WPEC_Electric_Program_Operating_Procedures.pdf

Operating Procedures for the Western Pennsylvania Energy Consortium (WPEC) Electric Supply Portfolio

March 2021

I. Overview A. This document contains operating procedures for the WPEC’s electric supply portfolio with an Electric

Generation Supplier (EGS) and Portfolio Energy Advisor (PEA).

B. WPEC consists of local government entities in the southwestern Pennsylvania region, each of which has executed a Memorandum of Understanding covering cooperative purchasing of electricity. These procedures are intended to ensure efficient operation of the portfolio and cover the following general categories:

• Roles and responsibilities;

• Transactions authorization and execution;

• Account billing and payment responsibility;

• Portfolio reporting;

• Communications among parties and recordkeeping.

C. Acronym Definitions

• ECMPP (Electric Cost Management and Procurement Plan)

• EDC (Electric Distribution Company) – local electric utility

• EGS (Electric Generation Supplier - Licensed Electricity Supplier for Pennsylvania customers).

• MOU (Memorandum of Understanding)

• PEA (Portfolio Energy Advisor – Energy Services Advisor)

• PJM - The mid Atlantic Regional Transmission Operator - grid operator

• UCAP (Unforced Capacity Obligation)

II. Communications Among Parties and Recordkeeping

1. Communications between parties may be verbal or written; however, all executed transactions must be documented in writing (electronic versions are suitable).

2. No changes in account structure may be made without full disclosure by the initiating Agency, discussion among WPEC members, and a vote by the Energy Committee members. In the absence of a consensus, the Agency with the majority percentage of investment shall make the final decision.

3. Both PEA and EGS will maintain documentation supporting transactions and billing for review of the

WPEC Energy Committee upon request.

III. Overview of Portfolio Structure

A. The WPEC electric supply portfolio was established to provide optimal energy price risk management flexibility, full cost transparency and lower energy costs to the WPEC members. The basic portfolio structure is a cost plus, block and index style of purchasing for the entire portfolio with the average cost of the portfolio billed to all WPEC members. This is different than a fixed price contract entered into on one date for the entire load for a specified contract term.

B. A block and index style purchasing uses fixed volumes of fixed price power to stabilize costs over time (hedges) with usage above or below fixed volumes charged or credited, respectively, at the prevailing spot market power prices.

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C. All WPEC member electric accounts are enrolled in a separate dedicated (PJM) sub account established by the EGS. Only WPEC electric accounts reside in the sub account.

D. All costs of the portfolio are captured in the subaccount and billed to the WPEC members as a cost plus arrangement.

E. PJM costs include the PJM real time and day ahead hourly energy rates, fixed rate block purchases, unforced capacity obligation (UCAP), transmission, and ancillary costs. In addition, the portfolio costs include Pennsylvania Alternative Energy Portfolio Standard (AEPS) costs, and EGS service fees. The portfolio costs may include energy and associated project renewable energy certificates from long term power purchase agreements (PPA’s) WPEC has entered into with renewable energy projects. Such agreements may be made directly with the renewable energy developer or thru sleeved agreements with the EGS .

F. The EGS bills each WPEC member on a monthly basis based on the local delivery company (LDC) metered usage and the approved unitary billing rates (¢/kWh).

IV. Roles, Responsibilities and Procedures

A. The portfolio is managed through a triad structure consisting of the Energy Consultant (PEA), the Electricity Supplier (EGS) and the WPEC Oversight Committee as defined in the WPEC MOU.

B. The WPEC Operations Committee is open to anyone in the member Agencies that has a direct or oversight involvement in the procurement of energy.

C. Responsibilities:

1. The responsibilities of the WPEC Operations Committee include:

• Review and approve the ‘Operating Procedures for the WPEC Electric Supply Portfolio’.

• Convene as needed to ensure compliance with the ECMPP, and make any changes, additions or deletions to the plan, the operating procedures or the membership as deemed in the best interest of the Agencies.

• Approve the ECMPP, by obtaining a consensus from Energy Committee Members, when required, to establish the WPEC Operations Committee’s position. In the absence of a consensus, the Agency with the majority percentage of investment shall make the final decision.

• Select a Transactor from among the WPEC Operations Committee members for a period of not less than one year.

2. The responsibilities of the WPEC Operations Committee Representatives specifically include:

• Oversee the execution of separate contract documents for each WPEC Entity, including the release of purchase orders, and the payment of invoices.

• Meet at least quarterly or as needed to execute its functions.

• Make recommendations to the WPEC Energy Committee Members on which energy procurement opportunities to pursue.

• Approve portfolio billing rates and re-pricing periods.

• Selected from among the Representatives a primary Transactor r.

3. The responsibilities of the Transactor, in addition to those described under Section B. “Transaction

Authorization”, include:

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• Receive notification from the PEA that a fixed rate block purchase transaction decision is to be made.

This communication will be primarily directed to the Transactor and include all WPEC Energy Committee members.

• The Transactor may query other Representatives.. Only objections to the pending decision will need to be communicated to the Transactor in writing prior to a designated time for the execution of the transaction.

• Via email, the WPEC authorized Transactor will authorize execution of the requested block purchase(s);

• Review all price confirmations for power purchases made on the PJM market and any other required energy contract activity.

4. The responsibilities of the Portfolio Energy Advisor (PEA) include:

• Develop the ECMPP;

• Support WPEC in the selection and contracting of the EGS;

• Direct the procurement activities of the EGS within approved portfolio limits;

• Submit authorized account enrollments/de-enrollments to the EGS;

• Direct the execution of authorized transactions between WPEC and the EGS;

• Provide Day Ahead Scheduling to the EGS;

• Execute annual transmission path selections via PJM’s Auction Revenue Rights process.

• Advise and coordinate Pennsylvania Alternative Energy Portfolio (AEPS) purchases (regulatory required renewable purchases)

• Ensure and report on compliance with the ECMPP;

• Monitor and report on the portfolio results;

• Develop annual portfolio budget estimates, WPEC member billing rates, repricing periods and working capital balances.

5. The responsibilities of the Electric Generation Supplier (EGS) include:

• Establish separate dedicated PJM sub account for the WPEC member accounts and ensure objective cost segregation from other EGS customers;

• Enroll and unenroll authorized WPEC member accounts in the dedicated PJM sub account per PEA instructions;

• Obtain fixed price block quotes upon request by the PEA;

• Execute authorized fixed rate block purchases;

• Implement day ahead scheduling;

• Administer portfolio billing rates;

• Provide summary monthly billing to WPEC members;

• Respond promptly to WPEC members billing inquiries;

• Provide monthly portfolio information to the PEA including portfolio costs, AEPS purchase prices and working capital position.

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D. Transaction Authorization

Neither the PEA nor the EGS may execute any transactions in the WPEC portfolio without duly authorized instructions from the WPEC Operations Committee. Following is a summary of transaction authorities granted by the WPEC Operations Committee:

1. WPEC Operations Committee Primary and Secondary Transactor– All transactions, except enrollment / unenrollment, which must be confirmed by PEA.

2. PEA – Request fixed price energy block transaction pricing from LSP or other potential counterparties that can affect delivery via the LSP, submit WPEC authorized fixed energy block purchases to EGS for EGS execution, submit Day-Ahead schedules/bids, submit accounts provided by the WPEC members for enroll / unenroll to the LSP, and submit WPEC approved billing rate changes to the LSP.

E. EGS – Execute fixed price energy block per PEA instructions which include documented WPEC authorization for all block purchases, implement day ahead scheduling provided by the PEA, enroll or unenroll accounts per PEA instructions, change billing rates per PEA instructions, make any administrative elections with local distribution company or PJM necessary to facilitate effective electric delivery to participating WPEC member accounts.

F. Transaction Execution

1. Fixed Rate Block Purchases

• The WPEC Operations Committee will designate a primary individual who is authorized to review fixed rate block purchases on behalf of the portfolio (herein referred to as “WPEC authorized transactor”);

• The PEA will initiate block purchase discussions with the WPEC Operations Committee recommendation and the review of the authorized Transactor in accordance with the approved

ECMPP;

• The PEA will initiate an email request to the EGS’s designated trading desk contact for fixed rate block quotes. The email will include a standard quote form. Although not required, the PEA will make best efforts to give the EGS trading desk 24 hours notice;

• The EGS will provide a minimum of three (3) quotes for the required block term(s) to the PEA;

• Via email, the WPEC authorized transactor will review and provide a recommendation to the Energy Committee on whether or not WPEC should pursue execution of the requested block purchase(s);

• The EGS will submit to the authorized WPEC transactor and Energy Committee and the PEA, the block purchase confirmation;

• The authorized WPEC transactor will coordinate with the WPEC Energy Committee to formally execute the confirmation and scan/email copies to the EGS and PEA.

2. Account Enrollment and Unenrollment Procedures

• Each WPEC member will designate individuals who are authorized to enroll and de-enroll accounts with the EGS on behalf of their respective organizations;

• Each WPEC member will provide the authorized names and changes to the authorized names to both the PEA and EGS;

• The PEA will provide the PEA and EGS contact names and contact information to the WPEC members for account enrollments, de-enrollments and authorization changes;

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• Account enrollments and de-enrollments will be submitted to the EDC once a month by the EGS;

• Authorized WPEC individuals should submit account enrollment requests to the PEA contact by the 25th day of each month to be included in the next month’s account enrollment submission by the EGS to the EDC;

• The PEA will maintain a database of the WPEC member electric accounts;

• The PEA will update the account database and submit the enrollment request for all valid accounts along with the account bill group number and appropriate billing rate to the EGS. The submission will be sent once a month to the EGS by the 30th of each month.

3. Day Ahead Scheduling

• The WPEC Operations Committee delegates Day Ahead Scheduling authority to the PEA;

• The PEA will provide the EGS in electronic form the desired Day Ahead scheduled load on a weekly and or daily basis by 10:00 AM on the business day preceding the day to be scheduled;

• The EGS will implement day ahead purchases based on the Day Ahead Schedule provided by the PEA. If no schedule is provided a default schedule of 90% of the forecasted Day-Ahead load will be used by the EGS.

4. Annual Transmission Path Selections

• The WPEC Operations Committee has delegated the Annual Transmission Path selection authority to the PEA.

• PEA will make annual transmission selections for the WPEC load through PJM’s annual ARR (Auction Revenue Rights) /FTR (Financial Transmission Rights) program.

• On an annual basis, EGS will provide PEA with read/write access to PJM’s eFTR program for the WPEC subaccount.

5. Excess Capacity Credits

• Execute sale of any excess capacity credits allocated to WPEC’s sub account on WPEC’s behalf.

G. Account Billing and Payment Responsibility

1. The PEA will develop the portfolio billing rates; however the WPEC Energy Committee must approve them.

2. The PEA will submit the approved billing rates to the EGS billing contact.

3. The PEA will recommend the billing rate reset period, which must be approved by the WPEC Energy Committee.

4. The EGS will submit in electronic form, the monthly WPEC member billing to the designated WPEC member utility bill processors.

5. The monthly billing will include the EDC account number, the utility reported usage, the approved billing rates and total energy charge. Copies of the billings will be provided to the designated PEA individuals.

6. WPEC member Agencies are expected to pay all billed usage presented by EGS in a timely manner.

Bill adjustments, as appropriate, will be handled as a debit/credit on future bills.

H. Portfolio Reports and Reporting The PEA and EGS will provide the following reporting on portfolio status and performance:

1. EGS Reports

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• Monthly Portfolio Statement – Summary statement of all costs charged to WPEC portfolio, which includes, PJM billing, bilateral energy transactions, local delivery company charges (if any), local regulatory charges, EGS fees (service fee and working capital cost of carry, as appropriate), etc.

• Monthly Working Capital Cost of Carry Charges Report – Provide calculation details supporting monthly charges.

• Monthly Billing / Receipts Report – Summary statement of total billings and receipt to / from WPEC members that shows cash receipts on a daily basis. Report will also include net cash balance outstanding.

• Aging Report – Provide an A/R aging report by WPEC member as needed.

2. PEA Reports

• Quarterly Portfolio Report – Report to include:

➢ monthly performance vs. budget,

➢ Next year’s cost estimates

➢ fixed rate blocks purchase log

➢ hedge summary and comparison to targets

➢ planned hedge purchases and compliance with strategy

➢ energy market price updates

➢ portfolio billing rates and comparison of billing rates with WPEC’s working capital balance held with the EGS (working capital balance representing the difference between costs paid out by the EGS on the WPEC portfolio’s behalf (payments to PJM, block settlements, etc.) and cash received from WPEC members via monthly supply billings.

➢ Capacity prices, annual capacity and transmission tags (MW’s)

➢ Other information as needed

• Annual Cost Estimates – PEA will prepare annual cost estimates for the WPEC portfolio as a whole

• Other – As needed

Any Changes to this document must be approved by the WPEC Energy Committee.