Howard --

If the ONE RTO doesn't have a day-ahead market, what happens?

Jim

 -----Original Message-----
From: 	Brown, Jeff  
Sent:	Thursday, September 20, 2001 9:37 AM
To:	Fromer, Howard
Cc:	Steffes, James D.; Jenkins, Beth; Paysse, Juan Carlos
Subject:	RE: MG Load Curtailment Option

Howard,

Since this will be a financial deal initially that could be physical in the future, I have only included the value of the day-ahead program in our model.  Thus if we elect to become the physical provider during the 36 months, we will have an incremental benefit.  However, if we never become the physical provider, I need to know that I will be paid in the Day Ahead program for reducing load.

Three key regulatory issues:

1.  NYISO has an Hour-Ahead market that load needs to be allowed to participate in.  This would  clearly increase the value of the MG deal and our NY products in general.
2.  The Day-Ahead Demand Response Program needs to remain in-tact.  This allows EES to realize the value of our call options, whether we are financial or physical.  
3.  The baseline calculation for load reduction does not work.  This summer, one of IBM's sites reduced load by 2 MW's, which is clear when reviewing this usage curves on the day of curtailment.  However, when comparing to their CBL (as currently defined) there was no reduction and therefore no payment for IBM or EES.  As we have discussed, NY should look at ISO-New England's baseline calculations.  This is a much better approach for Enron and our customers.

Thanks - Jeff



From:	Howard Fromer/ENRON@enronXgate on 09/20/2001 08:04 AM
To:	James D Steffes/ENRON@enronXgate
cc:	Jeff A Brown/HOU/EES@EES 
Subject:	RE: MG Load Curtailment Option

Jim: I have participated in a number of calls with Jeff and his team over the past few weeks regarding this deal, goving over the details of how NY's demand response programs work, reviewing draft contracts, and putting him in touch with appropriate ISO staff when even more detailed followup was needed. I see little likelihood of NY's demand response programs being eliminated over the next few years given the increasingly tight supply situation the state faces and the long lead time for permitting and bulding new generation, and the great success these programs achieved this past summer. (Most folks credit the 600 MW produced by NY's day-ahead and emergency demand response programs with keeping the lights on in the northeast during the early August heat wave.) Only the day-ahead incentive program has a risk of not being continued beyond October 2003, it's current expiration date. However, even there, there is likely to be pressure to extend it for an additional year or two. With respect to potential RTO impacts, in our discussions with PJM, they have stated that at a minimum they would allow NY to continue its demand response programs in the new Northeast market on day 1, even if they differed from the rest of the region.Further, PJM would even consider making the NY programs applicable throughout the region on day 1 if that was what the market participants in the region wanted to do. 

 -----Original Message-----
From: 	Steffes, James D.  
Sent:	Wednesday, September 19, 2001 9:25 AM
To:	Fromer, Howard
Subject:	MG Load Curtailment Option

Howard -

Have you and Jeff Brown talked about the MG deal?  I want to make sure that you understand fully and appreciate any issues / concerns.

Thanks.