Working Paper on Standardized Transmission Services and Wholesale Electric Market Design Alice Fernandez, Derek Bandera, Connie Caldwell, Jignasa Gadani, Mark Hegerle, Udi Helman, David Mead, Deborah Ott, Elizabeth Rylander, Roland Wentworth, David Withnell, Andrea Wolfman

What the Paper Does Policy framework to be used in developing NOPR Policy framework to be used in developing NOPR Preliminary decisions subject to further comment Preliminary decisions subject to further comment Does not address scope and governance issues Does not address scope and governance issues

Outline of the Paper Updated single transmission tariff Updated single transmission tariff New flexible transmission service New flexible transmission service Energy and operating reserves markets Energy and operating reserves markets Market power monitoring and mitigation Market power monitoring and mitigation

Updated Single Tariff All transmission service under one tariff All transmission service under one tariff New OATT updated for SMD and comparability New OATT updated for SMD and comparability Phased implementation Phased implementation First phase-interim changes to improve the OATTFirst phase-interim changes to improve the OATT Second phase- SMDSecond phase- SMD

New Transmission Service New network service available to all customers New network service available to all customers Access to all sources and sinks Access to all sources and sinks Price certainty with transmission rightsPrice certainty with transmission rights Congestion charges w/o transmission rightsCongestion charges w/o transmission rights Locational marginal pricing (LMP) for congestion management Locational marginal pricing (LMP) for congestion management Transmission service scheduling integrated with energy markets Transmission service scheduling integrated with energy markets Network access charge to recover embedded costs Network access charge to recover embedded costs

Energy Markets Day-ahead market Day-ahead market Voluntary, bid-based, security- constrainedVoluntary, bid-based, security- constrained Financially bindingFinancially binding Real-time market Real-time market Bid-based, security constrainedBid-based, security constrained Used to settle all imbalancesUsed to settle all imbalances Supply and demand resources participate Supply and demand resources participate

Operating Reserves Markets for operating reserves Markets for operating reserves Bilateral arrangements and self- schedulesBilateral arrangements and self- schedules Bid-based day-ahead and real time marketsBid-based day-ahead and real time markets Operated together with energy and transmission markets Operated together with energy and transmission markets

Monitoring and Mitigation Market rules should enhance competition Market rules should enhance competition Preventative mitigation measures built into market rules Preventative mitigation measures built into market rules Role of the Market Monitoring Unit Role of the Market Monitoring Unit Independent of RTO managementIndependent of RTO management Focus on withholding and market efficiencyFocus on withholding and market efficiency

State Participation in RTO Activities Formal role for state participation in RTO process Formal role for state participation in RTO process Advisory committees Advisory committees Rate issues Rate issues

System Security OATT will state requirement to comply with appropriate standards for system security and reliability OATT will state requirement to comply with appropriate standards for system security and reliability Recommendations of President’s Critical Infrastructure Protection Board Recommendations of President’s Critical Infrastructure Protection Board Standards may be developed by other organizations Standards may be developed by other organizations

Next Steps Release working paper Release working paper Comments on working paper – 3/27 Comments on working paper – 3/27 Address allocation of embedded costs and transmission rights Address allocation of embedded costs and transmission rights Address implementation issues Address implementation issues Staff strawman SMD tariff Staff strawman SMD tariff NOPR with tariff by summer NOPR with tariff by summer