Subject: Reissuance of ECA20000907A
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Fri, 8 Dec 2000 08:06:00 -0800 (PST)

What follows is a memorandum from William J. Museler to me invoking the
Temporary Extraordinary Procedures and requesting me to reissue ECA20000907A.
Immediately following the memorandum is the ECA itself.  It now carries the
number ECA20001208A.  The memorandum and the ECA are also being posted on the
OASIS.

MEMO

Date:          December 8, 2000

From:          William J. Museler, President & Chief Executive Officer

To:       Steven J. Balser, Manager of Market Monitoring and Performance
James H. Savitt, Market Monitor

Re:       Extraordinary Corrective Action to Address a Market Design Flaw:
HAM Transactions Failing Checkout (ECA 20001208A; re-issuance of ECA
20000907A)

Thank  you  for  the  presentation of the Market Monitoring and Performance
Unit  and  the Market Advisor regarding the progress that has been made with 
the
Market  Participants  in addressing the market design flaw concerning import 
and
export   transactions,  including  wheel-through  transactions,  that  fail  
the
check-out procedure between the completion of BME and the SCD operating 
hour.  I
am  pleased  that  the  Business  Issues Committee gave unanimous support to 
the
NYISO  to  re-issue ECA 20000907A until the Market Participants can consider 
and
approve,  and  the  NYISO can implement, a tariff change required to 
permanently
address the Market Design Flaw.

As  stated in my Memorandum to you of September 6, 2000, I agreed with your
conclusion that the conduct identified at that time constituted a 

?Market Design
Flaw?  as  defined  in  Attachment  Q  to  the ISO OATT, Temporary 
Extraordinary
Procedures  for  Correcting  Market  Design  Flaws  and  Addressing 
Transitional
Abnormalities (the ?TEPs?).  As further stated in that Memorandum, I agreed 
with
your  analysis that prices produced by exploiting this Market Design Flaw 
would,
absent  appropriate action, remain at levels different from what would 
otherwise
occur during periods of efficient competition.

I  have  now  determined,  based  on  consultations  with ISO Staff and the
support  of the Business Issues Committee, that it is appropriate to maintain 
in
effect  the  corrective measures adopted as ECA 20000907A while consultation 
and
cooperation with the Market Participants and jurisdictional agencies is 
on-going
to  develop  and  implement appropriate rules or rule changes in accordance 
with
the ISO Agreement.

Please re-issue the text of the Extraordinary Corrective Action (?ECA?) and
post  it  on  the  OASIS,  for implementation effective at the expiration of 
ECA
20000907A.  The ECA shall be effective for a period of ninety (90) days.

William J. Museler, President and CEO
New York Independent System Operator

cc:  Market Participants via OASIS

New York Independent System Operator

Extraordinary Corrective Action 20001208A:

Market Design Flaw Regarding HAM Transactions Failing Checkout

Applicability

This Extraordinary Correction Action (ECA) shall apply to:

?    Import and export transactions;
?    that are scheduled for an operating hour in the Hour-Ahead Market (HAM) 
by
the Balancing Market Evaluation (BME); and
?    that fail checkout for reasons within the control of the Market
Participant, or that are cancelled at the request of said Market Participant.

Wheel-through transactions shall be treated as both an import and an export
transaction, and the relevant Market Participant shall be billed the sum of 
both
financial impacts, as provided below.  This ECA shall not apply to import,
export, or wheel-through transactions that fail checkout due to NYISO error or
action, or neighboring control area operator error or action.

Rationale

Import Transactions: During the HAM resolution, BME reduces commitments for
energy  resources  within  NYCA  to  accept  scheduled  import transactions 
at a
specific  proxy  bus  indicated  by the Market Participant.  Where the 
scheduled
import  transaction  fails checkout following BME, the real-time energy price 
at
the  proxy  bus  may  be  elevated  above the HAM price due to the failed 
import
transaction.   The  difference  between the real-time price and the BME price 
at
that  proxy  bus is currently charged to all purchasers in the real-time 
market.
Under  this  ECA,  this  amount  (when  positive),  multiplied  by the number 
of
megawatts  of  the  transaction  for  that  hour,  shall be billed to the 
Market
Participant that scheduled the failed import transaction as the financial 
impact
of causing the failure to complete checkout of the transaction.

Export  Transactions:  During the HAM resolution, BME makes commitments for
energy  resources  to  supply  scheduled  export transactions up to the 
purchase
price  indicated  by the Market Participant at the appropriate proxy bus.  
Where
the  scheduled  export  transaction  fails checkout following BME, the 
real-time
energy  price  at  the proxy bus may be depressed below the HAM price due to 
the
failed  export  transaction.   The  difference  between  the  BME  price and 
the
real-time  price  at that proxy bus is currently charged to all loads as part 
of
Schedule  1  costs.   Under this ECA, this amount (when positive), multiplied 
by
the number of megawatts of the transaction for that hour, shall be billed to 
the
Market Participant that scheduled the failed export transaction as the 
financial
impact of causing the failure to complete checkout of the transaction.

Wheel-Through   Transactions:  During  the  HAM  resolution,  BME  includes
scheduled wheel-through transactions up to the transmission congestion cost 
that
equals  the  decremental  bid  indicated  by  the Market Participant.  Where 
the
scheduled  wheel-through transaction fails checkout following BME, the 
real-time
energy  price  at  both  the  import  and export proxy busses may be elevated 
or
depressed,  respectively,  due  to the effects on transmission congestion of 
the
failed wheel-through transaction.  Under this ECA, the effects of the import 
and
export  portions  of  the  failed  wheel-through  transaction will be 
calculated
separately,  as though they were separate failed transactions.  The sum of 
those
impacts  shall  be  billed  to  the Market Participant that scheduled the 
failed
wheel-through  transaction  as  the  financial  impact of causing the failure 
to
complete checkout of the transaction.

Implementation Rules

1.   An External Transaction for the delivery of energy to the NYCA at an
external Proxy Generator Bus that is scheduled in BME but for which no energy 
is
delivered to the NYCA in real-time, will be settled by the scheduling entity
selling the amount of energy scheduled in BME into the LBMP Market at the
scheduling entity?s BME Bid Price, and buying the energy that was not 
delivered
from the LBMP Market at the Real-Time LBMP prevailing at the external Proxy
Generator Bus.  No payment will be required of the scheduling entity if it is
shown that the External Transaction was properly scheduled in each Control 
Area
and the energy was not delivered due to an error or action by the NYISO or the
delivering Control Area.  No payment will be required of, or made to the 
Market
Participant if the Real-Time LBMP at the external Proxy Generator Bus is lower
than the BME Bid Price of the entity that failed to deliver scheduled energy.

2.   An External Transaction for the receipt of energy from the NYCA at an
external Proxy Generator Bus that is scheduled in BME but for which no energy 
is
received from NYCA in real-time, will be settled by the scheduling entity 
buying
the amount of energy scheduled in BME from the LBMP Market at the scheduling
entity?s BME Bid Price and selling the energy that was not taken into the LBMP
Market at the Real-Time LBMP at the external Proxy Generator Bus.  No payment
will be required by the scheduling entity if it is shown that the External
Transaction was properly scheduled in each Control Area and the energy was not
taken by the scheduling entity due to an error or action by the NYISO or the
receiving Control Area.  No payment will be required of, or made to the Market
Participant if the Real-Time LBMP at the external Proxy Generator Bus is 
higher
than the BME Bid Price of the entity that failed to take scheduled energy.

3.   An External Transaction for the delivery of energy to the NYCA at one
external Proxy Generator Bus and the delivery of energy from the NYCA at a
different external Proxy Generator Bus that is scheduled in BME but for which 
no
energy is delivered to or received from the NYCA in real-time, will be settled
by applying rules 1 and 2 of this ECA separately to the failed delivery of
energy to the import Proxy Generator Bus and the failed receipt of energy at 
the
export Proxy Generator Bus, and summing the total of the two amounts for 
payment
by the scheduling entity.  No payment will be required by the scheduling 
entity
if it is shown that the External Transaction was properly scheduled in each
Control Area and the energy was not taken by the scheduling entity due to an
error or action by the NYISO or the delivering or receiving Control Area.  No
payment will be required of, or made to the Market Participant for the import 
or
the export portion of the External Transaction if no payment would have been
required had that portion of the transaction been a separate transaction under
rule 1 or 2 of this ECA.

Issued:  December 8, 2000, 3:00 p.m.
Effective:  December 8, 2000, Operating Hour Beginning 0000