RE: RTOs and Market Monitoring

I am worried if we give the MM "penalty" ability - especially before the fact. This feels alot like the NYISO implementing some market remedies. FERC can act quickly to abuse if it is found.

Jim

-----Original Message-----
From: Novosel, Sarah
Sent: Wednesday, August 22, 2001 8:51 PM
To: Shapiro, Richard; Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Alvarez, Ray; Fulton, Donna; Roan, Michael; Maurer, Luiz; Connor, Joe; Montovano, Steve; Migden, Janine; Stroup, Kerry; Mara, Susan; Comnes, Alan; Walton, Steve; Hoatson, Tom; Fromer, Howard; Allegretti, Daniel; Guerrero, Janel; Perrino, Dave; Staines, Dan; Dadson, Aleck
Subject: RE: RTOs and Market Monitoring

Some additional issues we're hearing in the Northeast:

1. Some people think the MM should be a separate entity -- a separate company/LLC/corp that monitors everyone, including the RTO. We have not taken a position on this either way. Others are pushing this a lot.

2. Some people have advocated that the MM have section 205 rights. We have opposed this.

3. Christi, with regard to your example of the MM having "penalty" authority, I agree with your example but would be careful in regarding this type of MM authority has "penalty" authority. I see this more as implementing a FERC order, and we don't want to go down the slippy slope of saying that some types of "penalties" may be appropriate.

Sarah

-----Original Message-----
From: Shapiro, Richard
Sent: Tue 8/21/2001 6:40 PM
To: Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Novosel, Sarah; Alvarez, Ray; Fulton, Donna; Roan, Michael; Maurer, Luiz; Connor, Joe; Montovano, Steve; Migden, Janine; Stroup, Kerry; Mara, Susan; Comnes, Alan; Walton, Steve; Hoatson, Tom; Fromer, Howard; Allegretti, Daniel; Guerrero, Janel; Perrino, Dave; Staines, Dan; Dadson, Aleck
Cc:
Subject: RE: RTOs and Market Monitoring

Agree with Christi.

-----Original Message-----
From: Nicolay, Christi L.
Sent: Tuesday, August 21, 2001 6:18 PM
To: Steffes, James D.; Shapiro, Richard; Robertson, Linda; Novosel, Sarah; Alvarez, Ray; Fulton, Donna; Roan, Michael; Maurer, Luiz; Connor, Joe; Montovano, Steve; Migden, Janine; Stroup, Kerry; Mara, Susan; Comnes, Alan; Walton, Steve; Hoatson, Tom; Fromer, Howard; Allegretti, Daniel; Guerrero, Janel; Perrino, Dave; Staines, Dan; Dadson, Aleck

Subject: RTOs and Market Monitoring

The structure of an independent market monitor is arising in the RTO proceedings. These are some thoughts:

Market monitor should have the ability to monitor the activities of the RTO and the markets. For example, if the RTO is a transco, it is appropriate for the MM to review whether the RTO is doing something potentially problematic in planning, ATC calcs, etc.
MM should only have the ability to recommend changes to market structure, possible penalties, etc. MM should not have the ability to issue a penalty to any one without first going to FERC. It is possible that the MM could ask for FERC pre-approval to issue "penalties" or remedies for certain conduct. The example that comes to mind is the $1000 price cap in PJM. It has been approved at FERC and if someone bids above it, the MM could reduce the bid to $1000 without going to FERC again.
MM has no authority that FERC does not have. (I have heard some (outside of Enron) people state that the MM should have authority to do things that FERC could not do.)
Market participants should always retain their right to go to FERC before providing documents in response to an MM request and should retain right to go to FERC even if there is an arbitration clause (should not be required to agree to binding arbitration).
Ultimately, FERC staff could provide the MM function.

Let me know any comments ASAP please (since I have comments due on this Friday for the SE RTO). Thanks.