Mike Roan, Janine Migden and Donna Fulton are now working on the Midwest RTO 
effort for Government Affairs.  See Mike's update below.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 05/07/2001 
11:55 AM ---------------------------
From: Mike Roan/ENRON@enronXgate on 05/02/2001 05:14 PM
To: James D Steffes/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT
cc: Janine Migden/NA/Enron@Enron, Ron McNamara/NA/Enron@Enron 

Subject: ARTO Progress

A quick update on ARTO....

Since taking the reigns from Jeff we have been concentrating on getting a 
seat at the table with ARTO to discuss day 2 congestion mgmt (CM).  We have 
been (tentatively) successful (i.e. we have a toe in the door but not a seat 
at the table).

? Initially ARTO were not interested in pursuing a stakeholder process to 
discuss market design issues. They held a stakeholder meeting in Columbus on 
3/22 where we suggested that they set up a meaningful stakeholder process.  
This was supported by a majority of stakeholders at the meeting.   However it 
appeared to fall on deaf ears.
? As a result of that meeting we assisted EPSA draft a letter to the ARTO 
mgmt committee setting out our concerns and proposing a stakeholder process 
that if implemented would avoid us going to FERC (the threat was implicit in 
the letter).
? ARTO held a second stakeholder meeting in Baltimore.  At that meeting they 
proposed a stakeholder process along the lines set out in the EPSA letter 
(the Market Development Advisory Group will meet every two weeks to reach 
concensus on day 2 CM).  We also suggested a tentative governance structure 
and a way of ensuring that ARTO fully considered our input.  While it is 
unclear whether ARTO are 'genuinely' seeking input from this group or trying 
to appease FERC, the setting up of the process is a useful step for us.  We 
can use the process to attempt to gain concensus around a fully developed 2 
day CM solution, propose this to ARTO and work with them on implementation by 
12/15/2002.   If ARTO refuse to adopt it we should have a stronger case with 
FERC as we will be able to show the process, output and lack of consideration 
by ARTO.  I am sure that ARTO are aware of this so i am trying to work out 
their angle, maybe they are being genuine (still it pays to be a sceptic at 
this stage).
? To start building concensus around a day 2 CM solution i have asked a small 
group of stakeholders to assist us develop a framework (at this stage the 
small goup is Edison Mission, Constellation, Duke Energy, PG&E and Reliant).  
They are happy for us to take the lead on developing this framework (no 
prizes for anyone who guesses what that framework looks like) and to start 
thinking about how we get wider concensus amongst stakeholders.

So some positive movement.  I am also opening up communications with ARTO 
mgmt committee members (have talked to Comed and started with Illinois Power 
through Dynegy....Ron & I are trying to set up a second meeting with AEP 
mgmt) and Janine is setting up a roadshow so we can visit other interested 
parties in the ARTO region over May/June.

A couple of other related points.  It would be useful to get in front of the 
decision makers at Dynegy to see where they are at generally...there is some 
differing feedback from the people i know so it is not clear what their 
corporate position is (i may need a hand here!).  This is reflected in the 
second point...at the last ARTO stakeholder mtg we were told that ARTO had to 
make a decision whether to select 'pay as bid' or 'single market clearing 
price' as the mechanism to determine price discovery.  We were told that 7 
out of the 10 ARTO mgmt commttee preferred 'pay as bid'.  Anyway we argued 
for 'single market clearing price'.  We also suggested that transmission 
owners should not make a decision that affected market participants.  We 
managed to convince a some stakeholder with our arguments and ARTO held a 
spot vote that recorded 3 for 'pay as bid', 9 for 'single market clearing 
price and 9 'not enough info'....i have heard to ARTO took this into account 
and will leave it to stakeholders which again is a positive step for the 
process. I strongly supported 'single market clearing price' whereas Dynegy 
was a strong proponent for 'pay as bid' but having talked to their people in 
Houston they say that that is not their position (its seems like they have 
the same problem as other large firms....).  So getting time with their 
decision makers would be useful.


I hope this update is useful, give me a call with any queries or feedback.

regards
MR

Christi, could you forward this to the traders if you think it is useful for 
them.