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Targeted General Market Power Mitigation Measures Under MR 1, Appendix A

Targeted General Market Power Mitigation Measures Under MR 1, Appendix A. NEPOOL Markets Committee April 23, 2003 Robert Ethier Market Monitoring. Review.

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Targeted General Market Power Mitigation Measures Under MR 1, Appendix A

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  1. Targeted General Market Power Mitigation Measures Under MR 1, Appendix A NEPOOL Markets Committee April 23, 2003 Robert Ethier Market Monitoring

  2. Review • September 20th FERC SMD Order required that the ISO provide further justification of the need for General Market Power Mitigation Measures. • ISO provided this justification October 7th by calculating hours in which there was a pivotal supplier. • December 20th FERC SMD Order denied request for General Market Power Mitigation rules, but opened the door to consider more targeted rules.

  3. December 20th Order • “Therefore, we reject this proposal for Level 1 Mitigation without prejudice to a filing that evaluates any remaining structural problems and a proposal that targets only those suppliers that obtain market power as a result of these structural problems.” Order at Paragraph 28

  4. ISO Response • At January 15th NEPOOL MC, ISO-NE stated that it was evaluating its response to the December 20th Order. • Indicated that there would be no general mitigation measures in effect for SMD Go-Live. • Indicated that we anticipated filing revised General Market Power Mitigation rules prior to Summer 2003. • At March 25 NEPOOL MC, ISO-NE presented 3 options for GMPM; no comments received outside meeting. • Here today to discuss the ISO-NE recommendation.

  5. Problem Statement • While under normal system conditions, the NEPOOL market is workably competitive, under tight conditions pivotal suppliers may choose to exercise market power • This may be expressed through increased energy supply offers, start-up offers, and/or no-load offers • ISO-NE, consistent with past market power mitigation rules, feels that mitigation authority is appropriate in these instances • Challenge is to make proposed rules more targeted

  6. Proposal • Add Pivotal Supplier trigger to previous rules. • Use same conduct/impact test with $100/300% thresholds • Applicable only to suppliers calculated to be pivotal using Residual Supply Index methodology • Supplier is pivotal if at least one MW of capacity required to meet load plus reserve requirements. • Would result in only portion of suppliers evaluated for mitigation in small proportion of hours. • Largest supplier evaluated in 8.3% of hours. • 2nd Largest supplier evaluated in 1.8% of hours. • 3rd Largest supplier evaluated in 1.7% of hours.

  7. Questions and Discussion

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