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(no amdt) ALBERTA REGULATION 42/2024 Alberta Utilities Commission Act Electric Utilities Act SUPPLY CUSHION REGULATION Table of Contents 1

Definitions 2 Eligibility 3 Information to be provided 4 Anticipated supply cushion 5 Issuance of directives 6 Price reconstitution 7 Cost guarantee 8 Paramountcy 9 Filing of ISO rules 10 E x p i r y

Definitions 1(1) In this Regulation, (a) “anticipated supply cushio n” means the supply cushion as determined by the ISO under

section 4; (b) “emission costs” means the amount that a pool participant for a long lead time asset pays in respect of the costs of complying with (i)

section 12(3) of the Technology Innovation and Emissions Reduction Regulation (AR 133/2019), and (ii) any similar obligation under an enactment governing greenhouse gas emissions in Alberta; (c) “ISO” means the Independent System Operator created under the Electric Utilities Act; (d) “long lead time asset” means a source asset that requires more than one hour to synchronize to the interconnected electric system; (e) “minimum stable generatio n level” means the greater of the minimum generation level, expressed in megawatts,

Section 1 AR 42/2024 SUPPLY CUSHION REGULATION 2 that a long lead time asset can be continuously operated without (

i) becoming unstable, or (ii) violating environmental permits; (f) “MSA” means the Market Surveillance Administrator continued under

Part 5 of the Alberta Utilities Commission Act; (g) “pool participant” means an electricity market participant registered with the ISO to transact in the power pool; (h) “source asset” means a generating unit, or an aggregation of generating units situated in the same proximate location, that (

i) has been assigned a unique identifier by the ISO for the purpose of enabling transactions in the power pool, and (ii) is registered with the ISO to a pool participant; (i) “supply cushion threshold” means the target supply cushion of 932 megawatts; (j) “unit commitment directive” means a directive issued by the ISO in accordance with this Regulation for a long lead time asset.

(2) In this Regulation, the following words and phrases have the meaning given to them in the Electric Utilities Act: (

a) electricity market participant; (

b) generating unit; (

c) interconnected electric system; (

d) I S O r u l e s ; (

e) ISO tariff; (

f) pool price; (

g) power pool; (

h) settlement interval.

Section 2 AR 42/2024 SUPPLY CUSHION REGULATION 3 Eligibility 2 The pool participant for a long lead time asset is eligible to receive a unit commitment directive. Information to be provided 3(1) The pool participant for a long lead time asset must submit to the ISO estimated cost parameters for a long lead time asset, including (

a) all variable charges under t he ISO tariff applicable to the long lead time asset, including any applicable loss factor charge or credit, (

b) variable operational and maintenance charges, (

c) fuel cost to start and ru n the long lead time asset, (

d) emission costs, and (

e) any other information requested by the ISO.

(2) The pool participant for a long lead time asset must submit to the ISO accurate physical constraints for a long lead time asset, including (

a) initial start-up time, (

b) minimum off time, (

c) ramp rate, (

d) minimum stable generation level, (

e) maximum run up time, and (

f) minimum on time, as defined in the ISO rules.

(3) The pool participant for a long lead time asset must ensure that the estimated cost parameters and physical constraints for the long lead time asset remain accurate and up to date.

(4) Any information submitted under this

section must be submitted in the form and manner set out in the ISO rules. Anticipated supply cushion 4 The ISO shall determine the anticipated supply cushion for a settlement interval in accordance with the ISO rules based on the following:

Section 5 AR 42/2024 SUPPLY CUSHION REGULATION 4 (

a) the available capability of applicable source assets; (

b) estimated output from win d and solar generating units; (

c) estimated total net imports and exports on all interties; (

d) estimated Alberta internal load; (

e) any other relevant variab le as determined by the ISO. Issuance of directives 5(1) If the anticipated supply cushion determined under

section 4 will be less than the supply cushion threshold for any settlement interval, the ISO must (

a) minimize the deficit to the extent reasonable for the safe, reliable and economic operation of the interconnected system by issuing unit commitment directives to pool participants for long lead time assets, and (

b) determine the order of unit commitment directives according to relative economic merit and physical constraint parameters.

(2) A unit commitment directive must require a long lead time asset to operate, specifying (

a) for a long lead time asset that is not already online, the start time of when the long lead time asset will be required to synchronize to the interconnected electric system, and (

b) the period of time the long lead time asset is required to operate.

(3) On receipt of a unit commitment directive, the pool participant for a long lead time asset, in accordance with the unit commitment directive, must, (

a) if the long lead time asset is not already synchronized to the interconnected electric system, (

i) synchronize and ramp up the long lead time asset to its minimum stable generation level by the time specified by the ISO, and (ii) continue to operate the long lead time asset until at least the end time specified by the ISO, o r

Section 6 AR 42/2024 SUPPLY CUSHION REGULATION 5 (

b) if the long lead time asset is already synchronized to the interconnected electric system, continue to operate the long lead time asset until at least the end time specified by the ISO.

(4) The ISO is not required to take any steps to maintain the supply cushion threshold other than those described in this section. Price reconstitution 6 The ISO shall not attempt to reconstitute the pool price to the level it would have reached without any action taken in accordance with a unit commitment directive. Cost guarantee 7(1) In accordance with

section 32(

b) of the Electric Utilities Act and the ISO rules, the ISO must pay the pool participant for a long lead time asset the incremental and prudent generation costs incurred by the pool participant from operating the long lead time asset up to but not greater than the minimum stable generation level in compliance with a unit commitment directive, net of pool price revenue received by the pool participant in the settlement intervals during which the long lead time asset responded to the unit commitment directive.

(2) The requirement for the ISO to pay under subsection (1) is conditional on the pool participant for a long lead time asset submitting a written request and attesting to the accuracy, prudency and completeness of the actual incremental costs incurred as a result of and following compliance with a unit commitment directive, which shall consist of the following: (

a) the actual costs of all variable charges under the ISO tar iff applicable to the long lead time asset, including any applicable loss factor charge or credit; (

b) variable operational and maintenance charges; (

c) fuel costs to start and run the long lead time asset; (

d) emission costs.

(3) The form and content of the information and attestation to be provided by the pool participant under subsection (2) must be in the form set out within the ISO rules.

(4) The MSA may audit the prudent and incremental costs submitted in accordance with subsection (2), and the pool participant for the long lead time asset shall provide the requested audit information in the time and manner specified by the MSA.

Section 8 AR 42/2024 SUPPLY CUSHION REGULATION 6

(5) If, as a result of an audit, the MSA determines that the audit information provided does not support the submitted costs, the MSA may direct the ISO to make any corresponding over or under payment to the pool participant.

(6) In accordance with

section 21 of the Electric Utilities Act, the ISO must recover all incremental costs paid to a pool participant for a long lead time asset under subsection (1) through a pro rata fee charged to every pool participant with energy consumption and production during the settlement intervals in which the unit commitment directive was issued. Paramountcy 8 If a provision of this Regulation is inconsistent or in conflict with a provision of another regulation under the Alberta Utilities Commission Act or the Electric Utilities Act, the provision of this Regulation prevails.

Filing of ISO rules 9(1) The ISO shall make or modify any ISO rules to facilitate the requirements and the objectives of this Regulation.

(2) The ISO shall file the required ISO rules under subsection (1) so as to ensure that they are in effect by July 1, 2024. Expiry 10 This Regulation expires on November 30, 2027.

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