Participants will offer products, quantities and prices at Reserve Zones in the auction. The assignment of assets to meet those obligations is done daily prior to midnight the day before the operating day to meet obligations procured in the auction or traded for bilaterally.

This will be done on a daily basis using the SMS Forward Reserve Assignment application. This application will be located with all other market applications, on the SMD Home page. The user of this application must be the lead Participant of the resource and also have a valid digital certificate with the proper credentials.

Yes. Forward Reserve Bilaterals will have upload capability using the existing upload to SMS, but a new file format will be used for Forward Reserve Bilateral transactions.

Yes. The August auction will be the first milestone.

Beginning June 30, 2006, The Lead Participant may ask ISO New England Customer Service to open a customer call ticket identifying the asset and indicating the number of MWs of Claim 10 capability and the number of MWs of Claim 30 capability to be recognized. Lead Participants need not make such a request unless they would like to increase the number of MWs of capability above the amount reported to them in June, 2006.

ISO New England staff will investigate each request submitted between June 30 and September 15, 2006 comparing the requested capability with the historical values reported to the Lead Participant in June 2006. If the requested value is higher, the Lead Participant will be instructed to submit a request to demonstrate the requested capability.

Demonstrations will be conducted according to the following timeline.

Note: This timeline counts only ISO New England business days and does not include any non-business days that may intervene. For example, if Day 1 is Friday, Day 2 is Monday.

• Day 1: Participant submits request to demonstrate capability to ISO New England Customer Service, identifying the asset and the MW quantities to be demonstrated.
• Day 2: The request is forwarded to a Market Administration Analyst who makes arrangements for an unscheduled startup by the asset.
• Days 3 - 5: One of these three days will be the test day. On the test day, during normal business hours, the plant will be asked, via a telephone call, to demonstrate the asset's capability. For generators, the Control Room Operator will state, "This is an audit to demonstrate X minute reserves. Start the unit and go to Y MW in X minutes." Y is the increased capability requested by the Lead Participant, and X is either 10 minutes when increasing the recognized Claim 10 capability or 30 minutes when increasing the recognized Claim 30 capability. One 30-minute audit can satisfy a request to increase both Claim 10 and Claim 30 capabilities.
• Days 1 - 5 after the Test Day: The analyst will determine the capability demonstrated by the asset and report the results to the Lead Participant. Results and any increases to the Claim10 capability or Claim 30 capability will be reported to the Lead Participant, to become effective on October 1, 2006.

During the startup and minimum run time of the asset, the asset will be treated as a self-scheduled generator. At the end of the minimum run time, the dispatch software will be allowed to dispatch the generator economically, to either remain on line or to request the unit to shut down.

Note: Any time after the demonstration period (usually 30 minutes), the generator operator may opt to do any of the following: remain on line for the remainder of the minimum run time, waive the minimum run time, or request a self-schedule for the generator to remain on line.

The generator operator will have the option of requesting a self-schedule with the intention of performing a seasonal claimed capability audit. In this situation, if the ISO New England Control Room Operator has accepted the request to self-schedule, the Lead Participant is responsible for ensuring that the CCA requirements are met, including remaining self-scheduled, if necessary, for remaining on line for the amount of time required for a CCA-Test and any reporting requirements for a CCA-Test.

No. In consideration of the number of days that could be required to completely address a request to demonstrate Claim 10 or Claim 30 capability and the degree of coordination and accuracy required in passing values into the new system for the October 1 cut-over, no new requests will be accepted during the last two weeks of September.

Participants are reminded that with the ASM Phase II implementation, the Claim 10 and Claim 30 values become daily offer data and the Participant will be able to update these values using the eMarket User Interface. These daily offer values, however, will not be sufficient to ensure recognition of the offered offline reserves - the offer values will be considered in conjunction with other indications of the asset's ability to provide these reserves. These other indicators include the asset's registration, NX-12 information, hourly operating limits, conformance to the definition of a fast start generator and the capability limits previously demonstrated to ISO New England.

Participants may request demonstrations to show new capability or increased capability beginning September 30. However, demonstrations of capability will then fall under rules and procedures that are effective October 1.

Yes. If a generator successfully demonstrates higher Claim 10 or Claim 30 capabilities than previously recognized, ISO New England will adjust the values shortly after the analysis of the demonstration results if the unit is currently recognized as a fast start capable unit. This may occur prior to October 1.

Yes. The beginning of a CCA-Test type of Seasonal Claimed Capability audit is a decision that is made by the Participant. The beginning of the Claim 10 and/or Claim 30 audit must be unannounced, but once the generator is online the Participant can make a decision to demonstrate its Seasonal Claimed Capability.

Yes. The Claim 10 and Claim 30 audits will be treated as self-scheduled activity until the end of the minimum run time unless the Participant notifies the Generation Coordinator that they wish to waive their minimum run time.

The answer to this question depends on considerations additional to the demonstration results. Assuming the demonstration occurs this summer for a generator that is already being recognized as a fast start generator, the demonstration results will become the current Claim 10 or Claim 30 value for the generator. For the generator in question, the Claim 10 value would be 29 MWs. This Claim 10 capability would be carried over into ASM Phase 2 as the Claim 10 cap (i.e. upper limit) for a Fast Start capable and Claim 10 capable generator. This Claim 10 cap would not restrict the amount of Claim 10 that the Participant could offer as offline reserves - it would provide an upper limit to the amount of Claim 10 capability (10-minute non-synchronous reserves) that would be recognized on the generator. In addition to being limited by the Claim 10 cap, the amount of the Claim 10 Offer MWs that could be credited for the reserve markets could be limited by other indicators such as the Economic Maximum or the staffing of the generator. As a footnote to this, the generator would also be given a Claim 30 of 29 MWs (or more, depending on the output of the generator after 30 minutes).

For a demonstration of previously unrecognized capability by a generator currently in commercial operation, the Participant is asked to supply the best (highest) output that they believe the generator can produce during the 10-minute and/or 30-minute test period.

If the demonstration above had been for a generator that was not currently recognized as being fast start capable, there would be no change to the Claim 10 value until the Participant requests the generator to be recognized as Fast Start capable, and the activities resulting from that request were completed. Were the activities completed prior to September 30, the Claim 10 value would be 29 MWs, as described above for a currently recognized fast start generator.