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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Dasovich, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JDASOVIC< X-To: 'Delaney Hunter ' <dhunter@s-k-w.com<, ''Lenny Goldberg' ' <lga@mother.com<, ''Jack M. Stewart' ' <jstewart@cmta.net<, ''John R. Redding (PS, NE) (E-mail)' ' <john.redding@gene.GE.com<, ''Evelyn Kahl' ' <ek@a-klaw.com<, ''Keith McCrea' ' <kmccrea@sablaw.com<, ''Mike Kahl' ' <mkahl@ka-pow.com<, ''Jeff Dasovich (E-mail)' ' <jdasovic@enron.com<, ''Bill Booth' ' <wbooth@booth-law.com<, ''Dorothy Rothrock' ' <drothrock@camfg.com<, ''Ann Cohn' ' <cohnap@sce.com<, ''Jan Smutny-Jones' ' <smutny@iepa.com<, ''John Fielder (E-mail)' ' <fieldejr@sce.com<, ''Barbara Barkovich' ' <brbarkovich@earthlink.net<, ''Dominic DiMare' ' <dominic.dimare@calchamber.com<, ''Karen Terranova' ' <kt@a-klaw.com<, ''Marc D. Joseph' ' <mdjoseph@adamsbroadwell.com<, ''Art Carter' ' <debinorton@aol.com<, ''Bill Dombrowski' ' <cra@calretailers.com<, ''Derek Naten' ' <derek.naten@roche.com<, ''John White' ' <vjw@cleanpower.org<, ''Robert Albergotti (E-mail)' ' <Robert.Albergotti@asm.ca.gov<, ''Diana Liebman (E-mail)' ' <liebmand@haynesboone.com<, ''Linda Sherif (E-mail)' ' <lys@a-klaw.com<, 'Mike Florio (E-mail) ' <mflorio@turn.org<, 'Phil Isenberg (E-mail) ' <isenberg@hmot.com<, 'Tom McMorrow (E-mail) ' <tmcmorrow@manatt.com< X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Sent Items X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst FYI. =20 Thought folks might be interested in the following story. =20 In addition, I've attached at the end for those that are interested a CSFB = report on PG&E's POR announced yesterday. Very much enjoyed working with this group on a solution for California. Pe= rhaps, given were things stand, we'll have another shot at helping get the = market, California energy policy, and Edison, back on their feet. Best, Jeff FERC To Examine Alleged Market Manipulation By Calif ISO=20 Updated: Friday, September 21, 2001 04:53 PM ET By Jason Leopold Of DOW JON= ES NEWSWIRES=20 LOS ANGELES (Dow Jones)--Federal energy regulators may investigate whether = the operator of California's wholesale electricity market has been manipula= ting its power-purchasing practices to reduce the costs of power the state = purchased under long-term contracts, according to documents obtained Friday= by Dow Jones Newswires Friday.=20 At issue is whether the California Independent System Operator has violated= its own market rules by purchasing expensive power secured by the state un= der contracts rather than cheaper power available in the spot market. The s= tate's need to sell off surplus power secured under those contracts has pro= ven embarrassing for Gov. Gray Davis, who signed $43 billion in deals to he= ad off a summer of spiking prices and blackouts that never materialized.=20 The Federal Energy Regulatory Commission will hold a meeting in California = Monday to address generators' complaints. The energy companies say that the= California ISO's purchasing decisions are difficult to comprehend and out = of line with the market, according to a letter sent by Andrea Wolfman, lead= FERC counsel for market oversight and enforcement.=20 The letter was sent to the ISO, the California Department of Water Resource= s - which has been buying power in lieu of the state's struggling utilities= since mid-January - and several generators, all of which were to attend th= e meeting.=20 "Recently we have become concerned that the scheduling and dispatch procedu= res of the California ISO, as they have had to change in the last nine mont= hs, are not well understood or are not well suited to the current market st= ructure," Wolfman said in her letter. "The purpose of the meeting is to dev= elop agreement between the ISO and those that participate in the scheduling= and dispatch (generators, utilities, CDWR) on appropriate practices and pr= ocedures."=20 ISO Procedures Need Explaining -FERC=20 The ISO's main responsibility is keeping power supply and demand in balance= on the state's electrical grid. As part of that job, the ISO determines wh= ich power plants to call into service and which suppliers to buy power from= .=20 If the ISO can't explain how it makes its decisions, FERC may conduct an au= dit of the organization and investigate the possibility it has manipulated = the market, Wolfman's office said.=20 "As discussed, FERC may schedule a technical conference and operational aud= it of CAISO," a second letter from FERC's market oversight and enforcement = division states. "This unprecedented examination of CAISO operations could = lead to the belief that complaints by generators of market manipulation and= other practices by the ISO should be investigated."=20 The ISO's operating rules generally call for it to purchase the cheapest po= wer first.=20 "The information that (generators) have provided all leads to a theory that= the CAISO is manipulating the market in order to purchase surplus DWR powe= r at high prices and protect Gov. Davis from political embarrassment," the = second letter says.=20 The ISO has said only that the market isn't operating as intended, and decl= ined to answer other questions about the allegations or discuss Monday's me= eting.=20 Generators Confused=20 Generators, including Mirant Corp. (MIR <http://quicken.excite.com/investme= nts/quotes/?symbol=3DMIR<, news <http://quicken.excite.com/investments/news= /?symbol=3DMIR<, msgs <http://quicken.excite.com/investments/discuss/?symbo= l=3DMIR<), Reliant Energy Inc. (REI <http://quicken.excite.com/investments/= quotes/?symbol=3DREI<, news <http://quicken.excite.com/investments/news/?sy= mbol=3DREI<, msgs <http://quicken.excite.com/investments/discuss/?symbol=3D= REI<), Williams Cos. (WMB <http://quicken.excite.com/investments/quotes/?sy= mbol=3DWMB<, news <http://quicken.excite.com/investments/news/?symbol=3DWMB= <, msgs <http://quicken.excite.com/investments/discuss/?symbol=3DWMB<;), Duk= e Energy (DUK <http://quicken.excite.com/investments/quotes/?symbol=3DDUK<;,= news <http://quicken.excite.com/investments/news/?symbol=3DDUK<;, msgs <htt= p://quicken.excite.com/investments/discuss/?symbol=3DDUK<) and Dynegy Inc. = (DYN <http://quicken.excite.com/investments/quotes/?symbol=3DDYN<;, news <ht= tp://quicken.excite.com/investments/news/?symbol=3DDYN<, msgs <http://quick= en.excite.com/investments/discuss/?symbol=3DDYN<), have bought apparently i= nexpensive power in the ISO's spot market only to find weeks later that the= price was much higher. That's because, according to the allegations, the I= SO is letting DWR supply expensive power into the market as "out-of-market"= purchases that aren't averaged into the real-time prices that ISO market p= articipants see.=20 DWR continues to buy out-of-market power regularly at the ISO's request, DW= R operations chief Pete Garris has said, but those purchases are being made= in the spot market and are never being satisfied by power from DWR's long-= term contracts.=20 The out-of-market purchases appear to be expensive, however. According to t= he ISO's August market report, the average out-of-market price for peak hou= rs was $55.90 a megawatt-hour, compared with $26.49/MWh on the ISO computer= ized market. Brokered prices of western electricity have been lower than th= e out-of-market prices for months.=20 None of the companies mentioned was willing to comment on the record.=20 The meeting is scheduled to be held at the ISO's headquarters in Folsom, Ca= lif., and representatives from power producers, utilities and the state are= expected to attend. FERC will serve as facilitator, Wolfman said. The meet= ing isn't open to the public.=20 The meeting will begin with a presentation by the ISO on its practices and = operational procedures, followed by adjustments that may be needed to impro= ve the market.=20 "The objective is to develop a written set of procedures that is agreed to = by all the market participants and that is consistent with good utility pra= ctices," Wolfman said in the letter.=20 -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjone= s.com <mailto:jason.leopold@dowjones.com<=20
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