2019 Business Plan and Budget Draft
Comments on the 2019 Business Plan and Budget Draft Funding Amounts associated with a) Scenario 1 – 2019 Status Quo and 2020 Transitional RC, and b) Scenario 2 – 2019 Wind Down and 2020 Wind Down Completion are invited. You can access the two Draft Funding Amounts and the two Scenario documents on the 2019 Business Plan and Budget page on the Peak website. Please note the two Scenario documents are unchanged from those posted on June 1, 2018.
Comments should be submitted no later than July 30, 2018 for Peak’s consideration. Please ensure you clearly identify which Scenario your comments relate to. To comment please select reply. Please note all comments are public. If you have problems uploading your comments please email them to: email@example.com and they will be posted. Thank you
Comments on the Wind Down Budget from WAPA
Peak did not provide sufficient detailed information to determine the reasonableness of Peak’s wind down budget. WAPA will support Peak’s decision to wind down; however, Section 5.3 of the Funding Agreement requires Peak to cooperate and negotiate its wind down with Funding Parties. As part of those negotiations, WAPA expects Peak to provide a detailed wind down plan to support its wind down budget. The wind down plan needs to ensure Peak can strategically wind down by December 31, 2019, while at the same time, reliably, providing its Funded Services through December 2019. The plan must ensure Peak has sufficient resources: capital, knowledge and human resources to orderly wind down. The plan should include an effective risk management framework that includes a plan for continued reliability. It also should include items such as retention plans, employee severance packages, lease and equipment terminations, contractual terminations, legal and regulatory terminations, de-certifications, transfer of ECC, WIT, hosted applications and other intellectual properties, sale of properties, etc. To ensure reliability, it is essential that Peak work with the Funding Parties to wind down and transition the Funded Services to other RCs. Peak has not provided Funding Parties with a wind down plan. WAPA must be able to understand and evaluate the wind down plan to ensure adequate funds will be available to successfully transition the Funded Services to one or more qualified RCs. While WAPA intends to support and fund Peak’s wind down, WAPA expects Peak to follow its contractual commitment to cooperate with the Funding Parties to ensure a seamless, and reliable transfer of RC services. As part of that cooperation, Peak needs to work with Funding Parties to develop and implement a wind down plan. WAPA looks forward to working closely with Peak and other stakeholders to ensure a successful, seamless and reliable transition of RC services by December 31, 2019.
Salt River Project’s Response to
Peak Reliability’s 2019 Wind-Down and 2020 Wind-Down Completion Budget
July 30, 2018
Salt River Project (SRP), a Class 1 member, would like to recognize Peak Reliability (Peak) and its employees who worked tirelessly to ensure the reliability of the bulk electric system (BES) in the West. Their efforts have increased reliability in the West by coordinating real-time and seasonal planning and modeling, and ensuring that data critical to the reliable and efficient operation of the BES is shared. Their efforts and professionalism should be applauded.
Given Peak’s July 18, 2018 announcement that it would cease operation at the end of 2019, SRP will be providing comments only on Peak’s Scenario 2: 2019 & 2020 Proposed Business Plan and Budget Wind-Down, Version 1, dated June 1, 2018 (Wind-Down Budget). In that document, Peak management acknowledged their fiduciary responsibilities to ensure that the dissolution of the organization is planned and properly accounted for, and indicated they have developed a plan to do so. The Wind-Down Budget is intended to address the financial aspects related to Peak ceasing operations on December 31, 2019 and includes additional expense related to staff retention and contractual obligations required to transition Reliability Coordinator (RC) responsibilities. Peak has indicated a total funding need of approximately $57.7 million in 2019 and an additional $6 million in 2020.
First and foremost SRP believes that in its efforts to wind down the organization, Peak must ensure that the reliability of the BES is not put into jeopardy. Therefore, Peak must remain a fully functional RC through 2019. This requires the retention of key reliability personnel. In addition, Peak must have access to the financial resources to engage the professionals and consultants, such as lawyers and accountants, needed to guide the organization through the wind-down process.
There continues to be looming questions regarding Peak’s Wind-Down Budget and associated plan. There are details lacking on how Peak will address its staffing and contractual responsibilities during its final year, and how essential RC services and tools will be transitioned to assure reliability is maintained in the Western Interconnection. SRP believes that there needs to be more transparency regarding the details of Peak management’s wind-down plan. For example, there needs to be clarity related to the timing of planned staff reductions, how Peak plans to backfill critical positions if they become vacant, and how essential RC tools will be managed prior to Peak’s cessation of operations. These tasks are vital to the continued reliability of the Western Interconnection and need further discussion.
SRP appreciates Peak’s statement that the Peak executive team and Board will manage the wind-down, and will work with the Balancing Authorities and Transmission Operators to provide an orderly reliability-focused transition. (Web Ex Q&A, July 18, 2018). SRP looks forward to working with Peak to ensure a smooth transition and urges Peak to schedule a meeting as soon as possible to further address questions related to the Wind-Down Budget and Peak’s plans for the transition to new RC service providers in the Western Interconnection.
of Arizona Public Service on the 2019 & 2020 Proposed Business Plan and
Budget Wind Down and Associated Questions
July 30, 2018
Arizona Public Service (APS) thanks Peak Reliability (Peak)
for the opportunity to comment on the 2019 & 2020 Proposed Business Plan
and Budget Wind Down and the associated Questions that were posted on June 1,
2018. APS’s priority is the viability of Peak and the assurance of critical
Reliability Coordinator (RC) operations through December 31, 2019. By December of 2019, it is anticipated that
all Western Interconnection (WI) entities will be appropriately placed with an
RC. APS is supportive of continued development of a Peak Wind Down budget
scenario for 2019/2020, including ensuring proper funding for employee
severance and retention. However,
additional detail and transparency regarding Peak’s Wind Down proposal/plan and
associated budget is necessary to facilitate a full and robust evaluation of
Peak’s proposed Wind Down plan. With
this initial premise in mind, APS provides specific comments in response to
Peak’s Questions on the proposed budget scenarios and provides general budget-
and wind down-related comments below.
APS appreciates the thoughtfulness of Peak’s Questions as
posted on June 1, 2018 and supports the provision of feedback on these
higher-level policy questions by the Funding Parties. Giving due consideration to Peak’s recent
announcement regarding its voluntary election of the “wind down” scenario, APS
provides responses by topic below on those questions that are applicable to the
“wind down” scenario.
financial implications, if any, do you anticipate (or should otherwise be
considered and/or mitigated) with the Wind Down scenario?
The wind down scenario and associated budget does not
provide enough detail for APS to understand and/or comment upon how Peak incorporated
or considered: (1) governance-related efficiencies such as board size
reductions; (2) any sharing or allocation of software licensing, tool,
technology, or other capability costs with/to other WI RCs that will commence
parallel and, potentially, full operations in 2019; and (3) any other
efficiencies that Peak considered as feasible in the Transitional Reliability
Coordinator (TRC) scenario. In
particular, it is unclear from the content of the proposal whether any of the
efficiencies proposed for the TRC scenario can be implemented in 2019 as Peak
begins its wind down and other WI RCs commence operations. As an additional note, it is unclear as to
why the operating reserve would be increasing under the wind down scenario and
budget. Finally, it is unclear how
natural attrition of employees is considered in the overall proposed funding
amounts. While Peak will be making
efforts to retain employees, it is unclear from the proposal if that retention
program is applicable to prioritized, key personnel or whether it is applicable
to all personnel.
Peak previously indicated that wind down costs would be
negligible and, while employee retention is an important upward-adjusting
consideration that APS strongly supports, potential efficiencies to mitigate
that upward adjustment should be considered and incorporated into the overall
budget. These include the transference
of continued tool enhancement projects or initiatives to other entities as well
as any software licensing-related cost allocations to entities that will be
running parallel operations and commencing full operations in the second half
of 2019. It is notable that several of
the proposed efficiencies set forth in the TRC scenario appear to be feasible
offsets for the enhanced retention costs anticipated in 2019, e.g., board size
reduction and other governance- and initiative-related efficiencies. For these reasons, APS respectfully suggests
that Peak reconsider how previously proposed efficiencies can be applied to the
2019 budget as well as how natural attrition and software licensing cost
allocations will or should reduce overall costs. APS believes that reliability is paramount
and requires additional details and information to ensure that reliability is
preserved in a cost-effective, responsible manner.
the standard set forth in the TSD, what operational Implications or risk, if
any, do you anticipate (or should otherwise be considered and mitigated) with
the Wind Down scenario?
APS appreciates Peak’s high standards of operational
excellence and compliance and certainly encourages Peak to maintain same
throughout 2019. However, tool, data,
and technology enhancement projects identified in the Technical Specifications
Document (TSD) should be evaluated for feasibility and/or transference to other
RC entities given Peak’s wind down in approximately seventeen months. Moreover, Peak should give due consideration
to the timing and impacts of the likely sharing of tools and applications. As Peak contemplates its wind down and the
potential expansion/sharing of its tools and capabilities, it should ensure
that such expansion, sharing, and/or transference is effected such that
operational excellence across the WI is not impacted and remaining RCs are
positioned to leverage the progress and advancements that Peak has spearheaded
for the benefit of the WI.
Additionally, APS is concerned about data sharing and
retention requirements and Peak’s intention relative to such data sharing,
retention, or transfer. For example,
where an entity is subject to audit after Peak has completed its wind down, it
is unclear how such entity would be able to access the data or records
necessary to demonstrate compliance with Peak’s RC data specification, outage
coordination process, etc. Further, the
sharing or transfer of such data may be necessary to facilitate a timely,
efficient transition from Peak to another RC, e.g., ICCP link data sharing from
Peak to its Transmission Operators and Balancing Authorities. Consideration should be given to how and when
such data sharing and/or transference can and should occur.
There is a further potential for operational implications as
a result of the success of Peak’s employee retention program. While APS supports the retention bonus and
severance proposal, a further goal should be to retain talent within the
WI. A potential supplement to the
retention bonus and severance proposal would be to work with industry to
identify potential placement opportunities for Peak personnel as Peak winds
down. Without such a supplement, there
is a possibility that personnel whose expertise is focused on WI tools and
operations could be lost to other industry opportunities.
These tool, software, data, and personnel considerations can
have significant operational implications and should not only be considered by
Peak, but should be the subject of a stakeholder process to ensure that all
needs, timelines, and obligations are adequately addressed as Peak approaches
its wind down time frame and other entities are commencing RC operations. It is important to the continued reliability
and operational excellence of the WI that any risk to reliable operations be
identified and evaluated to ensure that appropriate mitigations are in place to
ensure that any operational implications during and after Peak’s wind down are
known and minimized to the extent possible.
i. Do you
have any other concerns about Peak’s governance? If so, what would you
recommend as a proposed solution?
APS suggests that the board reduction and other governance-related
efficiencies proposed under the TRC scenario is an excellent step to engender
some cost savings and would recommend its application to the 2019 budget
year. This is significant as there has
been stakeholder interest in board reduction for some time. Other possible considerations are a reduction
in the participating sectors and board pay and leveraging web technology to
reduce costs. While APS understands that
the wind down scenario will require significant efforts, the implementation of
governance-related efficiencies could reduce the overall effort and resource
commitment for Peak as well as costs for funders during the transitional time
i. Do you
expect any impact on reliability under the TRC or Wind Down scenarios? How does
this impact compare to that (if any) associated with switching to another RC
With careful planning and implementation, there should not
be an impact to reliability as a result of the implementation of the wind down
scenario. However, APS remains concerned
that all entities within the WI will be able to effectively transition to a new
RC provider by December 31, 2019. For
this reason, APS urges Peak to work with the remaining RC services providers to
identify any potential “at risk” entities and ensure that the remaining RC
service providers will be positioned to accept all WI entities and that all WI
entities are appropriately placed by December 31, 2019. Further, APS urges Peak to work with the
remaining RC services providers to ensure that there is a backup mechanism or
fall back plan in place as an additional assurance to the WI that all entities
will have an RC services provider by December 31, 2019.
APS recommends that there are potentially serious financial
and reliability implications to be considered as Peak and the remaining RC
services providers determine the capabilities and timing of entity
transitions. For this reason, APS also
recommends that Peak and the remaining RC services providers coordinate with
the Western Electric Coordinating Council to determine feasible back up
mechanisms or fall back plans for entities.
Examples include: maintenance of Peak at a reduced or subsidized cost,
the use of delegation agreements to coordinate RC services participation through
other registered entities, identification of facilitation efforts and
assistance that Peak could provide, i.e., transference or sharing of ICCP
links, servers, software, etc.
To summarize, Peak has a seminal role in shaping the overall
transitional process for entities and is uniquely positioned to identify and
determine back up mechanisms for at risk entities.
Allocation to Fixed Cost BAs and TOPs
APS understands that certain parties to the funding
agreement pay a “set” annual amount as there is not a Net Energy for Load
formulation or other measure of consequence through which to capture their
costs. APS notes that the Funding
Agreement requires all funding parties to pay the costs of Peak’s wind
down. Accordingly, APS requests
clarification on how these entities will be assessed a portion of Peak’s wind
Into The Wind Down Plan And Process
APS notes that, during the most recent webinar, Peak
indicated that it was premature to provide information regarding the wind down
plan and process. However, such process
will, ultimately, affect the proposed budget and funding amounts. For this reason, APS requests clarification regarding
the proposed budget timeline and enhanced engagement and transparency as Peak
develops its overarching wind down plan.
APS thanks Peak again for the opportunity to comment on its
recent posting. APS respectfully
reiterates to Peak that, as it plans and implements it wind down scenario, it
consider the following:
obligation to preserve reliability – The reliability of the WI is of paramount
importance and should be considered as Peak plans its wind down. Timely, efficient, reliable transitions
require the sharing of data, infrastructure, skills, software, tools, etc. Peak has invested significant resources in
its tools, processes, and assets. Such
investments benefit the entirety of the WI and APS urges Peak to work closely
with the remaining RC services providers, WECC, its vendors, and its
shareholders to identify appropriate sharing, transfers, cost allocations, etc.
obligation to mitigate costs – Peak proposed new and unique processes,
governance, and other efficiencies for the TRC scenario. Although that scenario is no longer viable,
APS suggests that Peak evaluate such proposals to determine their applicability
and feasibility to the wind down scenario.
Application of such efficiencies would mitigate costs and resource
investment for Peak and the funding parties, resulting in an overall benefit.
• Timing –
The December 31, 2019 deadline for Peak’s wind down requires significant
coordination, cooperation, and collaboration.
All entities will need to have and understand a feasible transition
schedule and the backup mechanism or fall back plan that would be implemented
should issues arise during the transition.
APS urges Peak to work with the remaining RC services providers, WECC,
its vendors, and its shareholders to ensure that timely, reliable transitions
APS is committed to support Peak in this effort and looks
forward to working closely with Peak to ensure a smooth, reliable transition
through December 31, 2019 and an appropriate, efficient wind down of Peak.
Black Hills comments on Peak 2019 Wind Down Budget
In light of the Peak’s announcement that it will pursue the “wind down” option and cease operations on December 31, 2019, Black Hills has focused its comments on the wind down budget. Black Hills comments are submitted pursuant to the process set forth in 4.1.5 of the Reliability Coordinator Funding Agreement. Black Hills seeks to work together with Peak and the other funding parties to ensure an orderly wind down and transition, which fully complies with the Reliability Coordinator Funding Agreement, in light of Peak’s decision. In general, Black Hills is supportive of continued development of the Peak Wind Down budget scenario for 2019, including ensuring proper funding for appropriately-planned employee severance and retention. However, Black Hills requires additional detail and transparency to fully evaluate Peak’s proposed Wind Down plan. Black Hills is committed to supporting Peak in this effort and looks forward to working closely with Peak to ensure a smooth, reliable transition through December 31, 2019 and an appropriate, efficient wind down of Peak operations.
I. Peak’s 2019 RC Wind-Down budget is $53.4 million which is a $7.6 million or 16.7% increase from its 2018 RC Function Budget. Peak indicates the primary driver is an “increase in labor costs, slightly offset by decreases in the Operating Expenses.” In addition in its July 19, 2018, call with Funding Parties and in the proposed budget, Peak has indicated that a personnel expense increase of $8.7 million dollars is due to “employee retentions” during the wind-down period.
· Comment 1- The 2019 wind-down budget proposal lacks transparency and detail. For instance additional transparency would be important, as to the “increased labor costs.” The budget proposal indicates that Peak will retain all full-time employees (174 FTEs) through December 31, 2019. By way of comparison, as of September 2, 2019 when CAISO’s withdrawal become effective, Peak will be responsible for roughly 30% less of the total NEL. It would seem that a gradual reduction in staffing levels would be appropriate as Peak’s scope of work changes over the course of 2019.
· Comment 2 – While Black Hills understands the need to ensure adequate staffing is maintained to ensure reliability during the wind-down period, additional information regarding the portion of the budget which is earmarked for “employee retention” would assist in evaluating the proposed budget. Additional relevant information would include how retentions were calculated and whether employee’s receipt of a retention bonus is conditioned on continued service through December 31, 2019? Furthermore, will the board review a package which details this information or simply a gross budget amount? It may also be advisable for the board to retain a consultant with experience in organizational closures to ensure the most prudent approach to ongoing operations, employee retention, and the strategy behind which employees are needed and for how long.
II. Peak has proposed that the wind down budget will continue into 2020. The published summary generally states that the “2020 wind down budget” includes items such as payroll and tax preparation and is set at $6 million dollars. By way of comparison, the accompanying spreadsheet indicates that the 2020 budget for personnel expenses is $1.7 million dollars and $7.8 million dollars in operating expenses. Thus the total spend appears to be closer to $9.5 million dollars.
· Comment 1 – As was the case with the 2019 budget, the 2020 projection lacks transparency. The projection for both personnel, operating, and travel expenses seems large when compared with the limited types of final wind down activities described in the proposed budget summary and the projected number of remaining full- time employees. Additional transparency and supporting information, as to the basis for these figures would be helpful in evaluating the proposed budget.
· Comment 2- There is a significant increase in “working capital” or “reserves” in the 2019 budget, but it is unclear how working capital will be applied during the wind down process.
· Comment 3- The Peak Funding Agreement sets both Peak and the Funding Parties obligations. According to the Funding Agreement, Peak can only allocate its costs for the next year. In addition, Funding Parties have no obligations beyond the effective date of their notice of withdrawal. Peak should provide its explanation and proposal for how it can allocate the “2020 budget” to Funding Parties who have an effective date of withdrawal of December 31, 2019.
III. At the July 19, 2018 call Ms. Jordan indicated that there were wind-up expenses associated with exiting certain equipment and maintenance agreements.
· Comment 1 - Are these expenses Ms. Jordan referred to include in the 2019 budget? If so, what component of the proposed 2019 or 2020 budget is tied to existing equipment and maintenance agreements. Additional detail and transparency as to the nature of these obligations is requested.
IV. Will Peak create a team to review the wind-down and transition process?
· Comment 1 - This question was proposed at the July 19, 2018 call wherein Peak announced its plans to pursue the wind-down budget. Peak indicated that it planned to create a Peak team to oversee the wind down and that there would be RC to RC communication as part of that process. The team which oversees the wind down should not be limited to Peak employees and should include representatives of the funding parties.
· Comment 2- Discussion of how the tools which are essential to the provision of reliability service will be transitioned or handled in this wind-down are of significant importance to the Funding Parties. For this reason, participation, coordination and collaboration in the wind-down process is necessary.
Comments on the Wind Down Budget from Tacoma Power
Tacoma Power’s top priority during this period of change is maintaining strong Reliability Coordinator services. Given Peak’s decision to pursue the Wind Down option, the viability of Peak and the smooth transition of RC services are paramount to ensuring this can be achieved.
Tacoma Power’s main focus, along with the other Funding Parties, is the viability of Peak and the assurance of reliable RC operations through 12/31/19. To that end, Tacoma Power and the Funding Parties are supportive of continued development of a Peak Wind Down budget for 2019/2020, including ensuring proper funding for employee severance and retention. The Funding Parties are committed to support Peak in this effort and look forward to working with Peak to ensure a smooth, reliable transition through 12/31/19 and an appropriate, efficient wind down of Peak.
However, in accordance with the Funding Agreement and our individual fiduciary responsibilities, the Funding Parties believe that there needs to be more transparency and open discussions with Peak on the details of the Wind Down plan in order for us to fully understand the planned expenditures. This is highlighted by the fact that the Funding Parties are not aware of any entity that has expressed an interest in acquiring Peak in order to continue RC operations beyond 2019. Therefore, the Funding Parties believe that we need to establish a formal dialogue with Peak through a sub-group of the Funding Parties. The sub-group may focus on topics concerning the disposition of tools built for the RC, timing of planned staff reductions, plans for backfills of critical positions, was well as intellectual property rights.
Tacoma firmly believes our priorities do align with Peak’s and we look forward to more detailed dialogue as soon as possible. Please feel free to contact our staff if you have any questions.
I am writing in response to the draft wind down budget circulated by Peak last month, in advance of having announced the decision to cease operations at year-end 2019, and not pursue a transitional structure for RC services beyond 2019. El Paso Electric Company (“EPE”), a party to the currently-effective Funding Agreement for RC services, believes strongly that securing the assurance of reliable RC operations through 12/31/19 is essential to an effective wind down process. As EPE staff reviewed Peak’s draft budget, we found it difficult to assess whether the budgeted amounts would accomplish the objective of reliable RC operations through 12/31/19, and we request information necessary to permit that kind of assessment. Information that would reveal the underlying assumptions made by Peak with respect to key cost drivers will allow for a meaningful review of exactly what is covered, and what is not covered, in Peak’s draft budget estimate. The Funding Agreement in place between us speaks to an affirmative negotiation of terms and costs. Peak’s assumptions underlying the budget entries for winding down RC services (for example, including, but not limited to, assumptions underlying employee and other staffing levels necessary to fully satisfy reliability needs through 2019, and employee/staff retention activities contemplated so that contractual commitments may be satisfied) are among the items deserving of such discussion as part of the negotiation of terms and costs associated with the wind down. To that end, EPE seeks Peak’s cooperation in this regard so that EPE may properly and fully evaluate Peak’s proposed wind down plan that is reflected in its assumptions underlying the draft 2019 budget entries.
In addition, the 2019 draft budget does not address all financial issues associated with the wind down. Discussions with respect to budget balances that may exist at the close of business on 12/31/19, issues associated with intellectual property rights, and other such items are among the topics requiring dialogue between and among Peak and the parties to the current Funding Agreement.
In closing, please know that EPE supports Peak in this effort. We’ve formed close relationships with Peak staff over the past several years, and we’ve developed a great deal of respect for Peak and its employees. EPE is committed to working closely with Peak to ensure a reliable year 2019 all the way through Peak’s last day of RC operations on 12/31/19.
NNSA Los Alamos (NNSAL) Responses to Peak Reliability Questions TRC vs Wind Down
1. Financial Implications. NNSAL does not anticipate significant financial implications from either scenario assuming our current apportionment from the NEL remains roughly similar. NNSAL has no visibility into the potential cost and which entities are likely to remain in TRC scenario. This lack of transparency makes the evaluation of the financial implications to remain with Peak a difficult decision. TRC needs to provide the funding parties certainty to be a viable alternative.
NNSAL recommends that Peak budget for the Wind Down scenario to ensure adequate funding is available depending on the outcome of the organization. NNSAL would like to see all entities currently in Peak to be financially responsible for funding the Wind Down scenario if chosen. The decisions of a few entities have affected the viability of Peak for all other entities and all current entities should pay their fair share of the burden to wind down Peak.
2. Operational Implications. NNSAL does not see any operational implications and believes that the TRC scenario could serve our needs for the RC function. NNSAL as a small TOP does not directly benefit from nor use the enhanced situation awareness tools.
3. Governance Implications.
a. NNSAL believes that Peak RC governance should be driven by the funding parties. To that end NNSAL recommends that Peak RC governance voting arrangements are restricted to class 1 and class 2 entities.
b. Bylaw and governance reform may be a complicated and tedious process. NNSAL recommends Peak uses the Wind Down option and stands up a new entity under a revised governance that is adapted and sized for the entities which remain with Peak.
c. Peak RC is a service provider to the BAs and TOPs. The Board needs to more effectively represent the interests of the funding parties to meet our NERC/WECC compliance needs.
4. Competing RC Alternatives. NNSAL is looking for a cost-effective solution that will meet our NERC/WECC obligations to have an RC service provider. The most important factor in our decision will be where our BA (PNM) choses to go for RC service. We expect that all scenarios currently under consideration have risk associated with transition and the implementation timeline.
5. Implementation Timeline. NNSAL expects that all scenarios currently under consideration have risk associated with transition. NNSAL does not have sufficient information to evaluate the potential for CAISO or SPP to integrate a substantial number of BAs/TOPs by Dec 2019. NNSAL believes that Peak, CAISO, and SPP need to have contingency plans in place to provide RC services during the transition process for the simultaneous large scale migrations being contemplated.
6. Impact of Emerging Markets. NNSAL is not currently interested in evaluating any RTO service model and derives value from the stand alone RC services at this time. NNSAL plans to evaluate any potentially transition to emerging markets in conjunction with our BA (PNM). NNSAL believes that market development within the TRC can only occur once the RC services have been re-stabilized.
NNSAL believes that Peak, CAISO, and SPP need to have contingency plans in place to provide RC services during the transition process which may extend the wind down period for Peak until all entities have a stable RC provider. NNSAL would like to see all entities currently in Peak as financially responsible for funding the Wind Down scenario if chosen at whatever duration is necessary to ensure stable and viable RC services for all current Peak members.
July 30, 2018
Portland General Electric Comments on Peak RC’s Future Direction
PGE appreciates the opportunity to provide comments on Peak RC’s future direction.
The reliability of the western interconnection must remain the priority for all parties during the transition and wind-down period. The main focus of the PGE and the Funding Parties is the viability of Peak RC and the assurance of reliable RC operations through 12/31/2019. PGE commits to work closely with Peak RC, CAISO, and the Funding Parties to ensure that reliability is maintained throughout the transition period.
PGE appreciates that the reliability of the western interconnection has always been Peak RC’s top priority and that reliability continues to remain the focus of the organization through the wind-down period. The transition period between RC service providers is a critical transition for regional reliability; the hand-off from Peak RC to any other service provider increases complexity and risk. For PGE, reliability first means that Peak RC and any other service provider senior management must demonstrate strong leadership, commitment and cooperation during this process. A smooth transition between RC service providers will be the ultimate demonstration of this strong, thoughtful leadership and a lasting testament to the region’s fundamental commitment to reliability first.
PGE requests that Peak RC give careful consideration to any additional Funding Parties support that might be required in order to ensure that reliability is maintained through the transition period. Peak RC should proactively communicate any support needs that it identifies to its regional partners.
PGE Supports the 2019 Wind-Down Scenario
PGE supports the continued development of a Peak RC Wind Down budget scenario for 2019/2020. PGE supports the current consensus among the Funding Parties for the 2019 wind-down with Peak RC services terminating on 12/31/19.
PGE supports providing Peak RC with the support and the funding needed to ensure reliability through the transition period; however, Peak RC must provide additional transparency into the 2019 budget and be willing to be flexible with RC funders on specific budget items. This is highlighted by the fact that the Funding Parties are not aware of any entity that has expressed an interest in acquiring Peak RC in order to continue RC operations beyond 2019. PGE requests that Peak RC senior management open a dialogue with a sub-group of the Funding Parties on the wind-down process and budget. PGE requests that this dialogue cover, at a minimum,
• Peak RC’s staffing plan, including the timing of staff reductions and approach to backfilling critical positions
• Transition plan for the tools built for the RC and other intellectual property
Disbursement of any funds remaining after the completion of wind-down
PGE values the technical expertise and tools that Peak RC has developed; open dialogue with the Funding Parties will facilitate this transition.
PGE is concerned that the transition period for RC services may not be sufficient. RC services are critical to the integrated operation of the western interconnection. PGE requests that Peak RC provide a wind-down scenario that extends Peak RC operations to April, 2020. PGE would like to evaluate this scenario,as it would provide additional assurances of a full transition with a sufficient period of redundancy in RC services, given the critical functions involved and only a few months of handover time currently planned.
Peak RC’s Proactive Support for the Transition Between RC Service Providers
PGE recognizes that transition will go more smoothly if Peak RC, the CAISO, and Funding Parties work closely together during the transitional period, particularly during the parallel operations period. PGE requests that Peak RC affirm that it is committed to not only maintaining RC services through the wind down period, but also to providing proactive support for the transition between RC service providers. PGE recommends that joint monthly briefings or reports be provided from the CEOs of both organizations. PGE believes that this joint demonstration of cooperation from the leadership of both will express the necessary unified front on the commitment to ensure reliability first. PGE will make the same request to CAISO leadership.
PGE recognizes that an effective employee retention program is essential to ensuring that Peak RC is able to continue to provide RC services through the wind-down period. PGE is prepared to work with Peak RC and the Funding Parties to enact an effective staffing plan for the wind-down period.
PGE requests that Peak RC provide the Funding Parties with documentation regarding the efficacy of the proposed staffing retention plan, including periodic updates. For example, can Peak RC demonstrate that it has secured the commitment of key personnel through the end of the wind-down period? What specific assurances from employees does Peak RC have that retention bonuses will be sufficient to incentivize retention? PGE and the Funding Parties need assurance that the proposed retention severance will be adequate inducement for Peak RC employees to remain with the organization through December, 2019.
PGE is committed to support Peak RC in the wind-down period. We look forward to working closely with Peak RC and the Funding Parties to ensure a smooth, reliable transition through 12/31/2019 and an appropriate, efficient wind down of Peak RC.
Business Plan and Budget Draft
30, 2018 Comments
Since it formed in 2014, Peak
Reliability (Peak) has made significant strides in maturing and evolving its
Reliability Coordinator (RC) services, staff, processes, procedures and tools.
The Bonneville Power Administration (Bonneville) appreciates the technical
expertise and robust systems that Peak has built through collaborative
relationships between Funding Parties and Peak staff.
On July 18, 2018, Peak
announced that it will cease operations, effective December 31, 2019, and will
therefore pursue the proposed Wind Down budget scenario. Bonneville supports
Peak's selection of the Wind Down scenario. Bonneville’s objective through this
Wind Down period is to help assure that Peak has a smooth and orderly
transition, including its ability to retain appropriate staff sufficient to
continue to provide reliable RC services for the Western Interconnection, meet
its contractual obligations, and offer appropriate severance packages.
Bonneville understands the need for Peak to work expeditiously on
retention/severance packages, and supports the Wind Down budget at this time in
order to facilitate timely certainty on the funding amount.
However, in accordance with the
Funding Agreement, Bonneville respectfully requests more detail and transparency
on the Wind Down plan, so that Balancing Authorities (BAs) and Transmission
Operators (TOPs) can understand the planned expenditures and work
collaboratively with Peak to support the orderly transition. For example,
information on timing of staggered staff reductions or plans for backfill would
allow BAs and TOPs to align hiring timelines to help Peak maintain their
planned staff levels. Bonneville would also request that Wind Down
collaboration include conversations of what happens to any remaining funding
after Peak has completed its Wind Down.
Peak has suggested that BAs and
TOPs might form a new governance structure to acquire Peak’s assets and people.
However, Bonneville is not interested in pursuing or participating in efforts
to stand up a newly restructured entity to acquire the assets and people,
because it is too high of a risk. Rather, Bonneville seeks to work
collaboratively with Peak to arrive at appropriate funding levels over the Wind
Down period, and to make the process through the transition as smooth, reliable
and transparent as practicable. Bonneville would also like further transparency
on plans to transition tools and intellectual property so that the value that
Peak has built over the past several years is not lost.
On July 18, 2018, Peak announced that it will cease operations, effective December 31, 2019 and will therefore pursue the proposed Wind Down budget scenario. Intermountain Rural Electric Association (IREA) supports Peak’s selection of the Wind Down scenario. IREA’s main focus is to help assure that Peak has a smooth and orderly transition, including its ablity to retain appropriate, qualified staff sufficient to continue to provide reliable RC services for the Western Interconnection, meet its contractual obligations, and offer appropriate severance packages. IREA understands the urgency for Peak to work expeditiously on employee retention and severance packages, and supports the Wind Down budget at this time in order to facilitate timely certainty on the funding amount.
However, in accordance with the Funding Agreement, IREA respectfully requests more detail and transparency on the Wind Down plan, so that Funding Parties can understand the planned expenditures and work collaboratively with Peak to support the orderly transition. IREA apprecitates the services and tools that Peak has provided to the Funding Parties. IREA would like futher transparency on plans to transition tools and intellectual property.
If you have questions please let me know.
Chief Operating Officer
INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION
5496 N. U.S. Highway 85 / Sedalia, Colorado 80135
Telephone (303) 688‐3100
July 30, 2018
Ms. Marie Jordan
Chief Executive Officer Peak Reliability Inc.
7600 NE 41st Street, Suite 20 l Vancouver, WA 98662
Tri-State Generation and Transmission Association, Inc. ("Tri-State"), as a Peak Reliability Coordinator (RC) Funding Party appreciates the opportunity to provide feedback on the 2019 budget documents.
Due to Peak's Stakeholder Bulletin issued on July 18 , 2018 whereby Peak states it has determined that based on the feedback from Peak's Funding Parties there is clearly overwhelming support for Peak to wind down the organization. As such, Tri-State does not see a need to comment on Budget Scenario 1 or respond to any of the questions posed since it assumed that as of 12/31/19, Peak would cease to exist as a provider of RC services.
As a transmission operator, Tri-State's number one focus is to ensure it has reliable RC services through December 31, 2019 when other providers will be in a position to transition into a RC role in the western interconnection. Tri-State is a Funding Party and not a Balancing Authority. Hence, it anticipates that it will follow the lead of its BAs which are PNM, PSCo, WACM, and PAC on the selection of the RC services provider.
In accordance with the Funding Agreement and our fiduciary responsibility to our Members, we believe the Scenario 2 Wind Down budget requires additional discussion on the details for us to be able to understand and explain the substantial increase to our Members. Just stating there are monies to pay retention bonuses to every Peak employee, pay leases, pay vendors is not a sufficient explanation. We understand the complexities of winding down the organization and support sufficient and proper funding for employee severance and retention. Based upon the information provided, it appears the cost of the Wind Down is approximately $17 million which is quite substantial; hence the need for more information and analysis.
It is Tri-State's position that there is an obligation on Peak's part to negotiate the terms and costs of transitioning the Funded Services with the Funding Parties. We also believe that regardless of the date of withdrawal from Peak, all Funding Parties should be responsible for their share of the Wind Down Budget Scenario 2 based upon their full year NEL.
Tri-State appreciates the opportunity to provide this feedback and will continue to engage in the process to support Peak' s decision to wind down the organization.
Senior Vice President Transmission
That which is most important to the Eugene Water & Electric Board (EWEB) during this period of change, is the continued Reliability of the Western Interconnection, and that Reliability Services are executed at the same high level of integrity, proficiency, and responsiveness that all funding members have grown accustomed too, and appreciate about Peak. This can only be achieved by assuring the viability of Peak, and the full functionality of Reliability Coordinator Operations through December 31, 2019.
On July 18, 2018, Peak announced that it will cease operations effective December 31, 2019, and in essence pursue the proposed wind-down Business Plan and Budget Scenario 2, dated June 1, 2018. EWEB supports Peak's decision of the wind-down scenario, and is supportive of the continued development of a Peak wind-down business plan and budget for 2019-2020; an essential element of which is staffing levels through the appropriate funding for employee retention, and severance. EWEB is committed to supporting Peak in this effort, and will work with Peak to ensure a smooth, reliable transition of Reliability Coordinator Services, as well as an appropriate, efficient wind down of Peak, as is provisioned in the Peak By-Laws and Finding Agreement.
In accordance with the Peak By-Laws and Funding Agreement, EWEB, as a Non-BA TOP, and in alignment with our BA, Bonneville Power Administration, respectfully requests more detail and transparency on the wind-down budget proposal, so that as a Transmission Operator (TOP) we may better understand the planned expenditures for 2019-2020; work collaboratively with Peak to support an orderly transition, and feel confident with the final plan.
EWEB seeks to work with Peak to arrive at appropriate funding levels over the wind-down period, so as to make the process through transition and Peak’s closure as smooth, reliable, and transparent as practicable. EWEB also requests additional transparency on plans for tools and intellectual property; and requests transparency regarding the plans for final remaining funds and/or reserves as is forecasted in Scenario 2 – 2019-20 Proposed Business Plans and Budget Scenario, dated June 1, 2018.
NERC Compliance Program Manager
Eugene Water & Electric Board
Comments on Peak Reliability’s 2019 Wind-Down Plan and Budget
With Peak Reliability’s announcement on July 18, 2018 that it will cease operations effective December 31, 2019 and pursue the “wind down” of Peak, Avista Corp. (AVA) supports the “wind down” option and will work together with Peak and the Funding Members to ensure a successful transition.
Avista’s primary concern is the viability of Peak and reliable RC operations through the wind down and transition to a new RC. Peak must remain fully functional through 2019, which requires that sufficient operating personnel are retained. Avista supports the required budget needs to ensure reliable operation of Peak, which may include necessary employee retention packages. In supporting the wind down plan, Avista respectfully requests the Funding Parties should be included in the transparent and open discussions of the plan and its budget implications. The Funding Parties need to understand the details of the wind down plan and associated expenditures for our respective organizations as we move through the process with Peak.
Avista appreciates all that Peak has become and was supportive of Peak being a viable option for RC services to compete with other providers. Given Peak is ceasing operations, Avista shares the same concerns about the wind down plan as many of the other Funding Parties and will work with Peak and the Funding Parties to help ensure the wind down of Peak and the transition to a new RC is successful.
PacifiCorp appreciates the opportunity to comment on Peak Reliability Coordinator’s (“Peak RC”) Budgeting Scenarios, which consist of: Scenario 1 – 2019 Status Quo and 2020 Transitional RC (“TRC”) and Scenario 2 – 2019 Wind Down and 2020 Wind Down Completion.
On July 18, 2018, Peak RC announced that it will cease operations, effective December 31, 2019, and will pursue the proposed Wind Down scenario.
PacifiCorp’s main focus is the viability of Peak RC and the assurance of reliable RC operations through December 31, 2019. Accordingly, PacifiCorp is supportive of continued development of a Peak RC Wind Down budget scenario for 2019/2020, including ensuring proper funding for employee severance and retention. However, PacifiCorp requests additional detail and transparency in order to fully evaluate Peak RC’s proposed Wind Down plan. PacifiCorp is committed to support Peak RC in this effort and looks forward to working closely with Peak RC to ensure a smooth, reliable transition through December 31, 2019 and an appropriate, efficient wind down of Peak RC.
NaturEner USA, LLC, on behalf of its two wholly-owned, generation-only, balancing authority
subsidiaries NaturEner Power Watch, LLC and NaturEner Wind Watch, LLC (NaturEner), submits these
comments to Peak’s requested non-binding “Letter of Intent – Transitional Coordinator (TRC) versus
Wind Down” and their related proposed budgets.
On July 18, 2018, Peak announced that it would cease operations effective December 31, 2019.
NaturEner, however, believed and still believes that a much slimmed-down version of Peak (likely
slimmed-down further than that reflected in the proposed TRC budget) offering core RC services had the
possibility of being a viable and preferred RC alternative for various BAs and TOPs. NaturEner believes
that such a slimmed-down version could have offered the benefits of Peak’s experience, considerable
personnel talent, the tools and systems it owns and/or has enhanced, the comfort of already being a
certified RC whereas the other potential RC services providers are not yet certified, and cost advantages.
Thus, NaturEner was disappointed in Peak’s announcement that it would be ceasing operations effective
December 31, 2019 - especially given that such announcement occurred prior to this July 30 deadline for
BAs and TOPs to submit their responses regarding the requested LOI and the related budget scenarios.
Given Peak’s statement that it will pursue a wind down, NaturEner submits the following comments on
Peak’s proposed Wind Down. Obviously the primary focus of such Wind Down and its supporting
budget is the viability of Peak and the assurance of reliable RC operations through December 31, 2019.
As previously mentioned, NaturEner believes that Peak has many talented and hard-working employees
and appreciates their dedication and effort. NaturEner is supportive of continued development of a Peak
Wind Down budget scenario for 2019, which Wind Down plan and related budget should contain
appropriate funding for employee severance/retention to orderly wind down Peak. However, NaturEner
believes that the Funding Parties require additional detail and transparency to fully evaluate Peak’s
proposed Wind Down plan. That said, it NaturEner’s understanding that the Funding Parties recognize
that it is in their best interests to timely support Peak with regards to a smooth, appropriate, and orderly
wind down of Peak which ensures the necessary and required reliability through December 31, 2019.
Senior Counsel, NaturEner USA, LLC
The State of Utah has one of the nation’s leading economies and highest qualities of life. Affordable, abundant and reliable energy is a key component of Utah’s successful formula. On behalf of Utah, the Utah Governor’s Office of Energy Development (OED) would like to thank Peak Reliability for the important role it has played in ensuring a reliable grid.
Given the importance of reliability coordinator services, coming changes will require careful consideration of a significant amount of information to assess near- and long-term impacts. Therefore, OED encourages all parties to devote the necessary time and resources to identify the most prudent course of action. As entities consider the value propositions of reliability coordinator options, OED hopes that a demonstrated ability to maintain reliability will always be the foremost consideration. OED encourages the development of solutions that preserve transparency and the independence of the reliability coordinator, and wherever possible, a comprehensive grid-wide approach. As Peak enters into its wind-down phase, it is imperative that balancing area authorities, transmission operators and stakeholders work collaboratively to ensure a smooth transition and continued reliability.
Again, OED appreciates Peak’s service to the Western Interconnection and looks forward to continued coordination with all entities involved to maintain reliable power in Utah and throughout the region.
Dr. Laura Nelson Energy Advisor