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Market Evolution Program

Wholesale/Retail Integration Project

R.A.S.C. Meeting

May 14, 2003

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What is a “Wholesale/Retail Issue?”

No formal definition, but generally these issues all display four common characteristics:

1) Both the wholesale and retail markets are affected;

2) It is in the long-term interest of both markets to resolve them

3) No single governing/regulatory authority has full rule-making powers or responsibility over the issue; and

4) They are generally complicated by the fact that they span the wholesale/retail market boundary - particularly in areas such as issue ownership, computer systems, business processes and financial risk management activities;

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Wholesale/Retail Integration

Issue Areas:

1) Financial issues across the market boundary

2) Opening the door to future demand response products that retail customers can participate in while providing a reliability benefit

3) Ensuring that the wholesale/retail market boundary keeps pace with emerging technologies such as retail-level metering and microgeneration

Developments:• Wholesale/Retail Integration discussion paper soliciting stakeholder feedback to be released shortly• Upcoming Pilot Projects

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The Players

• Wholesale Market Participants:• Distributors• Wholesale Buyers/Sellers• Retailers• Importers/Exporters• Generators• Wholesale Consumers

• Wholesale Transmission Customers

• Metering Service Providers

The Rules

• IMO Market Rules• IMO Licence Conditions• OEB Transmission Rate

Orders• Bill 210 regulations• Other regulations (Debt

Retirement Charge, Market Power Mitigation, etc.)

• Distributors• Retailers• Retail Customers• Retail Generators• Retail Metering Service

Providers• EBT Hub Providers

• OEB Retail Settlement Code and Rate Handbook

• Affiliate Relationships Code• Distributor and Retailer

Licence Conditions• Bill 210 Regulations

Examples of Solutions/Processes that

could be integrated

• Prudential Risk Allocation• Wholesale Market Settlement• Wholesale Payment Timelines• Demand Response Programs• Retail Market Settlement• Retail Payment Timelines• Distributed Generation• Retail Interval Metering

Wholesale Market

Retail Market

The Wholesale/Retail Market Boundary

Aspects of Wholesale/Retail Integration

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Wholesale/Retail Integration

The Approach:

• Avoid overlap with topics being addressed in existing stakeholder forums

• Use of Pilot Projects to look ahead to future logistical challenges

• Ensure that future solutions do not conflict with the evolving role of various market participants and retail entities

• Ensure alignment with other MEP initiatives

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Wholesale/Retail IntegrationRegulatory Issues Encountered so far

Retail Interval Metering:

Current regulatory framework needs to be adapted in order to allow for a meaningful, Ontario-based pilot study.

Raises regulatory questions concerning cost-recovery, administration, and the role of the LDC in this area.

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Wholesale/Retail IntegrationRegulatory Issues Encountered so far

Load Aggregators:

Various pilot projects being considered - encompassing both “load response” and “price response”.

Final form of participation will need to fit with the IMO’s broader strategy concerning demand response

Regulatory issues centre around the relationships that would govern payment streams from the wholesale market to the aggregator and on to the ultimate consumer.

Many other ISO’s define the boundary of their relationship/jurisdiction down to the market participant level - not the final retail customer.