Reissuance of ECA20000907A

What follows is a memorandum from William J. Museler to me invoking the
Temporary Extraordinary Procedures and requesting me to reissue ECA20000907A.
Immediately following the memorandum is the ECA itself. It now carries the
number ECA20001208A. The memorandum and the ECA are also being posted on the
OASIS.

MEMO

Date: December 8, 2000

From: William J. Museler, President & Chief Executive Officer

To: Steven J. Balser, Manager of Market Monitoring and Performance
James H. Savitt, Market Monitor

Re: Extraordinary Corrective Action to Address a Market Design Flaw:
HAM Transactions Failing Checkout (ECA 20001208A; re-issuance of ECA
20000907A)

Thank you for the presentation of the Market Monitoring and Performance
Unit and the Market Advisor regarding the progress that has been made with
the
Market Participants in addressing the market design flaw concerning import
and
export transactions, including wheel-through transactions, that fail
the
check-out procedure between the completion of BME and the SCD operating
hour. I
am pleased that the Business Issues Committee gave unanimous support to
the
NYISO to re-issue ECA 20000907A until the Market Participants can consider
and
approve, and the NYISO can implement, a tariff change required to
permanently
address the Market Design Flaw.

As stated in my Memorandum to you of September 6, 2000, I agreed with your
conclusion that the conduct identified at that time constituted a

?Market Design
Flaw? as defined in Attachment Q to the ISO OATT, Temporary
Extraordinary
Procedures for Correcting Market Design Flaws and Addressing
Transitional
Abnormalities (the ?TEPs?). As further stated in that Memorandum, I agreed
with
your analysis that prices produced by exploiting this Market Design Flaw
would,
absent appropriate action, remain at levels different from what would
otherwise
occur during periods of efficient competition.

I have now determined, based on consultations with ISO Staff and the
support of the Business Issues Committee, that it is appropriate to maintain
in
effect the corrective measures adopted as ECA 20000907A while consultation
and
cooperation with the Market Participants and jurisdictional agencies is
on-going
to develop and implement appropriate rules or rule changes in accordance
with
the ISO Agreement.

Please re-issue the text of the Extraordinary Corrective Action (?ECA?) and
post it on the OASIS, for implementation effective at the expiration of
ECA
20000907A. The ECA shall be effective for a period of ninety (90) days.

William J. Museler, President and CEO
New York Independent System Operator

cc: Market Participants via OASIS

New York Independent System Operator

Extraordinary Corrective Action 20001208A:

Market Design Flaw Regarding HAM Transactions Failing Checkout

Applicability

This Extraordinary Correction Action (ECA) shall apply to:

? Import and export transactions;
? that are scheduled for an operating hour in the Hour-Ahead Market (HAM)
by
the Balancing Market Evaluation (BME); and
? that fail checkout for reasons within the control of the Market
Participant, or that are cancelled at the request of said Market Participant.

Wheel-through transactions shall be treated as both an import and an export
transaction, and the relevant Market Participant shall be billed the sum of
both
financial impacts, as provided below. This ECA shall not apply to import,
export, or wheel-through transactions that fail checkout due to NYISO error or
action, or neighboring control area operator error or action.

Rationale

Import Transactions: During the HAM resolution, BME reduces commitments for
energy resources within NYCA to accept scheduled import transactions
at a
specific proxy bus indicated by the Market Participant. Where the
scheduled
import transaction fails checkout following BME, the real-time energy price
at
the proxy bus may be elevated above the HAM price due to the failed
import
transaction. The difference between the real-time price and the BME price
at
that proxy bus is currently charged to all purchasers in the real-time
market.
Under this ECA, this amount (when positive), multiplied by the number
of
megawatts of the transaction for that hour, shall be billed to the
Market
Participant that scheduled the failed import transaction as the financial
impact
of causing the failure to complete checkout of the transaction.

Export Transactions: During the HAM resolution, BME makes commitments for
energy resources to supply scheduled export transactions up to the
purchase
price indicated by the Market Participant at the appropriate proxy bus.
Where
the scheduled export transaction fails checkout following BME, the
real-time
energy price at the proxy bus may be depressed below the HAM price due to
the
failed export transaction. The difference between the BME price and
the
real-time price at that proxy bus is currently charged to all loads as part
of
Schedule 1 costs. Under this ECA, this amount (when positive), multiplied
by
the number of megawatts of the transaction for that hour, shall be billed to
the
Market Participant that scheduled the failed export transaction as the
financial
impact of causing the failure to complete checkout of the transaction.

Wheel-Through Transactions: During the HAM resolution, BME includes
scheduled wheel-through transactions up to the transmission congestion cost
that
equals the decremental bid indicated by the Market Participant. Where
the
scheduled wheel-through transaction fails checkout following BME, the
real-time
energy price at both the import and export proxy busses may be elevated
or
depressed, respectively, due to the effects on transmission congestion of
the
failed wheel-through transaction. Under this ECA, the effects of the import
and
export portions of the failed wheel-through transaction will be
calculated
separately, as though they were separate failed transactions. The sum of
those
impacts shall be billed to the Market Participant that scheduled the
failed
wheel-through transaction as the financial impact of causing the failure
to
complete checkout of the transaction.

Implementation Rules

1. An External Transaction for the delivery of energy to the NYCA at an
external Proxy Generator Bus that is scheduled in BME but for which no energy
is
delivered to the NYCA in real-time, will be settled by the scheduling entity
selling the amount of energy scheduled in BME into the LBMP Market at the
scheduling entity?s BME Bid Price, and buying the energy that was not
delivered
from the LBMP Market at the Real-Time LBMP prevailing at the external Proxy
Generator Bus. No payment will be required of the scheduling entity if it is
shown that the External Transaction was properly scheduled in each Control
Area
and the energy was not delivered due to an error or action by the NYISO or the
delivering Control Area. No payment will be required of, or made to the
Market
Participant if the Real-Time LBMP at the external Proxy Generator Bus is lower
than the BME Bid Price of the entity that failed to deliver scheduled energy.

2. An External Transaction for the receipt of energy from the NYCA at an
external Proxy Generator Bus that is scheduled in BME but for which no energy
is
received from NYCA in real-time, will be settled by the scheduling entity
buying
the amount of energy scheduled in BME from the LBMP Market at the scheduling
entity?s BME Bid Price and selling the energy that was not taken into the LBMP
Market at the Real-Time LBMP at the external Proxy Generator Bus. No payment
will be required by the scheduling entity if it is shown that the External
Transaction was properly scheduled in each Control Area and the energy was not
taken by the scheduling entity due to an error or action by the NYISO or the
receiving Control Area. No payment will be required of, or made to the Market
Participant if the Real-Time LBMP at the external Proxy Generator Bus is
higher
than the BME Bid Price of the entity that failed to take scheduled energy.

3. An External Transaction for the delivery of energy to the NYCA at one
external Proxy Generator Bus and the delivery of energy from the NYCA at a
different external Proxy Generator Bus that is scheduled in BME but for which
no
energy is delivered to or received from the NYCA in real-time, will be settled
by applying rules 1 and 2 of this ECA separately to the failed delivery of
energy to the import Proxy Generator Bus and the failed receipt of energy at
the
export Proxy Generator Bus, and summing the total of the two amounts for
payment
by the scheduling entity. No payment will be required by the scheduling
entity
if it is shown that the External Transaction was properly scheduled in each
Control Area and the energy was not taken by the scheduling entity due to an
error or action by the NYISO or the delivering or receiving Control Area. No
payment will be required of, or made to the Market Participant for the import
or
the export portion of the External Transaction if no payment would have been
required had that portion of the transaction been a separate transaction under
rule 1 or 2 of this ECA.

Issued: December 8, 2000, 3:00 p.m.
Effective: December 8, 2000, Operating Hour Beginning 0000