no analysis to determine whether i'm assuming was a proposal to allocate the program's cost the transmission owners was just unreasonable and it made no conclusion that the allocation methodology proposed that love serving entities would not have the ability to pass grows through those costs to load because loads over half of these have fixed rate contracts when a surcharge comes out of the blue after ten years they can't simply problem first of all with respect to the costs of the two thousand and thirteen program instead of load which is the cause of the costs in the beneficiary of the cost of absorbing those costs they i think sats the most equitable way to go to pass along these increased costs well but when it's passing along in some instances or a nonexistent cost as a result this if you think about this it's kind of like an insurance policy arises and that's something a risk that they would have to suffer insure against well again first of all there were from the time of two thousand and five until this program in two thousand and thirteen there were no surcharges of this part load meaning consumers would have been paying for nothing now i mean there's been so we all know how insurance works it's going to give a small buffer against it and over time then it comes up ten years later and you've you've they paid more during the warmer times and then they pay less during the cold times and that's that's the nature of a long term contract there's a distinct difference here in that this is a regulated entity and industry where the entities that were making the sales and  in this instance the generators they're regulated by ferg they are permitted to charge only just in reasonable rates and when they then they charge whatever they're going to charge below serv owners then the rate payers would have paid much less because they don't have to absorb these risk premiums in prior years because of the guaranteed right of transmission others pass through the costs under was well said we dealt with this argument back in two thousand and five well if you go back to the two thousand and five order you'll see that first of there was most certainly a similar argument made but it wasn't a dental when he's still talking three million dollars and that later on it acknowledged that that actually didn't include risk premiums and and profit margins for the suppliers when the bids came in they were a good at seventy point eight million dollars for eighty three percent of the target level of service so rate payers and that up paying the penny upon how you look at the range of costs one point eight five times the original estimate there was no you know it's very interesting i think that the first said that the product that's being delivered here is unique in interest each instance each because the suppliers are at different locations they're providing a different level of service and that justifies a different rate for each of those suppliers well i'll accept that as a given if that's a given then you have require rejection of these contracts in this instance and i'd say yes because there was never an investigation there's absolutely no evidence to determine that these sellers then individually have market power and charge power and let me show you why or there's at least a reason to fear that there is market power well as any condemning you can do just sketch out that concern but have of course we tried to make the argument we made the argument based upon the evidence that was available to us and first said first shut us down and said no we have we actually asked for an evidentiary hearing i believe said no this is just unreasonable and they just moved on so we dealt with what the evidence was that we had available to us and what we would have liked to have developed more i can see my ten minutes is up but you could you get i mean it would be useful if you would sketch what what you think or what i mean even if there's not evidence in the record what is the basis for concern that these as good prices reflect market power given that if you look at the record or there were many different suppliers opting to put forward b  and do we have any reason to believe for example that there was collusion among those bigger or that there's market power there there's not a competitive market there i don't there's certainly no evidence of collusion and we never made an allegation of that sort but but there was evidence of a cost estimate of sixty to forty three million dollars and and there is evidence that suggests that the excess was due to risk premiums and profit margins so since there never was an analysis of whether individual sellers have market power i think there are certainly reason to believe that that's possibly was exercised in the sense that it's in our concern is  and needs to be investigated whether they are building high to get more of a risk premium more profit even though they might then not be selected and that somehow the whole group of them is doing  gathering the public by because any typically you have as a better i mean this is why auctions work you have an incentive to say well i want to get high enough to get my profit margin on my risk but i don't want to get so high that i'm in that  that right hand of the curve and i'm not going to get out of business and that's the discipline and the question is why isn't that disciplined working here and i understand your point about the the estimate and then the prices as they came in and but just structurally i want to understand your case short of the reason that's not working is that generators in this instance are obviously located at various places all across the ice on the way with grid and to provide reliability it's simply not a matter of any generator subject to reliability problems the actual writer could go into this bidding process knowing more or less with some certainty that it was going to get selected regardless what price charged so did the generators charge that every single generator taken advantage of that potentiality probably not i don't have any evidence of that but did some very possibly and that's what first should have investigated then did good morning i'm carol banter for the commission i'd like to begin by picking up on this last point that millard and looking at exactly what the commission saw when the big results came in i j a six o five there's a footnote in the b results i think is the first bad result order noting that the i s o had explained that the accepted bids forty three percent of the bids that he missed i think that not just forty three percent of the accepted it's been forty three percent of the were less than ten dollars per megawatt hour twenty five percent were between ten and twenty and twenty percent were between twenty and thirty one dollar cutoff point that sort of a numerical expression of the graph that was in our brief and that's also in the  of finding of the market is competitive there's no market dominance and i don't see that well i think your general statements about need and bidding buy but that typically hasn't been enough and i'm i don't see any case that really supports this kind of thin market well it is kind of thin record on you know is just the perk saying we're confident that it's competitive well and then the commission did not say it was market based and of course and did not it of course was a novel approach and the commission didn't think it was a model for the best way to do this going forward it was it was an interim program that was urgently needed so the commission if it's kind of a hybrid it was not market break based in the way the commission use is that term  approves a market and then he lets it run it also was looking at the i s o had this question for instance discretion not to buy the full amount that was one way to keep costs down and in fact the i s o did decide to buy less than the full amount approved and the commission noted in the big results order that that the i s o had been trying to keep keep the cost down so it had it had some market characteristics like a competitive bidding process the criteria that were tailored very much based on the reliability needs that were to be met with the i s o exercising a lot of discretion to choose more reliable resources over ones that offered fewer benefits but also to keep costs down i more i would add to that that earlier in that paragraph the commission said it also was looking at the total cost of this program and balancing it against the need to do something actually do they were to do that that's what i could find going to do that i think that this paragraph fifteen is where the commission said we looked at the overall cost of this and we're ok with this for the purpose of keeping the lights on in new england for three months and this did turn out to be a winter in which eighty percent of the oil per carried under this program was burned it was it was it was the polar vortex winter these decisions are being made in that now we're looking now at the big results we're hearing or what happened after the fact in april when the commission knew what had happened but the tariff was approved in september the bid results were approved in october the oil tanks had to be filled by december first so this was all being done on an extremely fast timeline and think i thought the commission's response to the petitioners argument here was that you know this was a commission of looked at each of these individual contracts they were all ok but i didn't i never saw  right now and why why wasn't this reviewed as an emergency program i i notice there's a there's a provision for about it's not looked at that way it wasn't looked at as the under the brigade cost base showing  trust us well it's not quite trust us it is a hybrid approach because the commission was looking at the overall costs rather than each individual contract that's true and it had market like aspects like the competitive bidding but the commission was looking at as a rate design it did refer to it as a great design in her twenty one of the tariff or here in order and it was just putting together and again i don't want to rush past that the considerations that emphasized numerous times in the orders about the reliability needs the urgency of the approaching winter the temporary nature of the program as well as the perspective costs as much as they could be estimated in advance in the rate design it had the competitive bidding the acknowledgement that non price factors you know that that a a resource with better turnaround time a better history of reliability in terms of outage percentages location and one of the heavier load pocket areas would be worth more money and that the crate tyria that the i also would apply again the cap on the total that could buy as well as it's described to buy less than that the commission really did look at this is as a package of measures that taken together for the purposes of this short term emergency program with the commission reviewing it as well was  in under twenty dollars forty three percent of them were under ten so there wasn't a rush to the top the ones at the top they bid too high they got cut off which they didn't know was going to happen because that i also had the discretion to cut off it less than the total it didn't say that it would it didn't say where it would be made that judgment based on the breakpoint that's like a graph that's not a long enough i mean if there are you know if there are three of us trading for something and we know that the the demand is for you know the this as a chord and it's i don't even know what standard you're asking us to look at what what do we have to find cost do we have to find market power no no what do we have to find think again it was a hybrid approach which is what in the standard if we were going to go gung ho we see the supreme to brave new world what standard do you propose that we apply the showing needed in a hybrid situation like this going forward is what i think will th to language in the commission's work which explains the methodology that but that's what we're looking for what what explains the methodology the commission used in this case and its ultimate judgment th what would you what would you point to that it's unclear we could be quite well i guess the best way in which you were you have so when we go back and talk among ourselves we're looking at the part of the warner which you think most now it's there are several places that i wanted to point to and i don't know where they're going on the best ones but this is in the rehearing or yes and i think that the commission was looking it's looking at this bucket of factors and and the criteria that were based on the reliability the discretion given to the eyes and the inability to know in advance what the actual cost would be but one and four seventy two and in paragraph thirty two it's talking about there being a cap on how big this program is even allowed to be with the i s o having discretion to go lower and it refer i mean the commission's focusing rather than on the individual bins that might come in because it does understand that this is expected to be a competitive bidding process it is focusing on the total cost and that is how it looked at this program what is going to  the total cost of providing this reliability and again it doesn't hold this up as a model for or or an approach going forward you are capped off to the company no they were capping the amount because they said you know it we may opt to purchase less from the full amount of costs are very high and then you're looking at it after the fact you're saying well did they make the right judgment fair you know did they did they draw the line between high and very high in a place that that is just unreasonable what tool what standard did the commission use there and i don't think there's a tool that set up i think it looked at the graph with the breakpoint it looked at that the number of megawatt hours that you know that i also didn't buy the full amount which would have been much more expensive but that thirty one dollars breakpoint it justify and again thirty one was on the top many of most of the bids were were far lower than that but it justified that great point by looking if we want to lower you spend a little bit less and lose a lot more reliability if you go a little bit higher you spend a lot more for a little bit of reliability in addition on the next page in the results the the i also said that that the commission looked at it look the total after a couple of adjustments for generators in the states was seventy five million dollars and because the bids mostly were at the lower end and and didn't shows some massive some pattern of being especially high that i don't think there's i don't think we know we have the list of which generators got which amounts of money but i don't think we have the information on which ones were in which regions to suggest whether they had been getting higher not that i'm not i'm quite sure reliability is actually a little bit confused by that in terms of geography i know the record does refer to where different generation looking back but i thought one of the distinctive aspects of the power grid was precisely that it doesn't so much matter where you are i guess it matters because the line goes down between and tuck it in and you know west lol and so you're right get cut off and i know there's some discussion  of that record i don't remember what it is now that that when they were looking for some geographic diversity they were kind of a i think they were assuming a worst case scenario where a lot of things are are going wrong i think so what's typically an integrated gr had broke out in that graph a certain way it did not end up substituting a more expensive more reliable resource for for a less expensive like the geographically they had broken out the way they needed to so that there were substantial resources in the eastern massachusetts and connecticut areas which were the heavier load oh i do want to point out also that there were fifty other there twenty generators that participate in the program that the selected bids were actually fifty six england is introducing a capacity performance auction that i don't know how it relates to models here exactly but it will attach i think different payments and also penalties for n used up all your time soon you can take two words you talk i have very limited rebuttal i just want to make one point that the council is discussing the fact that the bids came in at ten dollars and twenty dollars thirty dollars and at least my take on the commentary was a suggestion that those were all in the in a very low range as compared to other bids that were significantly higher but it has to be remembered that these suppliers were being paid for capacity separate from this program they were being paid for energy separate from this program they were being paid for ancillary services separate from this program basically what this price up from the original cost estimate of forty five million dollars to max to almost eighty million dollars can you break that down a little bit i've been wondering about that and just what what is the how does the program work and what are these payments accounting for like somebody so let's say it's a year where i've been a successful bet are and i've offered to provide this reliability service and it turns out to be warm and the i assume any doesn't need the service am i being paid anyway and what am i being paid for if i'm not a dual fuel i'm just just an oil based provider yes my whole thing so they don't use it and i think because remember the way the program was designed and this gets back to the allocation issue the commission said to the load serving entities well you need to pass through those costs now