In response to FERC Order 890 regarding the provision of Regulation and Frequency services by non-generating resources, ISO-New England is conducting an Alternative Technology Regulation (ATR) Pilot Program. The goal of the ATR Pilot Program is to allow ISO-NE to identify the impact on the New England system of alternative technologies with new and unique performance characteristics that might previously have been unable to participate in the Regulation market and to allow the owners of the ATR resources to evaluate the technical and economic suitability of their technologies as market sources of Regulation service.

Resources eligible to participate in the Pilot Program include, but are not limited to, flywheel technology, battery technology, and certain Demand Response resources. Other resources may be eligible to participant in the Pilot Program. Please contact ISO-NE Customer Service for additional information regarding eligibility.

The ATR Pilot Program is limited to 13 MWs of total participation with no one participant allowed to provide in excess of 5 MWs of Regulation services. The minimum MW value required for program participation is 0.1 MW.

ISO-NE will initiate the ATR Pilot program beginning November 2008 and running through to at least May 2010. Customer interested in participating must contact ISO-Ne Customer Service to express interest in the Pilot program and must be able to commence operations no later than November 2009.

ATR resources will be compensated based on AGC performance (i.e. mileage payments) and availability to provide Regulation (i.e. time-on regulation payments) at the Regulation Market's hourly Regulation Clearing Price. ATR resources will not submit offers into the Regulation Market and will not directly impact the Regulation Clearing price. The ATR resources will be treated as 'self-scheduled for Regulation.” In addition, units participating in the Pilot Program will not participate directly in the Energy market, will not be eligible to receive Capacity payments, and will not be assessed Capacity charges. Also, the units will not be eligible for Regulation Lost Opportunity Cost payments. ATR resources that arrange to take electrical service through a Load Serving Entity (LSE) will be subject to charges from the LSE in accordance with the terms of their arrangements.

Yes

There are several requirements to be met prior to becoming an active resource in the ISO-NE Regulation market. Many of the requirements can be accomplished in conjunction with one another:

• NEPOOL Membership – Allow 2 to 3 months
• Interconnection:
• Must have signed agreement with local Transmission Operator – Allow 3 to 4 months
• Submission of I.3.9 Proposed Plan for generator interconnection or Less than 5 MWs Generator Notification Form. Must be approved by NEPOOL Reliability Committee – Allow 3 to 4 months
• Physical electrical interconnection to the grid – Allow 4 to 6 months depending on location and complexity
• Communication Equipment and Circuit ordering, installation, and testing – Allow 3 to 4 months
• Asset Registration – 5 business days prior to activation

Participant must bear any interconnection and metering costs. If the participant is interconnected and metered in a manner that results in a Real Time Load Obligation (RTLO), then the participant will receive a charge equal to a proportional share of certain costs allocated based on RTLO.

Whenever the facility indicates it is available to regulate, the ISO will send an AGC signal every 4 seconds directing the resource to move up, down, or remain at its current output/consumption level. The resource is paid for being available to follow the AGC signals, and for actually changing output/consumption in response to the signals. This is a “pay-for-performance” program, and resources will only be compensated when available, and when successfully following the AGC signal. Partial success in responding to the AGC signal will generally result in only partial compensation, although certain grace periods and provisions apply. The ISO will work collaboratively with each program participant to fine-tune the dispatch process for each resource to identify an operating strategy that best fits the resource.

Costs for regulation services provided by ATR resources will be charged to Market Participants proportionately based on Adjusted Regulation Obligations, which is based on Real-Time Load Obligation adjusted for bilateral Regulation purchases and sales.

The ATR Resources will be integrated into the existing Regulation market settlement reports with the addition of a few extra columns. Report format changes will be posted in mid-October 2008.