FERC Clarification of Market Mitigation Procedures

MEMORANDUM

TO: Regulatory Affairs Committee
Power Marketers Working Group

FROM: Jim Steffes, Regulatory Affairs Committee Chair
Bob Reilley, Power Marketers Working Group Chair
Julie Simon, Vice President of Policy
Mark Bennett, Senior Manager of Policy
Erin Perrigo, Manager of Policy

DATE: May 29, 2001

RE: FERC Clarification of Market Mitigation Procedures

On Friday afternoon, the Commission issued an Order clarifying certain
aspects of its April 26th Order on mitigation measures. While not addressing
the rehearing requests or the CAISO compliance filing, the Commission
established procedures for the CAISO to use alternative information from a
comparable unit for generators that refuse to provide heat rate and emission
data to the CAISO. If an alternative source of data doesn't exist, the CAISO
can assume the generator is a price-taker and use a bid of $0/MWh for all
available capacity from that unit.

Second, the Commission rejected the CAISO'a approach to calculating the proxy
gas price and directed the CAISO to calculate the price using the published
daily price for Malin, PG&E CityGate, Southern California Border (Kern River
Station), SoCalGas large packages and PG&E large packages.

Third, the Commission rejected the CAISO's decision to apply price mitigation
only to the Imbalance Energy Market and not to Ancillary Service spot markets
or Adjustment Bids.

Finally, the Commission granted a request by several California cities to
require that a creditworthy buyer be in place for all must offer power.

The order is attached. If you have any questions, contact Julie Simon at
EPSA at 202-628-8200 or jsimon@epsa.org.

- el00-95-031.pdf.pdf