Summary of the Wednesday FERC Orders

The FERC orders will not be out until sometime Thursday but here is a boile=
d=20
down version of what we heard from the meeting, the press, and the press=20
release:

FERC Market Monitoring and Mitigation Plan for California

? Approved 2-1 with Massey dissenting
? Imposes mitigation (caps) in R/T in California only during Stage 1/2/3=20
beginning _____ (not clear; assume immediately or soon).
o Applies to all thermal generation with a PGA with ISO (even if not a FER=
C=20
jurisdictional entity)
o All subject generation is paid a single proxy price
o Proxy price is based upon the marginal unit=01,s gas price x heat rate +=
=20
emission adder. (Heat rate determining cap will not longer be pegged at=20
18,000 but will change daily and posted by CAISO)
o Proxy price is determined on a day-ahead basis Still not clear what ga=
s=20
price will be used.=20
o Bids above the proxy are allowed but the seller must justify the cost
? Hydroelectric resources--in-state or out-of-state--are exempt.
? CAISO will still acquire resources outside of the proxy price via OOM cal=
ls
? Silent on exports and expect CAISO to cut exports unless ordered to do=20
otherwise. (However, requirement for CAISO to become a part of a =01&real=
=018 RTO=20
would imply that it must honor firm schedules.)
? All LSE in R/T markets to submit demand bids and to identify load that ca=
n=20
be curtailed at a specified price
? Contingent on CAISO filing a plan to become part of a region wide RTO by=
=20
June 1. I.e., if CAISO does not make an adequate showing, all mitigation=
=20
measures are cancelled.
? Opens an investigation on a subset of transactions. According to Massey=
=20
this band is very narrow.
? The $150 breakpoint and reporting requirements, which were put into effec=
t=20
with the December order, will end with this order.=20
? In all hours (not just emergencies) there is increased market monitoring =
of=20
outages and bidding behavior
? Although the plan is only for California, it seeks comments on a West-wid=
e=20
price mitigation plan.
? Also seeks comments on whether CAISO should impose an adder to address=20
generator unpaid bills.

RTO West:

? RTO West Phase 1 filing (made back in Nov 2000) is accepted.

? TransConnect, a Transco proposed by RTO West's transmission-owning IOUs,=
=20
was also accepted. =20

? Incentive rates allowed if owner separates transmission from the generati=
on.

? Phase 2 filing due December 1. This filing will require tariffs and=20
additional details including how RTO West can become part of a larger=20
West-wide RTO

? Order encourages Canadian utilities to be a part of RTO West