1. ASM Phase IIReserve Zone Criteria NEPOOL Markets Committee May 24, 2005 Jim Milligan ISO-NE Markets Development

2. Outline • Proposed Reserve Zones • Use of Reserve Zones • Reserve Zone Characteristics • Review/Definition Periodicity • Relationship with Other Zone Definitions

3. Proposed Reserve Zones • The ISO is proposing that the following Reserve Zones be defined and used for the initial implementation of ASM Phase II: • SouthWest Connecticut (SWCT) • Connecticut • NEMA/Boston

4. Use of Reserve Zones • Reserve Zones will be modeled as part of the power system configuration used in the New England Wholesale markets • Reserve Zones and Reserve Zone requirements will be inputs into the LFRM clearing, the real time dispatch algorithm and Settlements

5. Reserve Zone Characteristics • Defined for areas of power system that routinely require Daily RMR Resources to cover local 2nd contingency reliability criteria. • Zones are import constrained areas and consist of closed interfaces. • Zones must be contained within or the same as Energy Load Zones.

6. Zone Review/Definition Periodicity • Zone definitions (and requirements) will be reviewed and discussed as part of derivation and assumptions for each LFRM Auction. • Zone changes will be published as part of LFRM Auction Assumptions. • Zone changes will be coordinated with other Market timing and notifications.

7. Zone Relationships (based on ISO Proposals)

8. Questions