In June 2000, SaskPower (Regina, Saskatchewan, Canada) announced that within a year it would develop an Open Access Transmission Tariff (OATT) for its 13,000 km (8000 mile) of high-voltage transmission lines. The OATT would enable SaskPower to buy transmission rights outside its jurisdiction and compete effectively with other energy companies — both suppliers and traders.

The announcement triggered many changes for SaskPower, not the least of which was the use of an innovative blend of software and services from Open Access Technology International Inc. (OATI, Minneapolis, Minnesota, U.S.). The similarity of the two acronyms, OATT and OATI (sometimes pronounced “Oh! 80” or, in Canadian, “Oh! 80, eh?”), is coincidental, but the common focus on open access to the transmission grid is not.

Cross Border Laws

The U.S. Energy Policy Act of 1992 set as a goal, “greater competition in the bulk power markets.” During the last decade, an open wholesale market has evolved in Canada and the United States. SaskPower, like most vertical utilities, has traded power for many years by voice and quite informally, usually only with neighboring utilities.

The open wholesale market changed all that, introducing the need for sophisticated and secure software, on the trading side, to capture deals, obtain transmission reservations, create tags, and schedule generation; and on the transmission operator's side, to manage Open Access Same-Time Information System (OASIS) transmission reservations and Available Transmission Capacity (ATC) calculations, approve/deny tags and schedule energy.

The Search for a Solution

On Oct. 17, 2001, SaskPower created NorthPoint Energy Solutions as a wholly owned yet arms-length subsidiary. We [Al Schreiner and Dean Jones] led a joint SaskPower/NorthPoint Energy Solutions team to study available software, under the assumption that solutions for operations and trading would require separate vendors. We found that the markets for each, while competitive, varied widely with respect to functionality and level of integration. Vendors varied sharply in price based on the level of customization. There are two types of customization: functional and platform.

Our team resisted the idea, so common among utilities, to ask for everything conceivable, focusing on the basics wherever practical while still allowing for growth. After all, this was new ground for SaskPower and its trading subsidiary, and we weren't entirely sure which functions were really important and which had trivial value.

Platform customization was another consideration. Different vendors' software ran on different platforms, not always the UNIX/Oracle environment of SaskPower's systems. Varying from that platform would entail additional maintenance costs. The quest for a satisfactory solution ended at OATI in February 2001. OATI offered a close fit to SaskPower's functional needs for both operations and trading, combined with a solid support structure in the form of an Application Service Provider (ASP).

The SaskPower team was familiar with OATI services from using its tagging system, but supporting these new strategically critical applications was a more significant undertaking. While we recognized the ASP approach appeared to be the best solution, we also knew we would probably be the first to explore this new territory.

Confidentiality and reliability were the greatest concerns in turning over responsibility to an outsider for functions so critical to our core business. However, SaskPower's prior positive experience with OATI and its role in providing the Interchange Distribution Calculator for the entire Eastern Interconnect persuaded us that the rewards of a high-quality, cost-effective implementation more than offset the perceived risks associated with an ASP model.

The Operations Solution

Perhaps the most significant aspect of our transaction management system, webTrans, is its high level of integration. webTrans directly interfaces to OASIS, automating the tagging and scheduling, including a minute-by-minute net schedule profile that can drive the Automatic Generation Control (AGC). While we use a pro-forma tariff, there are many subtle differences that must be managed by an extensive validation process.

The first step is the Transmission Service Request (TSR) check and later, the E-Tag, which is even more complicated and critical to system operating integrity. Keeping the system free of erroneous data in this way enables the operator to focus on operating the power system. Data is entered only once and when it is, point-and-click technology speeds the process. Automated ATC calculations and OASIS posting requirements occur without operator intervention. With several custom features, OATI has developed a complete package.

The Trading Solution

SaskPower's integrated financial and physical system simplifies trading energy in Saskatchewan. Thus far, it has primarily implemented the front-office capabilities of webTrader. Dealing mainly with physical hourly transactions, every minute counts in making sure transactions flow — ease-of-use translates directly into deals and dollars. The software features “Deal Automation,” a single-entry deal capture system that automatically submits any required OASIS reservations and North American Electric Reliability Council (NERC) E-Tags and assists in managing these processes until completion. webTrader's seamless interfaces with OATI's webSweep and E-Tag applications make this possible. The Deal Automation also includes a transmission loss profiling function that automatically populates loss profiles on E-Tags and creates associated loss compensation financial transactions. All the deals pass to an external risk management system at the end of the day.

Lessons Learned

In November 2001, NorthPoint Energy Solutions went live with webTrader. At the same time, the SaskPower Grid Control Center became operational with webTrans. It would be nice to say this was on the original schedule, but we were a few months late — not bad for the magnitude of this project. We can attribute some of the slippage to underestimating the scope of the project.

Another element was negotiating a tight contract with OATI. An ASP solution requires a more complex contractual agreement but it is well worth it. With today's technology, communications costs are relatively minor, so the location of the computer matters little. Contractual safeguards protect confidentiality and assure availability.

Lastly, the ASP approach provides us with greater flexibility to respond to FERC/NERC changes that require redevelopment of software functionality. For SaskPower and NorthPoint Energy Solutions, the ASP model has proven successful for both transmission operations and energy trading.

Dean Jones has more than 23 years experience working in the electrical industry, primarily in system operations and energy trading areas. Jones is currently a power marketer for NorthPoint Energy Solutions.

Al Schreiner has more than 34 years experience working in the electrical industry, primarily in system operations, power production and energy trading. He is currently a transmission tariff supervisor with SaskPower.

NERC E-Tags

In July 1997, North American Electric Reliability Council (NERC) implemented a process of electronically documenting an energy transaction via the Internet. The process is formally called the Transaction Information System (TIS) but is more commonly referred to as Electronic Tagging (E-Tag). A tag is an electronic documentation of an energy transaction that requires coordination of and approval from all operating entities involved — origin, intermediate, and destination. The transaction is described within the tag as an “energy schedule” to be transferred over a prescribed path for a specific duration and time frame. Tags are transmitted via a computer-to-computer, point-to-point method over the Internet in order that Transmission Line Loading Relief (TLR) can be more readily managed. The information contained in the tag is generally considered to be confidential, particularly in the hourly market. Tagging is not scheduling. Tagging is the communication of information necessary to perform security evaluations and of a desire to schedule.

Since electricity obeys the laws of physics, not economics, some of the energy will actually flow through other systems not involved in the energy schedule, resulting in “parallel flows” on those systems. With the rapid increase in energy transactions, these parallel flows can cause serious operational problems for many transmission systems. NERC implemented tagging to improve the exchange of transaction information between marketing entities, system operators and security coordinators. Each energy transaction is identified and communicated through an electronic interchange transaction tag, and its impact on the transmission grid is calculated by the Interchange Distribution Calculator (IDC), which contains a model of the Eastern Interconnection and all tagged transactions. This calculation generally is performed “after the fact”, in case of an overload, and not before the transaction is initiated. The object is to provide a rational and economically equitable basis for curtailing transactions. However, while minimizing the need for curtailments, the process does not eliminate the need for them.

Open Access Same-Time Information System

To prevent discrimination and preference in the provision of open access transmission services, FERC requires transmission system information to be available to all transmission users at the same time by way of the Open Access Same-Time Information System (OASIS).

OASIS is an Internet-based electronic communication and reservation system, through which transmission providers furnish potential transmission customers with information pertaining to the availability and price of transmission and ancillary services and potential customers may select and procure those services in the form of service reservations.

To ensure that individual OASIS nodes present information in a consistent and uniform manner, standards and protocols were developed that specify, among other things, OASIS templates defining the information that must be presented to customers interested in procuring transmission-related services, both in the interactive form of graphical displays or screens, and in the form of downloadable files.