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

• MRTU Schedule
• Market Simulation
• APX MarketSuite

The CAISO continues to aggressively pursue the February 1 MRTU go live date with the Board having directed CAISO Management to submit a 60 Day Certification filing with FERC on December 1, 2008. The Board direction occurred despite near unanimous Market Participant input that it was premature to make the decision based on the current state of readiness and a more informed decision could be made if they waited until late November to give Management direction. The Board did agree to have a public meeting on November 24 as a checkpoint prior to making the filing to receive an update on the functioning of the systems and the overall state of readiness, both from a CAISO perspective and a Market Participant.

The outstanding issues causing the greatest concern is the state of Settlements, consistency of market results and LMP pricing. As of September there has yet to be a "clean" set of daily settlement statements that tie out to a monthly statement and invoice. The CAISO has re-run September statements in an effort to demonstrate that the market results from September are traceable to the daily statements and invoice for the month. APX and other market participants are currently analyzing the September settlements re-run to determine if this objective has been met. The consistency of market results continues to improve both in the Day Ahead and Real-time markets with Day Ahead Market runs being turned out in a production like manner and Real-time market runs providing solutions for the 5 minute dispatch over 90% of the time. Pricing volatility and variances can generally be explained due to a market set up condition, e.g. the overall bids presented an un-likely scenario, or an anomalous constraint or input to the network model.

The CAISO has been proactive in vetting these major concerns and working with Market Participants to develop a set of criteria that can be used to determine if these issues have been addressed. The challenge continues to be to satisfactorily close issues with enough time for Market Participants to thoroughly test their systems in an environment that ensures confidence that February 1 is a viable date.

MRTU market simulation has been running fairly consistently since August and, until late October, on a test system that ultimately included all of the expected MRTU go-live functionality. The CAISO migrated the simulation to the MRTU Production systems in late October and made it available for testing on October 26. The migration to the Production systems exposed connectivity issues that prevented full use of the Bid and Trade functionality for aproximately two weeks, but as of November 10, most issues had been resolved and the simulation environments are stable and performing well.
Most of the objectives and criteria that were established for the Integrated Market Simulation Update 2 (IMS U2) in early spring have been met notwithstanding issues surrounding the quality and consistency of the data and data flow to produce meaningful settlement results. While the CAISO acknowledges that traceability from bid to bill is important, they have determined that there is diminishing value in continuing to try and refine the IMS U2 process to the point where 100% quality is achieved and have determined that it is best to move out of this phase of simulation. This approach will leave open questions as to whether or not the exit criteria for IMSU2 has been met to the letter, but is unlikely to change the quality of the simulation effort going forward.
The CAISO is advancing with plans to initiate a Parallel Operations phase of market simulation on December 1 that presumes that market participants are ready to submit bids that more closely resemble their current market behavior. From the CAISO perspective this begins with CAISO grid operations personnel supporting market simulation outage (SLIC) and real-time Automated Dispatch System (ADS) the week of November 17. Beginning the week of November 24 grid operations support will expand to include Control Area Scheduler (CAS) E tagging process and disabling the CAS automated scripts that produce intertie schedules.

Effective December 1 the CAISO plans to implement full 24X7 support for SLIC, ADS and CAS tagging during simulation. In the broader context of simulation, the summer forecast will be used until the Full Network Model DB 37 is implemented in mid December and from that point forward the CAISO will use the same load forecast as it is currently using in production.

If you have any questions regarding details of market simulation, participation or the next steps, feel free to contact Spence Gerber at sgerber@apx.com or (916) 351-9759.

Favorites allows for a user defined set of parameters to be identified and saved for quick access to transactions in the Checkout, Bid/Offer and Trade applications. This eliminates the need to identify selection criteria each time a user wants to access particular portfolios or commonly used transactions. The ability to modify selection criteria from an existing Favorite will allow convenient access to additional transactions without having to repopulate common criteria and is being added on an incremental basis during the current deployment.

Direct linkage from transactions that are displayed in the Checkout to the Bid/Offer and Trade applications allows quick access to transactions that may need editing prior to submittal to the CAISO or viewing more granular details. When the link icon is selected, the transaction appears in a new window and is fully executable for editing and saving to the database.

Automated forwarding of Day Ahead market awards to the Real-time environment better assures that modifications to Day Ahead bids and schedules are performed in a manner that is consistent with MRTU bidding rules. Further, the APX process forwards attributes that are important for settlement purposes that are left out in the CAISO forwarding process. Specifically Contract IDs and depend on resource designations are carried forward with energy schedules to assure the proper settlement of wheeling and ETC transactions.

Contact your Account Manager Cris Gallegos (408.517.2154) or Wendy Brown (281.489.7633) for more information.