In yet another Order issued yesterday (see attached), FERC rejects the request by Con Edison to extend the Revised Localized Market-Power Mitigation Measures (Revised LMM)* until October 31, 2002. The Revised LMM had been approved by FERC on July 20  (on rehearing after initially rejected them on May 16), but were required in that Order to expire on October 31, 2001. FERC denies Con Ed's requested extension because it was "procedurally improper," and directs the NYISO to address FERC's concerns regarding the revised LMM as part of the comprehensive mitigation proposal FERC required the NYISO to prepare by March 1 in its AMP extension order also issued yesterday. (An email regarding that Order has been sent to you separately.) In particular, FERC wants to know how the revised LMM will work in conjunction with other mitigation measures in effect or proposed; whether the mitigation is designed to apply only in must-run situations or more broadly and why; whether market conditions in NYC warrant structural triggers for market power mitigation; and whether in-city mitigation measures should apply to all generation in the City or just to the units divested by Con Edison. FERC again directs the NYISO to consider mitigation measures used by PJM and ISO-NE to aid in the transition to a Northeast RTO. Finally, FERC directs Con Ed and the NYISO to make a filing that removes all in-city mitigation measures from Con Ed's tariff and puts them into the ISO's tariff. Significantly, FERC directs the NYISO to address in that filing, "and remedy to the extent required in NYISO's tariff and in the operations of NYISO and ConEd, allegations...that ConEd currently has operational responsibility for the New York City transmission grid and can direct out-of-merit dispatch. Ultimate responsibility for such functions, if not hands-on operational control, must lie with NYISO rather than ConEd." Elimination of ConEd's ability to dispatch units out-of-merit is crucial to the proper functioning of the markets in New York City. Development of the comprehensive market mitigation plan called for in both this and the AMP order by March 1 is going to be an enormous and time consuming undertaking for the NYISO and market participants over the next three months.
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* The Revised LMM expanded the application of the LMM approved by FERC in 1998 as part of Con Ed's generation divestiture proposal to: (1) bids for sale of energy in the real time markets during constrained periods; (2) bids for min gen and start-up whenever gen must be operated out-of-merit due to local reliability requirements; (3) bids for start-up and min gen during constrained periods (i.e., whenever mitigation would apply to a unit's incremental energy bid); and (4) all generators located electrically within NYC, not just those divested by Con Edison.

 -----Original Message-----
From: 	Lauren Mildren [mailto:lmildren@bracepatt.com] 
Sent:	Tuesday, November 27, 2001 2:24 PM
To:	Andrea Settanni; Yeung, Charles; cnicola@enron.com; Fulton, Donna; hfromer@enron.com; snovose@enron.com; Lindberg, Susan
Subject:	ER01-1385 ConEd v. NYISO -- Special Market Power MitigationMeasures for NYC