In regard to the market monitoring issue below, this effectively adopts NY's 
circuit breaker proposal for mitigation.  FERC's approval leaves little hope 
to overturn this in NY and makes it likely that similar measures will be 
adopted in other markets.  This is not a good development.  It entrenches 
regulatory manipulation and will serve to dampen volatility.

Tom


From: Sarah Novosel on 05/08/2001 10:04 AM EDT
To: Kevin M Presto/HOU/ECT@ECT, Mark Dana Davis/HOU/ECT@ECT, Jeff 
Ader/HOU/EES@EES, Edward D Baughman/Enron@EnronXGate, Joe 
Gordon/Enron@EnronXGate, Janelle Scheuer/Enron@EnronXGate, mbrown9@enron.com, 
Mark Bernstein/HOU/EES@EES, John Llodra/Corp/Enron@ENRON, George 
Wood/Corp/Enron@Enron, Paul J Broderick/HOU/ECT@ECT, Jason 
Thompkins/Enron@EnronXGate, Mason Hamlin/HOU/ECT@ECT, Robert 
Stalford/NA/Enron@Enron, Tom May/Corp/Enron@Enron, Gautam Gupta/HOU/ECT@ECT, 
Narsimha Misra/NA/Enron@Enron, Steve Montovano/NA/Enron@Enron, Garrett 
Tripp/TOR/ECT@ECT, Berney C Aucoin/HOU/ECT@ECT, Jason 
Thompkins/Enron@EnronXGate, Rob Wheeler/Enron@EnronXGate, Jim 
Meyn/NA/Enron@Enron, Aleck Dadson/TOR/ECT@ECT, Daniel 
Allegretti/NA/Enron@Enron, Pearce W Hammond/HOU/EES@EES, Joe 
Hartsoe/Corp/Enron@ENRON, Donna Fulton/Corp/Enron@ENRON, Howard 
Fromer/NA/Enron@Enron, Kathleen Sullivan/NA/Enron@ENRON, Tom 
Hoatson/NA/Enron@Enron, Thane Twiggs/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Sarah Novosel/Corp/Enron@ENRON, Christi L Nicolay/HOU/ECT@ECT, James D 
Steffes/NA/Enron@Enron, Linda Robertson/NA/Enron@ENRON, Richard 
Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron, Charles 
Decker/HOU/EES@EES
cc:  

Subject: FERC Orders

The following are a few summaries of recent New England orders.  Please let 
us know if you have any questions.

Sarah

FERC Approves NEPOOL's Three-Part Bids

On April 25, FERC approved NEPOOL,s proposal to implement a system where 
generators can submit three-part supply offers consisting of a start-up 
price, an hourly no-load price, and an incremental energy price.  NEPOOL also 
proposed that when a supplier,s total revenues over a day from the energy and 
operating reserves markets were less than its total bid costs, the shortfall 
would be paid to the supplier as net commitment period compensation (NCPC) 
uplift.  There was disagreement within NEPOOL as to who will pay these uplift 
costs.

In approving NEPOOL,s three-part bid system, FERC finds that the system is 
consistent with the policies in place in New York and PJM.  With regard to 
NCPC uplift cost allocation, FERC finds that NEPOOL,s exiting method of 
allocating NCPC uplift costs broadly, based on electrical load, is 
appropriate since it is difficult to determine who causes what amount of 
uplift costs.  The new three-part bid system will take effect July 1, 2001.

FERC Rejects Proposal to Disclose Bidding Information

In an April 13 FERC order of no overall interest to us, FERC includes a 
discussion about the rules for disclosure of bidding and other data gathered 
by the ISO.  Braintree had argued that FERC should require public disclosure 
of bidding and other data in order to allow NEPOOL participants to monitor 
the actions of others.  FERC rejected Braintree,s arguments, finding that 
FERC,s rules strike an appropriate balance between the need to disclose as 
much information as possible and the desire to avoid disclosure requirements 
that will make it more difficult for the ISO to obtain information from 
market participants in the first place.  FERC states that because data 
collection is critical to the ISO,s ability to monitor the NEPOOL markets, it 
does not want to take action that would impede the ISO,s ability to collect 
this information.

Information Policy

NEPOOL submitted a March 5, 2001 request for revisions to NEPOOL,s 
Information Policy, to be effective May 5, 2001, which permits FERC to obtain 
NEPOOL Participant confidential information directly from ISO-NE.  On April 
25, 2001, FERC issued an order approving the filing.  FERC stated that ISO-NE 
should be able to turn over confidential information to FERC without first 
being required to notify the affected member of receipt of a request for 
information.  However, the Commission notes that the information given to 
FERC will be treated confidentially by FERC until FERC rules otherwise, and 
those Participants' whose information is given to FERC will retain the 
opportunity to oppose release of that information to the general public 
before FERC makes the information public.

Market Monitor Information Collection

ISO filed revised procedures intended to give ISO the authority to monitor 
for generator physical and economic withholding as a way to raise prices.  
Under the revised procedures, a reference price is calculated for each 10MW 
block for each generating unit.  The specific reference price is an average 
of in-merit bids over the last 30 days.  ISO will investigate all bids that 
deviate significantly from the reference price.  

Under the ISO's proposed procedures, prospective mitigation will occur if ISO 
determines that the bid will have a significant effect on the relevant market 
clearing price or uplift payment and the generator cannot adequately justify 
why its bid is not anti-competitive.  If a bid is mitigated, ISO will 
substitute the generator,s reference price as its default bid.  ISO will 
implement these new mitigation measures on July 1.  ISO also proposed to 
release bid data after a 3 months delay (FERC previously ordered ISO to 
release bid data after a 6 month delay).

Many generators opposed the procedures; Braintree argued they do not go far 
enough.  On April 26, FERC accepted ISO,s changes, finding that they do not 
give ISO too much discretion and are consistent with NYISO mitigation 
procedures.  FERC rejected ISO,s proposal to release data 3 months 
after-the-fact and directed ISO to wait 6 months before release.