Re: FERC Orders ,
 In regard to the market monitoring issue below, this effectively adopts NY'=
s=20
circuit breaker proposal for mitigation.  FERC's approval leaves little hop=
e=20
to overturn this in NY and makes it likely that similar measures will be=20
adopted in other markets.  This is not a good development.  It entrenches=
=20
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=20
Ader/HOU/EES@EES, Edward D Baughman/Enron@EnronXGate, Joe=20
Gordon/Enron@EnronXGate, Janelle Scheuer/Enron@EnronXGate, mbrown9@enron.co=
m,=20
Mark Bernstein/HOU/EES@EES, John Llodra/Corp/Enron@ENRON, George=20
Wood/Corp/Enron@Enron, Paul J Broderick/HOU/ECT@ECT, Jason=20
Thompkins/Enron@EnronXGate, Mason Hamlin/HOU/ECT@ECT, Robert=20
Stalford/NA/Enron@Enron, Tom May/Corp/Enron@Enron, Gautam Gupta/HOU/ECT@ECT=
,=20
Narsimha Misra/NA/Enron@Enron, Steve Montovano/NA/Enron@Enron, Garrett=20
Tripp/TOR/ECT@ECT, Berney C Aucoin/HOU/ECT@ECT, Jason=20
Thompkins/Enron@EnronXGate, Rob Wheeler/Enron@EnronXGate, Jim=20
Meyn/NA/Enron@Enron, Aleck Dadson/TOR/ECT@ECT, Daniel=20
Allegretti/NA/Enron@Enron, Pearce W Hammond/HOU/EES@EES, Joe=20
Hartsoe/Corp/Enron@ENRON, Donna Fulton/Corp/Enron@ENRON, Howard=20
Fromer/NA/Enron@Enron, Kathleen Sullivan/NA/Enron@ENRON, Tom=20
Hoatson/NA/Enron@Enron, Thane Twiggs/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT,=
=20
Sarah Novosel/Corp/Enron@ENRON, Christi L Nicolay/HOU/ECT@ECT, James D=20
Steffes/NA/Enron@Enron, Linda Robertson/NA/Enron@ENRON, Richard=20
Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron, Charles=20
Decker/HOU/EES@EES
cc: =20

Subject: FERC Orders

The following are a few summaries of recent New England orders.  Please let=
=20
us know if you have any questions.

Sarah

FERC Approves NEPOOL's Three-Part Bids

On April 25, FERC approved NEPOOL=01,s proposal to implement a system where=
=20
generators can submit three-part supply offers consisting of a start-up=20
price, an hourly no-load price, and an incremental energy price.  NEPOOL al=
so=20
proposed that when a supplier=01,s total revenues over a day from the energ=
y and=20
operating reserves markets were less than its total bid costs, the shortfal=
l=20
would be paid to the supplier as net commitment period compensation (NCPC)=
=20
uplift.  There was disagreement within NEPOOL as to who will pay these upli=
ft=20
costs.

In approving NEPOOL=01,s three-part bid system, FERC finds that the system =
is=20
consistent with the policies in place in New York and PJM.  With regard to=
=20
NCPC uplift cost allocation, FERC finds that NEPOOL=01,s exiting method of=
=20
allocating NCPC uplift costs broadly, based on electrical load, is=20
appropriate since it is difficult to determine who causes what amount of=20
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=20
discussion about the rules for disclosure of bidding and other data gathere=
d=20
by the ISO.  Braintree had argued that FERC should require public disclosur=
e=20
of bidding and other data in order to allow NEPOOL participants to monitor=
=20
the actions of others.  FERC rejected Braintree=01,s arguments, finding tha=
t=20
FERC=01,s rules strike an appropriate balance between the need to disclose =
as=20
much information as possible and the desire to avoid disclosure requirement=
s=20
that will make it more difficult for the ISO to obtain information from=20
market participants in the first place.  FERC states that because data=20
collection is critical to the ISO=01,s ability to monitor the NEPOOL market=
s, it=20
does not want to take action that would impede the ISO=01,s ability to coll=
ect=20
this information.

Information Policy

NEPOOL submitted a March 5, 2001 request for revisions to NEPOOL=01,s=20
Information Policy, to be effective May 5, 2001, which permits FERC to obta=
in=20
NEPOOL Participant confidential information directly from ISO-NE.  On April=
=20
25, 2001, FERC issued an order approving the filing.  FERC stated that ISO-=
NE=20
should be able to turn over confidential information to FERC without first=
=20
being required to notify the affected member of receipt of a request for=20
information.  However, the Commission notes that the information given to=
=20
FERC will be treated confidentially by FERC until FERC rules otherwise, and=
=20
those Participants' whose information is given to FERC will retain the=20
opportunity to oppose release of that information to the general public=20
before FERC makes the information public.

Market Monitor Information Collection

ISO filed revised procedures intended to give ISO the authority to monitor=
=20
for generator physical and economic withholding as a way to raise prices. =
=20
Under the revised procedures, a reference price is calculated for each 10MW=
=20
block for each generating unit.  The specific reference price is an average=
=20
of in-merit bids over the last 30 days.  ISO will investigate all bids that=
=20
deviate significantly from the reference price. =20

Under the ISO's proposed procedures, prospective mitigation will occur if I=
SO=20
determines that the bid will have a significant effect on the relevant mark=
et=20
clearing price or uplift payment and the generator cannot adequately justif=
y=20
why its bid is not anti-competitive.  If a bid is mitigated, ISO will=20
substitute the generator=01,s reference price as its default bid.  ISO will=
=20
implement these new mitigation measures on July 1.  ISO also proposed to=20
release bid data after a 3 months delay (FERC previously ordered ISO to=20
release bid data after a 6 month delay).

Many generators opposed the procedures; Braintree argued they do not go far=
=20
enough.  On April 26, FERC accepted ISO=01,s changes, finding that they do =
not=20
give ISO too much discretion and are consistent with NYISO mitigation=20
procedures.  FERC rejected ISO=01,s proposal to release data 3 months=20
after-the-fact and directed ISO to wait 6 months before release.
sarah.novosel@enron.com