Message-ID: <16249462.1075841418363.JavaMail.evans@thyme> Date: Mon, 17 Dec 2001 16:36:15 -0800 (PST) From: crcommunications@caiso.com To: 20participants@caiso.com Subject: CAISO Notice - Market Design 2002 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: CRCommunications X-To: ISO Market Participants X-cc: X-bcc: X-Folder: \ExMerge - Platter, Phillip\Inbox X-Origin: PLATTER-P X-FileName: phillip platter 6-26-02.PST MARKET NOTICE December 17, 2002 Market Design 2002 ISO Market Participants: The ISO has begun a market design effort, "Market Design 2002" or "MD02," that will culminate in several FERC filings over the next seven months or so. This effort will put in place changes to the California electricity market beginning with the Real-time Market Pricing ("Target Price") change, continuing through the termination of the June 19, 2001 FERC market mitigation measures on September 30, 2002 and completing the changes by Summer, 2003. This message will give you some background on the design effort and identify a few of the upcoming project milestones. Background Since its start on March 31, 1998, the electricity market in California has experienced many changes in market rules and operating procedures. In February, 2000, the ISO began a Congestion Management Reform (CMR) effort spanning the next 12 months, which culminated in the January 2001 CMR Proposal. Although this effort produced a comprehensive approach to resolving issues related to inter-zonal and intra-zonal congestion management, forward and real time energy markets, local reliability and several other issues, and reflected considerable Stakeholder input, it was never filed with FERC for approval nor implemented. The significant and unforeseen operational and financial events over the past 12 months have changed the California electricity market substantially. One of the most significant changes was the FERC Order of June 19, 2001 that implemented price mitigation measures, not only in California but throughout the West. The price mitigation measures are scheduled to expire on September 30, 2002. Therefore, the ISO has initiated MD02 to complete the market redesign process that began with the CMR project and to ensure that upon expiration of the FERC-established price mitigation measures, there will be adequate measures in place to maintain market/price stability and reliable ISO operation. Milestones The following are a few of the short-term key dates for the MD02 project: December 21, 2001 ISO distributes draft MD02 Design Elements to stakeholders for initial review. This preliminary document will identify the primary problems to be addressed and outline a proposal for addressing them. Although this will not be the primary document for soliciting stakeholder comments, the ISO will receive any comments you may have on this initial document. January 4, 2002 ISO distributes MD02 Comprehensive Design Draft for stakeholder review. This document will include greater detail than the December 21 Design Elements document and will be the focus of subsequent discussions with market participants. January 14-17, 2002 Focus Group meetings to discuss the MD02 Comprehensive Design Draft. The format of these meetings will be similar to that of the recent Focus Group meetings on uninstructed deviation pricing. The targeted groups for these meetings are: * January 14: Load-Serving Entities * January 15: Generators and Marketers * January 16: Municipal Utilities * January 17: Other Control Areas We will send specific details of the meetings by the end of this week. January 23, 2002 Stakeholders' written comments on MD02 Comprehensive Design Draft are due to the ISO. February 1, 2002 MD02 Comprehensive Design distributed to ISO Governing Board members and stakeholders February 7, 2002 Present MD02 Comprehensive Design to ISO Governing Board for approval. Following the Board's decision on the MD02 Comprehensive Design on February 7, 2002, we will update you with a schedule for FERC filings and implementation. This is an aggressive schedule for an ambitious undertaking. However, it is imperative that the ISO address basic design flaws of the market and make major changes where necessary prior to the expiration of the FERC-established price mitigation measures. We also believe this schedule is necessary to put the ISO in a position to implement a comprehensive redesign that will occur in several phases beginning with the summer of 2002 and continuing through Spring 2003. We look forward to working with you to develop this proposal. If you have questions or would like additional information, please contact Byron Woertz at bwoertz@caiso.com or (916) 608-7066. Client Relations Communications.0715 CRCommunications@caiso.com