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How Are Ancillary Services Handled?
13.
HOW ARE ANCILLARY SERVICES HANDLED?
Ancillary Services are those services other than the production of energy required
maintain a stable frequency and voltage on the transmission system. The HTSO
responsible for procuring and using these services in its scheduling and dispatch
generation and in its use of the transmission system. All costs incurred by HTSO
procuring Ancillary Services are passed on to Participants through Uplift.
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The Operating Code specifies certain mandatory Ancillary Services. HTSO procures other
Ancillary Services through Ancillary Service Agreements with individual Participants.
These agreements specify the obligations of Participants to provide Ancillary Services and
the terms by which they are paid, including payment for some mandatory Ancillary
Services. Ancillary Services for which Participants sign agreements are:
•
Automatic Generation Control;
•
Operating Reserve;
•
Contingency Reserve;
•
Reactive power; and
•
Black Start
For each type of non-mandatory Ancillary Service, HTSO would from time to time identify a
need - perhaps on a regional basis - and open contracts for bidding, and select the least cost
tender. However, for as long as PPC dominates the industry, the prices paid by HTSO for
such contracts would be cost-regulated. If there were some profit component in those
regulated prices, then that would also be determined on some standard regulatory basis.
Independent generators would choose whether or not to sign these regulated contracts and
in the long-run it is envisaged that contract prices would be set by competitive tender.
For mandatory Ancillary Services that HTSO pays for, HTSO would sign contracts with
generators and the prices paid by HTSO for such contracts would also be cost-regulated.
Participants with agreements to provide Ancillary Services declare their capability to
provide each contracted Ancillary Service by 12:00 of the day immediately preceding the
Dispatch Day. It is the responsibility of each Participant to ensure that such declarations
comply with the terms of its Ancillary Service Agreements.
When HTSO determines the Generation Schedule for the following Dispatch Day, it makes
an initial selection of hour-to-hour providers of energy and Ancillary Services from those
sources available, adhering to the principles of a least-cost and security constrained
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