MAY 10, 2012 | NEPOOL MARKETS COMMITTEE WESTBOROUGH, MA Andrew Gillespie PRINCIPAL ANALYST | MARKET DEVELOPMENT Proposal Static De-List Bid Changes

Static De-List Bid – Current Process No later than 127 days before the auction, the ISO issues qualification determination notifications for qualified resources By this time, the Internal Market Monitor (IMM) will have reviewed all submitted Static De-List Bids and will indicate in each notification whether the IMM has: – Approved the submitted de-list bid, or – Rejected the submitted price, and consequently developed a different IMM-derived de-list bid 2

Current Process – IMM Approved If the IMM approved the submitted de-list price: The de-list bid is included in the auction The de-list bid cannot be withdrawn or modified by the participant 3

Current Process – IMM Rejected If the IMM rejected the submitted de-list price, the de-list bid is not included in the auction, unless The participant makes a filing with the Commission within 15 days of the ISOs submission of the informational filing (while also notifying the ISO) that: – The participant accepts the IMM derived price In this case, the IMM derived de-list bid will be included in the auction – The participant is challenging the IMM rejection of the de-list price In this case, the de-list will be included in the auction if and only as directed by the Commission 4

Problem The Static De-List Bid price is fixed when it is submitted during the Existing Capacity Qualification period Under steady-state timing of auctions – The Existing Capacity Qualification is in June – The Qualification Notification is 127 days prior to auction – The primary auction (FCA) is conducted in February 5

Static De-List Bid – Proposal No later than 127 days before the auction the ISO issues qualification determination notifications for qualified resources By this time, the Internal Market Monitor will have reviewed all submitted Static De-List Bids and will indicate in each notification whether the IMM has: – Approved the submitted de-list bid, or – Rejected the submitted de-list bid, and consequently developed a different IMM-derived de-list bid NEW – After the qualification determination notifications are issued, open a window (seven days) to allow participants to modify Static De-List Bids 6

Proposal – IMM Approved If the IMM approved the submitted de-list bid, a participant may: Submit a new price for the Static De-List Bid that is – Less than the submitted and IMM approved de-list bid, but – Greater than $1.00/kW-mo Withdraw the de-list bid If no action is taken during this window The submitted and approved de-list bid will be included in the auction 7

Proposal – IMM Rejected If the IMM rejected the submitted de-list bid, a participant may: Submit a new Static De-List Bid that is – Equal to or less than the IMM derived de-list bid, but – Greater than $1.00/kW-mo Indicate that the participant intends to challenge the IMM rejection of the de-list bid If no action is taken during this window The de-list bid will not be included in the auction Provided that no price has been submitted, a participant may still make a filing with the Commission to challenge the IMM-derived bid The de-list bid will be included in the auction if and as directed by the Commission 8

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