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Discussion Points on ISO’s Performance Incentives Proposal. Fernando DaSilva, Director April 10, 2013. Timing/Process. Given the importance, expedite timeline for consideration Process should not take a year
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Discussion Points on ISO’s Performance Incentives Proposal Fernando DaSilva, Director April 10, 2013
Timing/Process • Given the importance, expedite timeline for consideration • Process should not take a year • Key aspects of the proposal – particularly those related to risk and cost – should be addressed up front • Impact Assessment should be completed by end of Q2 at the latest
Stop Loss • As one of the key risk components/factors, the details around Stop Loss should be a sooner-than-later item • Participants need to demonstrate a balance sheet/financial strengthor post sufficient financial assurance commensurate with the loss risk • Consider different stop loss payments for different types of non-performance • Within management control v. outside management control (OMC) • Consider capping losses on a per event (daily), monthly and annual basis • For example, annual limit should not be reachable in one event/one day • Supplier reimbursement should be payable over a reasonable period of time
Other Discussion Points Capacity Bilaterals/Hedges • In order to hedge, generators/suppliers should be able to transact on a more granular basis than monthly • Weekly, daily and perhaps hourly bilateral options should be available • Location of substitute supply products for temporal periods should be considered Allow Risk to be Reflected in Offers • IMMU must not apply inappropriate offer mitigation that thwarts the ability of suppliers to accurately value risk • Risk should include all aspects of business risk – operational, fuel procurement, credit, working capital, etc. • Must not be just a theoretical discussion; provide specific examples Resource Comparability • Treatment of ALL resourcesshould be equal in all respects