Line Loss Rule – Procedural Ruling
The AUC released a procedural decision in proceeding 790, which relates to a complaint filed on December 31, 2005 by Milner Power Inc. (“Milner”) concerning the Alberta Electric System Operator’s (“AESO”) Transmission Loss Factor Rule and Loss Factor Methodology (“Line Loss Rule”). The AUC previously ruled in Decision 790D032015 that the AESO must file by February 1, 2016, a plan to develop a revised Line Loss Rule implementing the AUC’s findings in Decision 790D032015 regarding developing a compliant Line Loss Rule.
Clarification Requests
The AESO requested clarification of certain findings made in Decision 790D032015, and its compliance with Decision 790D032015.
The AESO requested clarification on calculating raw loss factors, stating that since loss factors are ultimately multiplied by the metered energy supplied, the corresponding value it would use in the loss factor calculation would be the dispatch volume, rather than total system losses as the denominator in the equation to determine loss factors.
The AUC confirmed that the use of dispatch volume as the denominator was the correct approach.
The AESO requested clarification regarding circumstances in which the system access point may not correspond to the energy market supply point. The AESO requested clarification on when a generation unit is connected to a distribution system, and when one or more generating units are connected within an industrial system. The AUC addressed this point in clarifying certain points for aggregating and disaggregating generating units for the purposes of calculating loss factors.
The AESO requested clarification regarding the compilation of 8,760 merit orders for the purposes of calculating loss factors. The AESO stated that the merit order changes throughout an hour, and may therefore result in compiling more than 8,760 merit orders during a year. The AESO stated that it would base its implementation plan on the use of a single merit order for each hour, and requested confirmation that this was the correct approach to complying with the finding in Decision 790D032015. The AUC confirmed that calculating a single merit order for each hour in the year was the correct approach.
The AESO submitted that the use of 8,760 raw loss factors obviated the need for weighting of base cases, but submitted that volume weighting was still necessary. The AUC confirmed that the use of volumeweighted average loss factors was compliant.
The AESO submitted that it would apply loss factor collars and any subsequent adjustments (i.e. clipping and shifting loss factors) at the end of a year, but noted that it would do so from midyear to midyear, and not coincident with the calendar year. The AESO sought confirmation that its approach was compliant with the AUC’s finding in Decision 790D032015. The AUC confirmed that a midyear to midyear approach was compliant.
AESO Implementation Plan
The AESO plans to submit a revised Line Loss Rule in the summer of 2016, with a view to having new loss factors becoming effective by January 2017. The AUC found that the AESO’s proposed timeline was reasonable.
AESO Modelling
The AESO stated that for modelling purposes:

where blocks of available capacity are offered as operating reserves, it would include those blocks at the top of the merit order;

if a source asset does not submit operating blocks, then a single block is used; and

available transfer capacity not scheduled over the interties will be added as an import block at the top of the merit order.
The AESO also stated that historical load data will be adjusted to incorporate system changes throughout the year, and that load volumes would be increased or decreased so that total load matches forecast system load for the forecast loss factor year.
New source assets, according to the AESO would be inserted into the merit order based on average price quantity blocks offered by similar assets.
The AUC found that the AESO’s modelling approach was consistent with its operation of the system, and was reasonable.
Publication of Input Data
The AESO stated that hourly data for individual data points would be commercially sensitive information which might harm competitive markets by, for example, disclosing bidding patterns or trends. As such, the AESO stated that it would not make public the hourly input data. The AESO stated it would make public any other data it uses for the development of loss factors that is not considered commercially sensitive.
A number of parties objected to the AESO holding any information in confidence, arguing that it would deny access to information necessary to make business decisions based on the AESO’s calculations.
The AESO stated in reply that it would provide a random distribution of representative hours to enable testing of loss factors.
The AUC held that the AESO’s approach to retaining commercially sensitive information was reasonable.
Aggregation of Source Assets
The AESO proposed to allow generators the choice of aggregating facilities by March 31, 2016 for 2017 loss factors. Market participants would be responsible for any direct costs or impacts under the ISO tariff arising from any aggregation or disaggregation.
The AESO’s criteria for aggregation for multiple generating units were as follows:

at a single location;

owned or controlled by the same entity; and

part of a single economic enterprise and not a standalone business.
The AESO stated that the generating units must be aggregated through a single measurement point, and that each point would be associated with one energy market supply point and one set of pricequantity pairs.
The AUC noted that with respect to power purchase arrangements (“PPA”), units held by a single PPA buyer would be eligible for aggregation, whereas units held by multiple buyers would not be, even if they are subject to common offer controls.
The AUC held that the AESO’s approach was reasonable.
Exclusion of Hours
The AESO stated that when large assets are disconnected for the purposes of loss factor calculations the system would rebalance through dispatching up the merit order. However, in some hours for large units, supply would be insufficient to balance load. In these instances, the AESO proposed to exclude such hours from its calculations. The AESO expected that the number of such hours would be low, and would not materially affect the total number of hours.
Several parties requested further information regarding the number of hours that were expected to be excluded. The AESO stated that it would not know the total number of hours until Q4 of 2016, once it has calculated 2017 loss factors. The AESO expected to provide a workbook with raw loss factors for each excluded hour, including an explanation for why it was excluded. The AUC found that the AESO’s approach was reasonable.
Steps for Loss Factor Calculation Methodology
The AESO proposed to take the following steps when calculating final loss factors:

calculate raw loss factors for each source asset in 8,760 hours at 59:59 of each hour;

calculate the volume weighted average loss factor for each source asset;

apply a single annual shift factor to all average loss factors;

clip and shift the loss factors within the collars; and

include provisions for adjusting final loss factors when the final loss factor for a source asset changes by 0.25 of more.
With respect to the timing of recalculating loss factors, when a facility’s loss factor changes by 0.25 or more, or when errors are identified, such were errors would be corrected prospectively by the AESO.
The AUC found that the AESO’s proposed steps to calculate loss factors were reasonable, subject to any determinations the AUC may make based on any further consultation between the AESO and stakeholders.
The AUC therefore approved the AESO’s implementation plan subject to the qualifications noted in the decision. Accordingly, the AUC directed the AESO to submit its compliance filing for review and approval in accordance with the timeline set out in the AESO’s own implementation plan, or earlier if possible.