EXHIBIT 99.206
CIGMOD GAME VARIATIONS
By modifying certain parameters, the user is able to simulation several
alternative configurations of the electric utility industry with CIGMOD. Below
is a description of the "system set-up" options, followed by a description of
several standard combinations of these options.
1. System Operation
"Direct Access Contracts": The retail company must satisfy all its requirements
with direct access contracts. The generator must serve all its contracts with
its capacity and is penalized if it cannot meet that load (PRODSW=1).
"PoolCo": The retail company must satisfy all its requirements with direct
access contracts. The power pool dispatches the generating plants resulting in a
system with old fashioned central dispatch based on marginal costs (PRODSW=2).
"Spot Market Only": Retail companies buy all their power from the spot market
and generators bid all their power into the spot market (PRODSW=3).
"Spot Market with Contracts for Differences" All power is bought and sold
through the spot market, but generators and retail companies may sign contracts
for differences to hedge against uncertainty in the spot market (PRODSW=4).
"Spot Market and Direct Access Contracts": Retail companies and generators
determine their mix of direct access contracts and spot market activity
(PRODSW=5).
2. Carbon Tax: A tax per unit of carbon (i.e. $2.00/ton) is charged to each
generator based on their fuel use (CARBONTX=0.00).
3. Transmission Constraints - If TRANSW equals 1, then the spot market and
direct access contracts are subject to transmission constraints at the time of
dispatch. If TRANSW equals 0, then no transactions are subject to transmission
constraints (TRANSW=1).
4. Self-Dealing - Generation companies sell a fraction (SELFFR) of their
existing capacity to their sister retail company at full embedded costs. This
option is used to simulate a continuation of the historical regulated vertical
monopolies (SELFFR=0.00).
5. Retail Wheeling - With retail wheeling retail customers are able to choose
their supplier of electricity. Retail wheeling may be selected for any or all
customer classes (residential, commercial, industrial) and geographic regions
(RWHEEL=0).
6. Customer Loyalty - Customer loyalty is the tendency of a customer to stay
with their current electric supplier regardless of the relative prices. This
loyalty declines as new companies move into the area. The average time in years
required to reduce customer loyalty is an option in CIGMOD (LAT=5, MAT=5).
7. Marketing/Advertising Efficiency - By marketing and advertising retail
companies are maintain or increase their market share of retail customers. The
advertising efficiency in mills/kWh is the parameter used to convert budgets
into customer loyalty (ADEFF=5).
10. Customer Price Response - Retail customers do not always pick their least
cost option. CIGMOD simulates the many factors which impact decisions by
consumers; however, when humans are playing the CIGMOD game they occasionally
set their prices at exorbitant level. This variable constrains the market share
for prices which are significantly greater than the lowest electric price within
the same customer class. (PELIMIT=2.0)
9. Historical Purchase Power Agreements - As the simulation begins, many
companies have existing purchase power agreements with other companies. If PPSW
equals 0, then all historical purchase power agreements are canceled. If PPSW
equals 1, then all purchase power agreements remain forever. If PPSW equals 2,
then the historical purchase power agreements are trended to zero over 5 years.
(PPSW=0)
10. Capacity Construction Constraint - Even with deregulation, state commissions
and siting councils may restrict the amount of new capacity. This option (still
being developed) will restrict the amount of new capacity whenever the reserve
margin for the region exceeds a limit. (RMMAX=1000)
11. Economic Growth - Economic growth is the primary driver of changes in energy
demands in CIGMOD. This option (still being developed) will change the economic
growth rate for all economic sectors (ECOGR=0.00).
12. Energy Prices - Energy prices impact the electric industry by changing the
cost of fuel to the generation companies and modifying the fuel choice decision
of the retail customers. This option (still being developed) will modify the
real growth rate of the primary energy prices. (GASGR=0.00)
TABLE OF GAME VARIATIONS
- ---------- ------ ------ ------ ------ ------- --------
DA CFD SP DARW DA100 DARWTX
------ ------ ------ ------ ------- --------
PRODSW 5 4 3 5 1 5
CARBONTX 0.00 0.00 0.00 0.00 0.00 2.00
TRANSW 1 1 1 1 1 1
SELFFR 0.00 0.00 0.00 0.00 0.00 0.00
RWHEEL 0 0 0 1 0 1
LAT, MAT 5 5 5 5 5 5
ADEFF 5.00 5.00 5.00 5.00 5.00 5.00
PELIMIT 2.00 2.00 2.00 2.00 2.00 2.00
PPSW 0 0 0 0 0 0
RMMAX 1000 1000 1000 1000 1000 1000
ECOGR 0.00 0.00 0.00 0.00 0.00 0.00
GASGR 0.00 0.00 0.00 0.00 0.00 0.00
- ---------- ------ ------ ------ ------ ------- --------
DA - This game contains direct access contracts with a spot market. The
transmission constraint is active. The price limit is 2.0 which means that any
price greater than twice the minimum price will receive no
marginal market share. This effect is dampened due to the delays in the system.
The advertising efficiency is 5 mills/kWh. There are no self dealing, no carbon
tax, and no retail wheeling in this run.
CFD - In this game all power is bought and sold through the spot market; however
retail companies are able to sign contracts for differences. The transmission
constraint is active. The price limit is 2.0 which means that any price greater
than twice the minimum price will receive no marginal market share. This effect
is dampened due to the delays in the system. The advertising efficiency is 5
mills/kWh. There are no self dealing, no carbon tax, and no retail wheeling in
this run.
SP - In this game all power is bought and sold through the spot market with no
contracts for differences. The transmission constraint is active. The price
limit is 2.0 which means that any price greater than twice the minimum price
will receive no marginal market share. This effect is dampened due to the delays
in the system. The advertising efficiency is 5 mills/kWh. There are no self
dealing, no carbon tax, and no retail wheeling in this run.
DARW - This game contains direct access contracts with a spot market. The
transmission constraint is active. The price limit is 2.0 which means that any
price greater than twice the minimum price will receive no marginal market
share. This effect is dampened due to the delays in the system. The advertising
efficiency is 5 mills/kWh. This run allows retail wheeling starting in 1995. The
impact of retail wheeling is gradual due to delays in the system. There are no
self dealing or carbon tax in this run.
DA - This game contains direct access contracts without a spot market. The
transmission constraint is active. The price limit is 2.0 which means that any
price greater than twice the minimum price will receive no marginal market
share. This effect is dampened due to the delays in the system. The advertising
efficiency is 5 mills/kWh. There are no self dealing, no carbon tax, and no
retail wheeling in this run.
DARWTX - This game contains direct access contracts with a spot market. The
transmission constraint is active. The price limit is 2.0 which means that any
price greater than twice the minimum price will receive no marginal market
share. This effect is dampened due to the delays in the system. The advertising
efficiency is 5 mills/kWh. This run allows retail wheeling starting in 1995. The
impact of retail wheeling is gradual due to delays in the system. A carbon tax
of $2.00/mmBtu begins in 1995. There are no self dealing in this run. (This run
is still being developed.)