Subject: Enron Questions on NG - ARTO
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Wed, 21 Nov 2001 09:54:58 -0800 (PST)

Ashley --

First, hope you have great Thanksgiving Holiday.  

Luiz Maurer and others put together the following set of questions for NG to potentially discuss at the upcoming meeting or earlier.  If you have any questions, please call me.

Also, Enron will sign on to a petition to for extension of time in the NG/ARTO case (not sure when this is due out).  Some other people were pushing it and with everything going on here at Enron we needed more time to respond.  Please don't take this as a signal that we can't continue to discuss and maybe help find a solution.

Thanks,

Jim

=============================

1) Profit-RTO - Where does your proposed organization fit in the attached graph in terms of end state ? Stage III? Stage IV?

2) Regarding document "Response of National Grid USA to questions posed by the Commission": Does it imply that core, for profit functions should not be subject to a stakeholder process? Wasn't the NETA design subject to an extensive 
consultation, even for profit, NG core functions?

3) If each Transco manages it own OASIS, how can we avoid fragmentation (balkanization), pancaking and many other
negative aspects and seams that the RTO process is trying to eliminate? How can you achieve one-stop shopping? By outsourcing those functions to one single third party?

4) As a follow up question, what are the mechanisms to assure that this "potential" fragmentation may lead to underinvestments in T, particularly in important inter-tie investments?

5) What kind of PBR mechanism are you envisioning for the Transco-RTO? Are you thinking about including "external" measures such as cost to provide ancillary services, congestion costs or costs incurred in energy balancing?

6) Are you envisioning an RTO-Transco model which will assume that all transmission assets in the region will be divested? Or can the model live with a "light" RTO where part of the assets are divested but others are not (and sign an operating agreement with the RTO. Would your proposed Matrix of RTO Functions (page 9) still be robust under this scenario?

7) Can your proposed RTO model dovetail with an LMP/Congestion Management system based on financial rights? [Our understanding is that NETA completely reorganized the UK pool. The UK system now looks like a "self-dispatch" physical rights model] 

8) As a follow up of the previous question: Assuming Alliance adopts a self-dispatch, physical rights approach similar to the one NG operates in the UK today. Don't you think that this will create significant barriers/seams with other neighboring RTOs, considering that there seems to be a general trend towards security constrained dispatch, LMP and financial rights for most RTOs in the US?

9) If your proposed system can be dovetailed to a central dispatch, LMP/financial rights, shouldn't some functions in your "Martix of RTO Functions" be collapsed? For example: management of congestion prices, calculation of congestion, operations of energy markets and generation redispatch?

10) Procurement and deployment of ancillary services is listed as non-core. However, in the UK system, this represents a significant role of the Transco, with incentives and penalties attached to its achievement. Is there a different vision or do you assume that those functions will end up being developed by the RTO and consequently will be part of the PBR formula?

11) Generation interconnection. Obviously, your proposal did not go that far. Conceptually, do you favor a system whereby T fixed costs are recovered via a postage stamp rate across an entire region or do you favor the UK model whereby fixed costs (use of the system) are calculated based on incremental cost and have a strong locational component (and connection costs are treates separately, according to a shallow method?

12) Establishment of transmission rates. How to reconcile the fact that those should be regulated and you propose that the Transco itself will establish its T rates? Are you thinking about some possible non-regulated activities?

13) You stated that separation and control of T assets persists, to a large extent, in the Collaborative Model proposed as part of the Southeast Mediation. Do you think that the Independent System Administration model is superior in this regard? What are the key important differences in your view in the conceptual design of those models