November 7, 2012 Mc meeting

1. November 7, 2012 Mc meeting Robert B. Burke Email: rburke@iso-ne.com PRD Full Integration Conforming Changes and Fixes

2. Background • On April 13, 2012, the ISO filed proposed changes to the transition period rules for demand response (reference April  10 , 2012 MC presentation, agenda item 4). The rule changes addressed: • RTEG Demand Reduction Value • Transition Period Metering Requirements • Baselines & Baseline Adjustments • Similar changes were needed for the full integration rules, but time constraints required the ISO to limit the scope of the changes to those affecting the transition period only. • On May 29, 2012, the Commission accepted the proposed transition period rule changes.

3. Background • The ISO has assessed the full integration rules in the context of the transition period changes and has determined the following changes are required to be carried forward: • RTEG Metering Requirements • Baseline & Baseline Adjustment Rules • Real-Time Emergency Generation (RTEG) • Demand Response Resource (DRR) • The ISO also identified that clarification to the capacity market rules is needed regarding the application of the Distribution Loss Factor • Some clarifying language changes will be made to both Appendix E and Section 13.

4. Effective Dates • Transitional PRD (TPRD) effective June 1, 2012 • Specific definitions apply (I.2.2) • Baseline methodology (III.8) • Capacity Market Participation (III.13) • Registration & Energy Market Participation (III.E) • PRD Full Integration (PRD FI) • Specific definitions apply (I.2.2.) • Effective June 1, 2017 • Baseline methodology (III.8) • Effective June 1, 2017 • Capacity Market Participation (III.13) • Effective January 15, 2013 • Registration & Energy Market Participation (III.E) • Effective June 1, 2017

5. Complexity • Section III.13 PRD FI refer to: • Uses defined terms for TPRD • Uses defined terms for PRD FI • Section III.8 for TPRD • Section III.E for TPRD • Section III.8 for PRD FI • Section III.E for PRD FI • Need all definition to be effective • Need both versions of III.8 and III.E in tariff

6. Solution • Definitions two versions that are date sensitive • For Capacity Commitment Periods commencing before June 1, 2017 • For Capacity Commitment Periods commencing on or after June 1, 2017 • Incorporate two versions of III.8 • III.8A for TPRD Baseline • For Capacity Commitment Periods commencing before June 1, 2017 • III.8B for PRD FI • For Capacity Commitment Periods commencing on or after June 1, 2017 • Incorporate two versions of III.E • III.E1 for TPRD Baseline • For Capacity Commitment Periods commencing before June 1, 2017 • III.E2 for PRD FI • For Capacity Commitment Periods commencing on or after June 1, 2017

7. Section I.2.2 Definitions • The August 19, 2011 filings • Had several new definitions that become effective June 1, 2017. • Had several definitions that changed effective June 1, 2017 • Other effective date changes require these definitions to be incorporated into the tariff now. • These definitions are: Demand Response Asset Demand Response Resource Demand Response Resource Notification Time Demand Response Resource Ramp Rate Demand Response Resource Startup Time Maximum Reduction Minimum Reduction Minimum Reduction Time Minimum time Between Reductions

8. Section III.8 Baseline • There are two versions of Section III.8 • One for transitional PRD – effective now • One for full integration PRD – needed 2013 • III.8A • Effective for CCP before June 1, 2017 • III.8A.3(b) • Correct typo • III.8A.4.2 • Correct typo

9. Section III.8B Baseline • Effective for CCPs commencing on or after June 1, 2017 • Carry forward RTEG changes from TPRD April 13, 2012 filing • Clarify Baseline calculation • Prior day • Present day • Next day • Clarify more than seven of the prior 10 days

10. RTEG Change Carry Forward • Carry the RTEG baseline and baseline adjustment language filed on April 13, 2012 and approved by the FERC into the version of MR1 Section 8 that is applicable under full integration • Maintain from transitional PRD that RTEG performance can be determined based on its Average Hourly Load Reduction or its Average Hourly Output depending on its metering configuration (relates to prior slide) • Meter data from a RTERG dispatched for an audit or OP-4 would not automatically be used to compute the asset’s baseline for the next day of the same day type (7 of the prior 10 applies) • The start-up time for RTEG (if using a baseline) must be specified for use in the baseline adjustment

11. Section III.13 FCM • III.13 includes TPRD and PDR FI • Effective 1/15/2013 • RTEG Metering Requirement carry forward the transitional change allowing RTEG to be metered either at the Retail Delivery Point or at the RTEG output • Very specific limitations applicable • Otherwise both RTEG output and Retail Delivery Point for facility must be metered • Requirement III.13.1.4.3.2 • Updated references to III.8A, III.8B, III.E1, and III.E2 • III.13.1.4 – deal with early commercial date for Demand Response Capacity Resource • III.13.6.1.5.4.2 – carry asset audits into PRD FI

12. Section III.13 FCM (continued) • For all active demand response clarify that a Demand Response Capacity Resource with an early COD would be considered a Real-Time Demand Response Resource • III.13.7.1.5 • Back out change eliminating transmission factor to capacity under PRD FI • Replace the terms “online” and “offline” for demand resources with “reducing demand” and “not reducing demand”

13. Appendix E • Define sections E1 and E2 • Identify their effective dates • Capitalize the term Retail Delivery Point Appendix E2 • III.E2.6 – Carry forward Threshold Price changes April 13, 2012 filing

14. Schedule