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Real-time Intertie Transaction Failure Settlement

The IESO has introduced new settlement charges to help deter and reduce the incidence of real-time intertie transaction failures. This is one of several initiatives being undertaken by the IESO to address reliability concerns ahead of the summer of 2006. This is, however, an enduring settlement process that is not connected to the duration of the Day-Ahead Commitment Process.

How this settlement is calculated

Market participants who fail to schedule energy or operating reserve for either an import or an export transaction for reasons1 other than those bona fide and legitimate2, will now receive an hourly charge. These charges will appear under settlement charge types:

Code Name Description
135 Real-time Import Failure Charge Applies to a scheduled real-time import that is scheduled in the hour-ahead pre-dispatch but fails to flow in real-time, and does not have a 'bona-fide or legitimate' reason for the failure.
136 Real-time Export Failure Charge Applies to a scheduled real-time export that is scheduled in the hour-ahead pre-dispatch but fails to flow in real-time, and does not have a 'bona-fide or legitimate' reason for the failure.
1135 Day-Ahead Import Failure Charge Applies to a scheduled day-ahead import that does not flow in real-time and does not have a 'bona-fide or legitimate' reason for the failure. See DACP settlements for more details.
1139 Intertie Failure Charge Reversal Reverses the smaller of charge type 1135 and 135 when they apply to the same import transaction.

In addition, loads and exports may see a credit in:

Code Name Description
186 Intertie Failure Charge Rebate • Based on a pro-rata share of AQEW/SQEW for money collected from intertie transactions that fail in real-time for reasons within the market participant's control
• The total rebate amount will be the sum of: day-ahead import failure charges; real-time import failure charges and export failure charges
• Both a day-ahead import failure charge and a real-time import failure charge can be calculated on the same transaction, in this case only the greater of the two will apply
• Rebate may or may not appear on a preliminary settlement statement depending on any intertie failure charges are calculated on the corresponding trade date.

For the month of June, charge type 1135 will be a detail record, while 135, 136, 1139 and 186 will be manual line items on the daily settlement statements. Effective July 1, 2006 all charge types will be detail records.

For charge integration details see Market Manual 9, "Day-Ahead Commitment Process Operations and Settlement" section 7.4.4

The real-time failure charge calculation includes the difference between the pre-dispatch and real time Ontario price during the hour of the failure. This difference is adjusted by a price bias adjustment factor – which compensates for the different methods used to calculate the pre-dispatch and real-time Ontario prices. These price bias adjustment factors are to be used in the settlement charge calculation for both the real-time import and export failure charge.

Adjustment Factor

The price bias adjustment factors that form part of the charge calculation will be provided in advance of the effective trade date. There are twenty four hourly factors that will apply for a three month period to both the import and export failure charge. These three month periods are aligned with the seasons of the year.

The effective period of the factors are in three month blocks and are defined in the table below. The effective start time is the first hour of the first day of the block and ends the twenty fourth hour of the last day of the block.

The factors will be updated at least one month before their effective trade date. The effective period of the factors appears at the top of each column below. Communications will be sent when the factors are updated. Old factors are overwritten with each update. Here is a table of current adjustment factors:

Date
Posted		 Oct. 22, 2007 Oct. 22, 2007 April 14, 2008 April 14, 2008
Hour
Dec. 2007 -
Feb. 2008
Mar. 2008 -
May 2008
Jun. 2008 -
Aug. 2008
Sep. 2008 -
Nov. 2008
1
2.84
3.01
2.63
1.63
2
3.49
2.45
2.26
1.95
3
1.84
2.17
1.67
1.69
4
1.21
2.63
1.01
1.50
5
2.95
4.92
2.18
3.13
6
7.06
10.58
4.10
6.76
7
11.89
12.48
6.15
9.41
8
7.56
8.54
9.11
9.23
9
4.51
7.90
8.39
8.32
10
5.29
7.77
6.40
4.52
11
3.72
7.03
4.29
2.48
12
2.47
4.75
1.53
1.25
13
1.83
4.95
1.97
1.48
14
1.33
3.61
2.96
1.23
15
3.04
5.23
6.93
3.03
16
8.20
6.61
7.23
6.36
17
16.28
5.48
6.15
11.57
18
17.86
10.36
8.49
14.24
19
13.74
13.95
8.66
11.03
20
10.34
12.69
6.37
12.90
21
11.33
14.00
4.58
19.36
22
11.50
18.81
16.31
18.83
23
10.81
13.03
9.66
7.63
24
8.10
6.94
5.63
3.97

More information on the calculation methodology for the price adjustment factors may be found in Market Manual 5.5: "Physical Market Settlement Statements"

1 The list of bona fide and legitimate reasons and their associated settlement reason codes are available in Market Manual 4.3, "Real Time Scheduling of Physical Markets". Physical Market Settlement Statements Manual 5.5 and Charge Types and equations documentation provide further clarification on settlement statement details.

2 Market Rules Chapter 7, Section 7.5.8A and S. 7.5.8B
 
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