Exhibit 99.435
ISO MARKET MONITORING & INFORMATION PROTOCOL
ISO MARKET MONITORING AND INFORMATION PROTOCOL
TABLE OF CONTENTS
MMIP 1 OBJECTIVES, DEFINITIONS, AND SCOPE
MMIP 1.1 OBJECTIVES
MMIP 1.1.1 Means and Actions
MMIP 1.1.2 Reporting Requirements
MMIP 1.2 DEFINITIONS
MMIP 1.2.1 Master Definitions Supplement
MMIP 1.2.2 Special Terms for This Protocol
MMIP 1.2.3 Rules of Interpretation
MMIP 1.3 SCOPE
MMIP 1.3.1 Scope of Application to Parties
MMIP 1.3.2 Liability of ISO
MMIP 2 PRACTICES SUBJECT TO SCRUTINY
MMIP 2.1 PRACTICES SUBJECT TO SCRUTINY - GENERAL
MMIP 2.1.1 Anomalous Market Behavior
MMIP 2.1.2 Abuse of Reliability Must-Run Unit Status
MMIP 2.1.3 Gaming
MMIP 2.1.4 ISO and PX Design Flaws
MMIP 2.1.5 Market Structure Flaws
MMIP 2.2 PRACTICES SUBJECT TO SCRUTINY PENDING DIVESTITURE
MMIP 2.2.1 Exercises of Horizontal Market Power
MMIP 2.2.2 IOU Mitigation Plans
MMIP 2.2.3 Effects Pending Divestiture
MMIP 2.3 RESPONSE ACTION BY ISO
MMIP 2.3.1 Corrective Actions
MMIP 2.3.2 Further Actions
MMIP 2.3.3 Response to Gaming Behavior
MMIP 2.3.4 Adverse Effects of Transition Mechanisms
MMIP 3 ISO MARKET SURVEILLANCE UNIT
MMIP 3.1 ESTABLISHMENT
MMIP 3.2 COMPOSITION
MMIP 3.3 ACCOUNTABILITY AND RESPONSIBILITIES
MMIP 3.3.1 Market Surveillance Unit
MMIP 3.3.2 CEO and ISO MSC
MMIP 3.3.3 Chief Executive Officer (CEO)
MMIP 3.3.4 Regulatory and Antitrust Enforcement Agencies
MMIP 3.3.5 Complaints
MMIP 4 SPECIFIC FUNCTIONS OF ISO MARKET SURVEILLANCE UNIT
MMIP 4.1 INFORMATION GATHERING AND MARKET MONITORING INDICES FOR
EVALUATION
MMIP 4.1.1 Information System
MMIP 4.1.2 Data Categories
MMIP 4.1.3 Catalog of Market Monitoring Indices
MMIP 4.2 EVALUATION OF INFORMATION
MMIP 4.2.1 Ongoing Evaluation
MMIP 4.2.2 Submission of Evaluation Results
MMIP 4.3 REVIEW OF ACTIVITY RULES
MMIP 4.4 REPORTS AND RECOMMENDATIONS
MMIP 4.4.1 ISO CEO and Governing Board
MMIP 4.4.2 Regulatory Agencies
MMIP 4.4.3 ISO Market Surveillance Committee
MMIP 4.5 ISO PARTICIPANTS
MMIP 4.5.1 Collection of Data
MMIP 4.5.2 Provision of Data by ISO Participants
MMIP 4.5.3 Dissemination of Data
MMIP 4.6 EXTERNAL CONSULTING ASSISTANCE AND EXPERT ADVICE
MMIP 4.7 COOPERATION WITH PX COMPLIANCE UNIT AND MARKET MONITORING
COMMITTEE
MMIP 4.8 LIABILITY FOR DAMAGES
MMIP 5 ISO MARKET SURVEILLANCE COMMITTEE
MMIP 5.1 ESTABLISHMENT
MMIP 5.2 COMPOSITION
MMIP 5.2.1 Qualifications
MMIP 5.2.2 Criteria for Independence
MMIP 5.3 APPOINTMENTS TO THE ISO MSC
MMIP 5.4 COMPENSATION AND REIMBURSEMENTS
MMIP 5.5 LIABILITY FOR DAMAGES
MMIP 6 SPECIFIC FUNCTIONS OF ISO MARKET SURVEILLANCE COMMITTEE
(ISO MSC)
MMIP 6.1 INFORMATION GATHERING AND EVALUATION CRITERIA
MMIP 6.2 EVALUATION OF INFORMATION
MMIP 6.3 REPORTS AND RECOMMENDATIONS
MMIP 6.3.1 Required Reports
MMIP 6.3.2 Additional Reports
MMIP 6.4 PUBLICATION OF REPORTS AND RECOMMENDATIONS
MMIP 7 IMPLEMENTATION OF RECOMMENDATIONS
MMIP 7.1 PLAN AND ACTIVITY RULE CHANGES
MMIP 7.2 TARIFF CHANGES
MMIP 7.3 SANCTIONS AND PENALTIES
MMIP 8 PUBLICATION OF INFORMATION
MMIP 8.1 MARKET MONITORING DATA AND INDICES
MMIP 8.2 REGULAR INFORMATION PUBLICATION
MMIP 8.3 REPORTS TO REGULATORS
MMIP 9 AMENDMENTS
ISO MARKET MONITORING AND
INFORMATION PROTOCOL (MMIP)
MMIP 1. OBJECTIVES, DEFINITIONS, AND SCOPE
MMIP 1.1 OBJECTIVES
This Protocol (MMIP) sets forth the workplan and, where
applicable, the rules under which the ISO will monitor the ISO
Markets to identify abuses of market power, to ensure to the
extent possible the efficient working of the ISO Markets
immediately upon commencement of their operation, and to provide
for their protection from abuses of market power in both the
short term and the long term, and from other abuses that have the
potential to undermine their effective functioning or overall
efficiency in accordance with Section 16.3 of the ISO Tariff.
Such monitoring activities will be carried out by the ISO Market
Surveillance Unit and the ISO Market Surveillance Committee to be
established and to operate under the terms of this Protocol, as
set forth below.
MMIP 1.1.1 MEANS AND ACTIONS
This Protocol sets forth the means of data collection, analysis,
decision-making, formulation of corrective actions, and
enforcement actions that will be instituted or undertaken by the
ISO. It describes the implementation mechanisms to be created by
the ISO to serve these purposes.
MMIP 1.1.2 REPORTING REQUIREMENTS
This Protocol sets forth the information dissemination,
publication and reporting activities and other means of providing
information that the ISO will undertake to meet its reporting
requirements to regulatory agencies, ISO Participants and others.
The goal of the reporting provisions of this Protocol is to
adequately inform regulatory agencies, ISO Participants and
others of the state of the ISO Markets, especially their
competitiveness and efficiency. This function is designed to
facilitate efficient corrective actions to be taken by the
appropriate body or bodies when required.
MMIP 1.2 DEFINITIONS
MMIP 1.2.1 MASTER DEFINITIONS SUPPLEMENT
Unless the context otherwise requires, any word or expression
defined in the Master Definitions Supplement to the ISO Tariff
shall have the same meaning where used in this Protocol.
References to a Section or Appendix are to a Section or an
Appendix of the ISO Tariff. References to MMIP are to this
Protocol or to the stated section, paragraph or appendix of this
Protocol.
MMIP 1.2.2 SPECIAL TERMS FOR THIS PROTOCOL
In this Protocol, the following words and expressions shall have
the meanings set opposite them:
"MARKET SURVEILLANCE UNIT" means the unit established under MMIP
3.1.
"ISO MARKET SURVEILLANCE COMMITTEE (ISO MSC)" means the committee
established under MMIP 5.1.
"ACTIVITY RULES" means the rules relating to the activities of
ISO or PX Participants set forth in or referred to in the ISO and
PX Tariff and Protocols.
"ISO HOME PAGE" means the ISO internet home page at
http://www.caiso.com or such other internet address as the ISO
shall publish from time to time.
MMIP 1.2.3 RULES OF INTERPRETATION
MMIP 1.2.3.1 Unless the context otherwise requires, if the provisions of this
Protocol and the ISO Tariff conflict, the ISO Tariff will prevail
to the extent of the inconsistency. The provisions of the ISO
Tariff have been summarized or repeated in this Protocol only to
aid understanding.
MMIP 1.2.3.2 A reference in this Protocol to a given agreement, ISO Protocol
or instrument shall be a reference to that agreement or
instrument as modified, amended, supplemented or restated through
the date as of which such reference is made.
MMIP 1.2.3.3 The captions and headings in this MMIP are inserted solely to
facilitate reference and shall have no bearing upon the
interpretation of any of the terms and conditions of this
Protocol.
MMIP 1.2.3.4 This Protocol shall be effective as of January 1, 1998.
MMIP 1.3 SCOPE
MMIP 1.3.1 SCOPE OF APPLICATION TO PARTIES
The MMIP applies to:
MMIP 1.3.1.1 All ISO Market Participants;
MMIP 1.3.1.2 PX Participants;
MMIP 1.3.1.3 the ISO.
MMIP 1.3.2 LIABILITY OF ISO
Any liability of the ISO arising out of or in relation to this
Protocol shall be subject to Section 14 of the ISO Tariff as if
references to the ISO Tariff were references to this Protocol.
MMIP 2 PRACTICES SUBJECT TO SCRUTINY
MMIP 2.1 PRACTICES SUBJECT TO SCRUTINY - GENERAL
The Market Surveillance Unit shall monitor the activities of
Market Participants and other entities described in MMIP 1.3.1.
It shall monitor such activities that affect the operation of the
ISO Markets and that provide indications of the phenomena set
forth below in this Section 2.1 and, where appropriate, it will
take such further action as it considers necessary under Section
2.3.
MMIP 2.1.1 ANOMALOUS MARKET BEHAVIOR
Anomalous market behavior, which is defined as behavior that
departs significantly from the normal behavior in competitive
markets that do not require continuing regulation or as behavior
leading to unusual or unexplained market outcomes. Evidence of
such behavior may be derived from a number of circumstances,
including:
MMIP 2.1.1.1 withholding of Generation capacity under circumstances in which
it would normally be offered in a competitive market;
MMIP 2.1.1.2 unexplained or unusual redeclarations of availability by
Generators;
MMIP 2.1.1.3 unusual trades or transactions;
MMIP 2.1.1.4 pricing and bidding patterns that are inconsistent with
prevailing supply and demand conditions, e.g., prices and bids
that appear consistently excessive for or otherwise inconsistent
with such conditions; and
MMIP 2.1.1.5 unusual activity or circumstances relating to imports from or
exports to other markets or exchanges.
The Market Surveillance Unit shall evaluate, on an ongoing basis,
whether the continued or persistent presence of such
circumstances indicates the presence of behavior that is designed
to or has the potential to distort the operation and efficient
functioning of a competitive market, e.g., the strategic
withholding and redeclaring of capacity, and whether it indicates
the presence and exercise of market power or of other
unacceptable practices.
MMIP 2.1.2 ABUSE OF RELIABILITY MUST-RUN UNIT STATUS
Where Generating Units are determined by the ISO to be
Reliability Must-Run Units, circumstances that indicate that such
Generating Units are being operated in a manner that will
adversely affect the competitive nature and efficient workings of
the ISO Markets.
MMIP 2.1.3 GAMING
"Gaming", or taking unfair advantage of the rules and procedures
set forth in the PX or ISO Tariffs, Protocols or Activity Rules,
or of transmission constraints in periods in which exist
substantial Congestion, to the detriment of the efficiency of,
and of consumers in, the ISO Markets. "Gaming" may also include
taking undue advantage of other conditions that may affect the
availability of transmission and generation capacity, such as
loop flow, facility outages, level of hydropower output or
seasonal limits on energy imports from out-of-state, or actions
or behaviors that may otherwise render the system and the ISO
Markets vulnerable to price manipulation to the detriment of
their efficiency.
MMIP 2.1.4 ISO AND PX DESIGN FLAWS
Design flaws and inefficiencies in the ISO Tariff, ISO Protocols
and operational rules and procedures of the ISO, including the
potential for problems between the ISO and other independent
power exchanges including the PX, insofar as they affect the ISO
Markets which may be evident from anomalous market behavior
monitored under MMIP 2.1.1 above, from evidence of gaming
monitored under MMIP 2.1.3 above, or from other activities.
MMIP 2.1.5 MARKET STRUCTURE FLAWS
With respect to flaws in the overall structure of the California
energy markets that may reveal undue concentrations of market
power in Generation or other structural flaws, the Market
Surveillance Unit shall provide such information or evidence of
such
flaws and such analysis as it may conduct to the ISO CEO, the ISO
Market Surveillance Committee or to the ISO Governing Board,
subject to due protections of confidential or commercially
sensitive information. After due internal consultation, if
instructed by any of such ISO institutions or persons, the Market
Surveillance Unit shall also provide such information or evidence
to the appropriate regulatory and antitrust enforcement agency or
agencies, subject to due protections of confidential or
commercially sensitive information. The Market Surveillance Unit
shall, provide such other evidence, views, analyses or testimony
as may be appropriate or required and as it is reasonably capable
of providing to assist the investigations of such agencies.
MMIP 2.2 PRACTICES SUBJECT TO SCRUTINY PENDING DIVESTITURE
In the transition periods pending completion of the various
divestiture plans undertaken by certain of the IOU's ("the
pre-divestiture period"), the Market Surveillance Unit shall
undertake the following measures to monitor the special
circumstances that may affect the operation of the ISO Markets
during this period and may recommend corrective actions as
provided in Section 2.3.
MMIP 2.2.1 EXERCISES OF HORIZONTAL MARKET POWER
The Market Surveillance Unit shall consider issues that have been
raised that some ISO Participants may be able to exercise
horizontal market power in the short term during this transition
period.
MMIP 2.2.2 IOU MITIGATION PLANS
The Market Surveillance Unit shall review all IOU mitigation
plans, as approved and modified by the FERC and other regulatory
agencies, that might affect the competitiveness of and the
efficient operation of the ISO Markets. In consultation with the
Compliance Unit of the PX, the Market Surveillance Unit shall
analyze what further actions may be necessary to ensure the
effective implementation of these mitigation plans with respect
to the ISO Markets, and may make such recommendations for further
actions as it considers appropriate to the ISO CEO and Governing
Board, the FERC, the CPUC or other regulatory agencies. The
Market Surveillance Unit shall monitor the ongoing implementation
of such plans to the extent feasible within the area of its
responsibility, capability and resources.
MMIP 2.2.3 EFFECTS PENDING DIVESTITURE
In the pre-divestiture period, the Market Surveillance Unit shall
monitor and analyze the combined effect of the operations of the
CTC and the rate freeze under which the Companies are required to
operate during the pre-divestiture period on the state of
competition in and the efficient operation of the ISO Markets;
and the Market Surveillance Unit shall consult with the
Compliance Unit of the PX with respect to such effects on both
the PX and ISO Markets.
MMIP 2.3 RESPONSE ACTION BY ISO
MMIP 2.3.1 CORRECTIVE ACTIONS
Where the monitoring activities or any consequent investigations
carried out by the Market Surveillance Unit pursuant to MMIP 2
and MMIP 4 reveal a significant possibility of the presence of or
potential for exercises of market power that would adversely
affect the operation of the ISO Markets, or the markets
administered by the PX or otherwise operating in the State of
California, the Market Surveillance Unit shall take the
appropriate measures under this section and under MMIP 4, 6, and
7 to institute the corrective action most effective and
appropriate for the situation or, in the case of markets
administered by the PX or otherwise operating in the State of
California, the Market Surveillance Unit may recommend corrective
actions to the PX or to the appropriate regulatory agencies.
MMIP 2.3.2 FURTHER ACTIONS
Where the monitoring activities of or any consequent
investigations carried out by the Market Surveillance Unit
pursuant to MMIP 2.1 and 2.2 reveal that activities or behavior
of Market Participants in the ISO Markets have the effect of, or
potential for, undermining the efficiency, workability or
reliability of the ISO Markets to give or to serve such Market
Participants an unfair competitive advantage over other Market
Participants, the Market Surveillance Unit shall fully
investigate and analyze the effect of such activities or behavior
and, where appropriate, make recommendations to the ISO CEO and
the ISO MSC for further action by the ISO or, where necessary, by
other entities. The ISO may publicize such activities or behavior
and it's recommendations thereof, in whatever medium it believes
most appropriate. The Market Surveillance Unit may, where
appropriate, make specific recommendations for amendment to rules
and protocols under its control, or for referral to the PX as to
rules and protocols under the PX's control, or for
changes to the structure of the ISO Markets, or by referral to
the PX, of the markets administered by the PX, and the Market
Surveillance Unit may recommend actions, including fines or
suspensions, against specific entities in order to deter such
activities or behavior.
MMIP 2.3.3 RESPONSE TO GAMING BEHAVIOR
If evidence of "gaming" or taking undue advantage exists, as
described in MMIP 2.1.4, the Market Surveillance Unit shall, in
cooperation with the PX Compliance Unit where appropriate, review
the "gaming" behavior and/or the relationship between system
conditions and market behavior and pricing in order to assess the
potential for and impact of such gaming behavior, with a view to
taking appropriate action, if necessary, either with respect to
structural changes such as Zone changes, or to changes to the ISO
or PX Tariffs, Protocols or Activity Rules, or to proscribe
specific behavior by Market Participants. In carrying out such
activities the Market Surveillance Unit shall in appropriate
circumstances seek the advice of the ISO MSC on the merits of
such actions. In appropriate circumstances, the Market
Surveillance Unit may institute or arrange for ADR procedures
involving Market Participants with conflicting perspectives, e.g.
as to whether a particular practice is better characterized as
improper gaming or legitimate aggressive competition or as to
whether rule changes may resolve conflicts.
MMIP 2.3.4 ADVERSE EFFECTS OF TRANSITION MECHANISMS
Should the monitoring and analysis conducted under MMIP 2.2.3
reveal significant adverse effects of transition mechanisms on
competition in or the efficient operation of the ISO Markets, the
Market Surveillance Unit shall examine and fully assess the
efficacy of all possible measures that may be taken by the ISO
and, in consultation with the Compliance Unit of the PX, all
possible measures that may be taken by the PX, in order to
prevent or to mitigate such adverse effects. The Market
Surveillance Unit shall make such recommendations to the CEO of
the ISO and to the ISO MSC as it considers appropriate for action
in this regard by the PX or the ISO or for referral to the
regulatory or antitrust enforcement agencies. Such proposed
measures may include, but shall not be limited to the following:
MMIP 2.3.4.1 the use of direct bid caps as a mechanism to prevent or mitigate
artificially high Market Clearing Prices caused by abuses of
market power;
MMIP 2.3.4.2 the use of contracts for differences for eliminating the
incentive for Generators to bid ISO prices to artificially high
levels enabled by the presence of market power;
MMIP 2.3.4.3 calling upon Reliability Must-Run Units to operate; and to modify
Reliability Must-Run Contracts;
MMIP 2.3.4.4 bid floors to prevent or mitigate the possible exercise of
below-cost bidding or predatory pricing that may arise from the
incentives provided by the combined effect of the CTC and the
rate freeze when the IOUs are net buyers of Energy.
The CEO and the ISO MSC shall consult on such recommendations and
each may, after due consideration, propose any of such measures
to the ISO Governing Board. In the event that the ISO Governing
Board adopts, and where necessary obtains regulatory approval
for, any measure proposed pursuant to MMIP 2.2.4, the Market
Surveillance Unit shall develop an implementation plan for such
measure, and shall submit such plan to the CEO and ISO MSC. Upon
approval of such plan by the CEO, the Market Surveillance Unit
shall monitor the implementation and effect of such measure on
the state of the ISO Markets and shall periodically report on
them to the CEO and the ISO MSC.
MMIP 3 ISO MARKET SURVEILLANCE UNIT
MMIP 3.1 ESTABLISHMENT
There shall be established on or before ISO Operations Date
within the ISO a Market Surveillance Unit that shall be
responsible for the ongoing development, implementation, and
execution of the ISO Market monitoring and information scheme
described in this MMIP and the adherence to its objectives, as
set forth in MMIP 1.1.
MMIP 3.2 COMPOSITION
The Market Surveillance Unit shall be adequately staffed by the
ISO with full-time ISO staff with the experience and
qualifications necessary to fulfill the functions referred to in
this MMIP. Such qualifications may include professional training
pertinent to and experience in the operation of markets analogous
to ISO Markets, in the electric power industry, and in the field
of competition and antitrust law, economics and policy. The
Market Surveillance Unit shall be directed by a Compliance
Director who shall be under the management of the ISO Chief Legal
Counsel and the ISO CEO.
MMIP 3.3 ACCOUNTABILITY AND RESPONSIBILITIES
MMIP 3.3.1 MARKET SURVEILLANCE UNIT
The Market Surveillance Unit shall report and be accountable to
the ISO CEO through the Chief Legal Counsel on all matters
pertaining to policy and other matters that may affect the
effectiveness and integrity of the monitoring function referred
to in this Protocol, including matters pertaining to market
monitoring, information development and dissemination and
pertaining to generic or entity-specific investigations,
corrective actions or enforcement.
MMIP 3.3.2 CEO AND ISO MSC
The ISO CEO and the ISO MSC shall each have the independent
authority to refer any of the matters referred to in MMIP 3.3.1
to the ISO Governing Board for approval of recommended actions.
MMIP 3.3.3 CHIEF EXECUTIVE OFFICER (CEO)
MMIP 3.3.3.1 The Market Surveillance Unit shall report to and be accountable
to the ISO CEO through the Chief Legal Counsel on all matters
relating to the day-to-day administration of the Market
Surveillance Unit and the internal resources and organization of
the ISO in accordance with MMIP 3.3.3(b).
MMIP 3.3.3.2 The ISO CEO shall ensure that the Market Surveillance Unit has
adequate resources and full access to data and the full
cooperation of all parts of the ISO organization in developing
the database necessary for the effective functioning of the
Market Surveillance Unit and the fulfillment of its monitoring
function. The ISO CEO shall institute within the ISO such data
collection, organization and analytic activities as may be
necessary for the Market Surveillance Unit to fulfill its
functions and responsibilities.
MMIP 3.3.4 REGULATORY AND ANTITRUST ENFORCEMENT AGENCIES
Where considered necessary and appropriate, or where so ordered
by the regulatory or antitrust agency with jurisdiction over the
matter in question, or by a court of competent jurisdiction, the
Market Surveillance Unit shall refer a matter through the ISO CEO
to the regulatory or antitrust enforcement agency concerned,
e.g., in cases of serious abuse requiring expeditious
investigation or action by the agency. In all such cases of
direct referral, the ISO CEO shall promptly inform the ISO
Governing Board and the ISO MSC of the fact of and the content of
the referral.
MMIP 3.3.5 COMPLAINTS
Any Market Participant, or any other interested entity, may at
any time submit information to or make a complaint to the Market
Surveillance Unit concerning any matter that it believes may be
relevant to the Market Surveillance Unit's monitoring
responsibilities. Such submissions or complaints may be made on a
confidential basis in which case the Market Surveillance Unit
shall preserve the confidentiality thereof. The Market
Surveillance Unit, at its discretion, may request further
information from such entity and carry out any investigation that
it considers appropriate as to the concern raised. The Market
Surveillance Unit shall periodically make reports to the ISO CEO
and ISO Governing Board on complaints received.
MMIP 4 SPECIFIC FUNCTIONS OF ISO MARKET SURVEILLANCE UNIT
MMIP 4.1 INFORMATION GATHERING AND MARKET MONITORING INDICES FOR
EVALUATION
MMIP 4.1.1 INFORMATION SYSTEM
The Market Surveillance Unit shall be responsible for developing
an information system and criteria for evaluation that will
permit it to effectively monitor the ISO Markets to identify and
investigate abuses of that market, whether caused by exercises of
market power or by other actions or inactions.
MMIP 4.1.2 DATA CATEGORIES
To develop the information system set forth in MMIP 4.1.1, the
Market Surveillance Unit shall initially develop, and shall
refine on the basis of experience, a detailed catalog of all the
categories of data it will have the means of acquiring, and the
procedures it will use (including procedures for protecting
confidential data) to handle such data.
MMIP 4.1.3 CATALOG OF MARKET MONITORING INDICES
The Market Surveillance Unit shall initially develop, and shall
refine on the basis of experience, a catalog of the ISO Market
monitoring indices that it will use to evaluate the data so
collected.
MMIP 4.2 EVALUATION OF INFORMATION
MMIP 4.2.1 ONGOING EVALUATION
The Market Surveillance Unit shall evaluate and reevaluate on an
ongoing basis the data categories and market monitoring indices
that it has developed under MMIP 4.1.2 and 4.1.3, and the
information it collects and receives from various other sources,
including and in particular the ISO's operation of the ISO
Markets. Such ongoing evaluations shall provide the basis for its
reporting and publication responsibilities as set forth in this
Protocol, for recommendations on proposed changes to the ISO
Tariff and ISO Protocols and other potential rules affecting the
ISO Markets, and for the development of criteria or standards for
the initiation of proposed corrective or enforcement actions. In
evaluating such information, the Market Surveillance Unit may
consult the ISO MSC or such external bodies as may be
appropriate.
MMIP 4.2.2 SUBMISSION OF EVALUATION RESULTS
The final results of the Market Surveillance Unit's evaluations
shall routinely and promptly be submitted simultaneously to the
ISO CEO and to the ISO MSC for comment.
MMIP 4.3 REVIEW OF ACTIVITY RULES
When an iterative bidding process is developed that requires the
application of Activity Rules, whether developed by the ISO or
the PX, the Market Surveillance Unit shall review such Activity
Rules for their effectiveness and consistency with its market
monitoring activities and standards. The Market Surveillance Unit
may at that time, and from time to time thereafter based on its
experience in monitoring the ISO Markets, propose that changes be
made in such Activity Rules.
MMIP 4.4 REPORTS AND RECOMMENDATIONS
MMIP 4.4.1 ISO CEO AND GOVERNING BOARD
On the basis of the evaluation conducted under MMIP 4.2 or the
review conducted under MMIP 4.3, the Market Surveillance Unit
shall prepare periodic reports, as required by the ISO CEO, and
specific ad hoc reports as appropriate, for the ISO CEO and ISO
Governing Board on the state of competition in or the efficiency
of the ISO Markets; and on its monitoring activities, the results
of its evaluation and review activities, and its development and
implementation of recommendations. Where appropriate, the ISO
Market Surveillance Unit may recommend actions to be taken,
including the amendment of the ISO Tariff and ISO Protocols and
corrective or enforcement action against specific entities. Such
reports shall be made not less frequently than quarterly in the
case of the ISO CEO and ISO MSC and annually in the case of the
ISO Governing Board and shall contain such information and be in
such form as specified by such entities. Such reports shall be
made public and publicized as specified by such entities except
to the extent that they contain confidential or commercially
sensitive information or to the extent such entities determine
that effective enforcement of the monitoring function dictates
otherwise.
MMIP 4.4.2 REGULATORY AGENCIES
As required in the ISO Tariff or by the ISO CEO and ISO Governing
Board, or as required by the regulatory agency with jurisdiction
over the matters in question, the Market Surveillance Unit shall
prepare reports to the FERC and other regulatory agencies, which
shall be reviewed and approved by the ISO CEO and Governing Board
and then submitted as required. When publicly available reports
are made to one regulatory agency with competent jurisdiction,
such as the FERC, the Market Surveillance Unit may simultaneously
make such reports available to other regulatory agencies with
legitimate interests in their contents, such as the CPUC and CEC.
MMIP 4.4.3 ISO MARKET SURVEILLANCE COMMITTEE
All reports and recommendations to be made to the ISO CEO and ISO
Governing Board under MMIP 4.4.1, or to regulatory agencies under
MMIP 4.4.2, unless urgency requires otherwise, shall first be
submitted to the ISO MSC for comments, which comments shall be
reflected in the submittal to the ISO Governing Board. In
addition, the Market Surveillance Unit may submit specific
reports to the ISO MSC itself, as it considers appropriate. All
final reports made to external regulatory agencies shall be
simultaneously submitted to the ISO MSC.
MMIP 4.5 ISO PARTICIPANTS
MMIP 4.5.1 COLLECTION OF DATA
The Market Surveillance Unit may request the submission of any
information or data determined by the Market Surveillance Unit to
be potentially relevant by ISO Participants, the PX or other
entities whose activities may affect the operation of the ISO
market. This
data will be subject to due safeguards to protect confidential
and commercially sensitive data. Failures by ISO Participants to
provide such data shall be treated under MMIP 4.5.2. In the event
of failures by other entities to provide such data, the Market
Surveillance Unit may report the failure to the ISO CEO and
Governing Board or the pertinent regulatory agency, as
appropriate, after providing such entity the opportunity to
respond in writing as to the reason for the alleged failure.
MMIP 4.5.2 PROVISION OF DATA BY ISO PARTICIPANTS
Failure by an ISO Participant to provide information requested
pursuant to MMIP 4.5.1, or otherwise to cooperate in the Market
Surveillance Unit's data collection or investigation activities,
may be treated as grounds for action against the ISO Participant
entity concerned. Such action may lead to the imposition of such
penalties or sanctions as are permitted under the ISO Tariff or
related protocols approved by FERC and may include possible
exclusion from the ISO Markets or termination of any relevant ISO
agreements or certifications. Before any such action is taken,
the ISO Participant shall be provided the opportunity to respond
in writing as to the reason for the alleged failure.
MMIP 4.5.3 DISSEMINATION OF DATA
ISO Participants may request that the ISO provide data that it
has collected; and, upon approval of the ISO CEO and at his sole
discretion, such data may, subject to constraints on the ISO's
resources, be provided by the ISO subject to due safeguards to
protect confidential and commercially sensitive data. Where such
activity imposes a significant burden or expense on the ISO, the
data may be provided on the condition that a reasonable
contribution to the cost incurred by the ISO is made to the ISO
by the requesting party.
MMIP 4.6 EXTERNAL CONSULTING ASSISTANCE AND EXPERT ADVICE
In carrying out any of its responsibilities under this MMIP 4,
including the development of an information system, market
monitoring indices and evaluation criteria, and the catalogs
associated therewith, and in its analysis and ongoing evaluation
of these catalogs and of the Activity Rules under MMIP 4.3, the
Market Surveillance Unit may hire consulting assistance subject
to the budgetary approval of the ISO CEO and may seek such expert
external advice as it believes necessary.
MMIP 4.7 COOPERATION WITH PX COMPLIANCE UNIT AND MARKET MONITORING
COMMITTEE
In carrying out its responsibilities under this Protocol, the
Market Surveillance Unit may at its discretion consult or
cooperate in the manner it considers most appropriate with the
PX's Compliance Unit and Market Monitoring Committee, or other
entities within the PX that fulfill the analogous market
monitoring functions, with respect to the following:
MMIP 4.7.1.1 exchange of data subject to any limitations on the ISO's ability
to disclose commercially sensitive information from other
Scheduling Coordinators to the ISO, monitoring methodologies and
results, and information on corrective, referral or enforcement
actions taken;
MMIP 4.7.1.2 monitoring of market performance;
MMIP 4.7.1.3 joint analysis of data, subject to any limitations on the ISO's
ability to disclose commercially sensitive information from other
Scheduling Coordinators to the ISO, and monitoring results of
markets and Market Participant behavior;
MMIP 4.7.1.4 investigations of specific market abuses; and
MMIP 4.7.1.5 proposals for concerted action on enforcement measures, e.g., as
to suspensions from trading.
MMIP 4.8 LIABILITY FOR DAMAGES
As provided in Section 14.1 and 14.2 of the ISO Tariff, the
Market Surveillance Unit, the ISO MSC, the ISO CEO and other ISO
staff shall not be liable to any Market Participant under any
circumstances whatsoever for any matter described in those
sections, including but not limited to any financial loss or loss
of economic advantage resulting from the performance or
non-performance by such ISO entities of their functions under
this Protocol.
MMIP 5 ISO MARKET SURVEILLANCE COMMITTEE
MMIP 5.1 ESTABLISHMENT
There shall be established on or before ISO Operations Date an
ISO Market Surveillance Committee (ISO MSC), whose role it shall
be to provide independent external expertise on the ISO market
monitoring process as described in this Protocol and, in
particular,
to provide independent expert advice and recommendations to the
ISO CEO and Governing Board.
MMIP 5.2 COMPOSITION
MMIP 5.2.1 QUALIFICATIONS
The ISO MSC shall comprise a body of three independent and
recognized experts whose combined professional expertise and
experience shall encompass the following:
MMIP 5.2.1.1 economics, with emphasis on antitrust, competition, and market
power issues in the electricity industry;
MMIP 5.2.1.2 experience in operational aspects of generation and transmission
in electricity markets;
MMIP 5.2.1.3 experience in antitrust or competition law in regulated
industries; and
MMIP 5.2.1.4 financial expertise relevant to energy or other commodity
trading.
MMIP 5.2.2 CRITERIA FOR INDEPENDENCE
Each member of the ISO MSC must meet the following criteria for
independence in order to be appointed:
MMIP 5.2.2.1 no material affiliation, through employment, consulting or
otherwise, with any Market Participant or affiliate thereof
consistent with the pertinent FERC Standards of Conduct; and
MMIP 5.2.2.2 no material financial interest in any Market Participant or
affiliate thereof consistent with the pertinent FERC Standards of
Conduct.
MMIP 5.3 APPOINTMENTS TO THE ISO MSC
For each position on the ISO MSC, the ISO CEO shall conduct a
thorough search and requisite due diligence to develop a
nomination to the ISO Governing Board, which nomination shall be
consistent with meeting the combined professional expertise and
experience of the ISO MSC set forth in MMIP 5.2.1 and with the
criteria for independence set forth in MMIP 5.2.2. The ISO
Governing Board shall expeditiously consider such nominations. If
the nomination is approved, the ISO CEO shall appoint the
candidate so nominated to the ISO MSC. If the nomination is
rejected, the ISO CEO shall expeditiously proceed to develop
another nomination in accordance with this MMIP.
MMIP 5.4 COMPENSATION AND REIMBURSEMENTS
Members of the ISO MSC shall be compensated on such basis as the
ISO Governing Board shall from time to time determine. Members of
the ISO MSC shall receive prompt reimbursement for all expenses
reasonably incurred in the execution of their responsibilities
under this MMIP 5.
MMIP 5.5 LIABILITY FOR DAMAGES
As provided in Section 14.1 and 14.2 of the ISO Tariff, the
Market Surveillance Unit, the ISO MSC, the ISO CEO and other ISO
staff shall not be liable to any Market Participant under any
circumstances whatsoever for any matter described in those
sections, including but not limited to any financial loss or loss
of economic advantage resulting from the performance or
non-performance by such ISO entities of their functions under
this Protocol.
MMIP 6 SPECIFIC FUNCTIONS OF ISO MARKET SURVEILLANCE COMMITTEE (ISO
MSC)
MMIP 6.1 INFORMATION GATHERING AND EVALUATION CRITERIA
The ISO MSC shall review the initial catalogs of information and
data and of evaluation criteria developed by the Market
Surveillance Unit pursuant to MMIP 4 and shall propose such
changes, additions or deletions to such catalogs or items therein
as it sees fit. In so doing, the ISO MSC shall have full
discretion to specify database items or evaluation criteria for
inclusion in the pertinent catalog.
MMIP 6.2 EVALUATION OF INFORMATION
The ISO MSC may, upon request of the Market Surveillance Unit,
the ISO CEO or the ISO Governing Board, or on its own volition,
evaluate such information or data as may be collected by the
Market Surveillance Unit on the basis of the evaluation criteria
developed by the Market Surveillance Unit or on such further
articulated evaluation criteria developed by the ISO MSC. In
carrying out such evaluations, the ISO MSC may consult the PX's
Compliance Unit and Market Monitoring Committee with respect to
any matter relating to such evaluations.
MMIP 6.3 REPORTS AND RECOMMENDATIONS
MMIP 6.3.1 REQUIRED REPORTS
All evaluations carried out by the ISO MSC pursuant to MMIP 6.2,
and any recommendations emanating from such evaluations, shall be
embodied by the ISO MSC in written reports to the ISO CEO and ISO
Governing Board and shall be made publicly available subject to
due restrictions on dissemination of confidential or commercially
sensitive information.
MMIP 6.3.2 ADDITIONAL REPORTS
The ISO MSC may make such additional reports and recommendations
as it sees fit relating to the monitoring program referred to in
this Protocol, the analysis of information, the evaluation
criteria or any corrective or enforcement actions proposed by the
Market Surveillance Unit or proposed of its own volition.
MMIP 6.4 PUBLICATION OF REPORTS AND RECOMMENDATIONS Upon request of
the ISO MSC, the ISO CEO shall publish reports and
recommendations of the ISO MSC or incorporate them, if
consistent, into the ISO's own reports or recommendations.
MMIP 7 IMPLEMENTATION OF RECOMMENDATIONS
MMIP 7.1 PLAN AND ACTIVITY RULE CHANGES
Upon recommendation of the ISO CEO, acting on the advice of the
Market Surveillance Unit, or based on the independent
recommendation of the ISO MSC, the ISO Governing Board may make
such changes as it believes are appropriate to any ISO Protocol
or Agreement or to any Activity Rules applicable in accordance
with MMIP 9.
MMIP 7.2 TARIFF CHANGES
Upon recommendation of the ISO CEO, acting on the advice of the
Market Surveillance Unit, or based on the independent
recommendation of the ISO MSC, the ISO Governing Board shall
consider and may adopt proposed ISO Tariff changes in accordance
with MMIP 9.
MMIP 7.3 SANCTIONS AND PENALTIES
Upon recommendation of the ISO CEO, acting on the advice of the
Market Surveillance Unit, or based on the independent
recommendation of the ISO MSC, and after an audit by the Market
Surveillance Unit the ISO Governing Board may impose such
sanctions or penalties as it believes necessary and as are
permitted under the ISO Tariff and related protocols approved by
FERC; or it may make any such referral to such regulatory or
antitrust agency as it sees fit to recommend the imposition of
sanctions and penalties. The audit by the Market Surveillance
Unit shall investigate whether the abuse or behavior identified
meets the criteria for and has such effect as to warrant the
sanctions or penalties recommended.
MMIP 8 PUBLICATION OF INFORMATION
MMIP 8.1 MARKET MONITORING DATA AND INDICES
The ISO Market Surveillance Unit shall, pursuant to MMIP 4.1,
develop a catalog of data and indices. Upon approval of the ISO
CEO, such catalogs shall be duly published on the ISO Home Page
and disseminated to all ISO Participants.
MMIP 8.2 REGULAR INFORMATION PUBLICATION
The following information shall be published by the ISO Market
Surveillance Unit, in a medium and form helpful to Market
Participants, on a regular basis:
MMIP 8.2.1.1 Market Clearing Prices for Energy;
MMIP 8.2.1.2 Market Clearing Prices for Ancillary Services;
MMIP 8.2.1.3 Aggregate Supply and Demand for each Zone;
MMIP 8.2.1.4 Congestion and Congestion Costs;
MMIP 8.2.1.5 Generation Unit and transmission line outages; and
MMIP 8.2.1.6 Hydro-electric Generation
MMIP 8.3 REPORTS TO REGULATORS
The Market Surveillance Unit shall develop a schedule, format and
proposed table of contents for the annual reports to FERC, and
such other reports as may be required by FERC, which shall be
submitted as a proposal to the ISO CEO and ISO MSC. Upon
approval of such proposal, the Market Surveillance Unit shall
proceed to prepare such reports according to such schedule for
approval and submission by the ISO CEO to the Governing Board and
to the regulatory agency concerned.
MMIP 9 AMENDMENTS
If the ISO determines a need for an amendment to this Protocol,
the ISO will follow the requirements as set forth in Section 16
of the ISO Tariff.