Policy & Regulation

Midwest ISO issues draft energy markets tariff

CARMEL, Ind., June 23, 2003 — In accordance with its comprehensive plan to ensure a smooth opening of day-ahead and real-time energy markets in the Midwest, the Midwest Independent Transmission System Operator, Inc. has released for review and comment a revised draft of its proposed Open Access Transmission and Energy Markets Tariff, the regional transmission organization announced Monday.

The draft tariff reflects changes necessary to incorporate energy market operations into the Midwest ISO’s Open Access Transmission Tariff. The proposed tariff incorporates feedback provided by numerous members and stakeholders following ongoing tariff discussions this spring that culminated in a two-day technical conference in May. The revised draft tariff also includes proposed changes based on Midwest ISO’s draft market protocols, which are the subject of a technical conference being held today and tomorrow (June 23 and 24) at Midwest ISO’s Indiana offices.

In another equally important step toward ensuring active involvement in market implementation, Midwest ISO has posted on its website for review and comment its first notice of the initial allocation of financial transmission rights (FTRs) for the market. FTRs are financial instruments that allow market participants to hedge their exposure to transmission congestion costs.

As part of the ongoing interchange between the Midwest ISO and stakeholders to determine the final methodology for allocating FTRs, Midwest ISO is encouraging stakeholders to review and comment on two different allocation methodologies used in the initial allocation of FTRs. The initial allocation of FTRs is based on a network data model that represents all of the load and generation in the Midwest region served by the Midwest ISO. Development of the network model and the production of initial FTR allocations are important milestones for implementation of day-ahead and real-time electricity markets in the Midwest on March 31, 2004.

The Midwest ISO will also continue to refine its network data model before it finalizes the allocation of FTRs in early 2004.

“Defining the tariff language necessary to provide a solid blueprint for market operations, developing a network data model and producing initial financial transmission rights allocations are key components of our overall plan for ensuring a smooth market opening,” said James P. Torgerson, president and chief executive officer of Midwest ISO, the nation’s first regional transmission organization approved by the Federal Energy Regulatory Commission (FERC).

“We are committed to honoring existing contracts and service arrangements consistent with federal and state policy,” he said. “We look forward to working closely with stakeholders so that no state experiences adverse impacts when the market opens,” he added.

The Midwest ISO is implementing market-based solutions to manage transmission congestion, as required under FERC Order No. 2000. With the market-based tools that the Midwest ISO is offering, participants will be able to better manage the costs associated with grid congestion, and customers will benefit from more efficient use of the transmission system, more economic dispatch of generation and more accurate pricing signals, Torgerson said.

Midwest ISO’s congestion management system features locational marginal pricing and financial transmission rights. Midwest ISO is working with stakeholders over the next several weeks to refine the allocation methodology before making an informational filing with FERC planned for August 1. FTR allocation issues will continue to be addressed in the Midwest ISO’s Transmission Rights Task Force (TRTF) stakeholder forum until the final allocation is made in early 2004. Details on the initial FTR allocation assessment and the two different methodologies offered are available at www.midwestiso.org .

To prepare participants for the Midwest Market opening, Midwest ISO is holding a series of training sessions over a seven-week period this summer in cities throughout Midwest ISO’s footprint and in New York and Houston.

Other Midwest Market Initiative activities in the next several weeks include registration and training of market participants as well as the following events:

– Energy Markets Tariff – Midwest ISO will host a technical conference on July 1 for members and stakeholders to provide feedback on the draft tariff. Midwest ISO plans to file its proposed Open Access and Energy Markets Tariff with the FERC on July 25.

– Systems integration testing – Midwest ISO is conducting business integration testing to make sure that software systems being implemented will meet the requirements and support the markets. The systems have been designed with the customer in mind, and the testing phase will verify that the Midwest ISO has the technology in place to support the market from bid to bill.

– Market Trials – Market Trials, beginning in November and running through Feb. 27, are the “dress rehearsal” for opening day. Market Trials provide participants with the opportunity to test their market systems in a realistic environment and address any unforeseen operational issues.

A detailed Midwest Market Implementation Guide is available on the Midwest Market Initiative web site, http://www.midwestmarket.org . The guide provides an overview for those who are just learning about the market, as well as details for stakeholders already closely involved in the process. For more information on any of these activities, visit www.midwestiso.org or www.midwestmarket.org .

About Midwest ISO

The Federal Energy Regulatory Commission approved the Midwest ISO as the nation’s first Regional Transmission Organization (RTO) on December 20, 2001. RTOs are responsible for ensuring the reliable operation of the wholesale electric transmission system and ensuring fair access to the system. From its headquarters in central Indiana, Midwest ISO serves as an independent agent for its transmission-owning members, and, with the inclusion of committed operations, controls an interconnected transmission grid encompassing more than 122,000 megawatts of generation capacity over 111,000 miles of high voltage transmission lines in all or parts of 15 states and parts of Canada. For more information on Midwest ISO, visit www.midwestiso.org