APX is pleased to present the current and future activities of the CAISO Market Redesign and Technology Upgrade (MRTU). This issue includes:

• MRTU Market Simulation
• APX MRTU System Update
• CAISO Go-Live Process

The Update 1 simulation was extended by two weeks to December 21st to allow time for the CAISO to stabilize the Update 2 software release with the goal of ensuring a smoother start for market participants.  The extension of Update 1 also has the benefit of adding some patches for bugs discovered earlier during the Update 1 simulation phase.  APX has been working closely with the CAISO to resolve an Automated Programmatic Interface (API) issue that allows the download of Bi-lateral trade results that had prevented testing of APX features, and has seen some progress that would have been deferred until the start of the year if it wasn’t for the extended testing time in Update 1.

Update 2 is scheduled to begin on January 2 and run through February 29.  The turn around time for settlement statements during Update 2 will be 15 business days, slowing the opportunity to assess the settlement impacts or the Update 2 changes, but is designed to more closely mirror the actual market.  Update 2 is critical in that a significant amount of market functionality that hasn’t been previously released will be available and the remaining CAISO systems that need to be integrated to make the overall market work are being added.  Some of the key functionality that is being released in Update 2 is Existing Transmission Contract scheduling, wheeling transactions and incorporating all MRTU charge codes.  Key integration elements include the Control Area Scheduler (to test E-tagging), OMAR for meter data and messaging services that send notices to Scheduling Coordinators when specific stages of the market processes are complete.

Update 2 is one of the best opportunities for market participants to determine if all of their business practices are functioning from bid to bill since the entire market functionality will be exercised.  There will be opportunities to fine tune the information in the Resource Data Templates (RDTs) to assure that the CAISO masterfile is synched up for the April go-live.  Update 2 is also the opportunity to test variants of regular business practices to see the impacts of different behaviors that the new market can impose on individual participants.

APX has reviewed client RDTs to ensure that the resources that belong to clients are represented under the correct SCIDs.  Some unit characteristics are variable and need to be reviewed and confirmed to best assure that the market returns expected results.  Please contact Cris Gallegos or Spence Gerber if you have any concerns or questions regarding how your resources are being conveyed to the market by the end of January so updates can be made and tested during the Update 2 simulation.

APX rolled out its Checkout, Bid/Offer, Trade, and Settlement Verification applications during Update 1 and exercised this functionality for a number of clients.  The response from APX clients that had an opportunity to test the software was positive, especially regarding the extended functionality, usability, and look and feel.  APX encourages clients to continue to view and use the new system in the sandbox environment to help flesh out bugs and communicate potential enhancements for consideration prior to the roll out of our MRTU compliant systems for go-live.

The next release of the APX MRTU system is targeted for late January for use during the Update 2 simulation and will feature incremental functions as well as bug fixes from the current version.  The new functionality scheduled for release includes the ability to submit centrally from Checkout, inclusion of the download of trade results, and enhancements to view additional status information.  Behind the scenes, a complete workflow manager is being implemented so that APX operations can monitor submission and retrievals to ensure increased reliability, availability, and performance with our operational support to better serve our clients.  APX acknowledges our client’s need to better understand the ISO settlement statements and values.  Due to the complexity and variability to date, we have adjusted our approach for this release to focus first on presenting the ISO statement values so they are consumable and secondly to present the underlying billing determinants through reports.

If you haven’t had a chance to view the new APX systems, please contact Cris Gallegos (408.517.2154) to set up a demonstration and register for the Update 2 simulation.

When will we know if the CAISO going to make the April 1, 2008 start date?  Besides requiring a well functioning market simulation that demonstrates that the systems are ready to go, the CAISO continues to assess the readiness and the progress of market participants.  The CAISO is documenting those items among others to prepare a filing with the Federal Energy Regulatory Commission (FERC) of their intent and ability to go live 60 days in advance of the go live date.  While this filing is not a regulatory mandate imposed by FERC, it is an information filing that will outline the status of the implementation effort to date and the steps required to get to the go-live date successfully.

The information gathering and assessment process culminates with a CAISO management report to the CAISO Board of Governors (BOG) meeting on January 28, 2008 to seek authorization to submit the informational filing to FERC on January 31, 2008.  Key elements of information being presented to the BOG for consideration include: the status of market simulation, particularly the start of Update 2, feedback from Market Participants regarding their state of readiness and ability to support the April 1, 2008 market launch and the progress of three independent evaluations of the CAISO market software, the quality of the market solutions and the state of the MRTU Settlement and Market Clearing (SaMC) system.

Presuming that the outcome of the January process indicates that any remaining issues and challenges can be resolved or a mitigation plan can be implemented by the end of March, the CAISO is scheduling a special BOG meeting on March 10, 2008 for presentation of a final evaluation and a go-no go decision.  By this point CAISO management will have sought the affirmation of several key market participants that their systems, processes and people can also support the April 1st start date.  If the CAISO BOG approves a April 1st market start, the CAISO will make a formal announcement of market launch on March 20, 2008 and open the MRTU production system for submission of Day Ahead Bids on March 22, 2008 which is seven days prior to the April 1, 2008 trade date.

Contact your Account Manager Cris Gallegos (408.517.2154) or Tony Frontino (714.544.1774) for more information.