Standard Market Design Proposal

---------------------- Forwarded by Daniel Allegretti/NA/Enron on 03/29/2001
11:06 AM ---------------------------

John Llodra
03/29/2001 10:57 AM
To: NEPOOL Power Trading Group
cc:

Subject: Standard Market Design Proposal

---------------------- Forwarded by John Llodra/Corp/Enron on 03/29/2001
10:59 AM ---------------------------

Customer Service at ISO-NE <custserv@iso-ne.com< on 03/29/2001 09:10:23 AM
To: NEPOOL Participant Committee <npmc@iso-ne.com<
cc:

Subject: Standard Market Design Proposal

Please see the press release at
http://www.iso-ne.com/iso_news/Standard_Market_Design_032901.doc or see the
content of the release below.

The referenced letter to FERC will be posted later today under FERC Filings
/ Congestion Management at
http://www.iso-ne.com/FERC_filings/documents/Index_CMSMSS.html

_____________

ISO New England and PJM Interconnection Propose a
Standard Market Design for Wholesale Electricity Markets

March 29, 2001 - HOLYOKE, MA - Two of the country's leading wholesale
electricity market administrators, ISO New England Inc. and PJM
Interconnection, L.L.C., together with ALSTOM ESCA Corporation, a systems
developer for electric utilities, today announce their intent to formalize
an agreement that will not only standardize their electricity markets, but
will lead, they believe, to the standardization of wholesale electricity
markets across the country.

Today, ISO New England delivered a letter to the Chairman and Commissioners
of the Federal Energy Regulatory Commission (FERC), enclosing a report
concerning its proposed comprehensive wholesale market program that combines
salient features of the PJM market model with elements of its own existing
wholesale market design. The combination would create a standardized
wholesale market structure called the Standard Market Design for wholesale
electricity markets ("Standard Market Design").

ISO New England, ALSTOM ESCA and PJM, acting through its wholly-owned
subsidiary, PJM Technologies Inc., have agreed to proceed with the
negotiation of an agreement where ISO New England will purchase the existing
PJM market design and certain software components from ALSTOM ESCA and PJM.
The two ISOs and ALSTOM ESCA will work together to create a standardized
market design that includes solutions to reserve markets and a common
solution to unit dispatch.

"This new market standard should put into place the necessary market
improvements more quickly and at a reduced cost than if we were to implement
a customized market system for New England," said William W. Berry, Chairman
and Acting CEO of ISO New England. "Now is the time to stop the
experimentation. Ultimately, we hope the Standard Market Design will serve
as the benchmark for wholesale electricity marketplaces across the country,
if not around the world."

"PJM is very excited to further standardize a design for a competitive
wholesale electricity market," said Phillip G. Harris, Chairman and CEO of
PJM. "Along with the progress in the implementation of the PJM West concept,
this initiative will provide an even broader standardized market design."

This approach should further expedite the elimination of trading barriers
across different markets and promote FERC's goal of creating a seamless
marketplace. "We intend to continue to work with the New York ISO on issues
of mutual importance," stated Mr. Berry. "This new market design, together
with our efforts to address the market "seams" and other coordination
issues, will eventually bring the three northeast ISO markets closer
together." ISO New England and the New York ISO will continue to work
together on these issues under a joint board resolution passed on January
16, 2001.

"Because of our geographic location, New York is in the center of the
Northeast markets, with ISO New England, PJM and IMO each on one of our
borders. We support the continued elimination of barriers across Northeast
trading markets to develop a more seamless marketplace where everyone will
benefit," said William J. Museler, President and CEO of the New York
Independent System Operator. "The New York ISO will continue to work with
our neighboring markets to remove barriers to trading across the region and
to move towards larger regional markets."

This proposed market design standard will be developed jointly with
stakeholder input. ISO New England will propose the Standard Market Design
to the New England Conference of Public Utility Commissioners and the New
England Power Pool in a series of meetings next week. Additional meetings
will be conducted in the next few weeks. The Standard Market Design for New
England will be subject to FERC approval.

"Standardization requires consistent and reliable technology to facilitate a
market's efficiency. A market that moderates price fluctuations and
encourages investment based on an expected return is an efficient market --
and efficiency is the key to establishing market liquidity," said Alain
Steven, CEO of ALSTOM ESCA. "In the future, this agreement will be viewed
as a catalyst in establishing more robust electricity markets."

ISO New England Inc. is the not-for-profit corporation responsible for the
day-to-day reliable operation of New England's bulk generation and
transmission systems with an installed capacity of almost 26,000 megawatts.
In addition to operating the bulk power grid, ISO New England is the
administrator of the region's wholesale electricity marketplace and the Open
Access Transmission Tariff on behalf of the New England Power Pool. ISO New
England is based in Holyoke, Massachusetts.

The PJM Interconnection, L.L.C., is an Independent System Operator,
administering the PJM Open Access Transmission Tariff and operating the PJM
Energy Markets and Capacity Markets. PJM currently administers the largest
wholesale electricity market in the world and has a membership of more than
200. It is headquartered in Norristown, Pennsylvania. PJM Technologies, Inc.
is a wholly-owned subsidiary of PJM Interconnection, L.L.C., designed to
respond to market opportunities by bringing cost-effective, reliable
solutions to the energy marketplace. It was created to commercialize PJM's
knowledge capital, experience, and proven success in electric energy
markets, system operations, and applications development.

# # #

For more information about the New York ISO, please call: Steve Sullivan,
Director of Communications, 518-356-7605.