Message-ID: <21806441.1075840895267.JavaMail.evans@thyme>
Date: Wed, 17 Oct 2001 06:37:19 -0700 (PDT)
From: l..nicolay@enron.com
To: john.lavorato@enron.com, louise.kitchen@enron.com, janet.dietrich@enron.com, 
	david.delainey@enron.com, douglas.smith@enron.com, 
	don.black@enron.com, david.forster@enron.com, david.duran@enron.com, 
	tim.belden@enron.com, f..calger@enron.com, h..foster@enron.com, 
	jae.black@enron.com, c..aucoin@enron.com, dale.furrow@enron.com, 
	jim.meyn@enron.com, claudette.harvey@enron.com
Subject: FW: RTO Week -- Summary of Congestion Management Panel
Mime-Version: 1.0
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: quoted-printable
X-From: Nicolay, Christi L. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=CNICOLA>
X-To: Lavorato, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jlavora>, Kitchen, Louise </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Lkitchen>, Dietrich, Janet </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=384eca1e-36846ef5-62569fb-57dcf1>, Delainey, David </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=28fc501b-22d3a001-62569fb-57caaa>, SMITH, Douglas </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Gwaddr/cn=HQ3.BR1.Douglas Smith>, Black, Don </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Dblack>, Forster, David </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DFORSTER>, Duran, W. David </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Dduran>, Belden, Tim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Tbelden>, Calger, Christopher F. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Ccalger>, Foster, Chris H. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Cfoster>, Black, Tamara Jae </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Tblack>, Aucoin, Berney C.  </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Baucoin>, Furrow, Dale </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Dfurrow>, Meyn, Jim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jmeyn>, Harvey, Claudette </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Charve2>
X-cc: 
X-bcc: 
X-Folder: \ExMerge - Kitchen, Louise\'Americas\Regulatory
X-Origin: KITCHEN-L
X-FileName: louise kitchen 2-7-02.pst

FYI.
Claudette and TJ -- Please forward to your groups.  Thanks.
-----Original Message-----
From: Novosel, Sarah=20
Sent: Tuesday, October 16, 2001 10:46 PM
To: Novosel, Sarah; Presto, Kevin M.; Davis, Mark Dana; May, Tom; Will, Llo=
yd; Lindberg, Susan; Gupta, Gautam; Misra, Narsimha; Scheuer, Janelle; Baug=
hman, Edward D.; Herndon, Rogers
Cc: Nicolay, Christi L.
Subject: RE: RTO Week -- Summary of Congestion Management Panel



 RTO Week

Day 2 -- October 16, 2001

Congestion Management and Transmission Rights

The morning panel discussion was on congestion management.  The panelists w=
ere:  Nancy Brockway, Commissioner New Hampshire PSC; Reem Fahey, Edison Mi=
ssion; Carol Guthrie, Chevron/Texaco; Shmuel Oren, University of California=
 - Berkley and advises Texas PUC; Andy Ott, PJM; Michael Schnitzer, NorthBr=
idge Group.

General Observations

The Commissioners were again all present (Wood left mid-morning to give tes=
timony on Capitol Hill).  Today, however, FERC Staff was much more active i=
n the discussion and the commissioners asked very few questions.  The topic=
s are so interrelated that many of the same issues already discussed are be=
ing rehashed again.  This will probably continue for the rest of the week. =
 What I have found most encouraging so far has been the widespread support =
for some of the basic concepts, most notably the need for a real time energ=
y market based using LMP.  Very few panelists have opposed this; at most, a=
 couple of panelists have argued that the real time market should not be st=
andardized -- basically conceding that PJM's system will be implemented in =
the Northeast but urging that it not be mandated everywhere else.   =20

Locational Marginal Pricing

The panelists all agreed that LMP in the real time market is necessary (Sch=
muel Oren does not oppose it).  Most of the panelists think this needs to b=
e standardized across RTOs.  Andy Ott says the seams will remain a problem =
and a barrier to trading if the real time market is not standardized.   Car=
ol Guthrie does not favor standardization and urged FERC to not standardize=
 the PJM system throughout the eastern interconnect.  She said FERC should =
try a couple of different systems and see what works. =20

FTRs versus Flowgates

The panelists agreed that transmission rights should be financial, not phys=
ical.  Schmuel conceded this point for the discussion but this may not be h=
is preference - unclear.  Most of the panelists, including the PSC commissi=
oner, prefer FTRs rather than flowgates.  Schmuel is a flowgate advocate.  =
After some discussion, the panelists agreed that FTRs and flowgates could w=
ork together, provided that the definition of flowgate is understood.  Andy=
 Ott said flowgates could work with FTRs if the purpose of having flowgates=
 is the same purpose of having hubs (liquidity, standard product), and if a=
 flowgate is defined as a grouping of point-to-point rights, then FTRs and =
flowgates can coexist.  If a flowgate is a hub for transmission rights, it'=
s okay.  However, if flowgate is defined as a physical boundary requiring s=
cheduling, the two cannot coexist.  Schmuel seemed to agree with this premi=
se, although this is not his preference.  He seems to prefer only flowgates=
 without FTRs.   Brockway seems to prefer FTRs rather than flowgates for fe=
ar that flowgates will result in excess socialization of costs.

The panelists also agreed generally that revenues generated from FTRs or fl=
owgates should be allocated to load, but the method of allocation was not a=
greed upon.

FERC staff asked the panelists to discuss commercially significant flowgate=
s.  Many of the panelists discussed the problem with deciding what constitu=
tes a commercially significant flowgate, and what happens when circumstance=
s change over time, resulting in different flowgates being commercially sig=
nificant.  Schmuel said you could use either a system that relies only on c=
ommercially significant flowgates or one that uses all flowgates, but if pa=
rticipants are willing to accept a system where they are not perfectly hedg=
ed, use of commercially significant flowgates is acceptable. =20

The panelists agreed that these financial rights (either FTRs or flowgates)=
 should be tradable in the secondary market.  The panelists disagreed on wh=
ich instrument -- FTRs or flowgates -- are more tradable.  Andy thinks FTRs=
 are more tradable; Schmuel thinks flowgates are more tradable.

Options versus Obligations

The panelists discussed the benefits of having FTRs be options but also dis=
cussed the additional problems presented to the system operator if FTRs are=
 only options and the FTR holder is not required to flow or pay if it does =
not flow.  Andy Ott said options will most likely result in fewer FTRs bein=
g allocated.  Schnitzer says the issue must be resolved up front. =20

The afternoon panel was on Transmission Planning and Expansion.  Steve Walt=
on was a panelist and will be providing a summary of the discussion shortly=
. =20

Let me know if you have any questions.

Sarah