Conference on Standard Market Design Issues Alice Fernandez, FERC Staff January 22-23, 2002

Overview of Conference  Primary objective – increase understanding of existing and proposed market designs  Presentations on existing market designs and those under consideration

Conference Schedule  Day 1-discussion of market designs in the Northeast and Midwest  Day 2 morning - discussion of market designs in the Northwest and Texas  Day 2 afternoon – roundtable discussion to discuss differences and “best practices”

Status of Market Designs  CAISO, ERCOT, ISO-NE, NYISO, and PJM in effect  CAISO staff issued Comprehensive Design Proposal on January 8  ISO-NE adopted PJM market design, in process of implementing

Status of Market Designs  MISO considering long-term market design and congestion management  RTO West considering congestion management proposals

Comparison – Energy Markets PJMNYISOISO-NE SMD MISO D-3 Congestion PricingLMP Day ahead & Real time Yes Self scheduleYes Supply bids3 Part Price responsive demand Some LossesSocializedMarginal Generation AdequacyCapacity Obligation Market Prices

Comparison – Transmission PJMNYISOISO-NE SMD MISO D-3 All under tariff Yes NEPOOL, MEPCO,HQ & Local Yes RightsFinancial Allocation Methodology AssignedAuction Assigned/ Auction PTP Obl.Yes PTP Opt.No Yes FlowgateNo Yes

Comparison – Reserves Markets PJMNYISOISO-NE SMD MISO D-3 RegulationYes Spin2002Yes Non spinNoYesNoTBD 30 minNoYesNoTBD

Market Power Mitigation PJMNYISOISO-NE current MISO D-3 Reliability must run Pre-July 1996 units In city rules Yes Bid screens NoYes, inc. AMP YesTBD Demand response proxy $1,000 bid cap None Generator Bid Rules Yes TBD