September 11, 2012 Mc meeting

1. September 11, 2012 Mc meeting Robert B. Burke rburke@iso-ne.com O: (413) 535-4356 C: (860) 833-5370 PRD Full Integration Conforming Changes and Fixes

2. Background • On April 13, 2012, the ISO filed proposed changes to the transition period rules for demand response (reference April 10 , 2012 MC presentation, agenda item 4). The rule changes addressed: • RTEG Demand Reduction Value • Transition Period Metering Requirements • Baselines & Baseline Adjustments • Similar changes were needed for the full integration rules, but time constraints required the ISO to limit the scope of the changes to those affecting the transition period only. • On May 29, 2012, the Commission accepted the proposed transition period rule changes.

3. Background • The ISO has assessed the full integration rules in the context of the transition period changes and has determined the following changes are required to be carried forward: • RTEG Metering Requirements • Baseline & Baseline Adjustment Rules • Real-Time Emergency Generation (RTEG) • Demand Response Resource (DRR) • The ISO also identified that clarification to the capacity market rules is needed regarding the application of the Distribution Loss Factor • Finally, some clarifying language changes will be made to both Section 13 and Appendix E.

4. Resources & Assets

5. Section III.13 Tariff Sections for Review • Audit values from assets associated with Real-Time Demand Response Resources carryover into CCP June 1, 2017 and associated Demand Response Capacity Resource. • Will still use sum of the audits of underlying assets. • Clarify appropriate loss factor for Demand Response Capacity Resource that clears for FCA 8 or FCA 9 with early Commercial Operation Date. • III.13.7.1.5.9 – backed out an earlier change. • Replace “online” and “offline” terminology.

6. III.13.6.1.5.4.2. General Auditing Requirements for Demand Response Capacity Resources (d) An audit is valid beginning with the date on which the audit is performed, and remains valid until the next audit is performed for a like season, which shall be no later than the end of the next like Seasonal DR Audit period. For the Capacity Commitment Period commencing June 1, 2017, the audit results for Demand Response Resources comprised of Demand Response Assets that were associated with a Real-Time Demand Response Resource in the prior Capacity Commitment Period shall be the sum of the audit results for those assets in the prior like Seasonal DR Audit period.

7. III.13.7.1.5.1.2. Special Provisions for Demand Resources that Qualifies in the Eighth or Ninth Forward Capacity Auctions in which Project Sponsor Proposes An Early Commercial Operation Date For a Demand Resource that first qualifies  in the Forward Capacity Auction for either of the Capacity Commitment Periods beginning June 1, 2017 or June 1, 2018 but has a Commercial Operation Date prior to June 1, 2017, the average avoided peak transmission and distribution loss factor (as described in Section III.13.7.1.5.1) shall apply for periods prior to June 1, 2017; and thereafter, only a distribution loss factor of 1.065 shall apply.

8. III.13.7.1.5.9. Determination of Hourly Calculated Demand Resource Performance Values for Real-Time Demand Response Resources and Real-Time Emergency Generation Resources Starting with the Capacity Commitment Period beginning June 1, 2012 Eliminated June 1, 2017 which was added previously and should not have been.

9. III.13.7.1.5.10.2 Availability AdjustmentsRemove “Online” and “Offline”, and “the greater of” in (ii) (i) For a Demand Response Resource that has received a Dispatch Instruction to interrupt its demand, the lesser of the resource’s Demand Response Baseline as adjusted pursuant to Section III.8.5 and Audited Demand Reduction adjusted down by the greater of the Maximum Reduction, as submitted or redeclared by the Lead Market Participant, or Real-Time Demand Reduction Obligation. (ii) for a Demand Response Resource that has not received a Dispatch Instruction to interrupt its demand, the lesser of the resource’s Actual Load and the Audited Demand Reduction adjusted down by the Maximum Reduction, as submitted or redeclared by the Lead Market Participant.

10. Append E Tariff Sections for Review • Change “retail delivery point” to “Retail Delivery Point” • Include change to Demand Reduction Threshold Price that was just filed for Transitional PRD • incorporate Transitional PRD filed change in full integration

11. 6. Determination of the Demand Reduction Threshold Price where FPIhis the historic fuel price index for the same month of the previous year, and FPIcis the fuel price index for the current month. The historic and current fuel price indices used to establish the Demand Reduction Threshold Price for a month shall be based on the lesser of the monthly natural gas or heating oil fuel indices applicable to the New England Control Area, as calculated three business days before the start of the month preceding the Demand Reduction Threshold Price’s effective date. The ISO will post the resulting Demand Reduction Threshold Price, along with the index-based fuel price values used in establishing the Demand Reduction Threshold Price, on its website by the 15th day of the preceding month in advance of the Demand Reduction Threshold Price’s effective date.

12. Schedule