and Open Competition Regulation as soon as reasonably practicable, and no later than 30 days following the material changes. e) Capital Power Generation Services Inc. must notify the Commission of any material changes to the information contained within the application relating to its own internal compliance plan and/or programs, including the continued applicability of any representations contained within the application that may affect the compliance of Capital Power Generation Services Inc. with the Fair, Efficient and Open Competition Regulation as soon as reasonably practicable and no later than 30 days following the material changes. f) TransAlta Generation Partnership must notify the Commission of any material changes to the information contained within the application relating to its own internal compliance plan and/or programs, including the continued applicability of any representations contained within the application that may affect the compliance of TransAlta General Partnership with Fair, Efficient and Open Competition Regulation as soon as reasonably practicable and no later than 30 days following the material changes. g) Capital Power Generation Services Inc. must perform an annual audit conducted by an external auditor, the scope of which shall include, but not be limited to, reviews of access to preferential information; employee training and certification; and process and procedures for handling preferential information. The audit reports produced as a result of such external audits will be shared with the MSA, and concerns raised will be shared with the but will otherwise remain confidential. Decision D (December 15, 2017) 9

14 , TransAlta Generation Partnership, and Capital Power Generation Services Inc. 6 Decision 39. Pursuant to the provisions of Section 3 of the Fair, Efficient and Open Competition Regulation, the Commission grants the application for the preferential sharing of records set out in the following order granted to the, TransAlta Generation Partnership and Capital Power Generation Services Inc. for the Keephills PPA, which is a separate disposition in this proceeding: Preferential Sharing of Records Keephills PPA Order D Dated on December 15, Alberta Utilities Commission (original signed by) Anne Michaud Panel Chair (original signed by) Bill Lyttle Commission Member (original signed by) Henry van Egteren Commission Member 10 Decision D (December 15, 2017)