J U N E 1 0 - 1 1 , 2 0 1 4 | N E P O O L M A R K E T S C O M M I T T E E

Matt BrewsterM A R K E T D E V E L O P M E N T

M B R E W S T E R @ I S O - N E . C O M | 4 1 3 . 5 4 0 . 4 5 4 7

ISO’s proposed scope and schedule for “phase 2” of demand curve implementation

FCM sloped demand curve:Capacity Zone demand curves & Reconfiguration Auctions

Phase 2 will complete core design changes to implement FCM sloped demand curves

• FERC accepted system-wide demand curve changes for FCA9

• Accelerated schedule for April 1st filing required deferring some scope of demand curve design

• June MC begins “phase 2” of the demand curve effort– Capacity zone demand curves (FCA10)– Reconfiguration Auctions and CSO bilaterals (FCA9, FCA10)

• ISO proposes to file phase 2 package with FERC by end of 2014– In May 30 order, FERC stated it “expected” the zonal curves changes

to be filed by January 2, 2015– FCA9 and FCA10 milestones occur in February 2015

• The proposed schedule affords time to continue the major initiative analysis for zonal demand curves

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Capacity zone sloped demand curves

• Intend to implement capacity zone sloped demand curves beginning with FCA10 (2019-20 period)

• ISO has retained Brattle Group for zonal demand curve design and Net CONE analysis

• Scope of work:– Demand curve parameters for capacity zones– Net CONE for capacity zones– Removal of import zone administrative pricing rules– Conforming changes; e.g., FCA rules, LSR study– FERC encouraged ISO to consider zonal Net CONE impact for capacity

zones determination (ER12-953 Order)

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Reconfiguration Auctions and CSO bilaterals

• Likely to require separate proposals for the 2018-19 (FCA9) period, and the 2019-20 (FCA10) period and beyond – Only system-wide demand curve will be implemented for FCA9– Capacity zone demand curves anticipated to be implemented

beginning with FCA10

• Scope of work– Auction structure; i.e., application of demand curves, supply offers– CSO bilateral transactions

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Timeline for major initiative evaluation of capacity zone demand curvesJune 10-11, 2014 MC Capacity zone demand curve concepts and baseline curves

June 20, 2014 Participants submit additional questions which Brattle will endeavor to answer at the July 8-10 MC

July 8-10, 2014 MC Answers to stakeholder questions

July 18, 2014 Participants submit additional questions which Brattle will endeavor to answer at the August 5-6 MC

Aug. 5-6, 2014 MC Answers to stakeholder questions

Aug. 8, 2014 Participants submit alternative zonal demand curve proposals for quantitative & qualitative analysis

Sep. 3-4, 2014 MC Results of quantitative analysis for stakeholder proposals (and ISO proposed demand curves)

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Committee meeting schedule

ISO proposes to file a comprehensive phase 2 package at FERC before the end of 2014; i.e., prior to FCA9 and FCA10 milestones that occur in February 2015 and consistent with FERC expectation that ISO file zonal curves by January 2, 2015