EXHIBIT 99.527
ALTERNATIVES FOR MITIGATING POTENTIALLY
HIGH ZONAL MARKET CLEARING PRICES
CONFIDENTIAL DRAFT
CALIFORNIA POWER EXCHANGE
Cal PX CONFIDENTIAL DRAFT
SUMMARY OF ALTERNATIVES:
<Table>
<Caption>
PRICING PROPOSALS TO MITIGATE HIGH ZONAL PRICES MITIGATING EFFICIENT IMPLEMENT'N GAMING LONG-TERM WORK FOR
HIGH PRICES PRICES REQUIREMENT POTENTIAL APPLICATION MPS
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ALTERNATIVE 1 Very Inefficient Moderate Very No Minor
effective limited
o Apply UMCP to all zones
o Pay bid prices to suppliers above IPS
o Create uplift charge to account for congestion
charges from the ISO and added payments in 2
o Charge uplift to all demand based on MWh
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ALTERNATIVE 2 Very Moderately Moderate Very No Minor
effective inefficient limited
o Same as Alternative 1 except charge uplift to
all demand based on zone and MWh
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ALTERNATIVE 3 Moderately Moderately Moderate Limited No Minor
effective efficient
o Use Regional Incremental Costs (RICs) for
zonal MCPs
o Create uplift as the additional congestion
payment/credit for the remaining ISO
congestion payment/credit for the remaining
ISO congestion charges
o Charge uplift to all demand based on MWh
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ALTERNATIVE 4 Moderately Moderately Moderate Limited No Minor
effective efficient
o Same as Alternative 3 except charge uplift
to all demand based on zone and MWh
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ALTERNATIVE 5 Moderately Efficient Moderate Limited Probably Moderate-
effective may
o Stay with current marginal pricing procedures challenge
o Require incremental adjustment bids for all Price
generators and imports capped at $250/MWh caps
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ALTERNATIVE 6 Effective Efficient Major Limited Probably Major
o Stay with current marginal pricing procedures
o Require that the SABs submitted with IPS to
mimic overall portfolio bids - capped at
$250/MW
o Limit total import MW bid to less than the
capacity of the path
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ALTERNATIVE 7 Very Efficient Major Limited Yes Major
effective
o Stay with current marginal pricing procedures
o Require the PX market participants to submit
"unit bids" instead of portfolio bids - capped
at $250/MW
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</Table>
Cal PX CONFIDENTIAL DRAFT
DETAILS OF THE ALTERNATIVES:
<Table>
<Caption>
MITIGATING EFFICIENCY
PRICING PROPOSALS TO MITIGATE HIGH HIGH ZONAL OF PRICE GAMING LONG-TERM ADDED WORK
ZONAL PRICES PRICES SIGNALS IMPLEMENTATION REQUIREMENTS POTENTIAL APPLICATION FOR MPs
- ---------------------------------- ---------- ---------- --------------------------- --------- ----------- ----------
ALTERNATIVE 1 Very Inefficient o Settlements should be Very Stop gap None-except
1. UMCP will apply to all zones effective modified to allow extra limited measure as for potent-
2. All suppliers with Final Sche- payments as lump sum pay- gaming for we will ially
dule (FS) above Initial Pre- ment to supplies (gener- the trans- deviate adjusting
fered Schedule (IPS) will ation or import)--not mission from marg- their soft-
receive their bid price for trivial auction inal pricing ware to
supply above IPS as a lump sum o Settlements should be principles deal with
3. The ISO congestion charge and modified to assign CUP as with new
the added payment to suppliers a lump sum charge for charge
are summed to create a congest- demands (loan or export) items
ion uplift payment (CUP) -- not trivial.
4. CUP will be allocated to all o Uplift charges and added
loads based on their MWh use payments can be calcul-
ated in ZPC and passed
onto the Settlements --
moderate effort
o Will have time to the
first Settlements cycle
to implement(1)
ALTERNATIVE 2 Very Moderately o Settlements should be Very Stop gap None-except
1. UMCP will apply to all zones effective inefficient modified to allow extra limited measure as for potent-
2. All suppliers will Final payments as lump sum pay- gaming for we will ially
Schedule (FS) above Initial ments as lump sum payment the trans- deviate from adjusting
Preferred Schedule (IPS) will to supplies (generation mission marginal their own
receive their bid price for or import) -- not trivial auction pricing software to
supply above IPS as a lump sum o Settlements should be principles deal with
3. The ISO congestion charge and modified to assign CUP as new charge
the added payment to suppliers a lump sum charge for items
are summed to create a con- demands (load or export)
gestion uplift payment (CUP) -- not trivial.
4. CUP will be first allocated to o Lump sun outside can be
each zone (ZCUP) based on the calculated in ZPC and
ISO relative congestion prices passed onto the Settle-
for the zones ments -- moderate effort
5. ZCUP in each zone will be o Will have time to the
allocated to loads in that first Settlements cycle
zone based on their MWh use to implement
</Table>
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(1) Of course the PX market participants will not observe the prices until
software changes are complete.
Cal PX CONFIDENTIAL DRAFT
<Table>
<Caption>
MITIGATING EFFICIENCY
PRICING PROPOSALS TO MITIGATE HIGH ZONAL OF PRICE IMPLEMENTATION GAMING LONG-TERM ADDED WORK
HIGH ZONAL PRICES PRICES SIGNALS REQUIREMENTS POTENTIAL APPLICATION FOR MPs
- ------------------------------ ---------- ---------- ------------------------- ------------- ------------ ---------------
ALTERNATIVE 3 Moderately Moderately - Settlements should be Gaming Stop gas None -- except
1. Regional Incremental effective efficient modified to assign opportunities measure as for potentially
Costs (RICs)(2) used for CUP as a lump sum with default we will adjusting their
zonal MCPs charge for demands congestion deviate from own software to
2. Additional congestion (load or export) -- pricing will marginal deal with new
payment/credit for the not trivial. be mitigated. pricing charge items
remaining ISO congestion - Uplift charges can be principles
charges are translated into calculated in ZPC and
a CUP passe onto the
3. CUP will be allocated to Settlements -- moderate
all loads based on their effort
MWh use - Will have time to the
first Settlements cycle
to implement
ALTERNATIVE 4 Moderately Moderately - Settlements should be Gaming Stop gap None -- except
1. Regional Incremental Cost effective efficient modified to assign opportunities measure as for potentially
(RIC) of each zone used CUP as a lump sum with default we will adjusting their
for zonal MCP charge for demands congestion deviate from own software to
2. Additional congestion (load or export) -- pricing will marginal deal with new
payment/credit for the not trivial. be mitigated. pricing charge items
remaining ISO congestion - Uplift charges can be principles
charges are translated into calculated in ZPC and
a CUP passed onto the
3. CUP will be first Settlements -- moderate
allocated to each zone effort
(ZCUP) based on the ISO - Will have time to the
relative congestion first Settlements cycle
prices for the congestion to implement
zones
4. ZCUP in each zone will be
allocated to loads in
that zone based on their
MWh use
</Table>
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(2) RIC is the price bid value for the last unit
incremented/decremented in a region (each region consists of one or more
zones with no congestion).
Cal PX CONFIDENTIAL DRAFT
<Table>
<Caption>
PRICING PROPOSALS MITIGATING EFFICIENCY
TO MITIGATE HIGH HIGH ZONAL OF PRICE IMPLEMENTATION GAMING LONG-TERM ADDED WORK FOR
ZONAL PRICES PRICES SIGNALS REQUIREMENTS POTENTIAL APPLICATION MPs
ALTERNATIVE 5 Moderately Efficient o Need to add validation Mitigated Applicable o MPs need to
effective for incremental bids- congestion created bids
1. Stay with current not trivial pricing
marginal pricing gaming. o Bids may be
procedures o ISO needs to modify Less rejected
software to leave our effective w/ delaying
2. Require incremental price bids alone energy market close.
adjustment bids for price
all generators and gaming. o Price caps
imports may be
challenged
3. Require the ISO not
to change our prices
for congestion
management process
4. Limit incremental
adjustment bid to a
mix of $250/MWh
ALTERNATIVE 6 Moderately Efficient o Need to add validation Mitigated Applicable o Bids may be
effective for incremental bids- congestion rejected
1. Stay with current not trivial pricing delaying
marginal pricing gaming. market close.
procedures Less
effective w/ o Will be
2. Require that the SABs energy difficult to
submitted as part of price mimic the
IPS, when aggregated, gaming. portfolio
to closely mimic the bid
the overall portfolio
bids o Price caps
may be
3. Limit total import MW challenged
bid to less than the
capacity of the path
4. Limit incremental
adjustment bid to a
mix of $250/MWh
ALTERNATIVE 7 Very Efficient o Need to test OMH Limited Applicable o Requires MPs to
effective software for overall create bid curves
1. Stay with current substantially larger gaming. per resource
marginal pricing number of bids
procedures o Need to develop a o Complicates
simple software the energy
2. Require the PX market to convert the unit auction process
participants to submit bid into adjustment
"unit bids" instead of bid o Price caps
portfolio bids may be
3. Convert the unit bids challenged
into SABs for
congestion management
4. Limit incremental
adjustment bid to a
max of $250/MWh
</Table>
Cal PX CONFIDENTIAL DRAFT