From: christi.nicolay@enron.com
To: steve.wang@enron.com, ebaughm@enron.com, terri.clynes@enron.com, oscar.dalton@enron.com, doug.sewell@enron.com, kcompea@enron.com, mike.e.kelly@enron.com, gary.justice@enron.com, patrick.hanse@enron.com, karla.compean@enron.com, kerry.stroup@enron.com, dave.mangskau@enron.com, jeff.brown@enron.com, russell.ballato@enron.com, don.baughman@enron.com, matt.lorenz@enron.com, jason.choate@enron.com, maria.valdes@enron.com, john.kinser@enron.com, peter.makkai@enron.com, jeff.king@enron.com, robert.benson@enron.com, fletcher.sturm@enron.com, berney.aucoin@enron.com, brad.morse@enron.com, fletcher.sturm@enron.com, kevin.presto@enron.com
Date: 2001-05-07 21:56:00+00:00
Subject: Alliance RTO Progress

Mike Roan, Janine Migden and Donna Fulton are now working on the Midwest RTO effort for Government Affairs.  See Mike's update below.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 05/07/2001 11:55 AM ---------------------------
From:	Mike Roan/ENRON@enronXgate on 05/02/2001 05:14 PM
To:	James D Steffes/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT
cc:	Janine Migden/NA/Enron@Enron, Ron McNamara/NA/Enron@Enron 

Subject:	ARTO Progress

A quick update on ARTO....

Since taking the reigns from Jeff we have been concentrating on getting a seat at the table with ARTO to discuss day 2 congestion mgmt (CM).  We have been (tentatively) successful (i.e. we have a toe in the door but not a seat at the table).

?	Initially ARTO were not interested in pursuing a stakeholder process to discuss market design issues. They held a stakeholder meeting in Columbus on 3/22 where we suggested that they set up a meaningful stakeholder process.  This was supported by a majority of stakeholders at the meeting.   However it appeared to fall on deaf ears.
?	As a result of that meeting we assisted EPSA draft a letter to the ARTO mgmt committee setting out our concerns and proposing a stakeholder process that if implemented would avoid us going to FERC (the threat was implicit in the letter).
?	ARTO held a second stakeholder meeting in Baltimore.  At that meeting they proposed a stakeholder process along the lines set out in the EPSA letter (the Market Development Advisory Group will meet every two weeks to reach concensus on day 2 CM).  We also suggested a tentative governance structure and a way of ensuring that ARTO fully considered our input.  While it is unclear whether ARTO are 'genuinely' seeking input from this group or trying to appease FERC, the setting up of the process is a useful step for us.  We can use the process to attempt to gain concensus around a fully developed 2 day CM solution, propose this to ARTO and work with them on implementation by 12/15/2002.   If ARTO refuse to adopt it we should have a stronger case with FERC as we will be able to show the process, output and lack of consideration by ARTO.  I am sure that ARTO are aware of this so i am trying to work out their angle, maybe they are being genuine (still it pays to be a sceptic at this stage).
?	To start building concensus around a day 2 CM solution i have asked a small group of stakeholders to assist us develop a framework (at this stage the small goup is Edison Mission, Constellation, Duke Energy, PG&E and Reliant).  They are happy for us to take the lead on developing this framework (no prizes for anyone who guesses what that framework looks like) and to start thinking about how we get wider concensus amongst stakeholders.

So some positive movement.  I am also opening up communications with ARTO mgmt committee members (have talked to Comed and started with Illinois Power through Dynegy....Ron & I are trying to set up a second meeting with AEP mgmt) and Janine is setting up a roadshow so we can visit other interested parties in the ARTO region over May/June.

A couple of other related points.  It would be useful to get in front of the decision makers at Dynegy to see where they are at generally...there is some differing feedback from the people i know so it is not clear what their corporate position is (i may need a hand here!).  This is reflected in the second point...at the last ARTO stakeholder mtg we were told that ARTO had to make a decision whether to select 'pay as bid' or 'single market clearing price' as the mechanism to determine price discovery.  We were told that 7 out of the 10 ARTO mgmt commttee preferred 'pay as bid'.  Anyway we argued for 'single market clearing price'.  We also suggested that transmission owners should not make a decision that affected market participants.  We managed to convince a some stakeholder with our arguments and ARTO held a spot vote that recorded 3 for 'pay as bid', 9 for 'single market clearing price and 9 'not enough info'....i have heard to ARTO took this into account and will leave it to stakeholders which again is a positive step for the process. I strongly supported 'single market clearing price' whereas Dynegy was a strong proponent for 'pay as bid' but having talked to their people in Houston they say that that is not their position (its seems like they have the same problem as other large firms....).  So getting time with their decision makers would be useful.


I hope this update is useful, give me a call with any queries or feedback.

regards
MR

Christi, could you forward this to the traders if you think it is useful for them.