Cal PX situation

CONFIDENTIAL
SUBJECT TO ATTORNEY CLIENT PRIVILEGE

Here is a line of argument which we might consider using to muzzle the PX.

1. Section 19.3.1 of the Tariff requires the PX to keep sensitive
information given to the PX by Participants Confidential.

2. Section 19.3.3 says no PX Participant has the right to review any ....
information... that another PX Participant has designated as confidential.

3. Section 19.3.4 says that if the PX thinks it has to disclose
information, it has to let the Participant that will be affected by the
disclosure have time to challenge the alleged disclosure requirement.

4. PX Tariff Schedule 10 (Dealing with Sanctions) says that the terms of
Section 19 apply in Sanction situations.

5. Schedule 10 is silent about whether or not the PX is required or
permitted to broadcast Sanctions to the market.

There may be a legal argument based on the Tariff that the PX has to keep
quiet about sanctions. Are they required or permitted to broadcast to the
whole world their findings?

Another line of reasoning based on the Tariff which might be worth exploring
is as follows: if this event had occurred now, with the new sanction part
of the tariff in effect, the PX would have had to have conducted an
investigation in accordance with Section 5.4 which requires the basis of a
finding to be given and, if after this relatively fair looking due process
section was followed, we were found guilty, we would have received a Level
1 Sanction, which is a Formal Warning which "shall take the form of a
written letter identifying the PX Participant's infraction. " and nothing
more. Therefore, why is the PX seeking to solve a problem it had before the
Tariff was brought up to date on Sanctions with a Kangaroo Court process
that is more draconian than its newly approved FERC sanctions? It is rather
ironic that we have escaped sanctions because they were't organized to impose
them when the actions in question occurred, but had the present Tariff been
in effect then, we probably would not have been treated so shabbily. Somehow
this has to be able to be turned into a legal argument in our defence. ---cgy

These are preliminary thoughts which I think merit further pursuit.
---cgy