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The Importance of Teamwork in Multi-Jurisdictional Energy Market Monitoring

The Importance of Teamwork in Multi-Jurisdictional Energy Market Monitoring. William F. Hederman, Director Office of Market Oversight and Investigations Federal Energy Regulatory Commission. Presented to: Eastern RTO/ISO Conference Washington, DC May 11, 2005. WH-5/11/05. Outline.

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The Importance of Teamwork in Multi-Jurisdictional Energy Market Monitoring

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  1. The Importance of Teamwork in Multi-JurisdictionalEnergy Market Monitoring William F. Hederman, DirectorOffice of Market Oversight and Investigations Federal Energy Regulatory Commission Presented to:Eastern RTO/ISO Conference Washington, DCMay 11, 2005 WH-5/11/05

  2. Outline • FERC Strategy • OMOI Organization • Delineation of Responsibilities • Diversity of MMU Models • Markets Overview • Program and Policy Options (Views expressed are Hederman’s, not the Commission’s.)

  3. FERC has 3-prong strategy. Infrastructure Effective Rules Strategic Approach Rules Competitive Markets Just & Reasonable Outcomes Enforcement

  4. Energy Market Progress Requires: Integrity ANDPublic Confidence In That Integrity

  5. OMOI has 3 essential processes to “Trust and Verify”. Professionally skeptical Diverse (private/public sectors, disciplines) Highly skilled Team-oriented C O u t s I d e O F E R C I

  6. Feds and Monitors share tasks and have distinct tasks. FERC OMOI RTO/ISO Market Monitors *Report to Commission *Coordinate with all MMUs *National State of the Markets *Seasonal Look-Aheads *Audit -Market Participants -RTO/ISOs *Enforce Regulations *Monitor Non-RTO Areas and Fuels (esp., Natural Gas) *Market Surveillance Reports/Market Snapshots *Order Development *EQR Implementation *Coordinate With Other Federal Agencies *Report to Board *Discuss Emerging *Report to PUCs Issues/Trends *Regional State of Market *Watch for Anomalous or *Mitigation Inappropriate Market Behavior *Supply Detailed Market Data *Confer on Market Developments Evaluations *Analyze Markets *Contribution to Market Design

  7. Common Market Metrics - MMUS Status of MMU Common Metrics from State of the Market Presentations 7

  8. There is no dominant market monitoring model Notes: (1) Lead for: real time, physical audits; (2) No Internal Monitor, staff liaison to the External Monitor; (3) Skeletal staff now, change likely; (4) Lead for: longer term, analytics; (5) Limited role setting DEC reference prices; (6) Pending legislation would require ERCOT to Fund, through administrative fees, an independent market monitor (contractor) that would be hired by the PUC and would report directly to the PUC

  9. The relevant markets and jurisdictions are complex. Natural Gas & Electric Market Space Nat Gas & Electric Derivatives Nat Gas & Electric Clearing Trading Venues Futures (NYMEX) Electronic Platforms Physical Nat Gas Phys Electric Power Voice Brokers Bilateral Trading RTO’s & ISO’s Generation Gas Supply Players Transmission & Pumped Storage Pipelines & Storage Price Contributors • Fixed price buyers & sellers • Speculators Price Takers -Indexed price buyers & sellers Delivered Market Delivered Market Gas to fuel power generation Source: FERC-OMTR&OMOI 9

  10. There are many dimensions to crafting Market Monitoring programs and policies. Just a few examples: • Monitor Qualifications (none/independent judgment/minimum/certification) • Monitor Reporting Requirements- FERC - RTO Board- PUCs - RTO Management • Monitor Independence/Incentives • Monitor Confidentiality Restrictions • Inter-monitor/Agency Interaction • Responses: Timeliness/QA-QC

  11. There is lots to discuss. Questions and Answers

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