Message-ID: <11166497.1075855757608.JavaMail.evans@thyme>
Date: Wed, 9 May 2001 09:58:00 -0700 (PDT)
From: donna.fulton@enron.com
To: james.steffes@enron.com, christi.nicolay@enron.com, janine.migden@enron.com, 
	mike.roan@enron.com, steve.wang@enron.com, ebaughm@enron.com, 
	oscar.dalton@enron.com, doug.sewell@enron.com, 
	mike.e.kelly@enron.com, gary.justice@enron.com, 
	karla.compean@enron.com, kerry.stroup@enron.com, 
	russell.ballato@enron.com, don.baughman@enron.com, 
	jason.choate@enron.com, maria.valdes@enron.com, 
	john.kinser@enron.com, peter.makkai@enron.com, jeff.king@enron.com, 
	robert.benson@enron.com, fletcher.sturm@enron.com, 
	berney.aucoin@enron.com, steve.wang@enron.com
Subject: ARTO/MISO Order Approving Settlement
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The Commission issued an order on May 8, 2001 in Illinois Power Co. Docket 
No. ER01-123 (as well as ComEd, Ameren and Alliance) that accepted the 
Settlement filed by the Alliance and MISO on 3/31/01.  The Settlement:
provided for the continuation of two separate RTOs in the Midwest - ARTO and 
MISO - to be operational by 12/15/01
provides for a single, non-pancaked Super-Regional rate for transactions with 
sources and sinks within the two- RTO Super Region
provides that ARTO and MISO will negotiate with PJM to develop a joint rate 
methodology
includes an Inter-Regional Cooperation Agreement committing the ARTO and MISO 
to develop compatible protocols and formats, share information and data, 
develop a combined reservations and scheduling system, coordinate on TLRs, 
and develop procedures for real-time operational disputes.
allowed withdrawal of IP, ComEd and Ameren from MISO to join ARTO with an 
exit fee of $60 million to cover start up costs.

Enron had filed comments opposing the settlement arguing that it failed to 
resolve the issues of the Midwest market.  Enron argued the the settlement 
did not provide for sufficient RTO scope, did not resolve rate pancaking, 
parallel path flow, and other operational and seams issues.

The Commission's order on the settlement continues the Hebert "incremental 
approach" to RTO's that it has exhibited in its prior RTO orders.  The Chief 
Judge had certified the settlement over Enron's opposition, claiming  Enron 
was asking the FERC to go beyond the scope of Order No. 2000.  Some of the 
important findings in the order are summarized below.

Accepted the Alliance stakeholder process over objections of Enron and 
several marketers.  Alliance will file its stakeholder plan by May 15 and 
parties may raise concerns at that time.  This does seem a late filing given 
that the RTO is to be operational by 12/15/01.  In the meantime, Alliance has 
held three meetings, focusing on interconnection procedures and congestion 
management.  They are continuing to meet with stakeholders every two weeks - 
this seems better than required by this order.
The Super-regional rate is not applicable to imports of generation into the 
Region.  This is definitely an example of the "incremental approach."  The 
Commission was very impressed that the Alliance and MISO represented the 
largest areas ever proposed for elimination of rate pancaking.  The order did 
recognize the competitive advantage this gave to generators within the Super 
Region vis-a-vis those located outside the Region, but noted that absent the 
settlement, transactions would incur two separate transmission rates.
 Sufficiency of scope and configuration will be determined in the respective 
RTO dockets.  Although the settlement provided that the scope of ARTO and 
MISO were sufficient, the Commission refused to make that determination in 
this order.   Note that the Alliance scope and configuration has been found 
to be sufficient to comply with Order No. 2000 in the Alliance January 24, 
2001 order.
Enron argued the Midwest transmission grid should be under the control of a 
single operator to provide for a seamless market.  The FERC finds that issue 
to be premature.  This is again the "incremental approach;"  the Commission 
encourages further efforts to build on the framework of the settlement to 
develop common processes and move toward an ultimate goal of a single 
operational RTO for the Midwest.  This open-ended issue may provide a good 
opportunity to set up a meeting with FERC staff to discuss future steps to 
work toward this ultimate goal.
Enron had argued that the IRCA was not a sufficient commitment to a seamless 
Midwest market.  The order accepts this aspect of the settlement, but allows 
that Enron and all parties can raise further concerns once coordination 
proposals are filed.
The Commission will not require joint energy imbalance and congestion 
management mechanisms at this time.  FERC found no basis in Order No. 2000 to 
find that multiple systems could not be compatible.  The order did not 
address Enron's argument that the settlement should provide for a real-time 
energy market, rather than just a balancing market.
A market monitoring committee is to be formed which will agree upon an 
independent market monitor for the Cooperating RTOs.
The settlement provides for a moratorium on the transitional pricing 
structure through 2004, subject to an exception for new investment..  The 
FERC accepts this provision due the rate certainty it provides.  

If you want a copy of the order, let me know.