Re: Ontario Master Project

Peter, just a follow-up to your email.

1. I would agree that OPG is mistaken. After the meeting, Chris and I and
others started the process of explaining to Joel Sheinfied, a contract
administrator, why deliveries in a pool situation were not just financial
settlements but involved a physical commitment to deliver or cause to be
delivered power. On this issue I think it would be helpful to present OPG w/
a product definition that works with the physical master. I know Chris is
already working on this. From what it sounds like, the Ontario pool is not
that different from NEPOOL. In UI, Chris worked on a product definition that
you could incorporate into the physical master.

2. I also agree that in pools, a fm will only exist when the pool fails and
there are no deliveries capable of being made (not a single MW flowing).
This is what we did in UI. This is what we do in the California pool. This
is what we attempt to do in NEPOOL. I think the EEI fm gets you to the same
place (nobody could call fm if the pool were making deliveries) but agree
that the language could be more direct. With the California product (CAISO
energy) we expressly modify the EEI fm since there are so many other things
we also have to fix. We likely in the future will also modify fm for the
NEPOOL product but we are still trying to introduce so many other products in
the US that this is a change for the near future. In general, fm is unique
to the product and I believe will change with each product. When Chris and I
were talking to OPG we told them that the fm we would be proposing for the
Ontario product would be just as you stated: Fm is only possible if the pool
fails. Just FYI, the god awful "Into"product in the US was created by Enron
for the very reason you stated: we wanted to eliminate fm risk in a non-pool
market - we did this by obligating the seller to continuously be required to
change delivery points (and not be allowed to call a fm) within the defined
control area if for any reason the prescheduled delivery point was
unavailable.