MSCP - EMC

Percentage of Offer Prices100%90%80%70%60%50%40%30%20%10%0%Chart 3: Offer Price Distributions30.8% 17.3% 1.8%0.7%16.0% 2.6%36.7%23.8% 4.6%37.6%36.6%34.7%34.6%44.3%33.5%35.5%37.3%$0/MWh26.1%27.3%29.6%40.0%31.6%27.8%29.6%$0.01/MWh-$50/MWh5.3%8.0%10.4%2.6%1.1%0.8%1.0%0.5%0.5%1.8%3.9% 0.5%0.5%3.9%4.1%$50.01/MWh-$100/MWh1.6%$100.01/MWh-$500/MWh16.2%16.6%7.8%1.0%0.1% 0.2% 0.3% 0.0% 0.7%0.2%$500.01/MWh-$1000/MWh9.2%4.4%1.5%0.5%0.3%0.3%0.0%1.4%0.5% 0.5%0.4%0.3%0.7%0.3% 0.2% 0.3% 0.1%0.1%0.1%$1000.01/MWh-$1500/MWhApr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07$1500.01/MWh-$2000/MWh20.8%23.9%25.7%29.9%31.1%26.9%2.1%30.0%31.9%26.8%>$2000/MWhd. Summary29. In summary, the analysis of supply conditions shows that the level of plannedoutages and quantities of regulation offered generally did not deviate fromhistorical trends during the review period.30. The only exception was the higher than previously seen level of planned outagesfor CCGTs in January 2007. This contributed to offers in the $0/MWh price rangefalling to their lowest level of 30.8 percent in January 2007 compared to 33.5 to44.3 percent between April 2006 and December 2006.31. However, the pricing of regulation offers had changed during the review period.There was a significant shift in capacity which was historically offered at eitherthe $0.01/MWh to $100/MWh price range or the exceeding $2000/MWh pricerange, to the $100.01/MWh to $2000/MWh price range.REASONS FOR HIGH REGULATION PRICES32. Based on our above analysis, the high regulation prices during the review periodwere the result of the following:a. Regulation offers particularly those at the lower price bands ($0.01/MWhto $100/MWh) and the extremely high price band (more than$2000/MWh) were converging at the $100.1/MWh to $2000/MWh priceband;Page 9 of 14