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T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Long Term FTR Auctions

Markets Committee, Summer Meeting

August 2003

Michael TaniwhaManager, Market Administration

ISO New England Inc.

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2T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Agenda

• What do the Rules Say• Neighboring Control Areas Long-term FTR

Auctions• Long-term FTR Auction timetable• What period for the Annual Auction• Summary of Monthly FTR Auctions to date• 2003 Congestion Revenue Fund Refund• Questions

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3T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

What do the rules say?

• Market Rule 1– Section 7 – Financial Transmission Rights Auctions

• Clause 7.1.1 Auction Period and Scope of Auctions.– (a) requires within seven (7) months of SMD Effective Date

first long-term auction to be held eg. before October 1st, 2003;

– Publication of long-term auction schedule; and– Such schedule shall coordinate the start and end times of

the long-term FTRs of neighboring Control Areas.

– (b) after the initial long-term FTR auctions, FTR auctions shall be held on a annual and monthly basis.

» 50% of the feasible transmission capacity (FTRs) shall be available in the annual FTR Auction.

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4T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Neighboring Control Areas Long-term FTR Auctions

• PJM– Annual FTR Auction period is June 2003 - May 2004

• NYISO– Annual FTR (TCC) Auction period November 2003 -

October 2004, May 2004 – April 2005– 6 monthly FTR (TCC) Auction period May 2003 -

November 2003, November 2003 - April 2004

• Other FTR Markets– CALISO

• Annual FTR (Firm TR) Auction period April 2003 - March 2004

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5T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Long-term FTR Auctions timetable

• First long-term FTR Auction will be for the period October 2003 – December 2003 (3 months)– Bidding period opens August 25th – 29th, 2003.– 50% of transmission capacity will be made available.– Remaining transmission capacity will be available in

October, November & December monthly FTR auctions

• Second long-term FTR Auction will be for period January 2004 to ????? 2004– Bidding period opens November 21th – 28th, 2003.– 50% of transmission capacity will be made available.– Remaining transmission capacity will be available in the

monthly FTR auctions

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6T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

What period for the Annual Auction?

• ISO is considering a four month period for the second long-term auction

• Followed with the first Annual FTR Auction for the period May 2004 – April 2005

• Some feedback from Market Participants suggest a calendar year (January to December) would be better– So as to be synchronized with the Standard Offer

load contracts?

• What do Market Participants think?

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Pro’s

• Running Annual FTR Auction before Standard Offer period may increase liquidity in the auction

• Market Participants bidding for Standard Offer contracts may be able to discount their bid if they have Annual FTR to back the contract

• Annual FTRs not required could be resold on secondary market to other Standard Offer holders

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8T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Con’s

• Only 50% capacity will be available in Annual Auction– May require Market Participant to bid for balance in

monthly FTR auction• Horse and Cart issue - which comes first:

– Obtain an Annual FTR first and then bid for Standard Offer; or

– Obtain Standard Offer supply first and then bid for Annual FTR.

• Annual FTRs on secondary market can only be sold after first being cleared in auction– FTR may not be available from secondary market

• No formal linkage between timing of Standard Offer RFPs and a fixed annual FTR auction schedule

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9T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

FTR Auction Results Bid Dollars

(Blue: Off Peak Purple: On Peak)

$23,767,739

$15,798,937

$5,460,508$4,168,085 $3,062,751

$8,600,346

$1,542,329

$671,599

$1,175,913

$935,718$499,301

$2,132,940

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

MAR 2003 APR 2003 MAY 2003 JUN 2003 JUL 2003 AUG 2003

Auction Period

Bid

Do

llar

s

Total Bid Dollars

Total Bid Dollars

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FTR Auction Results On PeakAwarded Dollars

$(101,580)$(93,392)

$(69,838)

$(43,664)

$(82,487)

$(38,499)

$1,331,275

$6,595,320

$3,019,017

$2,270,916

$690,774

$1,045,539

$(1,000,000.00)

$-

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

$7,000,000.00

MAR 2003 APR 2003 MAY 2003 JUN 2003 JUL 2003 AUG 2003

Auction Period

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ard

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Total PositiveAw ardDollars

TotalNegativeAw ardDollars

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FTR Auction Results Off PeakAwarded Dollars

$327,879$372,420

$142,219$105,157

$9,948$48,324

$(5,825)$(39,672)

$(12,360)

$(1,026)

$(1,804)$(92)

$(100,000.00)

$(50,000.00)

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

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JUN 2003 JUL 2003 AUG2003

Auction Period

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Total NegativeAward Dollars

Total PositiveAward Dollars

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12T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

FTR Auction Results Bid MW

(Blue: Off Peak Purple: On Peak)

24,204.0

49,041.4

20,308.330,331.1

22,388.517,031.7

30,723.7

8,375.1 13,453.1

15,843.1

21,786.0

13,508.1

0.0

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

60,000.0

70,000.0

80,000.0

MAR 2003 APR 2003 MAY 2003 JUN 2003 JUL 2003 AUG 2003

Auction Period

Bid

MW

Total Bid MWs

Total Bid MWs

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FTR On Peak Auction ResultsAwarded MWs

16,863.217,638.0

14,800.9

10,917.810,761.911,335.1

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

18,000.0

20,000.0

MAR 2003 APR 2003 MAY 2003 JUN 2003 JUL 2003 AUG 2003

Auction Period

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FTR Off Peak Auction ResultsAwarded MWs

9,657.5

10,949.1 10,907.8

7,145.87,503.7

9,207.7

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

MAR 2003 APR 2003 MAY 2003 JUN 2003 JUL 2003 AUG 2003

Auction Period

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15T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

2003 Congestion Revenue Fund Refund

• Congestion Revenue Fund stands at approximately $19 million (year-to-date)

• Congestion Revenue Fund balance as of December 31st, 2003 will be refunded as per Manual 28, rule 6.3.5– To those who have paid Transmission Congestion

costs throughout the year

• December bill will include refund and will be sent out in January 2004

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T H E P E O P L E B E H I N D N E W E N G L A N D ’ S P O W E R .

Questions?