Re: ISO problems

Thanks Mary, I'm having some folks look into the matter. Scott

<<< <Mary.Hain@enron.com< 01/30/01 05:38PM <<<
At your request, here's a write-up of our problems with the ISO.

Issue 1 - Concerning the intertie going North out of California into the
Northwest (NW) at the California Oregon Border (COB), since about the 24th
of January, the ISO has started telling market participants that the
available transmission capacity, which is usually 2300 MW, is zero. Last
Friday, this caused prices to increase at the Mid-Columbia (NW trading hub)
by about $50-75, costing the NW wholesale market an estimated $2-5 million
per day. This transmission capacity is within the ISO's control and,
because capacity is available, the ISO's actions seem to violate Order No.
888. I also wonder what would happen if another control area decided they
were going to take similar action. This hurts Enron financially because we
own FTRs and if there is no congestion, we don't get paid anything. This
is like "economic" force majeure. The reason the ISO is listing zero ATC
is that they're in a Stage 3 Emergency and they're not offering sufficient
price/credit terms to get the power they need. California obviously thinks
its power needs are more important than the NW's.

Issue 2 - We have transmission we are purchasing from some California munis
using transmission facilities that are not part of the Cal ISO. The ISO
advised today that they are thinking about cutting exports from California.
We are concerned that the ISO will cut our transaction even though it uses
transmission assets and rights that are not under the ISO's control. If
our deal were cut, it could cost us $20,000 to $100,000 per hour (we have a
125 MW deal and spreads now are $125 and they would likely blow out more if
exports were cut). We hesitate to call the ISO and ask if they are going
to cut us because we are afraid we might suggest something that they
haven't thought of.

I'd be happy to answer any questions. I'm at (503) 464-8862.