20200110Application.pdf

AifltstA
I
-;f- mC)oIn
im oG)
c,
Avista Corp.
1411 East Mission P.O. Box 3727
Spokane, Washinglon 99220-0500
Telephone [phone]
Toll Free 800-727-9170
VIA OVERNIGHT MAII,
January 9, 2020
Diane Hanian
Commission Secretary
Idaho Public Utilitics Commission
I l33l W. Chinden Blvd
Building 8, Suite 201-A
Boise. ID 83 7'14
RE: CASE NO. AVU-E-20-gl
IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION FOR AN
ACCOUNTING ORDER AUTHORTZING ACCOUNTING AND RATEMAKING
TRE,ATMENT OF COSTS ASSOCIATED WITH THE ENERGY IMBALANCE
MARKET
Dear Ms. Hanian:
L,nclosed lor filing with the Commission is Avista's Application for an Accounting Order
Authorizing Accounting and Ratemaking Treatment of Costs Associated with the Energy
Imbalance Market (EIM). The filing consists of an original and seven copies of Avista's
Application.
Please direct any questions regarding this filing to Liz Andrews at [phone] or
[e-mail].
Sincerely,
/s/ Paul Kimball
Paul Kimball
Manager of Compliance & Discovery
Enclosures
1
2
J
4
5
6
7
8
9
10ll
t2
13
t4
l5
lo
t7
l8
t9
20
21
22
23
24
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O.BOX3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINCTON 99220-37 27
TELEPHONE: [phone]
FACSIMILE: [phone]
RECEIVED
' :l Jiti I 0 PH 3: 0f
25
26
27
28
29
30
3l
32
tt
34
35
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )oFAVISTACORPORATIONFOR )
AN ACCOUNTING ORDER AUTHORIZING )
ACCOUNTING AND RATEMAKING )
TREATMENT OF COSTS ASSOCIATED WITH )THEENERGYIMBALANCEMARKET )
CASENO. AVU-E-2O.OI
36
I. INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter Avista or Company),
at 1411 East Mission Avenue, Spokane, Washington, pursuant to Section 6l-524 Idaho Code
and Rule 52 of the Idaho Public Utilities Commission ("Commission Rules of Procedure"),
hereby applies to the Commission for an order authorizing the accounting and ratemaking
treatment detailed in this Application related to the incremental costs the Company will incur
associated with joining the California Independent System Operator (CAISO) Westem Energy
Imbalance Market (EIM). In this filing, the Company is requesting Commission approval to
def'er, for later recovery in rates, these costs until such time as they are included in base rates.
These costs will primarily be related to developing the network model per CAISO requirements
including EMS/SCADA integration, development of a generation resource bid strategy and
population of the generation resource master file, conducting request for proposals and
Application of Avista Corporation Page 1
Case No. AVU-E-20-
I selecting new market related software applications, completion of modeling into the CAISO
test environment, project and change management and employee training.
Pursuant to Commission Rule of Procedure 20 t, the Company requests that this filing
be processed under the Commission's rules for Modified Procedure.
Communications in reference to this Application should be addressed to:
2
3
4
5
6
1
8
9
10
1l
t2
13
l4
15
David J. Meyer, Esq.
Vice President and ChiefCounsel for
Regulatory and Govemmental Affairs
Avista Corporation
P.O. Box 3727
l4l I E. Mission Avenue, MSC-7
Spokane, WA 99220-3727
Phone: [phone]
[e-mail]
Patrick D. Ehrbar
Director of Regulatory Affairs
Avista Corporation
P.O. Box 3727
141 I E. Mission Avenue, MSC-27
Spokane, WA 99220-3727
Phone: [phone]
[e-mail]
l6
17
18
19
20
2l
23
1A
25
27
28
22
26
II. BACKGROI]NI)
Avista has actively monitored the operation and expansion of the Westem EIM. The
Company regularly participates in regional meetings and dialogue associated with the EIM
including the potential expansion of the EIM to a day ahead market. Avista has been
continuously evaluating the operational benefits associated with EIM participation, and the
associated risks of not participating in the market. One of the largest operational benefits for
current EIM participants is the ability to balance and regulate load and renewable resources by
leveraging available matket resources, instead of relying on only intemal Avista resources to
provide regulation and flexible ramping.
Avista has also closely monitored the impacts to the bi-lateral trading market as more
entities join the EIM. The recent integration of Idaho Power and Powerex into the EIM has
had an impact on short term hourly market liquidity. In addition, the commitment of Seattle
City Light, NorthWestem Energy, and the recent notice of intent of the Bonneville Power
Application of Avista Corporation Page 2
Case No. AVU-E-2O-
29
2
Administration to join the market in the next few years, will continue to put a stress on near
term hourly market liquidity. EIM participants are less likely to conduct biJateral transactions
close to the operating hour, due to the need to pass EIM sufficiency and flexible ramping tests,
and meet other market transaction closing times that occur well before the operating hour. This
leads to significant risk and inefficiencies for non-market participants to reliably and
responsibly meet load service obligations. With over 75 percent of the load in the westem
interconnection committed to joining the EIM by 2022, non-participating utilities will face
growing market liquidity risk and will therefore need to hold more reserves to minimize
exposure to in-hour fluctuations or extended non-planned generation outages. Holding
additional reserves will lead to higher overall power supply costs since excess available
resources can't be fully optimized or additional resources may need to be purchased.
In addition, Avista's renewable resource mix is changing as the price of renewable
resources continue to decline, our customer's interest in purchasing cleaner energy increases,
and the implementation of new carbon emission policies in the West. Recently, Avista signed
two Power Purchase Agreements (PPA) for 20 MW of solar starting in December of 2018
(Adams-Neilson) and 145 MW of wind starting in late 2020 (Rattlesnake Flat), based on
competitive pricing and customer interest. Avista expects to integrate additional renewable
resources into its Balancing Authority Area (BAA) in the future associated with the
development and adoption of state and local clean energy and carbon emission policies, and
the increased interest of qualifuing resources that meet the requirements under the Public
Utility Regulatory Policies Act (PURPA). As additional variable resources are integrated into
the Avista BAA, it becomes more efficient and cost-effective for Avista to rely on the EIM to
help meet the in-hour variability, instead of holding back and dispatching Avista-owned
resources to meet the flexible ramping requirements.
Application of Avista Corporation
Case No. AVU-E-20-
3
4
5
6
7
I
9
10
11
t2
l3
1n
l5
l6
t7
t8
l9
20
2l
22
23
?4
Page 3
Based on the short term market liquidity risks associated with being a non-EIM
participant, and Avista's changing resource portfolio, Avista decided it was time to join the
Westem EIM. Avista signed an EIM Implementation Agreement with the CAISO on April
25,2019 with a planned goJive date of April 1,2022. CAISO filed the implementation plan
with FERC on December ll,20l9 and requested an effective date of April l, 2020 to allow
Avista to integrate into the market no later than April 1,2022. A copy of the EIM ISO/Avista
Implementation Agreement and the CAISO FERC filing letter are included as Attachment A
and B, respectively.
III. EIM ESTIMATED COSTS AND BENE,FITS
As part of Avista's market monitoring and evaluation efforts between 2015 and 2017,
Avista hired two consultants to evaluate the costs and benefits of EIM participation. Avista
recently updated these previous assessments based on current EIM operation and actual
performance. Utilicastl was hired in the second half of 2018 to help Avista develop a full
technology road map and conduct a metering assessment associated with EIM participation
requirements. Utilicast also updated the market costs assessment that it had previously
conducted for the Company in 2015. Based on the Utilicast assessments and preliminary
planning done in the first quarter of 2019, Avista estimates it will cost between $21.4 million
and $26.7 million (on a system basis) to fully prepare for market entry. These costs include
metering upgrades, generation control modifications, communication infrastructure additions
and improvements, the purchase and integration of up to eight market based software
applications, the hiring ofa System Integrator consultant, and intemal Avista labor. The on-
t Utilicast is a provider of consulting services to the energy and utilities industry, providing expertise and
experience in the areas ofregional electricity market solutions, power systems operations, project implementation,
analytics, energy seryices, customer care and related IT infrastructue.
Application ofAvista Corporation Page 4
Case No. AVU-E-20-
2
J
4
5
6
7
8
9
l0
ll
12
l3
t4
l5
l6
t7
l8
19
20
2l
22
I going annual system costs to operate in the market are anticipated to be between $3.5 million
and $4.0 million. Anticipated on-going costs include maintenance costs for software licenses
and communication networks, the addition of approximately 12 new employees to facilitate
market operations and settlements, including a new five person 24x7 hour EIM operating desk,
and CAISO EIM membership fees. The Utilicast technology and meter assessments are
included as Confidential Attachments C and D, respectively. Avista also created an EIM
Program Charter in May 2019 to document updated cost estimates, project implementation
processes and project govemance. The EIM Charter is provided as Confidential Attachment
E. The integration and on-going cost estimates will be further refined as Avista conducts
extensive planning assessments and completes project milestones in 2020, including selecting
software vendors, completing meter and control upgrade designs and finalizing the internal
program structure and associated employee resource plan.
Avista contracted with Energy and Environmental Economics (E3)2 in the fall of 2017
to perform an EIM benefit analysis. E3 was chosen since they had previously conducted
multiple market benefit assessments for other EIM participants and had the best available
system model. This allowed Avista to compare results to the other utilities. The E3 assessment
estimated that Avista could see a range of system annual benefits from $2 million to $12
million by participating in the EIM. The E3 study is provided as Confidential Attachment F.
There are four main study assumptions that drive the range of potential EIM benefits: the
amount of flexible hydro Avista bids into the market, the amount of transmission that is made
available for market transactions, the amount of renewable generation that is integrated into
the Avista BAA, and the data source of the estimated benefits of other EIM participants. which
2 Energy+Environmental Economics (or E3) is an energy consulting firm that helps utilities, regulators, policy
makers, developers, and investors make strategic decisions as they implement new public policies, respond to
technological advances, and address customers' shifting expectations,
Application of Avista Corporation Page 5
Case No. AVU-E-20-
2
3
4
5
6
7
8
9
10
ll
t2
13
14
l5
16
t7
18
l9
20
2l
22
2
J
4
5
6
7
8
9
was used for comparison purposes and a proxy for market price variations. E3 varied the
assumption of these critical drivers to create 24 different study scenarios. Avista analyzed the
24 different scenarios and anticipates EIM system annual benefits to be $5.8 million, which is
an average of four of the 24 benefit scenarios (scenarios 6, 12, 18,24). These four scenarios
assume: Avista maximizes hydro bids into the market, based on discussions with Portland
General Electric (PGE) and Idaho Power Company (lPC) about EIM benefits being directly
related to bidding flexible resources into the market; an increase in projected renewable
generation into the Avista resowce mix, due to new emission policies; an average of low and
high transmission made available to the market; and an average of EIM benefits based on
modeled and actual data to represent price variations.
There is a high likelihood that Avista could see benefits move closer to the upper end
of the study range ($12 million system) based on the actual benefits that have been published
for existing EIM participants. Recent market price volatility experienced in2018 significantly
increased the benefits of current EIM participants, compared to anticipated results from their
E3 studies. Both IPC and PGE achieved EIM benefits in 2018 as calculated by the CAISO
that were over five times their anticipated benefits as calculated by 83. Avista's resource mix
and transmission connection to other EIM participants most closely matches IPC and PGE.
There are other operational benefits associated with EIM participation that were not
quantified in the E3 study. Participation in the EIM will improve system visibility and
reliability through improved modeling and new real-time monitoring. EIM participants also
experience improved outage coordination, both intemal and extemal. Because of load and
generation diversity that exists across the larger EIM footprint, as compared to individual
utilities, the total flexible ramping requirements are reduced by approximately 45%o per the
CAISO 2019 third quarter benefits report. The flexible ramping requirement reduction can be
Application of Avista Corporation
Case No. AVU-E-2O-
l0
ll
12
t3
14
l5
16
t7
18
t9
20
2l
22
23
1,t
Page 6
I shared among the EIM participants. The CAISO also calculates reduced renewable
curtailments and associated greenhouse gas emission reduction as a result ofEIM padcipation.
None ofthese additional benefits were given an economic value in the E3 study, however after
entering the EIM, Avista's customers will see some unquantified financial benefit from these
operating effi ciencies.
Avista performed an economic analysis to determine the system annual benefits
required to breakeven over a ten year operating period based on EIM implementation costs of
either $21.4 million (expected system project costs) and $26.7 million (expected system with
contingency). In order to break even in l0 years, assuming integration costs of$21.4 million,
Avista will need to achieve system annual benefits of approximately $5.0 million. Assuming
integration costs of $26.7 million, Avista will need to achieve affrual system benefits of
approximately $6.0 million. As previously discussed, based on the E3 benefit analysis, Avista
anticipates a-nnual EIM benefits to be $5.8 million (system). Therefore, Avista anticipates
positive revenue from EIM participation in less than 10 years. If actual EIM system benefits
are closer to the potential upper bound of $12 million, as determined by E3 and experienced
by other similar situated EIM participating utilities, tien Avista customers would see positive
revenue in a much shorter time period. This economic analysis prepared by Avista is provided
in the confidential work papers included with this filing.
The current total estimate for EIM implementation system O&M expense over the
entire project from 2019 to Apil2022 is between $3.2 million to $4.0 million. The estimated
annual project costs will be reassessed after the selection of the software vendor and other
planning assessments are completed in early 2020. Current estimated planning costs for 2020
related to the initial Project Manager and Change Management labor, system integrator
consultant, software requirements development, miscellaneous technology assistance, training
Application of Avista Corporation
Case No. AVU-E-20-
Page 7
I and potential accuracy testing analysis for generation and metering measurement devices, are
expected to be between $1.2 million and $1.5 million, on a system basis.
IV. PROPOSED ACCOUNTING TREATMENT
In this filing, beginning January l, 2020, the Company is requesting an order allowing
the defenal of incremental O&M costs associated with the implementation of EIM until such
time as they are included in base rates via a general rate case proceeding. As noted above,
these costs will primarily be related to the network model development, including
EMS/SCADA integtation, development of generation resoruce bid strategy and population of
the generation resource master file, completion of modeling into the CAISO test environment,
project and change management and employee training.
To track these costs, the Company would defer the ElM-related monthly expenses
based on actual EIM participation costs after it has incurred those costs (without a carrying
charge), until that amount is fully imbedded in base rates.r The EIM costs that the Company is
proposing to defer include what will be accounted for in the following projects:
I This is consistent with that approved for Idaho Power on Janlraty 31,2017 in Case No. IPC-E-16-19, per Order
No. 33706, allowing tdaho Power to defer their "initial costs ofjoining the EIM until such time as benefits begin
to flow to customers. ...We decline to apply a carrying charge to the defened amounts. We Iind that the ability
to defer O&M costs for future recovery, compared to the normal ratemaking treatment, provides sufficient benefit
to the Company." The Commission lirther stated: "We note that the deferral treatment applies to the O&M
expenses ofjoining the EtM, and not to capital costs, which should be treated as any other capital expenditure."
Application of Avista Corporation
Case No. AVLJ-E-20-
2
3
4
5
6
7
8
9
10
11
12
IJ
t4
l5
Page 8
I
2
J
4
f
6
7
8
I
10
11
12
13 The Company requests to defer the total cost in Account 182.3 - Other Regulatory
Assets. In a future general rate case, Avista would request recovery ofthe defened balance and
propose an amortization period at that time.
14
15
Application ol Avista Colporation
Case No. AVU-E-20-
Listing of Projects Used to Record EIM Costs
Project #
09806037
09806037
'ossooo+o
09806040
'ostoooro
09806036
09806038
09806038
'oseooo:s
6seooo:q
'ostooo:s
'osgoos:s
'osgoos:a
09906538
'ostoso:o
'ostose:o
09806054
09806053
Task # (FERC
Account #)
566010
566020
588010
588020
557000
557020
549010
5490.20
923010
926t0r
920000
923010
926101
920000
549000
549001
54E000
53E000
Pn ject Nrmc
EM - Transmjssion Ops O&M
EIM - Transmissbn Ops O&M
EM - Substatbn O&M
EIM - Sub,station O&M
EIM - Power Suppv O&M
EIM - Power Supply O&M
EIM - GPSS O&M
EIM - GPSS O&M
EIM - Accounting lS/lT, Suppty Chain
EIM - Accounting IS/IT, Suppty Chain
EIM - Accounting ISflT, Supply Chain
EIM - lT Network O&M CD.AA
EIM - IT Network O&M CD.AA
EIM - [T Network O&M CD.AA
EIM - Power Supply O&M
EIM - Power Suppv O&M
GPSS EIM CT & PT Testing
GPSS EIM CT & PT Testing
Trsk Descriptiom
Other Expense-Labor
Other - Training
Misc Expense - Labor
Misc Expense - Training
Other Expense - Labor Training
Other Expense - Training
Other Expense-Labor
Other - Training
Odside Services Employed
Training - Required
A&G Labor
Outslie Services Employed
Training - Requbed
A&G Labor
Mbc. Power Supply - Labor
Mbc. Power Supply - Integrator
Other Expense - Testing
Turbines & Equipm€nt
Note: Costs will also inchrde Avista's standard payroll and overhead bading costs, recorded in FERC Accourts
q26,4O8, et.f..
Page 9
Ope ration and Maintenance Accounti[g
I V. CUSTOMER NOTIFICATION
Notice to the public of the proposed revisions, pursuant to IDAPA 31.21.02.102, will
be given simultaneously with the filing of this Application by posting a notice to the
Company's Website.
WI{EREFORE, Avista respectfully requests that the Commission issue an Order
approving the deferral of incremental O&M costs associated with the implementation of EIM
incurred by Avista, effective on and after January 1, 2020, until such costs are included in a
future proceeding, with this application being processed under Modified Procedure.
+4-
DATED at Spokane, Washinglon, this 7 iay of J anuary,2020.
AVISTA CORPORATION
BY
David J M
Vice Presi and Chief Counsel for
Regulatory and Governmental Affairs
Application of Avista Corporation
Case No. AVU-E-20-
2
3
4
5
6
7
8
9
10
t2
l3
14
1l
15
16
17
18
t9
20
Page l0
STATE OF WASHINGTON
County of Spokane
David J. Meyer, being first duly swom on oath, deposes and says: That he is the Vice President
and Chief Counsel for Regulatory & Govemmental Affairs for Avista Utilities and makes this
verification lor and on behalfofAvista Corporation, being thereto duly authorized;
That he has read t}re foregoing filing, knows the contents thereof, and believes the same to be true.
)
)
)
{74 7-
SIGNED AND SWORN to before me this ?
/Ay
of January 2020,by David J. Meyer.
rffir"-
NOT
Washington, residing at Spokane
Case No. AVIJ-E-20-
VERIFICATION
commissionEx pi."", lllLz)lul
PUBLIC in and lbr the State of
Page 1 1
ATTACHMENT A
Implementation Agreement
Page 1 of 17
ENERGY IMBALANCE MARKET
ISO/AVISTA IMPLEMENTATION AGREEMENT
This lmplementation Agreement ("Agreement") is entered into as of April 25. 2019. by
and between Avista Corporation, a Washington corporation ("Avista"), and the California
lndependent System Operator Corporation, a California nonprofit public benefit
corporation ("lSO"). Avista and the ISO are sometimes referred to in the Agreement
individually as a "Party" and, colleclively, as the "Parties."
RECITALS
A. WHEREAS, Avista has determined there is an opportunaty to secure benefits for
Avista's customers through improved dispatch and operation of Avista's generatron fleet
and through the efficient use and continued reliable operation of existing and future
transmission facilities and desires to participate in the energy imbalance market
operated by the ISO ("ElM"):
B. WHEREAS. the ISO has determined there are benefits to ISO market
participants through greater access to energy imbalance resources in real{ime and
through the efficient use and reliable operation of the transmission facilities and markets
operated by the lSO, and desires to expand operation of the EIM to include Avista;
D. WHEREAS, the Parties are entering into this Agreement to set forth the terms
upon whrch the ISO will timely configure its systems to incorporate Avista rnto the EIM
("Project") on or before April 1 , 2022 (' lmplementation Date").
NOW THEREFORE, in consideration of the mutual covenants contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
AGREEMENT
(a) This Agreement shall become effective upon the date the Agreement is
accepted, approved or otherwise permitted to take effect by FERC, without condition or
modification unsatisfactory to either Party ("Effective Date").
(b) ln the event FERC requires any modification to the Agreement or imposes
any other condition upon its acceptance or approval of the Agreement, each Party shall
1
Attachment A
C WHEREAS. Avista acknowledges that the rules and procedures governing the
EIM are set forth in the provisions of the ISO tariff as filed with the Federal Energy
Regulatory Commission ('FERC") and that participatlon in the EIM requires
corresponding revisions to Avista's Open Access Transmission Tariff ("Avista Tariff')
and the execution of associated service agreements: and
1 . Effective Date and Term.
Attachment A
have ten (10) business days to notrfy the other Party that any such modification or
condition is unacceptable to that Party. lf no Party provides such notice. then the
Agreement. as modrfied or conditioned by FERC, shall take effect as of the date
determined under Section '1(a). lf either Party provides such notice to the other Party,
the Parties shall take any one or more of the following actions: (i) meet and con{er and
agree to accept any modifications or conditions imposed by such FERC order; (ii) jointly
seek further administrative or legal remedies with respect to such FERC order, including
a request for rehearing or clarification; or (iii) enter into negotialions with respect to
accommodation of such FERC order, provided however, if the Parties have not agreed
to such an accommodation within thirty (30) days after the date on which such FERC
order becomes a final and non-appealable order, such order shall be deemed an
adverse order and the Parties shall have no further rights and obligations under the
Agreement.
(c) The term of the Agreement ("Term") shall commence on the Effective Date
and shall terminate upon the earliest to occur of ( t ) the date FERC permits all
necessary revisions to the Avista Tariff to take effect and the service agreements under
such tariff and the ISO tariff necessary for the commencement of Avista s participation
in the EIM have taken effect: (2) termination in accordance with Section 2 of this
Agreement: or (3) such other date as mutually agreed to by the Parties ("Termination
Date").
(d) This Agreement shall automatically terminate on the Termination Date and
shall have no further force or effect, provided that the rights and obligations set icrth in
Sections 5 and 6 shall survive the termination of this Agreement and remain in full force
and effect as prr:vided therein.
2.Termination
(a) The Parties may mutually agree to terminate this Agreement in writing at
any time. ln addition, either Party may terminate this Agreement in its sole discretion
after conclusion of the negotiation period in Section 2(b) or as provided in Section 2(d)
or 2(e) as applicable.
(b) lf either the ISO or Avista seeks to unilaterally terminate this Agreement, it
must first notify the olher Party in writing of its intent to do so ("Notice of lntent to
Terminate") and engage in thirty (30) days of good faith negotiations in an effort to
resolve its concerns. lf the Parties successfully resolve the concerns of the Party
issuing the Notice of lntent to Terminate, the Party that issued such notice shall notify
the other Party in writing of the withdrawal of such Notice ("Notice of Resolution")
(c) At the time the Notice of lntent to Terminate is provided, or any time
thereafter unless a Notice of Resolution is issued, Avista may provide written nolice
directing the ISO 1o suspend performance on any or all work on the Projecl for a
specified period of time ("Notice to Suspend Work"). Upon receipt of a Notice to
Suspend Work, the ISO shall. (1) discontinue work on the Proiect; (2) place no further
orders with subcontractors related to the Project; (3) take commercially reasonable
2
Page 2 ot 17
Attachment A Page 3 of 17
actions to suspend all orders and subcontracts; (4) protect and maintain the work on the
Projectl and (5) otherwise mitigate Avista's costs and liabilities for the areas of work
suspended. The ISO will not invoice Avista pursuant to Sectton 4(c) of this Agreement
for any milestone payment following the issuance of a Notice to Suspend Work. To the
extent a Notice of Resolution is issued pursuant to Section 2(b), the Notice to Suspend
Work in effect at the time shall be deemed withdrawn and the ISO shall be entitled to
invoice Avista for any milestone completed as specified in Section 4(c) of this
Agreement and Avista shall pay such invoice pursuant to Section 4.
(d) Any time afler thirty (30) days from the date of the Notice of lntent to
Terminate under Section 2(b), issued by either Party, and prior to the date of a Notice of
Resolution, the ISO may terminate this Agreement by providing written notice to Avista
that it is terminating thrs Agreement ("Termination Notice") effective immediately, The
ISO may terminate this Agreement under the terms of thrs Section 2(d) at its sole
discretion for any reason.
(e) Any time after th irty (30) days from the date of the Notice ot lntent to
Terminate under Section 2(b), issued by either Party, and prior to the date of a Notice of
Resolution, Avista may terminate this Agreement by providing written notice to the ISO
that it is terminating this Agreement ("Termination Notice") effective immediately. Avista
may terminate this Agreement under the terms of this Section 2(e) at its sole discretion
for any reason.
(0 ln the event this Agreement is terminated by either or both of the Parties
pursuant to its terms, this Agreement will become wholly void and of no furlher force
and effect, without further action by either Party, and the liabilities and obligations of the
Parties hereunder will terminate, and each Party shall be fully released and discharged
from any liability or obligation under or resulting from this Agreement as of the date of
the Termination Notice provided in Section 2(d) or 2(e), as applicable, notwithstanding
the requirement for the ISO to submit the filing specified in Section 2(g).
Notwithstanding the foregoing, the rights and obligations set forth in Sections 5 and 6
shall survive the termination of this Agreement and remain in full force and effecl as
specified in Sections 5 and 6. and any milestone payment obligation pursuant to Section
4(c) that arose pnor to the Termination Notice an accordance with Section 2(d) or 2(e)
shall survive until satisfied or resolved in accordance with Section 'l 1,
(S) The Parties acknowledge that the ISO is required to file a timely nolice of
termination with FERC. The Parties acknowledge and agree that the filing of the notice
of termination by the ISO with FERC will be consrdered timely if the filing of the notice of
termination is made after the preconditions for termination have been met. and the ISO
files the notice of termination withrn ten (10) days after the Termination Notice has been
provided by either the ISO in accordance with Seclion 2(d) or Avista in accordance with
Section 2(e). This Agreement shall terminate upon acceptance by FERC of such a
notice of [errrrinatiorr.
3
Attachment A Page 4 of 17
(a) The Parties shall complete the Project as described in Exhibit A, sub,ect to
modification only as described in Section 4(e) below-
(b) The Parties shall undertake the aclivities described in Exhibit A with the
objective of completing the Project and implementing the EIM no later than the
lmplementation Date, including all milestones listed undcr Exhibit A for the
lmplementation Date, subject to modification only as described in Section 3(c) below.
(c) Either Party may propose a change in Exhibit A or the lmplementation
Date to the other Party. lf a Party proposes a change in Exhibit A or the lmplementation
Date, the Parties shall negotiate in good faith lo attempt to reach agreement on the
proposal and any necessary changes an Exhibit A and any other affected provision of
this Agreement, provided that any change in Exhibit A, or any change to the
lmplementation Date, must be mutually agreed to by the Parties, The agreement of the
Parties to a change in Exhibit A, or a change to the lmplementation Date, shall be
memorialized in a revision to Exhibit A, which wlll then be binding on the Parties and
shall be posted on the internet web sites of the ISO and Avista. without the need for
execution of an amendment 10 this Agreement. Changes that require revision of any
provision of this Agreement other than Exhibit A shall be reflected in an executed
amendment to this Agreement and filed with FERC for acceptance.
(d) At least once per calendar month during the Term, the Parties' Designated
Executives. or their designees. will meet telephonically or in person (at a mutually
agreed to location) to discuss the status of the performance of the tasks necessary to
achieve the mileslones in Exhibit A and the continued appropriateness of Exhibit A to
ensure that the Prqect can meet the lmplementation Date. For purposes of this
section, "Desrgnated Executive" shall mean the individual identified in Section 8(g), or
her or his designee or successor.
4. lmplementation Char-qeg- ltrvoicinq and Milestone Paymenls
(a) As itemized in Section 4(c) below, Avista shall pay the ISO a fixed fee of
$300,000 for costs incurred by the ISO to implement the Project ("lmplementation Fee"),
subiect to completion of the milestones specified in Section 4(c) and subject to
adiustment only as described in Section 4(b).
(b) The ISO will provide prompt written notice to Avisla when the sum of its
actual costs through the date of such notice and its projected costs to accomplish the
balance ol the Project exceed the lmplementation Fee. The lmplementation Fee shall
be subject to adjustment only by mutual agreement of the Parties if the Parties agree to
a change in Exhibit A, or a change to the lmplementation Date, in accordance with
Section 3(c) and lhe Parties agree that an adjustment to the lmplementation Fee is
warranted in light of such change.
(c) Upon completion of the milestones identified in Exhibit A, the ISO shall
invoice Avista for the lmplementation Fee as follows:
4
3. lmplementation Scope and Schedule.
Attachment A
$50,000 upon the Effective Date as further described in Section '1 of this
Agreement and Exhibit A as Milestone 1:
$50,000 upon deployment into the ISO test environment of the full network
model database that includes the topology of the Avista system as further
described in Exhibit A as Milestone 2;
lt $50,000 upon ISO promotion of market network model including Avista
area to non-production system with Avista connection and data exchange
data in advance of market simulation as further described in Exhibit A as
Milestone 3:
$50,000 upon commencement of EIM market simulation as further
described in Exhibit A as Milestone 4:
$50.000 upon start of parallel operations as further described in Exhibit A
as Milestone 5: and
S50,000 upon the lmplementation Date as further described in Exhibit A as
Milestone 6.
(d) Following the completion of each milestone identified in Section 4(c)(i)
through (vi), the ISO will deliver to Avista an invoice which will show the amount due,
together wrth reasonable documentation supporting the completion of the milestone
being invoiced. Avista shall pay the invoice no later than forty-five (45) days after the
date of receipt. Any milestone payment past due will accrue interest, per annum,
calculated in accordance with the methodology specified for interest in the FERC
regulations at 18 C.F.R. S 35.19a(aX2)(iii) (the "FERC Methodology").
(e) lf a mitestone has not been completed as described in Section (c)(i), (ii),
(iii), (iv), or (v) and in Exhibit A, as Exhibit A may have been modified in accordance with
Section 3(c), the Parties shall negotiate in good faith an agreed upon change to the
Project Delivery Dates (as defined in Exhibit A) consislent with Section 3(c) such that
the timing of milestone payments in Section 4(c) can be adjusted to correspond to the
updated Exhibit A.
(0 lf Avista disputes any portion of any amount specified in an invoice
delivered by the ISO in accordance with Section 4(c), Avista shall pay its total amount of
the invoice when due. and identify the disputed amount and state that the disputed
amount is being paid under protest. Any disputed amount shall be resolved pursuant to
the provisions of Section 11. lf it rs determined pursuant to Section 11 that an
overpayment or underpayment has been made by Avista or any amount on an rnvoice is
incorrect, then (i) in the case of any overpayment, the ISO shall promptly retum the
amount of the overpayment (or credit the amount of the overpayment on the next
invoice) to Avista; and (ii) in the case of an underpaymenl, Avista shall promptly pay the
amount of the underpayment to the lSO, Any overpayment or underpayment shall
include interest for the period from the date of overpaymenl, underpayment, or incorrecl
Page 5 of 17
i
Attachment A Page 6 of 17
allocation until such amount has been paid or credited against a future invoice
calculated in the manner prescribed for calculating interest in Section 4(d).
(S) All costs necessary to implement the Prolect not provided for in this
Agreement shall be bome separately by each Party, which in the case of the ISO will be
recovered through rates as may be authorized by its regulatory authorities.
(h) All milestone payments required to be made under the terms of this
Agreement shall be made to the account or accounts designated by the Party which the
milestone payment is owed, by wire transfer (in immediately available funds in the laMul
currency of the United States).
5. Coefidentialitv
(a) All written or oral information received from the other Party in connection
with this Agreement (but not this Agreement or any information in connection with this
Agreement to the extent such Agreement and information is filed with FERC) necessary
to complete the Project and marked or otherwise identified at the time of communication
by such Party as containing information that Party considers commercially sensitive or
confidential shall constitute "Con{idential lnformation'' subject to the terms and
conditions herein-
(b) lf Avista publicly releases Avista's Confidential lnformation in connection
with a public process or a regulatory filing. or if the ISO publicly releases the ISO's
Confidential lnformation in connection with a public process or a regulatory filing, then
the information released shall no {onger constitute Confldential lnformation; provided,
however, that Confidential lnformation disclosed under seal (or in such other manner as
to be trealed confidentially) in connection with a regulatory filing shall retain its status as
Confidential lnformation under this Agreement. ln addition, Confidentaal lnformation
does not include information that (i) is or becomes generally available to the public other
than as a result of disclosure by either Party, its officers, directors, employees. agents.
or representatives; (ii) is or becomes available to such Party on a non-confidential basis
from other sources oI their agents or representatives when such sources are not known
by such Party to be prohibited from making the disclosure; (iii) is already known lo such
Party or has been independently acquired or developcd by such Party without viclating
any of such Party's obligations under this Section 5; (iv) is the subject of a mutual
written agreement between the Partles, including an agreement evidenced through an
exchange of electronic or other communications, with regard to information for
discussion at any stakeholder meelings or during the stakeholder process or with any
regulatory authority; or (v) is the sub1ecl of a mutuel written agreement between the
Parties, including an agreement evidenced through an exchange of electronic or other
communications, to allow for such disclosure and designation as non-confidential or
public information on a case-by-case basis in accordance with Section 10 of this
Agreement.
(c) The Confrdential lnformation will be kept confidential by each Party and
each Party agrees to protect the Confidential lnformation using the same degree of
b
Attachment A PageT of17
care, but no less than a reasonable degree of care, as a Party uses to protect its own
confidential information of a like nature. Notwithstanding the preceding sentence. a
Party may disclose the Confidential lnformation or portions thereof to those of such
Party's officers, employees, partners, representatives, attorneys, contractors, advisors,
or agents who need to know such information for the purpose of analyzing or performing
an obligation related to the Project. Notwithstanding the foregoing, a Party is not
authorized to disclose such Confidential lnformation to any officers, employees,
parlners, representatives, attorneys, contractors, advisors, or agents without
(i) informing such officer, employee, partner, representative, attorney, contractor.
advisor, or agent of the confidential nature of the Confidential lnformation and (ii)
ensuring that such officer. employee, partner, representative, attorney, contractor,
advisor, or agent is subject to confldentialig duties or obligations to the applicable Party
thal are no less restrictive than the terms and conditions of this Agreement. Each Party
agrees to be responsible for any breach of this Section 5 by such Party or a Party's
officers, employees, partners, representatives, attorneys, contractors, advisors or
agents, subject to the limitations set forth in Section 6 below.
(d) ln the event that a Party is required by a court of competent jurisdiction or
regulatory authority (by law. rule. regulation, order, deposition, interrogatory. request for
documents. data request issuedas part of a regulatory process, subpoena, civil
investigative demand or samilar request or process) to disclose any of the Confidential
lnformation, such Party shall (to the extenl legally permitted) provide the other Party
with prompt written notice of such requirement so that the other Party may seek a
protective order or other appropriate remedy and/or waive compliance with the terms of
this Section 5. ln the event that such protective order or other remedy is not obtained,
the disclosing Party hereby waives compliance with the provisions hereof wfih respect
to such Confidential lnformation. ln such event, the Party compelled to disclose shall (i)
furnish only that portion of the Confidential lnformation which, in accordance with the
advice of its own counsel (which may include internal counsel), is legally required to be
fumished, and (ii) exercise reasonable efforts to obtain assurances that confidential
treatment will be accorded the Confidential lnformation so furnished.
(e) Notwithstanding the foregoing, the Parties acknowledge that they are
required by law or regulation to report certain information that could embody
Confrdentral lnformatron trom trme to trme, and may do so trom trme to time wrthoul
providing prior notice to the other Party. Such reports may include models, filings. and
reporls of costs, general rate case filings, cosl adjustment mechanisms, FERC+equired
reporting, investigations, annual state reports that include resources and loads.
integrated resource planning reports, reports to entities such as FERC, the North
American Electric Reliability Council ("NERC), Western Electricity Coordinating Council
("WECC') or similar or successor organizations, or similar or successor forms, filings,
or reports, the specific names of which may vary by jurisdiction, along with supporting
documentation. Additionally, in regulatory proceedings or investigations in all state and
federal jurisdrctrons in which they may do business, the Parties will from time to time be
required to produce Confidential lnformation, and may do so without prior notice using
its business judgment in compliance with all of the foregoing and including the
appropriate level of confidentiality for such disclosures in the normal course of busrness.
7
Attachment A Page 8 of 17
(fl Each Party is entitled to seek equitable relief, by injunction or otherwise, to
enforce its rights under thrs Section 5 to prevent the release of Confidential lnformation
without bond or proof of damages, and may seek other remedies available at law or in
equity for breach of this provision, subject to the limitations set forth in Section 6 below.
(g) Unless otheMise prevented by law, upon written request by a Party, the
other Party shall promptly retum to the requesting Party or destroy all Confidentral
lnformation it receMed, including all copies of its analyses, compilations, studies or other
documents prepared by or for it, that contain the Confidential lnformation in a manner
that would allow its extraction or that would allow the identification of the requesting
Party as the source of the Confidential lnformation or inputs to the analysis.
Notwithstanding the foregoing, neither Party shall be required to destroy or alter any
computer archival and backup tapes or archival and backup files (collectively,
"Computer Tapes"), provided that any Confidential lnformation of the other Party
retained by a Party shall be kept confidential in accordance with the terms of this
Agreement.
(h) Nothing in this Agreement shall be deemed to restrict either Party from
engaging with third parties with respect to any matler and for any reason, specifically
including the ElM. provided Confidential lnformation is treated in accordance with this
Section 5.
(i) This Section 5. Confidentiality, applies for two years (24 months) after the
Termination Date or the date of any expiration or termination of this Agreement.
(a) The Parties acknowledge and agree that, except as otheMise specified in
Section 4(f) of this Agreement, neither Party shall be liable to the other Party for any
claim, loss, cost, liability, damage or expense, including any direct damage or any
special, indirect, exemplary, punitive, incidental or consequential loss or damage
(including any loss of revenue, income, profits or investment opportunities or claims of
third party customers), arising out of or directly or indirectly related to such other Party's
decision to enler into this Agreement, such other Party's performance under this
Agreement, or any other decision by such Party with respect to the Project-
(b) Each Party shall indemnify, defend and hold harmless each of the other
Party and its officers, directors, employees. agents, contractors and sub-contractors,
from and against all third-party claims, .judgments, losses, liabalities. costs, expenses
(including reasonable attorneys'fees) and damages for personal injury, death or
property damage, to the extent caused by the negligence, willful misconduct, or breach
of this Agreement of the indemnifying Party, its officers. directors, agents, employees,
contractors or sub-contractors related to this Agreement; provided, that this
indemnification shall be only to the extent such personal injury, death or property
damage is not attributable to the negligence or willful misconduct related to this
Agreement or breach of this Agreement of the Party seeking indemnification, its officers,
directors. agents, employees, contractors or sub-conlractors. The indemnified Party
o
6. Limitation of Liabilitv: lndemniW.
Attachment A Page 9 of 17
shall give the other Party prompt notice of any such claim. The indemnifying Party, in
consultation with the indemnified Party. shall have the right to choose competent
counsel, control the conduct of any litigation or other proceeding. and settle any claim,
provided that any such settlement shall not impose costs upon the indemnified Party.
The indemnified Party shall provide all documents and assistance reasonably requested
by the indemnifying Party.
(c) The righa and obligations under this Section 6 shall survive the
Termination Date and any expiration or termination of this Agreement.
(a) Representations and Warranties of Avista. Avrsta represents and
warrants to the ISO as of the Effective Date as follows:
(1) lt is duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formalion
(2) lt has all requisite corporate power necessary to own its assets and
carry on its business as now being conducted or as proposed to be conducted under
this Agreement.
(3) lt has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligatrons under this Agreement, and the
execution and delivery of this Agreement and the performance by it of this Agreement
have been duly authorized by all necessary corporate action on its part,
(4) The execution and delivery ol this Agreement and the performance
by it of this Agreement do not: (i) violate its organizational documents; (ii) violate any
governmental requirements applicable to it; or (iii) result in a breach of or constitute a
defaull of any material agreemeni to which it is a party-
(5) This Agreement has been duly and validly executed and delivered
by it and constilutes its legal. valid and binding obligation enforceable against it in
accordance with its terms, except as the same may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally and by principles of equi]
regardless of whether such principles are considered in a proceeding at law or in equity.
(6) All material governmental authorizations in connection with the due
executjon and delivery of this Agreement, have been duly obtained or made prior to the
date hereof and are in full force and effect.
(b) Representations and Warrantres of the ISO ISO represents and warrants
to Avista as of the Effective Date as follows:
(1) lt is duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation.
I
7 . Bgpresentation and Warranties.
Attachment A Page 10 of 1 7
(2) lt has all requisite corporate power necessary to own its assets and
carry on ils business as now being conducted or as proposed to be conducted under
this Agreement.
(3) lt has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. and the
execution and delivery of this Agreement and the performance by it of this Agreement
have been duly authorized by all necessary corporate action on its part.
(4) The execution and delivery of this Agreement and the performance
by it of this Agreement do not: (i) violate its organizational documents; (ii) violate any
governmental requirements applicable to it; or (iii) result in a breach of or constitute a
default of any material agreement to which it is a party.
(5) This Agreement has been duly and validly executed and delivered
by it and constitutes its legal, valid and binding obligation enforceable against it in
accordance wrth its terms, excepl as the same may be limited by bankruptcy,
insolvency, regulatory authority. or other similar laws affecting creditors' nghts generally
and by principles of equity regardless of whether such principles are considered in a
proceeding at law or in equity.
(6) All material governmental authorizations in connection with the due
execution and delivery of, and performance by it of its obligations under this Agreement,
have been duly obtained or made prior to the date hereof and are in full force and effect
8. General Provisions
(a) This Agreement, including Exhibit A to this Agreement. constitutes the
entire agreement between the Parties, and supersedes any prior written or oral
agreements or understandings between the Parties, relating to the subiect matter of lhis
Agreement; provided. that nothing in this Agreement shall limit, repeal, or in any manner
modify the existing legal rights. privileges, and duties of each of the Parties as provided
by any other agreement between the Parties, or by any statute or any other law or
applicable court or regulatory decision by which such Party is bound.
(b) This Agreement may not be amended except in writing hereafter signed
by both of the Parties; provided, however, the Parties may mutually agree to changes in
Exhibit A in accordance with Sechon 4(e).
(c) Any waiver by a Party to this Agreement of any provision or condition of
this Agreement must be in writing signed by the Party to be bound by such waiver, shall
be effective only to the extent specifically set forth in such writing and shall not limit or
affect any rights with respect to any other or future circumstance.
(d) This Agreement is for the sole and exclusive benefit of the Parties and
shall not create a contractual relationship with, or cause of action in favor of, any third
party
10
Attachment A Page 11 ol 17
(e) Neither Party shall have the right to voluntarily assign its interest rn this
Agreement, including its rights, duties, and obligations hereunder, without the prior
written consent of the other Party, which consent may be withheld by the other Party in
rts sole and absolute discretion. Any assignment made in violation of the lerms of this
Section 8ie) shall be null and void and shall have no force and effect-
(f) ln the event that any provision of this Agreement is determined to be
invalid or unenforceable for any reason, in whole or part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and effect to
the fullest extent permifted by law, and such invalid or unenforceable provision shall be
replaced by the Parties with a provision that is valid and enforceable and that comes
closest to expressing the Parties' intention with respect to such invalid or unenforceable
provision.
lf to Avista
Avista Corporation
PO Box3727
Spokane, WA 99220
Attention: Jason Thackston, Senior Vice President, Energy Resources
E-mail: [e-mail]
lf to the ISO:
California lndependent System Operator Corporation
250 Outcropping Way
Folsom. CA 95630
Attention: Petar Ristanovic. Vice President, Technology
E-mail: [e-mail]
Each notice, consent or approval shall be conclusively deemed to have been given (i)
on the day of the actual delivery thereof, if given by personal delivery, email senl by
5:00 p.m. Pacific Time, or overnight delivery, or (ii) date of delivery shown on the
rcceipt, if given by certified mail (return receipt requested). lt is the responsibility of
each Party to provide, in accordance with this Section, notice to the other Party of any
necessary change in the contact or address information herein
11
(S) Whenever this Agreement requires or provrdes that (i) a notice be given by
a Party to the other Party or (ii) a Party's action requires the approval or consent of the
other Party, such notico, consent or approval shall be given in writing and shall be given
by personal delivery, by recognized ovemight courier service, email or by certified mail
(return receipt requested), postage prepaid. to the recipient thereof at the address given
for such Party as set forth below, or to such other address as may be designated by
notice given by any Party to the other Party in accordance with the provisions of this
Section 8(g):
Attachment A Page 12 of 17
(h) This Agreement may be executed in one or more counterparts (including
by facsimile or a scanned image), each of which when so executed shall be deemed to
be an original, and all of which shall together constitute one and the same rnstrument.
(i) Nothing contained in this Agreement shall be construed as creating a
corporation, company, partnership, association. joint venture or other entity with the
other Pany. nor shall anything contained in this Agreement be construed as creating or
requiring any fiduciary relationship between the Parties. No Party shall be responsible
hereunder for the acts or omissions of the other Party-
(j) The decision to execute an EIM service agreement and participate in the
EIM remains within the sole discretion of Avista and the decision whether to continue to
ofier EIM services (subject to Sections 1(c) and 2) remains withrn the sole discretion of
the lSO.
(k) Nothing in this Agreement shall preclude a Party from exercising any
rights or taking any action (or having its affiliates take any action) with respecl to any
other project.
(l) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply: (i) any reference in this Agreement to gender
includes all genders, and the meaning of defined terms applies to both the singular and
the plural of those terms; (ii) the insertion of headings are for convenience of reference
only and do not affect, and will not be utilized in construing or interpreting, this
Agreement: (iii) all references in this Agreement to any "Section" are to the
corresponding Section of this Agreement unless otheMis€ specified: (iv) words such as
"herein," "hereinafter," "hereof." and "hereunder" refer to this Agreement (including
Exhibit A to this Agreement) as a whole and not merely to a subdivision in which such
words appear, unless the context otherwise requires; (v) the word "including" or any
variation thereof means "including, without limitation" and does not limit any general
statement that it follows to the specific or similar items or matters immediately following
it: and (vi) the Parties have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as jointly drafted by the Parties and no presumptron
or burden of proof favoring or disfavoring any Party will exist or arise by virtue of the
authorship of any provision of this Agreement.
(m) The above-stated recitals are incorporated into and made a part of this
Agreement by this reference to the same extent as if these recitals were set forth in full
at this point.
9. Venue. Venue for any action hereunder shall be FERC, where subject to its
jurisdiction, or otherwise any state or federal court with jurisdiction within the State of
California.
10. Communication. The Parties shall develop a communtcation protocol for the
dissemination of material information associated with the Proiect, which shall be
1)
Attachment A Page 13 of 1 7
approved by Avista and the lSO. Pursuant to the communication protocol, the individual
identified in Section 8(g), or their desjgnee or successor. shall provide reasonable
advance notice to the other Party of planned press releases. public statements, and
meetings with the public or govemmental authorities in which material information
conceming the Project or Avista's involvement will be shared. The Parties shall
mutually consult with each other as provided in the communication protocol prior to
making such public statements or disclosures; provided that nothing herein shall
prevent, limit, or delay either Pafi front ntaking any disclosure required by aprplicable
law or regulation, subject to the provisions of Section 5 hereof" ln the event either Party
engages in material unplanned communications about the Project that otherwise should
have been subject to this Section and the communication protocol, such Party shall
provide notice to the other Pafi as promptly as possible of the nature and content of
such communication.
11. Dispute Resolution. Unless otherwise provided herein, each of the provisions of
this Agreement shall be enforceable independently of any other provision of this
Agreemenl and independent of any other claim or cause of action. ln the event of any
dispute arising under this Agreement, the Parties shall, to the extenl practicable first
attempt to resolve the matter through direct good faith negotiation between the Parties,
including a full opportunity for escalation to executive management within the Parties'
respective organizations. lf the Parties are unable to resolve the issue within thirty (30)
days after such escalation of the dispute, then for matters subject to FERC jurisdiction
either Party shall have the right to file a complaint under Section 206 of the Federal
Power Act. For all other matters, then;
(a) To the fullest e)ftenr permitted by law. each of the Panies hereto waives
any right it may have to a trial by jury in respect of litigation within the federal or state
courts located within California as specified herein in Section 9, directly or indirectly
arising out of, under or in connection with this Agreement. Each Party further waives
any right to consolidate, or to request the consolidation of, any action in which a jury trial
has been waived with any other action in which a jury trial cannot be or has not been
waived.
(b) lf a waiver of jury trial is deemed by any court of competent jurisdiction
within the State of Califomia as specified herein in Section 9 to not be enforceable for
any reasol. then to the fullest extent permitted by law, each of the Parties hereto
agrees to attempt to settle amicably through non-binding arbitration. Notwithstanding
the foregoing. either Party may seek provisional legal remedies if, in such Party's
judgment, such action is necessary to avoid ineparable damage or preserve the status
quo.
12. Third Partv Aqreements. The Parties may engage in discussions with third
parties, either jointly or unilaterally. to facilitate the Project. Each Party may adopt or
modify tariffs or enter into or modify binding agreements between such Party and third
parties to implement the approved terms and conditions of the Project or EIM as
necessary and appropriate.
IJ
Attachment A
13. Compliance. Each Party shall comply with all federal, state, local or municipal
governmental authority; any governmental, quasigovernmental, regulatory or
administrative agency, commission, body or other authority exercising or entitled to
exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing
authority or power, including FERC, NERC, WECC; or any court or governmental
tribunal; in each case, having jurisdiction over either Party in connection with the
execution, delivery and performance of its obligations under this Agreement. This
Agreement is not intended to modify, change or otherwise amend the Parties'current
functional responsibilities associated with compliance with WECC and NERC Reliability
Standards; provided, however, the Parties may enter into separate mutually agreed to
arrangements to clarify roles and responsibilities associated with compliance with
WECC and NERC Reliability Standards in respect of this Agreement.
lN WITNESS WHEREOF, each of the Parties has caused its duly authorized officer to
execute this lmplementation Agreement as of the date first above written,
By
Nartre
Title:
Jason Thackston
Senior Mce President, Energy Resources
CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION
By:
Name:Petar Ristanovic
Title: Vice President, Technology
14
Page 14 ol 17
AVISTA CORPORATION
I4I
a
(
Attachment A Page 15 of 17
EXHIBIT A: PROJECT SCOPE AND ScHEDULE
The Project consists of the activilies and delivery dates identified in this Exhibit A,
implemented in accordance with the Agreement. The Parties have included a schedule
for the lmplementation Date to coordinate their efforts required for completion of the
Project on a milestone track.
The Parties understand that input recervecl from stakeholders during the course of
implementing the Project, conditions imposed or questions raised in the regulatory
approval process, and the aclivities of the Parties in implementing the Project may
cause the Parties to determine that changes in the Project are necessary or desirable.
Accordingly, this Exhibit A may be modified in accordance with Section 3(c) of the
Agreement.
Each Parly is responsible for performing a variety of tasks necessary to achieve the
mileslones on the scheduled dates specified in the table below ("Project Delivery
Dates") and shall plan accordingly. The Parties shall communicate and coordinate as
provided in the Agreement to support the planning and execution to complete the
Project.
Project Scope and Milestones
Project
Delivery
Dates
supPorting
April,2O22
Detailed Project luanagement Plan - The Partres will develop
and initiate a final prolect management plan that describes specific
prqect tasks each Party must perform. delivery dates, project team
m€mbers. meeting requirements. and a process for approving
chaoges to support completion of the Prolect. Thrs phase will
in:lude a detailed lT system review to assrst Avrsta in developmenl
of a detailed meteflng plan, brd-to-brll system and coordrnation
with Avista EMS. Work wll be rnrtiated on the Avrsta staff trainrng
program using the foundational and detailed system computer-
based trarnrng module. as well as on the resource data templates
needed dunng Milestone 2.
May 2019-
Decermber
2019
llilestone 1 - Thrs milestone is completed when the
Agreement has been made eftectrve rn accordance with
Section 'l of the Agreement .
Ap 2020
Full Nehaork Model Expansion - Full Network Model expansron
for Avista and EMSiSCADA including, proof of concept of
exporvrmport of EMS data: complete model anto the ISO test
envr.onment, complete validation for all SCADA pornts 'rom
November 2020
1
Attachment A Page '16 of 17
Avista: testing of the new market model. and valadation of the
Outage and State Estimator applications.
Milostono 2 Thrs mabstonc rs completed upon modeling
Avista into the ISO Full NefiJvork Model through the EMS
whrch will be deployed inlo a non-production test
environment using the ISO'S network and resource
modeling process
Jrly 2021
System lmplamentation and Connectivity Testing - System
requrrements and software design, the execution of necessary
software vendor contracts. development of Market network model
including Avista allow Avista to connect to a non-production test
system
August 2021
Milsstone 3 - ISO to promote market network mocel
including Avista area to non-production system, and allow
Avisia to connect and exchange data rn advance of Market
Simulation.
September 2021
Construction, Testing and Training in Preparation for t arkgt
Simulation - Thrs task includes lT infrastructure upgrades, security
testrng. trainrng, Day-rn-life srmulation, and functional testing.
September 2021
Mileston€ lla - Starl of Joint lntegration Testing wrth lSO.
lnterface testang wilh minimum data requirements and
tunctronal integration testing. ISO will make the tesi
envaronm€nt available Ior Av€la connectivity testing pnor to
the delivery date assuming Avisia has provrded all requisite
datia and non-production system availability does not conflict
with ISO production system Spring Release schedule
September 2021
Milestone 4b -Begin 'Day in the Life'scenario testing November 2021
tlilestone .k - Begin Structured Market simulation
(Milestone 4 payment due at this point)oecember 2021
Activate Parallel Operations - During January 2022, the ISO will
actuate a parallel operation environment to practice productron
grade systems antegration as well as market processes anC
operating procedures rn anticipation ot the rmpending Avista
Ja uary 2022
2
acluation as an EIM Enhty and to confirm compliance wrth the EIM
readiness critena set forth in lhe ISO tanff
Milestone 5 - Start of parallel operations Febtuary 202?
System Deployment and Go Live - lmplemenhng the Project and
gorng lrve will rnclude resourc€ regislration. operatrng pro:edures
and updates, execution of service agreements, completron of the
Avista taritt process. apphcable board approvals, the filing and
asceptance of servEe agreements and tariff changes with FERC.
and completion and filing of a readiness criteria certificahon in
accordance with the ISO tariff
March 2022
Milestone 6 - This mrestone rs complete upon the first
productron nvrsta oncrgy rmbalance market trade date.Aprl 1 ,7022
Attachment A Page 17 ot 17
3
a
ATTACHMENT B
CAISO FERC Filing Letter
Allachmenl B Page 1 of 7 )
e Colifornio ISO Calrlbmia lndependent Sls1em Operalor ('orporalion
The Honorable Kimberly D. Bose
Secretary
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
Re: California lndependent System Operator Corporation
Filing of CAISO Rate Schedule No. 6037
Docket No. ER20- -000
Dear Secretary Bose:
The California Independent System Operator Corporation ("CAlSO')
submits for filing and acceptance an agreement ("lmplementation Agreement")
dated April 25,2019, between the CAISO and Avista Corporation ("Avists'1.t
The lmplementation Agreement sets forth the terms underwhich the CAISO will
extend its existing realtime energy market systems to provide imbalance energy
service to Avista, pursuant to the CAISO'S Energy lmbalance Market ("ElM")
tariff.2 Under the lmplementation Agreement, Avista will compensate the CAISO
for its share of the costs of system changes, software costs, and other
configuration activities. The CAISO requests that the Commission accept the
lmplementation Agreement effective April 1 , 2020, so that the extension of the
realtime energy market to include Avista may proceed towards implementation
no later than April 1, 2022.3
l. Background
1 The CAISO submits the lmplementation Agreement pursuant to Section 205 of the
Federal Power Act, 16 U.S.C. S 824d.
2 The EIM tariff provisions are set forth primarily in Section 29 of the CAISO Tariff.
3 See lmplementation Agreement, Seclion 1; see a/so CAISO Tariff, Section 29.2(b)
| 250 Outcropping Way, Folsom. CA S5630 |916.35'1.4400
December 11,2019
The EIM provides other balancing authority areas the opportunity to
participate in the real-time market for imbalance energy that the CAISO operates
in its own balancing authority area. Pacificorp's balancing authority areas
(PacifiCorp East and PacifiCorp West) were the first two to join the ElM. The
EIM market rules went into effect on October 24, 2014, for the first trading day
a Attachmenl B Page 2 ol7
Honorable Kimberly D. Bose
December 11,2019
Page 2
November 1 , 2014.4
The EIM has continued to develop and attract the interest of a diverse
array of participants throughout the Western lntercon nection. NV Energy joined
on December 1,2015, Puget Sound Energy lnc. and Arizona Public Service
Company began participation on October 1,2016, Portland General Electric
Company followed on October 1,2017, and the ldaho Power Company joined
concurrently with Powerex Corp. on April 4, 2018. The Balancing Authority of
Northern California ('BANC') commenced phase 1 EIM participation in April
2019. Also, the Salt River Agricultural lmprovement and Power District and the
City of Seattle, by and through its City Light Department ("Seattle City Light")
intend to commence EIM participation in April 2020. NorthWestern Energy, the
City of Los Angeles Department of Water and Power, Public Service Company of
New Mexico, and the Turlock lrrigation District intend to commence EIM
participation in April 2021, concurrent with BANC phase 2. Other entities,
including the Bonneville Power Administration, Tucson Electric Power, and
Tacoma Power, will commenc€ EIM participation along with Avista in the spring
of 2022.5
ll. The lmplementation Agreement
Under the lmplementation Agreement, the CAISO and Avista must
complete a variety of project tasks necessary for implementation by April '1, 2022
4 See Cal. lndep. Sys. Operator Cory., 149 FERC tT61,005 (2014).
5 EIM participation materials are at httos://www.westerneim.com/Paoes/Abouudefault.asDx.
6 See lmplementation Agreement, Sections 3-4 and Exhibit A.
7 See Cal. hdep. Sys. Operator Cory., 143 FERC tl 61 ,298 (2013); CaL lndep. Sys.
Opentor Cory.,147 FERC fl 61,20O (2014), Cal. /ndep. Sys. OpentorCory.,151 FERCll61,158
(?o15), Cal. lndep. Sys. Operator Corp.,152 FERC fl 61,090 (2015), Cal. lndep. Sys. Opemtor
Corp., 154 FERC fl 61 ,020 (2016); CaL /ndep. Sys. Operator Corp., 155 FERC 'll 61 ,31 1 (2016);
Commission Letter Order, Docket No. ERlT-868-000 (Mar. 14, 2017); Commission Letter Order,
Docket No. ER17-1300-000 (May '18,20'17); Commission Letter Order, Docket No. ER17-2'l2O-
000 (Sept. 7,2017); Cal. lndep. Sys. Operator Corp.,160 FERC I[61,058 (2017); Commission
Letler Order, Docket No. ER17-2559-000 (Nov. 16, 2017); Commission Letter Order, Oocket No.
ER19-1080-000 (Apr. 5, 2019); Commission Letter Order, Docket No. ER20-95-000 (Dec. 4,
2019).
The lmplementation Agreement details the contractual terms, including the
scope of work and the agreed-upon fee, under which the CAISO will take the
steps necessary to incorporate Avista into the EIM consistent with the identified
key milestones and associated payment provisions.6 The lmplementation
Agreement is modeled after implementation agreements previously accepted by
the Commission and, therefore, adopts provisions substantially similar to those
which have been filed with and accepted by the Commission.T
Aitachmenl B Page 3 of 7
Honorable Kimberly D. Bose
December 11,2019
Page 3
The parties chose this date to provide sufficient time for completion of all
expected activities based on the size, complexity, and compatibility of Avista,
including filing a certification of readiness with the Commission. The specific
tasks may be modified by mutual agreement of the parties.8
The lmplementation Agreement specifies that Avista will pay a fixed
implementation fee of $300,000, subject to completion of six specific milestones
for recovery of the portion of the costs attributable to the CAISO's effort to
configure its real{ime market systems and incorporate Avista into the ElM.e The
methodology that the CAISO used to determine the implementation fee for Avista
is the same methodology that the CAISO used to determine all of the previously
accepted implementation fees for the other EIM participants described above.
The implementation fee is based on the CAISO's estimate of the costs it
will incur to configure its real-time energy market to function as the EIM available
to all balancing authority areas in the Western Electricity Coordinating Council
("WECC'1 to The components of that estimate are described in the Declaration
of April D. Gordon, the CAISO's Director of Financial Planning and Procurement,
which is included with this filing as Attachment B, and are summarized below.
lmplementation Costs (in thousands of dollars)
Licenses 12,150
Energy management system
upgrades 1,000
Data storaqe 2,000
Hardware upgrades 500
Production software modifications 1 ,000
Network configuration and mappinq 500
lntegration 500
Testing 1,500
System performance tuninq 250
Training and operations readiness 150
Project management 100
Total $19,650
Using this estimate, the CAISO derived a rate that allocates the $19.65
million to potential entrants into the EIM according to their proportionate share of
the total WECC load (excluding the CAISO's load), using updated data reported
8 lmplementation Agreement, Section 3.
e ld., Section 4.
10 The total estimated cost is a projection assuming the total work effort remains stable
lmplementations either completed or underuray are not considered in this estimate.
)
t Attachfienl E Page 4 of 7
Honorable Kimberly D. Bose
December 11 , 2019
Page 4
to WECC. The CAISO then applied this fee to Avista's share of the updated
WECC load (exclusive of the CAISO) to account for the Avista implementation
fee.
The $300,000 implementation fee is just and reasonable because it
allocates a portion of the overall cost to Avista in an amount proportionate to
Avista's share of the benefits that will ensue from the ElM, as measured by
usage. ln addition, as explained in Ms. Gordon's declaration, the CAISO
confirmed the reasonableness of the resulting allocation by comparing it with an
estimate of the costs the CAISO pro.jects it will incur to configure its real-time
energy market to function as the EIM that serves both the CAISO and Avista.
This comparison confirmed that the fee reasonably represents those costs, even
though certain costs may not be triggered by the Avista implementation but may
instead be incurred by the CAISO to incorporate other entrants. ln future
implementations, the CAISO will confirm that the rate is reasonable by
conducting a similar comparison of the total implementation costs with the
individual entity costs.
The lmplementation Agreement also provides for adjustment of the fixed
implementation fee by mutual agreement of the parties in the event that the
CAISO's actual or expected costs exceed the estimate that forms the basis of the
implementation fee.11 This provision allows for appropriate consideration of the
allocation of costs associated with incorporation of Avista into the ElM. At the
same time, the requirement for Avista to agree to any increase in the
implementation fee ensures that Avista's share of those costs remains
reasonable. The lmplementation Agreement therefore reflects a reasonable
balance of the parties' interest in preserving a level of cost certainty for Avista,
while appropriately allocating the costs of implementing the ElM.
The lmplementation Agreement represents a binding commitment of the
parties. As such, it provides a workable framework for the parties to resolve any
differences and to make course corrections along the way. On the other hand,
the lmplementation Agreement recognizes that the parties are entering into the
agreement on a voluntary basis and circumstances may arise that interfere with
the incorporation of Avista into the EIM through the planned process.
Accordingly, the lmplementation Agreement allows either party to terminate the
agreement for any or no reason, provided it has first entered into good-faith
discussions for 30 days in an effort to resolve any differences.12 This and other
11 lmplementation Agreement, Section 4. See a/so Commission Letter Order, Docket No.
ER14-1350-000 (Apr. 8,2014) (accepting amendment to EIM implementation agreement
between the CAISO and PacifiCorp, to increase the Pacificorp implemenlalion fee to cover
additional scope identified in the stakeholder process). Pacificorp's request for additional scope
is the only instance thus far where an amendment of the implementation fee has been necessary
12 lmplementation Agreement, Section 2.
Allachment B Page 5 of 7
Honorable Kimberly D. Bose
December 11,2019
Page 5
related provisions mean that the parties must work closely together to achieve
the goal of implementing Avista into the EIM in a timely manner.
The lmplementation Agreement also includes general provisions that
round out the parties' commitments. These general provisions address
confidentiality (Section 5), limitations of liability (Section 6), representations and
warranties (Section 7), general provisions such as those regarding notices,
amendments, etc. (Section 8), venue (Section 9), communication (Section 10),
and dispute resolution (Section 1 1 ).
lll. Next Steps
Following the Commission's acceptance of the lmplementation Agreement,
the CAISO will incorporate Avista into the ElM. Avista's implementation will be
subject to the CAISO ta riff readaness requirements and the flling of a certificate of
readiness with the Commission.l3 The CAISO will also take into consideration
lessons learned from the prior implementations, as the readiness criteria
represent the baseline for measuring the readiness of each new EIM entity's
processes and systems for EIM participation.
Avista will continue to engage with its customers prior to participation in the
ElM. The CAISO expects that Avista will make any necessary modifications to
its open access transmission tariff in advance of the implementation date. The
CAISO recognizes that this effort will involve Avista working with interested
parties to facilitate implementation of the ElM, and the CAISO will engage in that
effort as Avista considers it appropriate.
lV. Effective Date
The CAISO requests that the lmplementation Agreement be made
effective on April 'l , 2020.
The CAISO submits that the filing substantially complies with the
requirements of section 35.13 of the Commission's rules applicable to filings of
this type.14 The CAISO respectfully requests waiver of any such requirement to
the extent this filing does not satisfy that requirement. ln particular, the CAISO
requests waiver of the requirement to submit Period 1 and Period 2 schedules,
because the implementation fee is a one-time fee that is not based on historical
data in Period 1 schedules or on the projections in Period 2 schedules. ln any
event, good cause exists to waive filing requirements that are not material to the
)
13 See CAISO Tariff, Section 29.2(b)
18 C.F.R. S 3s.13.
V. Request for Waivers
I Attachmenl B Page 6 of 7
Honorable Kimberly D. Bose
December 11 ,20'19
Page 6
Commission's consideration of the lmplementation Agreement.
Vl. Service
The CAISO has served copies of this filing upon all scheduling
coordinators, Avista, the California Public Utilities Commission, and the California
Energy Commission. ln addition, the CAISO has posted the filing on the CAISO
website.
Vll. Contents of Filing
The following attachments, in addition to this transmittal letter, support the
instant filing:
Attachment A lmplementation Agreement; and
Attachment B Declaration of April D. Gordon, Director of
Financial Planning and Procurement
Vlll. Correspondence
Pursuant to Rule 203(b)(3) of the Commission's Rules of Practice and
Procedure,l5 the CAISO requests that all correspondence, pleadings, and other
communications concerning this filing be served upon the following:
15 18 C.F.R. S 385 203(b)(3)
John C. Anders
Assistant General Counsel
California lndependent System
Operator Corporation
250 Outcropping Way
Folsom, CA 95630
Tel: [phone]
Fax: [phone]
E-mail: [e-mail]
Attachment B Page 7 ol7 I
Honorable Kimberly D. Bose
December 11 ,2019
PageT
lX. Conclusion
The CAISO respectfully requests that the Commission accept this filing
and permit the lmplementation Agreement, CAISO Rate Schedule No. 6037, to
be effective April 1,2020, as requested. lf there are any questions concerning
this filing, please contact the undersigned.
Respectfully submitted,
Attorneys for the California
I ndepe nde nt Sy ste m O perator
Corporation
Bv: /s/ John C. Anders
Roger E. Collanton
General Counsel
Burton A. Gross
Deputy General Counsel
John C. Anders
Assistant General Counsel
California lndependent System
Operator Corporation
Tel: [phone]
Fax: [phone]
Email: [e-mail]