Market Evolution Program

2 Topics Overview of the Market Evolution Program Consultation Plan for Phase 1 Overview of the Market Evolution Program Consultation Plan for Phase 1

3 Market Evolution Program A group of initiatives designed to move Ontario market forward over 2003/2004 Considered together for reasons of funding, initial resourcing and to ensure they are developed in an efficient and consistent fashion Consist of deferred features and other opportunities to improve the market identified by stakeholders and the IMO based on the first six months of operation A group of initiatives designed to move Ontario market forward over 2003/2004 Considered together for reasons of funding, initial resourcing and to ensure they are developed in an efficient and consistent fashion Consist of deferred features and other opportunities to improve the market identified by stakeholders and the IMO based on the first six months of operation

4 Objectives Improve price transparency and operational stability while ensuring reliability Improve overall operation of IMO-administered and retail markets Meet new legal and regulatory requirements Consistency with Standard Market Design as far as possible Improve price transparency and operational stability while ensuring reliability Improve overall operation of IMO-administered and retail markets Meet new legal and regulatory requirements Consistency with Standard Market Design as far as possible

5 Objectives Favour options that: use existing successfully deployed solutions provide for speed of implementation are adaptable to regulatory and legislative changes Favour options that: use existing successfully deployed solutions provide for speed of implementation are adaptable to regulatory and legislative changes

6 Initiatives Day ahead market Multi-interval optimization Short term Resource Adequacy Long term Resource Adequacy Environmental Information Tracking Wholesale/Retail Market Integration Locational Marginal Pricing Day ahead market Multi-interval optimization Short term Resource Adequacy Long term Resource Adequacy Environmental Information Tracking Wholesale/Retail Market Integration Locational Marginal Pricing

7 Approach Phase 1 Feasibility of each initiative Recommendation on whether and in what form initiative should proceed Phase 2 Design (rules/procedures/system requirements) and implementation planning Phase 1 Feasibility of each initiative Recommendation on whether and in what form initiative should proceed Phase 2 Design (rules/procedures/system requirements) and implementation planning

8 Timing of Phases Jan Feb SepJul Aug Mar Apr May Jun Phase 1 Phase 2 Apr

9 Phase 1 Activities Establish likely implementation approaches Identify market operating cost implications Identify SMD and other convergence opportunities Stakeholder findings Make recommendation to IMO Board Establish likely implementation approaches Identify market operating cost implications Identify SMD and other convergence opportunities Stakeholder findings Make recommendation to IMO Board

Phase 1 Process JanFebMar Initial Fact finding Stakeholdering Initial Report to IMO Board Recommendation to IMO Board

11 Program Organization Steering Committee Program Manager Steve Mullins Len Kula/Mark Wilson day ahead market better optimization Jason Chee-Aloy short/long term resource adequacy Edward Arlitt wholesale/retail Hok Ng environmental tracking Mike Falvo locational marginal pricing Drew Phillips stakeholder process

12 Discussion Papers Week of Jan 30: Day ahead market/Multi-interval optimization Short Term Resource Adequacy Week of Feb 21: Wholesale/Retail Integration Week of Mar 14: Long Term Resource Adequacy Environmental Tracking Week of Jan 30: Day ahead market/Multi-interval optimization Short Term Resource Adequacy Week of Feb 21: Wholesale/Retail Integration Week of Mar 14: Long Term Resource Adequacy Environmental Tracking

13 Short Term Resource Adequacy Measures for this summer Coordinating exercise includes looking at current initiatives, such as the hour ahead dispatchable load, as well as new ones Measures for this summer Coordinating exercise includes looking at current initiatives, such as the hour ahead dispatchable load, as well as new ones

14 Locational Marginal Pricing Initial data analysis to begin early March Report on nodal price behaviour up to this point in market operation completed early April No implementation until October 2004 at the earliest Initial data analysis to begin early March Report on nodal price behaviour up to this point in market operation completed early April No implementation until October 2004 at the earliest

15 Wholesale/Retail Issues under investigation: A more accurate assignment of a portion of the wholesale market prudential risk to the underlying sources of financial risk Opening the door to future demand response products that retail customers can participate in while providing a reliability benefit Ensuring that wholesale/retail market boundary keeps pace with emerging technologies such as retail-level interval metering and microgeneration Issues under investigation: A more accurate assignment of a portion of the wholesale market prudential risk to the underlying sources of financial risk Opening the door to future demand response products that retail customers can participate in while providing a reliability benefit Ensuring that wholesale/retail market boundary keeps pace with emerging technologies such as retail-level interval metering and microgeneration

MEP Phase 1: Consultation Plan

17 Scope Set out objectives, activities and timelines to facilitate stakeholder input to Phase 1 Develop a consultation plan to be used for Phase 2 Use consultation framework of Market Advisory Council, its Standing Committees and other forums as per the Consultation Handbook Set out objectives, activities and timelines to facilitate stakeholder input to Phase 1 Develop a consultation plan to be used for Phase 2 Use consultation framework of Market Advisory Council, its Standing Committees and other forums as per the Consultation Handbook

18 Objectives Awareness and education Opportunity and access to information Issue identification and consensus building Feedback and documentation Awareness and education Opportunity and access to information Issue identification and consensus building Feedback and documentation

19 Challenges Short timelines in some cases (e.g. short term resource adequacy) Infrequently scheduled MAC and Standing Committee meetings Short timelines in some cases (e.g. short term resource adequacy) Infrequently scheduled MAC and Standing Committee meetings

20 Proposed Solution Centralized repository for all MEP documents - Market Evolution Program web page notification to MAC members when new information is posted with comments Call dedicated IMO consultation support line to discuss/explain further ( ) Centralized repository for all MEP documents - Market Evolution Program web page notification to MAC members when new information is posted with comments Call dedicated IMO consultation support line to discuss/explain further ( )

21 What will be posted? Discussion papers/current thinking Background information Any IMO Board decisions affecting the MEP Any presentations given to stakeholder groups during the consultation Presentations will be available for viewing (with audio) using Windows Media Player Discussion papers/current thinking Background information Any IMO Board decisions affecting the MEP Any presentations given to stakeholder groups during the consultation Presentations will be available for viewing (with audio) using Windows Media Player

22 Phase 2 Consultation Plan Looking for volunteers to form a working group to develop a Phase 2 Consultation Plan Draft plan for presentation at Feb 18 MAC Final plan available by Mar 5 MOSC Looking for volunteers to form a working group to develop a Phase 2 Consultation Plan Draft plan for presentation at Feb 18 MAC Final plan available by Mar 5 MOSC

23 References MEP Phase 1 Consultation Plan Market Evolution Program Definition Document MEP Phase 1 Consultation Plan Market Evolution Program Definition Document