MARCH 13, 2014

| NEPOOL MARKETS COMMITTEE

Jonathan LowellPRINCIPAL ANALYST | MARKET DEVELOPMENT

Updates to Manuals M-REG, M-RPA, M-28, M-29 and M-35

Market Manual Updates for Order 755 Regulation Market Changes

Order 755 Regulation Market Implementation

• ISO currently anticipates an effective date in late-May 2014 for the Order 755 regulation market implementation

• The manuals are being updated to reflect the changes in how Market Participants will participate in the market

• The biggest of these changes include:– Offers will now include a capacity price and a service (mileage) price– Offers may be updated throughout the day– Alternative Technology Regulation Resources may now register and

participate in the market– No more self-scheduled regulation

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Summary of Changes to Market Manuals

• Note: changes from drafts presented at the February MC meeting are shown in red.

• M-28 Accounting– Minor edits to recognize there are now two different regulation

clearing prices, and regulation resources are no longer limited to generators

– Removed reference to “trading regulation”– In Section 12.2.5.2, corrected the incorrect reference to 12.3.5.1 to

the correct location: 12.2.5.1

• M-29 Billing– Minor edit to correct capitalization of “regulation market”– Updated the description of regulation credits and charges that will

appear on billing invoices

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Summary of Changes to Market Manuals

• Note: changes from drafts presented at the February MC meeting are shown in red.

• M-35 Definitions and Abbreviations– Terms that are defined in Section I.2.2 or III.F are deleted– Terms that are no longer relevant are deleted

• Primarily because there is no more “self-scheduling for regulation”– Updated the definition of “Redeclaration” to include ATRRs– Reinstated the definition of Generator Regulation Credits

• This term is eliminated as part of the new NCPC design, which does not go into effect until Q4 2014.

• M-RPA Registration and Performance Audits– ATRRs added to Section 1.1.2 Roles and Responsibilities– New Section 1.9 added to address ATRR registration procedures

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Summary of Changes to Market Manuals

• Note: changes from drafts presented at the February MC meeting are shown in red.

• M-REG Regulation Market– Inclusion of references to new tariff sections

• Offer requirements and offer timing• Eligibility requirements• Settlement

– Recognize there are now two different clearing prices– Recognize the resources other than generators will be able to provide

regulation– Updated timing for the selection of regulation resources– Updated discussion of regulation resource testing and evaluation– Inclusion of references to relevant operating procedures– Deleted a superfluous “hourly” from Section 1.1(3)(b)

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Summary of Changes to Market Manuals

• Reminder – in summer 2013 the content of M-11 (Operations) related to regulation was moved into a brand new M-REG manual– Therefore, no changes for Order 755 are required in M-11

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M-REG – Review of Proposed Changes (1)

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Section Description Proposed Change1.1 Regulation Unit Criteria and

Offer Components• Eligibility and offer requirements revised for

consistency with O755 rules. • References to OP-14, OP-18 and III.14 included.• Removed discussion of “Self-Scheduled for

Regulation”

1.2 Regulation Requirement Determination

• Updated to address both capacity and service requirements

1.3 Regulation Offer Period • Minor edits to address offer timing, capacity and service offer prices, and elimination of self-scheduling for regulation

1.4 Regulation Assignment • Changed “assignment” to “selection” and included MR reference.

1.5 Calculation of Regulation Clearing Prices

• Updated to include both capacity and service prices.

• Updated the MR reference

M-REG – Review of Proposed Changes (2)

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Section Description Proposed Change1.6 Regulation Market

Operations in Real-Time• Updated to include both generators and ATRRs

2.1 Settlements • Replaced the outdated description of the settlement process with a brief overview of compensation components and a reference to detailed information in Section III.14.8

2.2 (new) Regulation Performance Monitoring

• New section referencing additional detail in Section III.14.7

2.2 (now renum-bered to 2.3)

Regulation Testing and Auditing Procedures

• Outdated text deleted• Added discussion of “minimum responsiveness

test” and the “Regulation Market Testing Environment”

2.3 Monitoring Period • Deleted. This is replaced by the new Section 2.2

M-REG – Review of Proposed Changes (3)

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Section Description Proposed Change2.4 Performance Calculations • Deleted. This is replaced by the new Section 2.2

2.5 Performance Records • Removed the line-item detail that is no longer accurate

2.6 Audit Frequency • Deleted. This is replaced by the new Section 2.2

2.7 Consequences of a Deficiency

• Deleted. This is replaced by the new Section 2.2

Next Steps

• If the Markets Committee acts on the Manual changes n March, the PC review would occur in April.

• Otherwise, – Request MC vote at April MC meeting– PC review at May 2014 meeting to support a late-May effective date

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