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2009 State of the Market Report

Market Performance

trading discussed above limited the response of the market to arbitrage these large price differences.

Midwest ISO: Cinergy Hub Michigan Hub Minnesota Hub WUMS Area

Day-Ahead

Real-Time

Difference

$30.77 $32.17 $26.17 $28.89

$30.30 $31.51 $25.43 $26.95

$0.47 $0.66 $0.74 $1.93

New England ISO: New England Hub Maine Connecticut

$43.18 $41.13 $44.52

$43.90 $41.72 $44.90

-$0.72 -$0.59 -$0.37

New York ISO: Zone A (West) Zone G (Hudson Valley) Zone J (New York City)

$32.92 $44.94 $49.12

$32.95 $45.24 $49.16

-$0.03 -$0.30 -$0.04

PJM: AEP Gen Hub Chicago Hub New Jersey Hub Western Hub

$32.79 $30.68 $43.73 $40.69

$33.07 $30.84 $43.27 $40.29

-$0.28 -$0.16 $0.46 $0.39

For comparison purposes, Table 3 compares day-ahead and real-time energy price differences in the Midwest ISO to other RTO markets in the Eastern Interconnect. For each market, we show the average price difference and the average of the absolute value of the hourly price difference for multiple locations (representing prices in select constrained and unconstrained areas in each market). Overall, these analyses indicate that price convergence in the Midwest ISO has been consistent with the other RTO markets.

$4.98 $6.68 $8.10 $7.44

$10.72 $13.27 $15.46

$6.52 $6.23 $6.94

Table 3: Price Convergence in Midwest ISO and Other RTO Markets 2009

$8.21 $9.70 $9.30 $9.77

Average Clearing Price

Average of Hourly Absolute Price Difference

Neighboring markets, which had exhibited consistent day-ahead premiums in 2008, exhibited slight real-time premiums at many locations in 2009. Meanwhile, the Midwest ISO has maintained its day-ahead premium across the footprint. This is consistent with higher real-time price volatility and higher RSG cost allocations in the real-time market compared to the day- ahead market. Real-time RSG cost allocations averaged $1.60 per MWh while day-ahead RSG

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