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Enron Mail |
What follows is a memorandum from William J. Museler to me invoking the
Temporary Extraordinary Procedures and requesting me to reissue ECA20001006B. Immediately following the memorandum is the ECA itself. It now carries the number ECA20001208B. 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: External Proxy Bus Prices During Transmission Constraints (ECA 20001208B; re-issuance of ECA 20001006B) 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 in the Real-Time energy markets concerning external proxy bus prices during transmission limitation periods. I am pleased that the Business Issues Committee gave unanimous support to the NYISO to re-issue ECA 20001006B 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 October 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 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 20001006B 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 20001006B. 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 20001208B Market Design Flaw Regarding Real-Time External Proxy Bus Prices Applicability This Extraordinary Correction Action (ECA) shall apply when the following two conditions are met: ? Transactions are proposed for an operating hour at an External Proxy Bus; and ? The Balancing Market Evaluation (BME) resolves transmission congestion constraints at the External Proxy Bus for the operating hour, resulting in transmission congestion charges in the Hour-Ahead Market (HAM). Rationale When BME solves for proposed transactions at an External Proxy Bus, and the total proposed transactions exceed the available transfer capacity, BME will resolve binding constraints at that External Proxy Bus using the decremental bid price or the sink price cap bid indicated by the Market Participants proposing the transactions. In the operating hour, the transfer capability and scheduled flows at the External Proxy Bus are fixed, and SCD is not required to resolve for transmission congestion costs associated with the scheduled transactions. Therefore, in operating hours where an External Proxy Bus constraint is binding, Real-Time prices at the External Proxy Bus will be significantly different from the HAM prices, due to the absence of transmission congestion costs being reflected in the Real-Time price. Currently, scheduled HAM transactions at an External Proxy Bus are settled at the Real-Time price at the External Proxy Bus during the operating hour, and the import transactions receive a Bid Production Cost Guarantee for the deviation in price between the HAM and Real-Time price. The Market Design Flaw in the current process is that transmission congestion constraints present when BME schedules HAM transactions are not reflected in the Real-Time settlement prices. Under the rules set forth below, the transmission congestion costs present in BME will be reflected in the SCD prices, so that a Market Participant proposing a HAM transaction will be charged the full cost of supplying that transaction, up to the decremental bid cost or sink price cap bid indicated by the Market Participant at the time the HAM transaction was proposed. Implementation Rules 1. These rules apply in hours that HAM import or export transactions are constrained in BME at an External Proxy Bus (EPB) by a transmission limitation or Desired Network Interchange (DNI) limit (an ?EPB Limit?). 2. For each hour in which an EPB Limit constrains net imports to NYCA from an External Proxy Bus in the HAM, the Real-Time settlement price at that External Proxy Bus will be the lesser of the real-time LBMP or the BME price at that External Proxy Bus. 3. For each hour which an EPB Limit constrains net exports from NYCA to an External Proxy Bus in the HAM, the Real-Time settlement price at that External Proxy Bus will be the greater of the real-time LBMP or the BME price at that External Proxy Bus. Issued: December 8, 2000, 3:00 p.m. Effective: January 10, 2001, Operating Hour Beginning 0000
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