1. Competitive Retail Electricity Markets in Areas Outside of Regional Transmission Organizations
Vanus J. Priestley
Philip R. O’Connor. Ph.D.
Constellation NewEnergy, Inc.
April 2, 2004

2. Constellation NewEnergy Competes in Virtually Every Competitive Retail Market
CNE Provides over 8000 MW of Electricity and 250 BCF of Natural Gas to Over 8000 Commercial and Industrial Customers in the following States/Regions
California
Connecticut
Delaware
Washington D.C.
Illinois
Maine
Massachusetts
Michigan
New Hampshire
New Jersey
New York
Ohio
Ontario
Oregon
Pennsylvania
Rhode Island
Texas
Virginia

3. Competitive Retail Markets and Regional Transmission Organizations
PJM
Pennsylvania
New Jersey
Maryland
Rhode Island
Virginia
Delaware
D.C.
NYISO
New York
NE RTO/NEPOOL
Massachusetts
Maine
Vermont
New Hampshire
CAL-ISO
California
RTO West
Oregon
OIMO
Ontario
ERCOT
Texas
No RTO/ISO
(Moving toward MISO/PJM West)
Illinois
Ohio
Michigan

4. Regional Transmission Organizations are Beneficial, But Not Compulsory
RTO’s Eliminate Many Problems That Occur in Competitive Retail Markets
RTO’s are Independent, without a financial stake in market outcomes
RTO’s improve the competitive wholesale environment
Competitive Retail Markets Can Work Without an RTO
No need to wait for the RTO
When RTOs are implemented, the transition can be Seamless

5. Retail Competition in El Paso
Market Size is Sufficient
Over 200,000 Residential Customers
Over 20,000 Commercial and Industrial Customers
Level of Wholesale Market Competition
El Paso Area can attract more Wholesale Competitors
Capacity Auctions will create liquidity

6. Open Access Transmission Tariffs Need Improved Flexibility
Conventional OATTs are fine for Bulk, Long-term Wholesale Transactions
Competitive Retail Markets require allowances for Smaller Loads, and Shorter Terms and Rapid Transaction Response Time
REPs need the ability to procure the discreet components necessary to serve retail load in small increments and for short time periods

7. OATT Problems Transmission Procurement Process Ancillary Services
Must be more flexible in terms and procurement with a quicker close time for transactions
Facilities Impact Studies can normally be waived
Ancillary Services
Market Based Pricing is optimal but not required
Balancing Energy Bands need more flexibility
Contracts Must be able to Substitute for Units
Energy Contracts must qualify as Network Resources

8. NON-RTO OPEN ACCESS IN NORTHERN ILLINOIS
ComEd, the utility serving Chicago and Northern Illinois will soon enter PJM.
Since October 1999 retail open access has operated without problems on the basis of ComEd’s FERC OATT.
Important OATT terms were agreed in1999 to accommodate retail access
The ComEd approach is replicable.

9. ANCILLARY SERVICES MEET RETAIL ACCESS NEEDS
Ancillary Service Prices set on basis of cost as a regulated monopoly service.
Energy Imbalance service charges are set to cover costs as well as adders to encourage good faith scheduling.
Ancillary services revenue part of “wires” utility revenue requirement.
Retail providers billed monthly.

10. ENERGY IMBALANCE CHARGES: FAIR, NOT PUNITIVE
Energy Imbalance Charge is the price paid by ComEd in that hour. 100% assessed for MWh imbalances less/equal to +/- 2% (2MW min).
Non-utility power providers pooled to set net hourly imbalance >100 MW subject to 10% adder to EIC for provider on “wrong” side.
25% adder to EIC for excess MWh if 25% out of balance for 10% or more hours.
Providers can trade imbalances if they wish.

11. POWER CONTRACTS: CAPACITY AND FIRM LD CONTRACTS
With FERC concurrence ComEd has accepted Firm Liquidated Damages contracts as satisfying the need for capacity backed provider power supplies.
Since Oct start of retail access there have been no reliability problems.
Now making the transition to RTO capacity requirements.

12. IN COMED NETWORK TRANSMISSION IS EASY TO GET
Speical “Retail” category on ComEd OASIS site for service queue.
ComEd NITS allows both designated and undesignated resources.
Firm LD counts as designating a system network resource
No transmission studies are required.
FTRs and capacity will be new features with PJM integration of ComEd.