Message-ID: <23304385.1075852908361.JavaMail.evans@thyme> Date: Thu, 4 Oct 2001 13:42:23 -0700 (PDT) From: gary.choquette@enron.com To: david.roensch@enron.com Subject: RE: FW: Gallup Peak Power Avoidance Data Points Cc: ben.asante@enron.com, bob.mcchane@enron.com, john.sturn@enron.com, kimberly.watson@enron.com, mark.walton@enron.com, james.centilli@enron.com, darrell.schoolcraft@enron.com, rich.jolly@enron.com, team.gallup@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: ben.asante@enron.com, bob.mcchane@enron.com, john.sturn@enron.com, kimberly.watson@enron.com, mark.walton@enron.com, james.centilli@enron.com, darrell.schoolcraft@enron.com, rich.jolly@enron.com, team.gallup@enron.com X-From: Choquette, Gary X-To: Roensch, David X-cc: Asante, Ben , McChane, Bob , Sturn, John , Watson, Kimberly , Walton, Mark , Centilli, James , Schoolcraft, Darrell , Jolly, Rich , Gallup, Team X-bcc: X-Folder: \KWATSON (Non-Privileged)\Watson, Kimberly\Inbox X-Origin: Watson-K X-FileName: KWATSON (Non-Privileged).pst According to the copy of the contract I have, under Exhibit A,=20 =091. The Rebate. A portion of CDEC's demand charge associated with CDEC's= generation fixed costs shall be avoidable by ECS if Customer operates the = Compressor such that ECS is able to avoid placing a load on CDEC's system d= uring certain CDEC coincidental peaks for any applicable month. To calcula= te the monthly rebate, the actual demand charges as billed by CDEC will be = subtracted from the Billing Demand Basis. The Billing Demand Basis is the = maximum demand charge on 10 MW of peak demand, assuming no peak avoidance d= uring the applicable month. Thus, the Customer's Rebate shall be a portion= of the Billing Demand Basis that ECS is not billed by CDEC as actual deman= d charges. The way I interpret this wording, we would be entitled to a demand charge r= ebate even if we only slow down the unit during the peak period. I've only= a copy of last August's bill, but we used 7.93 MW during Tri-States (CDEC'= s generation) peak. At $8.86/kW (generation demand), this would entitle TW= to a rebate of $18,340 for the month of August alone. To me it is unclear= if TW is actually receiving this rebate. I've got Mark Walton looking int= o the issue. Note that there is an additional "transmission demand" of $3.= 35 /kW that is coincident with CDEC's peak. Currently, we have no method o= f predicting CDEC's peak. Apparently for the month of August, CDEC's and T= ri-State's peaks did not occur at the same time (although there is no speci= fic information on the CDEC bill as to when their demand peak occurred) as = the Tri-State peak and CDEC peak demand charges are based on different load= s. Interpretation of the contract language would lead one to believe the r= ebate would only apply to the demand associated generation, and thus be val= ued at $8.86/kW. Even so, if we avoided CDEC's peak, it would be a saving = to ECS and thus to Enron. I understood from James Centilli that the econom= ics were based on avoiding the peak demand 70% of the time (at $8.86/kW or = $12.21/kW I don't know). David, you are correct, we only have to avoid one peak in the month, the pr= oblem is predicting which peak is going to be the largest peak in the month= . You don't know for sure on the first day of the month if the load on tha= t day will be higher than the load on the last of the month. Below is a li= st Tri-States historical peaks (in MW): 1/3/2000=091114 2/1/2000=091048 3/20/2000=091080 4/3/2000=09 977 5/23/2000=091126 6/22/2000=091381 7/7/2000=091888 8/14/2000=091924 9/5/2000=091541 10/23/2000=091296 11/17/2000=091439 12/18/2000=091534 1/30/2001=091516 2/9/2001=091482 3/1/2001=091388 4/22/2001=091251 5/25/2001=091407 6/29/2001=091932 7/31/2001=091939 8/6/2001=092008 9/4/2001=091699 For January 2000 the peak was on the 3rd, in 2001 it was on the 31. The pr= oblem is you don't know for certain which day of the month will have the pe= ak. The contract did not specify they would only have one peak that they w= ere going to interrupt us on, only that if we avoided their peak (whenever = it occurred) we would save in demand charges. Using the most conservative approach to avoid a demand peak, you would not = run at all on the first day of a month (the first day is always a peak day = in the month to date). You would only run during the second day when the sy= stem load is less than the peak we saw on the first day. If the system loa= d on the second day is higher than that of the first day, this now becomes = the new peak of the month to date. You would repeat this approach for each= subsequent day in the month, shutting down or slowing down for each new pe= ak in the month to date. The approach I take is a little riskier in that it looks at last years load= and 'budget' loads to estimate a 'minimum expected monthly peak'. It than= allows operation of the unit anytime the system load is less than the high= er of (1) the actual monthly peak to date and (2) the 'minimum expected mon= thly peak'. Thus my utility would let you run for the majority (and possib= ility all) of the first day and would have fewer peaks during the month tha= n the conservative approach. You are correct about ECS's obligation in establishing an automated system.= That system has turned into my system. Sections 3.6 and Article 6 of the= contract discuss this topic. In my mind, ECS did not live up to their end= of this agreement. CDEC didn't do much either, only providing us access t= o Tri-States web site. Tri-State changed their web site mid year requiring= a change in the automated process (due to file format changes) delaying my= implementation. I offered to take over the automated system sometime arou= nd the end of the first quarter this year to force some progress on the iss= ue. There may me legal recourse available to recover some past demand char= ges due TW from ECS. By my calculation/contract interpretation, the maximum rebate TW could rece= ive is $8.86/kW * 10,000kW/Month * 12 Months/Year =3D $1,063,200/year. -----Original Message----- From: =09Roensch, David =20 Sent:=09Thursday, October 04, 2001 11:16 AM To:=09Choquette, Gary; Schoolcraft, Darrell; Jolly, Rich Cc:=09Asante, Ben; McChane, Bob; Sturn, John; Watson, Kimberly Subject:=09RE: FW: Gallup Peak Power Avoidance Data Points Gary you are correct in your assesment that we can avoid electrical power d= emand charges if we shut down during power utilities pear power period. Ho= wever, in discussions prior to finalizing this contract, I got the impressi= on that a decision had been made that we MUST shut the unit down during pea= k demand periods or the econimics of the project did not come out. (these = discussions included: Mike Nelson, Rich Jolly, Mary Kay Miller, Dave Fotti,= Ben Asante, D. Schoolcraft, James Centelli, Kevin Hyatt etc....) Second: The issue came up of "What about during tariff months?", can we st= ill shut down during peak demand periods. Again, if I remember correctly, = the answer was, Yes, even during tariff months we don't have a choice we wo= uld have to shut down. =20 Third: I was under the impression that from a risk standpoint we would not= have to deal with more than ONE peak demand period in the month. Fourth: ECS was responsible for working with the CDEC to establish an auto= mated system which would read CDEC's online load profile and convert the re= ading into a signal which would automatically control the loading on the Co= mpressor and Motor (which would provide us with the opportunity to avoid th= e CDEC's peak load periods). TW of course would have an override option. = However, I was also under the impression that ECS would hold TW harmless & = reimburse, if this feature was not provided. =20 I may be interpreting this incorrectly but again the CSA specifies ECS's ob= ligation in helping us avoid the demand energy charge. The demand charge i= s $12.21 * 10,000 KW * 12 Months =3D $1.465,200 of potential rebate back t= o TW each year. =20 =09=09 =09=09 << File: rebate_sensitivity.xls >>=20 ---------------------- Forwarded by David Roensch/ET&S/Enron on 10/04/2001 = 09:40 AM --------------------------- From:=09Gary Choquette/ENRON@enronXgate on 10/03/2001 09:46 AM CDT To:=09Darrell Schoolcraft/ENRON@enronXgate, Rich Jolly/ET&S/Enron@ENRON, Ri= ck Smith/ET&S/Enron@ENRON, David Roensch/ET&S/Enron@ENRON, Todd Ingalls/ET&= S/Enron@ENRON, DL-ETS Gas Controllers@/O=3DENRON/OU=3DNA/CN=3DRECIPIENTS/CN= =3DDL-ETSGASCONTROLLERS@EX@enronXgate, Dale Ratliff/ENRON@enronXgate cc:=09Ben Asante/ENRON@enronXgate, Kim Kouri/ENRON@enronXgate, Bob McChane/= ENRON@enronXgate, John Sturn/ET&S/Enron@ENRON, Errol Wirasinghe/ENRON@enron= Xgate=20 Subject:=09RE: FW: Gallup Peak Power Avoidance Data Points As I understand/interpret the Gallup contract, we can completely avoid elec= trical power demand charges (approximately $42,000 per month) if we do not = run the unit during the power utilities peak power period. If we can not s= hut down the unit, we can still reduce or demand costs by minimizing our po= wer usage during the peak period. Unlike Hubbard where the contract states avoiding the peak during a specifi= ed period of the day (5-7 PM), Gallup requires us to guess both the day of = the month their peak will occur and the time of day. Through access to Tri= -States history data, I can guess what I think the minimum peak for the mon= th will be. I can look at the current day's usage and estimate if today's = peak will be higher than the higher of (1) my estimated peak or (2) the act= ual peak so far this month. If so, the "Probability today is a peak" will = be near 100 indicating the operators they should expect a possible power pe= ak sometime today. The "Probability now is peak" approached 100 when an a= ctual peak is underway. The Tri-State Power Peak In Progress alarm trigger= s when a power peak is underway. Note that it is impossible to predict with 100% accuracy if any day in the = month is an actual power peak. If the first day of the month has an estima= ted peak 1000 and last years peak for the same month, was 985. It appears = possible that this will be a power peak day. Assume that the actual peak u= sage for the first day was 1010. Now on the second day of the month, the e= stimated peak is 965, not likely to be a power peak day. The third day has= an estimated peak of 1005, a possible power peak day. If the actual for t= he third day is 1012, it now becomes the new peak for the month. If all ot= her estimated peaks in the month are significantly below 1012, they are not= likely to be power peaks, and unit turndown is not required. The point is, to completely avoid demand charges, we would have had to shut= down the unit for a period on the first day of the month, and also on the = third day. The utility integrates their peak over a 30 minute period, thus= the minimum time the unit could be down. I'm guessing that my utility cou= ld predict around seven peaks requiring turndown in a given month. So far this month, I guessed a power peak on 10/1/01 starting at 20:18 and = ending at 21:05. The actual peak so far this month according to the utilit= y was 10/1/01 starting at 20:30 lasting to 21:00. I'm sorry for any confusion. I had asked Dale to pass this information on = to the Operators. If there are any additional questions, do not hesitate t= o call me at 87-7546.