Presentation on SMD2 Joint BoardMC Meeting

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Presentation on SMD2Joint Board/MC Meeting

• Dr. Mayer Sasson
• Consolidated Edison Company of New York
• on Behalf of the Transmission Owners of New York
• October 21, 2003

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RTS Brings Important Improvements to NYISO Systems

• Co-optimization of energy and ancillary services
  fully meeting the intent of FERCs SMD
• Better price convergence between day ahead
  commitment and real-time commitment and dispatch
• Look-ahead features in RTC and RTD are important
• Improvements in market flexibility, efficiency
  and reduction in uplift
• Multiple transactions per hour
• Two-settlement system for ancillary services
• Real-time market power mitigation
• More robust computer and communications
  infrastructure

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Schedule

• NYISO staff working intensely to maintain
  schedule
• Massive tariff changes released for review during
  the last few weeks
• Market participants have responded with
  concentrated review of scope and tariffs
• Most controversial issue is the Reserve Demand
  Curve (RDC)

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Reserve Demand Curve (RDC)

• NYISO addressed reliability concerns
• Reserve requirements will be met    
• TOs expressed concerns on market power incentives
  and on setting and revising price levels
• RDC-based prices when there were no physical
  shortages
• Unwarranted spiking RDC prices at times of
  scarcity
• Market power exerted to cause RDC to trigger high
  prices
• NYISO responded comprehensively
• NYISO response was well received
• Not all concerns resolved yet
• Market Advisor made a presentation to MSWG
• TO involvement has been useful
• There is a better understanding of RDC concepts
• New protection measures have evolved

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Reserve Demand Curve (RDC)

• TOs confident that NYISO will address and resolve
  TO issues
• There are concerns that RDC might result in
  excessive price levels
• It is important to get this new function right
• There is still time to constructively deal with
  remaining TO concerns within current schedule
• NYISO to provide detailed justification of RDC
  price levels
• NYISO to provide criteria for revising RDC prices
  up or down
• TOs pledge to continue efforts to resolve
  concerns and still meet NYISO schedule