Why Should Retail Customers Care About the MISO Market? WIEG Board Meeting November 8, 2007 WIEG Board Meeting November 8, 2007 Submitted by: Kavita Maini, Principal KM Energy Consulting, LLC

2 Midwest Independent System Operator (MISO) MISO and other Independent System Operators - A result of the Federal Energy Regulatory Commission’s (FERC) Orders and Energy policy Act of 1992 to create a robust, competitive interstate wholesale market for electricity in the hope that a more efficient use of generation and transmission resources will reduce prices paid by electricity consumers

3 Regional Transmission Organizations (RTOs/Independent System Operators (ISOs)

4 Regional Reliability Organizations

5 Size Matters in More Ways than One! Source: MISO Non Profit Ensure Reliability Price Transparency

6 Grey Areas Between Wholesale & Retail RETAILWHOLESALE State CommissionsFERC RROs, ISOs Utilities 1.Reserve Margins 2.Fuel Rules 3.Transmission Exp. 4.Interruptible Rates 5. Socialized /admin. costs RRO= Regional Reliability Organizations ISO = Independent System Operator

7 Objectives of WIEG Participation at MISO Cost avoidance – MISO’s mission User friendly provisions and equitable compensation for demand response – Impact on legacy interruptible rates Effective competition – Market power/impact on energy prices Proper cost allocation – Demand vs. Energy Cost minimization – Socialization of costs associated with market operations, administration costs