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Vice President, Markets Development
September 2002 ISO New England Inc. Massachusetts Restructuring Roundtable ISO New England Perspectives on the FERC SMD NOPR Dave LaPlante Vice President, Markets Development September 13, 2002
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New England Standard Market Design
Standard Market Design (SMD) is a major revamp of the current wholesale electricity market in New England Establishes congestion management/multi-settlement system in New England Locational Prices more accurately reflect cost of power delivery and value resources in specified areas Day-ahead settlement provides market certainty Cost effective approach to complete market redesign SMD FTR’s fully consistent with CRR’s in SMD NOPR
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New England Standard Market Design Consistent With FERC SMD
September 2002 ISO New England Inc. New England Standard Market Design Consistent With FERC SMD ? ? ? ? ? ?
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Key Issues for New England
Governance Transmission Planning and Cost Allocation Resource Adequacy Load Response
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Governance ISO-NE supports core principles in NOPR
Independent Board of Directors; accountable to FERC ISO-NE believes stakeholders should NOT have a hand in electing Board members Regional variation should be allowed Board meetings should be closed Commission should allow latitude as long as independence and reporting to FERC criteria is met
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Transmission Planning & Cost Allocation
FERC has defined the Northeast as planning region New England’s planning process (RTEP), the envisioned NERTO process (NSP) are consistent with the NOPR position States should play advisory role in developing pricing mechanisms for needed expansion. Currently, cost of reliability and system benefit upgrades socialized in New England FERC proposes 138 kV to 345 kV and above threshold ISO-NE feels 138 KV could be local and 345 is more appropriate FERC has expressed interest in a “cost causation” approach A default funding mechanism is needed to assure that projects can move forward
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Resource Adequacy ISO supports:
Forward-looking requirement Assurances that constructed capacity can be delivered Penalties for failure to meet obligation RSAC oversight at the regional level Final rule should codify principles and allow regional variation Load shifts under retail access must be recognized RSAC jurisdiction should be clearly outlined
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SMD and Seams Elimination
Key objective is to standardize markets to reduce seams Seams are affected by operating protocols/practices To eliminate seams, additional detail on transaction protocols between ITPs may be needed Scheduling frequency Data exchange Transaction evaluation methods
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NERTO addresses regional differences and Preserves New England Priorities
Balanced independent governance structure Prudent implementation, no risk to power supply Future NERTO Board adopts “no net harm” standard to protect smaller regions from cost shifting Fairly allocates transmission upgrade costs
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Load Response Demand response should be built into market design
Price transparency and rules that accommodate characteristics of demand response resources are necessary Eliminate retail restrictions that prevent demand response resources from participating effectively in wholesale markets Resolve technical measurement and metering issues Encourage development of demand response technology to enable participation of demand response in the energy markets
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September 2002 ISO New England Inc. In Conclusion ISO New England is supportive of FERC’s Standard Market Design SMD 1.0 (New England’s SMD; 3/1/03) is consistent with FERC’s SMD ISO suggests RTO/ITP Business Practices enhancements Governance Transmission Cost allocation Resource adequacy
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