EXHIBIT 99.280
UNCAPPING ANCILLARY SERVICES
MARKET ISSUES MEETING
AUGUST 12, 1998
SUMMARY OF PRESENT SITUATION
-- Price caps are temporary
-- Generators are getting less than they think they should
-- Loads are paying more than they think they should, but less
that they could as FERC initially structured it.
CRITERIA FOR REVIEWING CAPS
-- Need supply sufficiency so that people can't charge whatever
they want.
-- Demand elasticity i.e. loads can refuse exorbitant prices.
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HERE ARE THE CATEGORIES I USED.
A. IN THE WORKS ALREADY. STATUS/ACCELERATION NEEDED.
B. NOT DIRECTLY IN ISO CONTROL
DE. DEMAND ELASTICITY
SS. SUPPLY SUFFICIENCY
NS. NO SOFTWARE CHANGE NEEDED
OI. OPERATOR ACTION/INTERVENTION
THE ISO COULD TAKE "A" AND "NS" AND BEGIN WORK IMMEDIATELY IF THEY ARE HIGH
PRIORITY
OI GROUP COULD LOOK AT WHY MUST THIS OCCUR? IF IT MUST, FORMALIZE CRITERIA AND
COMMUNICATIONS.
B COULD BE ADDRESSED BY IOU/REGULATORY/MUNICIPAL REPRESENTATION IN THE GROUP.
DE AND SS MAY EACH DESERVE SUB-GROUPS.
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SUPPLY SUFFICIENCY
A -- Change software so that it considers only the upward range for
regulation bids. (Agreed. ISO is doing this)
A -- Allow bids from outside of the control area. A couple hundred
MW coming in. (Agreed. This is in place. Is it working)?
B -- Promote A/S market participation by munis/government
utilities.(How)?
A -- Accelerate software modifications to allocate A/S costs by
metered load. (How does this help the objective)?
A -- Accelerate software modifications to allow inter-SC trades for
A/S. (Status)?
DEMAND ELASTICITY
DE -- Allow supplemental load bids - price threshold set by SC for
load curtailment.
S -- Promote A/S self provision - remove software barriers,
facilitate Independent A/S markets. (What's stopping this
now) (Does inter-SC trade provisions for A/S address this?)
COMMENTS AND SUGGESTIONS
-- Make sure the ISO requirements are reasonable. (For what)?
SS -- Does the ISO know accurately how much A/S is available? (Good
question. Where could we be missing)?
-- Address the conflict between adjustment bids and A/S
(CONG/ASM interface) (OK. What's this? How does this help)?
NS -- Allow emergency ramp rates that exceed normal ramps (Would
this help? Or does it happen anyway)?
NS -- Look at unit maximum capacities.
NS -- The market needs a detailed description of what we mean by the
ISO Procuring A/S based on the ISO load forecast. (Agreed. We
will do it. How About -how we plan to allocate cost)?
-- Need to separate DA and HA A/S market procurement. (More
definition ??)
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-- Raise/eliminate caps to the low end of the market.(More
definition??
DE -- Demand elasticity may be compromised by procuring based on ISO
forecast rather than on scheduled loads. (Explain.
Interesting, so what's the Recommendation?).
OI -- ISO should explain how it is using RMR units to address the
A/S situation. (Agreed, but does this help our objective)?
OI -- Is the ISO fully using market mechanisms before dispatching
RMR? (Agreed, but does this help)?
OI -- Skipped BEEP bids discourage A/S bids.
SS -- Should parties with capped prices be required to offer
services? (This is not Market based).
SS -- Allow the same unit to self-provide, sell into the market and
export.
DE -- How to facilitate/certify N/S replacement from loads?
B -- AB1890 caps are impediment. (How can we fix?)
DE/B -- IOUs could seek CPUC approval for load programs
DE -- Better information on OASIS for ESPs, others. (What
specifics??)
DE -- Allow loads to have more than one SC - one for energy, one
for A/S. (Sounds good, but does this increase A/S supply).
SS -- Make self-provision price sensitive (I will self-provide if
the market price Exceeds $XX). (Interesting- Does this
increase the supply of A/S or make the demand truly elastic)?
SS -- Allow real time A/S provision from ties through settlements
(Allow more than one schedule at a tie point)?
SS -- A/S adjustment bids for transmission?
SS -- Consider alternative to sequential auction?
-- What are the criteria for determining that the problem is
fixed?
-- Develop criteria for adjusting caps. (Let's dedicate our time
to eliminating).
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OI -- Address differences between the tariff/protocols and current
ISO practices Before redesigning the A/S market. One question
is whether practices are consistent with tariff/protocols.
Another is setting the criteria for special operator
intervention and communication).
- Allow intrazonal procurement
- Ramp rates
- Different size block
ANCILLARY SERVICES REDESIGN PROJECT
OBJECTIVES (FROM THE MARKET ISSUES FORUM)
-- Simplify the auction process and software. (Good- How does it
help)?
-- Facilitate least cost procurement. (If it's market based,
this will happen).
-- Encourage market participation. (It it's market based, this
will happen).
-- Facilitate demand elasticity. (Covered in objective).
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