Subject: FW: Imbalance Issues
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Sun, 12 Aug 2001 20:12:01 -0700 (PDT)

Jim,
Per your request, below is an email from Chris Townsend explaining the imbalance program.  I plan to call him to get a better handle on the discount issue, but I think that it is useful that marketers can trade imbalances, but the benefit is premised on there being many suppliers.  More to follow when I return.
Janine

 -----Original Message-----
From: 	"Townsend, Christopher J. - CHI" <[email-masked]>@ENRON [mailto:IMCEANOTES-+22Townsend+2C+20Christopher+20J+2E+20-+20CH[email-masked]] 
Sent:	Wednesday, August 08, 2001 8:01 PM
To:	Migden, Janine
Cc:	Fein, David I. - CHI
Subject:	Imbalance Issues

Janine --

As you might recall from the memo summarizing the 1999 Edison DST
proceeding, the Illinois Commerce Commission essentially "punted" on the
imbalance issue, instead deferring to FERC.  Attached is the section from
our memo that discussed the imbalance issue.  It is my recollection that the
issue of establishing subaccounts was not addressed.  We will try to confirm
this tomorrow.

As lawyers, please do not hesitate to call or email if we can be of any
further assistance.

> Christopher J. Townsend
> Piper Marbury Rudnick & Wolfe
> 203 N. LaSalle Street
> Chicago, IL 60601
> (312) 368-4039 (direct line)
> (312) 630-6300 (direct fax)
> [email-masked]
>
		Energy Imbalances

		1.	Jurisdictional Issues

	The ARES Coalition, Alliant, and IIEC argued that the Commission
should address energy imbalances in the proceeding.  Enron and NewEnergy
abandoned this argument after reaching a settlement agreement with Edison.
Staff and Edison argued that charges for energy imbalances are properly
addressed within Edison's OATT and subject to the jurisdiction of the FERC.

	The Commission concluded that in the interest of avoiding protracted
litigation and the harm of delay to retail competition, the Commission would
not address the propriety of FERC's asserted authority over energy imbalance
issues.  The Commission indicated that its deferral to the FERC in no way
"waives its right to assert jurisdiction over energy imbalance service at
some future time."

		2.	Factual & Policy Issues

	Edison proposed an energy imbalance service to retail customers
containing the following provisions:

*	Energy imbalance will be calculated separately for each hour and
settlements will occur on a cash basis for each hour's imbalances;
*	For those RESs whose energy imbalance in an hour is 2% or less, or 2
MW or less, settlement is made at 100% of out-of-pocket costs ("OPC"),
regardless of the net imbalance or the direction of the error;
*
*	Those RESs whose energy imbalances exceed 25% of their own
individual schedules will pay an adder or be charged a discount of 25% of
OPC.  Adjustments are made to avoid double-counting of adders and discounts
applicable to those RESs that are also subject to an adder or discount
below.  These imbalance charges will be phased-in as follows:
*
*	From October 1, 1999 through December 31, 1999 -- No adder  will
apply under this provision.
*
*	From January 1, 2000 through March 31, 2000 -- 25% adder/discount
will apply to those RESs whose imbalances exceed 25% of their schedules 20%
or more of the hours of the month.  If the 20% of the hours are exceeded,
the adder/discount shall apply to all hours.
*
*	Starting April 1, 2000 -- 25% adder/discount will apply to those
RESs whose imbalances exceed 25% of their schedules 10% or more of the hours
of the month.  If the 10% of the hours are exceeded, the adder/discount
shall apply to all hours.

*	Edison also applies a bandwidth to the total net energy imbalance
attributable to unbundled retail load served by RESs.  If the hourly
imbalance caused by all unbundled retail load, excluding PPO load, is within
the 100 MW bandwidth, no RES (except those whose imbalance exceeds ?25%, as
noted below) will be subject to an adder or discount.  PPO load will, in
aggregate, be subject to the same terms and conditions as above, but
imbalance attributable to the PPO will be compared against a 100 MW deadband
separately from all RES load.

*	Edison will permit RESs to trade energy imbalances among themselves,
to offset their imbalances at whatever prices and terms they wish, before
applying a charge for energy imbalance.  According to Edison, this feature
will allow RESs to minimize energy imbalance charges by exchanging
overscheduled megawatt-hours for underscheduled megawatt-hours in the same
hour.  All remaining imbalances will be settled in cash at 100% of Edison's
OPC.  Edison shall make available information on OPC ten days prior to the
opening of the trading window.
*
*	The net retail energy imbalance in excess of 100 MW will be charged
an adder or discount of 10%.  This charge will be allocated among RESs who
are out of balance in the direction of the net and whose imbalance exceeds
their individual deadband.  The allocation will be based on the ratio-share
of the amount by which these individual RESs' imbalances exceed their
individual deadbands.  Any such adder/discount will be billed separately
from charges for any imbalances remaining after trading. Likewise, any
adder/discount attributable to the provisions of Paragraph 3 will be billed
separately from charges for any imbalances remaining after trading.
*
*	Load profiles will be developed using Dynamic Load Modeling with
seasonal adjustments.  Edison will not require the installation of interval
demand recorders for customers of less than 400 kW at this time.
*
*	Energy imbalances will be assumed to be within the bandwidth (i.e.,
no adders/discounts) when the imbalances are due to (1) Edison interruptions
and restorations, or (2) customer force majeure events, that are in each
case material to the RESs' schedule and of which the RES could not
reasonably be aware in sufficient time to adjust the schedule.
*
*	Edison will include a description of the methodology for determining
OPC in its energy imbalance schedules filed with the FERC.

	The IIEC opposed Edison's proposal and requested that the Commission
require Edison to offer an optional imbalance service at the distribution
level.  Blackhawk also opposed Edison's proposal and supported the IIEC
proposal  Alliant also supported Edison being required to offer an energy
imbalance service at the distribution level.  Mid-American opposed any
effort by the Commission to exert jurisdiction on energy imbalances.

	The Commission failed to weigh-in on the energy imbalance issue
consistent with its determination that the FERC is the appropriate forum for
such issues.  The Commission reserved the right to address the issue in some
future FERC proceeding.

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