Can we focus the PJM language as an interim fix toward the East (while maybe 
the threat of PJM in the West will make the West RTOs act quickly and adopt 
everything that Steve W. has been advocating).  Also, I agree with the ISO 
being required to provide much greater information on where the congestion 
occurs.  While the allocation of FTRs is a problem and the idiosyncratic 
nature is also a problem, it is because the traders do not have access to all 
the information.  They have told me that if they had access to all the 
information about congestion from the past several years, they could 
essentially build a model for anticipated congestion that could trade "above" 
the underlying FTRs as financial instruments.




Steve Walton
06/18/2001 03:30 PM
To: James D Steffes/NA/Enron@ENRON
cc: Christi L Nicolay/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Sarah 
Novosel/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron 

Subject: Re: INTERIM MODEL TALKING POINTS  

Jim,

 I have added my comments to your draft.  My concern with the "Adopt PJM" 
approach is that it will become a fiat accompli with regard to congestion 
management. and the nature of future transmission rights.  Once adopted as 
the standard, nothing else will be accepted and any move to a decentralized 
approach is highly unlikely.  Unlike the British, we have a hard time 
changing horses because of our multi-jurisdictional Federal system of 
government.

 The PJM's lack of a secondary FTR market is more that just an allocation 
problem.  If that were true, they New York would have a secondary market -- 
none exists there either.  The unpredictability of prices is probably the 
biggest problem since no one knows how to value FTRs or TCCs.  I think the 
nature of instrument is also not particularly helpful.

 During our discussion of Seabron Adamson's last draft, I maintained that a 
centralized unit commitment process didn't fit the Pacific Northwest (PNW) 
with its pattern of trading to achieve coordination between hydroelectric and 
thermoelectric generation.  You asked me to provide more detail hydro-thermal 
operation.  I am including a paper that covers the nature of PNW operations 
and contracting with observations about the nature of unit commitment.  Given 
other work and travel, it has taken some time to complete the paper and its 
examples.  I hope this will help to explain why I am hesitant to endorse a 
centralize unit commitment implementation.

Steve





	James D Steffes@ENRON
	06/18/2001 01:48 PM
		 
		 To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Christi L 
Nicolay/HOU/ECT@ECT, Sarah Novosel/Corp/Enron@ENRON, Steve Walton/HOU/ECT
		 cc: 
		 Subject: INTERIM MODEL TALKING POINTS

Here is the draft of an Interim step for Enron to give to Lay.  Please give 
me your comments.  This is CONFIDENTIAL and should not be shared outside the 
company.

Jim