Meter Reader 90 Day Working GroupResponse to the Markets Committee

August 2005 Directive

Presented to the Markets Committee

Susan Clary (CMP) and Carmel Gondek (NU)

October 17, 2006

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MC’s August 2005 Directive to MRWG

The Markets Committee (MC) requests that the Meter Reader Working Group (MRWG) develop a recommendation(s) for consideration by the MC related to meter data errors that are discovered after the final settlement has been conducted by ISO-NE. (emphasis added)

The recommendation(s) should result in both an expected reduction in the occurrence of such data errors and, because it is not possible to eliminate all potential data errors, provide a means to resolve them within the ISO-NE settlement process.

The MC requests that the MRWG focus its efforts on stakeholder process changes and improvements that would preferably not result in an extension of the time period required to complete the final billing process. The MC recognizes that changes to Manuals and/or Market Rule 1 may be required to implement any recommendation that is ultimately approved.

To the extent that the MRWG develops a recommendation(s) that would require extension of the time period needed for final billing to occur (i.e. a post 90 day resettlement), the MC requests that such a recommendation be vetted with the NEPOOL Budget and Finance Subcommittee prior to presentation to the MC.

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Interim Market SettlementsMay 1999 thru February 2003

• Preliminary Hourly Settlement – Preliminary hourly settlement based on data submitted by hour 37

• Interim Settlement – Revised hourly settlements based on revisions to 37 hour data submitted prior to specific deadline within the calendar month

• 90 Day Monthly Resettlement – Monthly resettlement based on calendar month MWH values (not hourly). Resettlements conducted for each calendar month based on monthly average rates

• Post 90 Day Resettlement – Revised monthly settlements based on revisions to monthly meter data. Resettlements conducted as necessary for each calendar month based on monthly average rates

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Standard Market Design SettlementsMarch 2003 - Present

• This period is characterized as post-SMD implementation period and does not allow for any post 90 day resettlements

• Preliminary Hourly Settlement – Preliminary hourly settlement based on data submitted by hour 37

• Interim Settlement – Revised hourly settlements based on revisions to 37 hour data submitted prior to specific deadline within the calendar month

• 90 Day Hourly Resettlement – Final hourly resettlement based on revisions to hourly meter data. Hourly resettlements conducted for each calendar month

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Background: April 2004

• MRWG representatives Sue Clary (CMP), Carmel Gondek (NU) and Dave Cavanaugh (ISO-NE) attended the MC meeting to address the MRWG’s concerns regarding post 90 day resettlements

– MRWG was concerned that if meter data errors were discovered AFTER the resettlement timeline there was no mechanism (under SMD) by which the Meter Reader could submit the revised data to the ISO, or a mechanism by which the ISO-NE could resettle the market

– MC reps collectively stated that if someone was financially harmed as a result of the fact that the market could not be resettled then they could “throw themselves on the mercy of the MC”

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Background: July 2004 – September 2005

• A Market Participant (Strategic Energy) discovered a meter data error in its final bill (90 Day Resettlement)

– The issue was brought to the attention of the AMR– The AMR attempted to submit corrected data to ISO-NE but

ISO-NE could not accept revised meter reads as the 90-day deadline had passed

• Participant submitted a request for a billing adjustment (RBA) to ISO-NE, which was denied

• With 92.48% support, the MC attempted to remedy error with proposed amendment to Second RNA

– Participant informed by ISO-NE that if they followed through with this resolution ISO-NE would contest this at the FERC

– Participant withdrew the resolution

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Background Continued:August 2005 – August 2006

• August 9, 2005 - The MC issued the MRWG the directive shown on slide #2

– The MRWG developed a special subgroup, known as the MR 90 Day WG, to address the MC’s directive

– The new MR 90 Day WG was comprised of representatives of ISO-NE, the Host Participant Assigned Meter Readers, Generators, Suppliers, and Day, Berry and Howard (DBH)

– Over the course of the year the MR 90 Day WG has met on a regular basis and has developed recommendations to bring back to the MC

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MR 90 Day Working Group Members

Host Participant Assigned Meter Readers (HP AMRs)Bill Bayard (NHEC)Heidi Blais (PSNH)Charles Carpinella (CMEEC)Dave Chase (NGRID)Susan Clary (CMP)Corrie Cockrell (PSNH)Carmel Gondek (NU)Bob Hardy (NSTAR)Dave Hesketh (NSTAR)Dan McDonald (Unitil)Jim Michaud (UI)Leslie Peterson (PSNH)Susan Romer (NSTAR)Susie Smart (NGRID)Pat Sprague (BHE)

ISO-NE Representatives:Cheryl Arnold Eric Banach Dave Cavanaugh Shannon HannRachel LikoverChris ParentDenise Rourke

Supplier and Generator SectorsCorey Albrecht (WPS)Nancy Chafetz (CES)Bill Darden (Constellation)Natalie DiGrigorio (Constellation)Ivan Kimball (Con Ed)Melanie Ladd (FPL)Jeff Levine (Suez)Richard Schuler (TransCanada)

Day, Berry & Howard (as NEPOOL Counsel)Michelle GardnerScott Myers

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September 2006

• September 19, 2006, MR 90 Day WG’s recommendations were presented to the Budget & Finance Committee (B&FC)

– B&FC agreed that the MR 90 Day WG’s understanding of the financial impacts was accurate and did not require changes to the financial assurance policy

– B&FC agreed that if a post 90 day resettlement was conducted, affected parties may incur additional financial assurance obligations for the applicable month only (consistent with the current RBA process)

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MR 90 Day WG Recommendations

• The group has developed recommendations that ultimately comport with the directive from the MC

• The recommendations are to:– Enhance the existing 90 day resettlement process to reduce

the opportunity for meter data errors

– Incorporate a modified RBA process (a Meter Reader Request for Billing Adjustment or MRRBA) which is a one-time post 90 day resettlement that allows correction for meter data errors

• This MRRBA would have a fixed, one-time only, 90 day window following the issuance of the bill containing the 90 day resettlement data

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Recommendations (continued)

• To aid in communicating the details of our recommendations we are sharing the following documents:

– The existing 90 day resettlement timeline – Reflects current process

– A revised 90 day resettlement timeline – Incorporates new activity which significantly improves the resettlement process by reducing the opportunity for error without extending the timeline and without impacting existing financial assurance requirements

– A post 90 day resettlement timeline or Meter Reading Request for a Billing Adjustment (MRRBA) – This timeline allows the correction of meter data errors (via the ISO-NE settlement process) that were not captured in the 90 day resettlement process

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Existing 90 Day Timeline

December 31May 11Monthly Bill - Final December

Example based on existing market rules - resettlement clock starts when final day is billed

February 26 Dec Initial Directly MeteredDay 45

April 2 Dec ProfiledDay 80

April 12Dec IBTsDay 90

February 1 March 1 April 1 May 1January 12ISO Bill Containing Dec 31

ISO has 29 days to run final settlement

January 13 Resettlement Clock Starts

March 18 Dec Final Directly MeteredDay 65

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Proposed 90 Day Timeline With Process Improvements

December 31

Example based on MR 90 Day WG proposal - resettlement clock starts first day of next month- Process Improvement ECHO Reports which Lead Asset Owners review to verify meter data accuracy.

May 11Monthly Bill - Final December

May 1April 1March 1February 1

February 15 Dec Initial Directly MeteredDay 45

Mar 26Dec Initial ProfiledDay 84

Apr 12Dec IBTsDay 101

ISO has minimum of 29-36 days to run final settlement (29 based on earliest date and 37 based on latest date to issue weekly bill with resettlement. When timeline does not include February, ISO may have more time to perform final resettlement.

January 1 Day 0

Mar 27Dec ECHO to Profiled Asset Owners Day 85

Apr 2 Asset Owner last day to Notify AMR of Issues Day 91

Apr 9 Final Dec Profiled Day 98

Apr 10Final ECHODay 99

AMR/Asset Ownerresolve issues

Asset Ownerreview ECHO

Start Resettlement Clock early gains 7 days..

Reducing the IBT submission time gains 7 days.

January 2 Day 1Resettlement Clock Starts

Asset Owner report concerns to AMR between days 85-91

March 7 Dec Final Directly MeteredDay 65

Feb 16Dec ECHO to Directly Metered Asset Owners Day 46

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Proposed POST 90 Day Timeline

May 11Monthly BillFinal December

July 10Initial Profiled Meterdeadline for DecemberData Error Day 60

July 11ECHO ReportProfiled Meter Data Day 61

Asset OwnerReview

July 24Profiled Load Asset Owner review ECHOreport contact AMR with issues Day 74

August 09AMR Resolve any issue and provide ISO with Final Profile Asset Data Day 90

AMR/Asset OwnerResolve Issues

Aug 10 ISO to start processes for December resettlement

20 Business Days to Resettle December

Sept 8ISO to release FAP Results of December Resettlement

Sept 14ISO to release results of December Meter Data Corrections with Monthly Invoice

June 26Final Directly Metered deadline for December Meter Data Errors Day 45

June 27ECHO Report for Directly Metered Assets Day 46

First Business Day after Day 43, Directly Metered Asset Owners verify ECHO Report

Process for Post Resettlement of Meter Data Errors

Letter agreement to ISO-NE describing issue

June 10Deadline for Asset Owner's to bring issues to Meter Reader attention. Day 30.

June 22Initial Directly Metered deadline for December Directly Metered Data Errors Day 42

June 23ECHO Report for Directly Metered Assets Day 43

Activity from this point forward would only occur if Meter Data Error was discovered and Host Participant Assigned Meter Readers revises meter data for ISO-NE to resettle.

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Eligibility RequirementsPost 90 Day Resettlement

• The following eligibility criteria must be met in order to trigger the occurrence of a post 90 day resettlement by ISO-NE

• A MWH per month threshold for at least one asset on one or more Metering Domains must be met to trigger the occurrence of a post 90 day resettlement (threshold to be determined)

– This trigger is the difference between the meter reading value utilized in the 90 day resettlement process and the meter reading value to be submitted for the post 90 day resettlement

– This is an individual asset threshold test

– One exception to the applicability of this threshold would apply to any potential meter data issues raised by the asset owner during the 90 day resettlement that could not be fully resolved for the 90 day resettlement

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Eligibility Requirements Post 90 Day Resettlement

(continued)

• The HP AMR must submit a MRRBA letter to ISO-NE no later than Day 90 following the date of the bill containing the 90 day resettlement charges for the affected calendar month

– This letter must explain the circumstances for the MRRBA and contain the signature of the HP AMR responsible for the affected Metering Domain(s)

– If more than one Metering Domain is affected, the HP AMR must also get the signature(s) of the HP AMR for the other affected Metering Domain(s)

– If a written acceptance by both HP AMR parties is not attached to the MRRBA it will not be accepted by ISO-NE

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Statistics for Post 90 Day ResettlementMarch 2003 – May 2006

Number of Affected Metering Domains

Calendar Month

MWH Threshold

Individual Asset

Number of Months

That Would Have

Been Resettled

Percentage of Months

1 Metering Domain 5,000 MWH 3 Months 8% of Months

1 Metering Domain 2,000 MWH 5 Months 13% of Months

1 Metering Domain 1,500 MWH 7 Months 18% of Months

1 Metering Domain 500 MWH 7 Months 18% of Months

1 Metering Domain 200 MWH 7 Months 18% of Months

1 Metering Domain 50 MWH 9 Months 23% of Months

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Process Improvements

• Proposal incorporates additional process improvements that were deemed appropriate and directly beneficial to the resettlement process

• Improvements to the resettlement have included:– Directly Metered Asset Stakeholder Review (May 2005)– Directly Metered Asset Echo Report (Oct 2006)– Profiled Asset Stakeholder Review and Echo Report (Oct 2006)– Ongoing review of ‘issues’ by MRWG for process enhancements

to internal business processes (ongoing since 1999)– Monthly meetings with ISO-NE representatives to prioritize

issues/needs, etc. (ongoing since 1999)

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Important Points for Consideration • What are the primary business reasons for requesting a post 90 day

resettlement (MRRBA)?– All other market products can be addressed through the RBA

process– This change would allow meter data errors identified after the 90

day resettlement to be corrected

• What are some of the causes of meter data errors?– Meter hardware/software failure – Meter hardware/software programming (incorrect data input

variables, wiring issues, etc.)– Meter accuracy (calibration issues identified during periodic on-

site evaluation/inspection)– Diversion (intentional or unintentional)– EDI/EBT data not processed correctly

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Important Points(continued)

• If the TOs allocated more money to the metering, data communication and ISO-NE reporting (which would be in addition to the already significant amount allocated to these matters) could they fully eliminate all meter data errors?

– No. In New England there are several million retail customer meters and several thousand meters that comprise the network load. Allocating resources to individually review every single hourly value for each and every meter in NE and manually checking all supplier transactions to be sure they all were executed without error would not be a prudent use of resources and would pose significant financial cost burdens to retail customers and/or suppliers with limited benefit

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Important Points(continued)

What Can Be Done to Address Meter Data Issues?

• Facilitate stakeholder review and input to settlement data• Continue to review and incorporate AMR best practices• Continue to work collaboratively with ISO-NE to identify additional

tools and processes designed to help prevent, identify, and/or resolve issues more readily (i.e. PTF tie line review, etc.)

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Do the MR 90 Day WG Recommendations Directly Comport with the MC Directive?

• Yes, the MR 90 Day WG recommendations comport with the MC directive as follows:– The MR 90 Day WG was directed to provide a recommendation

that results in an expected reduction in occurrence of data errors • The recommendation for enhancements to the 90 day

resettlement accomplishes that objective

– The MC’s directive recognized that not all errors could be eliminated and asked the group to provide a means to resolve them within the ISO-NE settlement process• The recommendation provides, through a post 90 day

resettlement, a means to resolve meter data errors that were not possible to eliminate during the 90 day resettlement

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Do the MR 90 Day WG Recommendations Directly Comport with the MC Directive?

(continued)– The MC’s directive requested that the group focus its efforts on

stakeholder process changes and improvements that would preferably not result in an extension of time required to complete the final billing process• The recommendation for enhancements to the 90 day

resettlement include stakeholder process improvements

• The recommendation for a post 90 day resettlement, or MRRBA, would result in an extension of time for final metered data billing only for months that an MRRBA is issued -- this falls well within the existing timeline for final billing of other market products (via the existing RBA process)

• The recommendation for a post 90 day resettlement includes stakeholder review of all revised metered data

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Does the MR 90 Day WG Recommendations Directly Comport with the MC Directive?

(continued)

– The MC’s directive requested that if the group developed a recommendation that would require an extension of the time period needed for final billing to occur (i.e. a post 90 day resettlement) that such a recommendation be vetted with the B&FC prior to presentation to the MC

• This objective was satisfied at the September 19, 2006, B&FC meeting

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Why does the MR 90 Day WG believe their recommendations are the best approach?

• Meets the needs of the Market Participants represented in the MR 90 Day WG

• Is consistent with the desires of the Market Participants (e.g. when the issue of a post 90 day resettlement for Strategic was brought to the MC it was supported with a 92.48% vote)

• These changes put meter data errors on the same footing as other billing issues– The existing RBA process corrects for all other market products

(excludes metered data corrections)– The recommendations of the MR 90 Day WG would correct this

oversight and give meter data corrections the same attention that other billing errors receive

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Why does the MR 90 Day WG believe their recommendations are the best approach?

(continued)

• Corrects meter data errors in the most accurate manner possible – In order to capture the financial impact of a meter data

correction, the markets must be resettled– ISO-NE is the only entity authorized and capable of performing

financial resettlements between Market Participants

• Provides the similar recourse that meter data errors had pre-SMD

• The recommendation for a post 90 day resettlement has finality as it does not include a continuous 90 day RBA cycle contained within the existing RBA process – The existing RBA process contains a continuous time loop

provision which poses considerably greater financial risk than the MRRBA process being proposed

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Next Steps and Proposed Schedule

• The MR 90 Day WG requests permission from the MC at the October meeting to allow the MR 90 Day WG to develop, with the assistance of NEPOOL Counsel and ISO-NE, red-lined documents reflecting necessary tariff and manual revisions that would be needed to support these recommendations

• Proposed schedule:– MR 90 Day WG representatives to return to the MC in November

2006 to present and discuss the red-lined documents

– MC to vote on MR 90 Day WG Proposal in December 2006 (or a later MC meeting, as appropriate)