# Presentation: 205141

## Role Of The Market Monitor:ISO New England

**Dr. Hung-po Chao**
**Director, Market Monitoring**
**FERC Open Meeting • Washington, D.C. • May 18, 2006**** **

## Role of the Market Monitor

**Provide critical functions in support of FERC, state regulators and New England stakeholders to ensure the success of the wholesale electricity markets**
**Successful wholesale electricity markets:**
**Support reliable operations**
**Produce competitive prices**
**Attract sufficient infrastructure investment**** **

## Market Monitoring in the RTO/ISO Organization

- Reporting structure reinforces the critical commitment to market success of the Board of Directors and executive management

## Role of the Market Monitor in New England

## Market Monitor’s Tasks

## Market Monitor’s Resources

**Direct access to the Board of Directors **
**Ensures the independent position within the RTO/ISO**
**Reinforces senior management team’s commitment**
**Consultation with Independent Market Monitor**
**Direct communication link to FERC’s Office of Enforcement**
**12 department staff members**
**Economists, engineers, business and operations analysts**
**Dedicated IT support**
**Production software for on-call duty/procedure**
**Market analysis and simulation tools**

## Market Monitor’s Current Priorities

**2006 Summer Monitoring Plan**
**Integration of Ancillary Services Market Phase II into established energy markets (Fall 2006)**
**Cold Weather Operations (Winter 2006/07)**
**Forward Capacity Market **
**Enhance communications links **
**FERC**
**State regulators**
**Market participants**

## Successful Markets Observe Fundamental Laws

- KEEP the Lights on
** ****Kirchoff’s laws (physical)**
** ****Economic law of supply and demand**
** ****Energy Policy Act**
** ****Power Act**

## Supplemental Information

## Role of the Market Monitor

**Critical informational and analytic resource to the RTO/ISO, FERC, state regulators, and New England stakeholders, including:**
**Providing assessments of how the markets are performing  **
**Identify the extent to which market prices reflect competitive outcomes versus market power abuses**
**Conduct periodic and ad hoc reporting on the performance of the markets and/or market products**
**Assess the impact of internal implementation decisions on market performance**

- S1

## Ensuring Successful Markets Requires

**Assessing current and proposed rules and procedures for appropriate market incentives and performance results**
**Recommending changes in rules and procedures to maintain or improve market efficiency**
**Identify potential anti-competitive behavior ****by market participants**

- S2

## Roles of the Market Monitor in New England

**Ensure success of the wholesale electric markets through a continuous process flow of:**** **
**Monitoring**
**Analysis**
**Enhance market performance through ****interaction and feedback**
**FERC**
**New England Stakeholders and state regulators**
**Wholesale markets**
**When market flaws are detected, the Market Monitor is an active participant in the solution**

- S3

**Solutions****	**
**Communications**

## Tasks of the Market Monitor

**Wholesale Electric Markets**
**Real-time monitoring to assure competitiveness and compliance to market rules and tariffs**
**Analyze and report on market performance, and identify opportunities to improve market rules**
**Monitor/review market development and integration to minimize risk**
**FERC**
**Provide timely answers to specific regional issues**
**Refer potentially sanctionable market behavior**
**Provide recommendations on market policy issue discussions**
**New England Stakeholders and State Regulators**
**Provide recommendations on regional market development discussions **

- S4

## Current Market Monitoring Priorities

**Implement enhanced, real-time, day-to-day monitoring including:**
**Comprehensive energy market review, including key market indicators**
**Review of interrelationships between electric and gas/oil markets**
**Continue assessment of Ancillary Services Markets and their impacts on the current energy markets prior to integration**
**Reviews of interrelationships between the energy market and other components (e.g., Regulation Market)**
**Enhance communication with market participants to enable a feedback loop of market performance issues from a sector perspective**

- S5