For additional information please contact:

Bob Burdett
Corporate Communications Manager
Nexant, Inc.

+1 415 369 1114
bburdett@nexant.com


   

NEXANT TO DELIVER CONGESTION REVENUE RIGHTS SYSTEM TO CALIFORNIA ISO

PROJECT WILL SUPPORT CALIFORNIA ISO MARKET REDESIGN AND TECHNOLOGY UPGRADE EFFORT

February 10, 2005---SAN FRANCISCO---Nexant, Inc. (www.nexant.com) announced today that it has been selected by the California Independent System Operator (California ISO) (www.caiso.com) to provide the ISO’s congestion revenue rights (CRR) market system. The new market system will be based on Nexant’s i-HEDGE™ product, a web-based CRR auction and allocation system developed by Nexant’s Energy Solutions division, with adaptations to the ISO's specific requirements.

The California ISO CRR system is part of its new multi-vendor Market Redesign and Technology Upgrade (MRTU) implementation program. MRTU represents a major change in the way the ISO will run the state's wholesale energy spot markets, as well as how it will manage transmission congestion. An important component of MRTU is adaptation of nodal energy pricing that reflects congestion costs. CRRs provide ISO market participants with the opportunity to hedge against congestion costs under nodal pricing.

In addition to determining the allocation of CRRs to qualified recipients, market participants will be able to submit bids to buy and sell CRRs via the new web-based CRR system. The system will perform the CRR auction and other calculations centrally, and will communicate the results to the participants. Once the redesigned California markets are operational in 2007, the new CRR system will replace the ISO's existing firm transmission rights auction system.

“CRRs are instruments that allow users to hedge against volatility in power prices due to transmission congestion,” said Dr. Ongun Alsaç, Nexant Senior Vice President and Director of the Energy Solutions division. “The success of any CRR system hinges on reliability, accuracy, security, performance, and the flexibility to accommodate a variety of CRR market instruments. Our existing i-HEDGE software incorporates standard transmission congestion rights auction and allocation rules and is rapidly being accepted as the leading product for CRR auction implementation in the U.S. For the California ISO, our challenge is to adapt and implement this system quickly and smoothly.”

Nexant's i-HEDGE CRR system uses modular software architecture, including the industry-standard Oracle relational database, secure web user interfaces, and HEDGE®, Nexant's CRR optimization engine that has been used by a number of ISOs. HEDGE allows central market operators to offer both obligation and option products, features that are expected to contribute to much more liquid wholesale markets. The advanced architecture of i-HEDGE helps to protect long-term investment in software systems, providing the necessary versatility to incorporate any potential future CRR market design changes.

“Managing congestion costs through the congestion revenue rights tool is a major part of our overall market redesign project,” said Randy Abernathy, California ISO Vice President for Market Services. “Our market participants need a way to hedge against the costs of congestion on the grid. The Nexant system will provide that in a user-friendly platform. We look forward to working with Nexant to see that this important part of market functionality gets put in place on time and on budget.”

ABOUT NEXANT

Nexant’s products and services help clients solve critical strategic and operational challenges in several key areas: retail and wholesale power markets; energy systems management; advanced energy technology; petroleum and chemicals, and enterprise risk management. The company is headquartered in San Francisco, CA. Nexant maintains offices in London, U.K.; Bangkok, Thailand; Tokyo, Japan; White Plains, NY; Washington, D.C.; Houston, TX; Phoenix, AZ; Boulder, CO; and Madison, WI. The company is owned by a select group of investors and Nexant management and employees. Nexant®, HEDGE®, and i-HEDGE™ are proprietary trademarks of Nexant, Inc.Nexant® is a proprietary trademark of Nexant, Inc.

ABOUT THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR

The California ISO is a not-for-profit public benefit corporation charged with managing the flow of electricity along California's open-market wholesale power grid. The ISO mission is to safeguard the reliable delivery of electricity and ensure equal access to 25,000 circuit miles of the “electron highway.” As impartial operator of the wholesale power grid in the state, the California ISO conducts a portion of the bulk power markets. These markets are used to allocate space on transmission lines, maintain operating reserves, and match supply with demand.

  

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