WPTF comments on Ranking Criteria

Cynthia,

WPTF is pleased to provide the following comments on the proposed ranking process. Please feel free to contact me if you have questions or would like further clarification.

Thanks,

Ellen

WPTF Comments on Market Initiatives Ranking Process

It seems unreasonable to have a process that expects to apply quantification and produce quantitative outcomes, such as the one the ISO has proposed. First and foremost the ISO should simplify the process and avoid risking misleading quantitative results. Should the ISO wish to pursue scoring categories and metrics, for the purpose of adding more substance and standardization to the ranking process, then qualitative descriptions would be more appropriate.

Furthermore, the ISO should have a goal of assessing the energy industry and end user costs and benefits and not just the costs and benefits to the ISO. Given this, the ISO should be very careful not to double count the same type of cost or benefit under multiple metrics.

With the above objectives in mind, we suggest as examples the following categories:

(Note that whether or not the change fulfills a mandate is not included on the list, as fulfilling a mandate seems to warrant higher priority treatment than many of the other criteria.)

A. Market Efficiency/Market Expansion – including such considerations as:

1. Does the new functionality promote competition or facilitate expanded market/ISO participation?

2. Does the new functionality enhance the use of markets instead of administrative mechanisms or CAISO discretion? Said another way, is the service provided by the new functionality valued through markets?

3. Does the new functionality enhance CAISO transparency and provide better information – including investment price signals - to market participants?

4. Does the new functionality reduce discriminatory treatment among market participants?

5. Does the new functionality promote long-term regulatory certainty?

6. Does the new functionality remedy any design flaws that were otherwise significantly detrimental to market efficiency/expansion?

7. Through one or more of the above sub items or otherwise, will the new functionality improve the perception of the viability and stability of the CA markets, market participations and the ISO?

B. Reliability: Will the change resolve a significant reliability risk or will it provide a significant additional level of security in areas viewed as necessary?

C. Promoting efficient development – will the new functionality enhance CAISO transparency and provide better information – including investment price signals – that will likely result in efficiency transmission, generation, or load management infrastructure?

D. Cost Impacts (Primarily direct costs/savings):

1. ISO cost impacts: Will the project have a net positive or adverse impact on ISO costs? That is, what will be the net effect on GMC; will GMC increase or decrease and by how much?

2. Market Participant Cost impacts: What are the implementation costs (one-time and ongoing) for Market Participants? Is there a direct savings for Market Participants?

E. Process Improvement (Indirect costs/savings): Will the new functionality result in significant efficiencies for Market Participants through process improvements at the ISO or enabling Market Participants’ process improvements in areas not already captured in the cost impacts?

F. Risk management: Does the change provide enhanced risk management opportunities on the part of the ISO? On the part of Market Participants?

Comments on High Level Ranking

The ISO should apply a similar, yet less cumbersome process, to that described above to suggest projects that warrant further study. Any projects that seem to offer substantial benefits relative to costs – often as indicated by various market participants’ pleas for consideration by the ISO – should be a candidate for more investigation. To the extent that the ISO finds there are too many candidate projects to investigate at one time, the ISO should allow market participants to individually rank order the priorities. A collective response from stakeholders should provide a sufficient indication of the relative perceived costs and benefits.

Comments on Ranking Criteria

See above.

Ellen Wolfe

WPTF MRTU Consultant

ph 916 791 4533

fax 916 791 4333

ewolfe@resero.com