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Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 ----- Forwarded by Susan J Mara/NA/Enron on 06/08/2001 04:16 PM ----- Greg.Blue@dynegy.com 06/08/2001 03:42 PM To: "Alex Sugaoka \(E-mail\)" <alex.sugaoka@uaecorp.com<, "Bill Woods \(E-mail\)" <billw@calpine.com<, "Bob Ellery \(E-mail\)" <bellery@spi-ind.com<, "Bob Escalante \(E-mail\)" <rescalante@riobravo-gm.com<, "Brian T. Cragg \(E-mail\)" <bcragg@gmssr.com<, "Carolyn A Baker \(E-mail\)" <cabaker@duke-energy.com<, "Curtis Kebler \(E-mail\)" <curtis_l_kebler@reliantenergy.com<, "Douglas Kerner \(E-mail\)" <dkk@eslawfirm.com<, "Duane Nelsen \(E-mail\)" <dnelsen@gwfpower.com<, "Ed Tomeo \(E-mail\)" <ed.tomeo@uaecorp.com<, "Eric Edstrom \(E-mail\)" <edstrome@epenergy.com<, "Greg Blue \(E-mail\)" <gtbl@dynegy.com<, "Hap Boyd \(E-mail\)" <rboyd@enron.com<, "Jack Pigott \(E-mail\)" <jackp@calpine.com<, "Joe Ronan \(E-mail\)" <joer@calpine.com<, "John G. Larrea \(E-mail\)" <john.g.larrea@williams.com<, "John O'Rourke \(E-mail\)" <john.orourke@elpaso.com<, "Kate Castillo \(E-mail\)" <CCastillo@riobravo-gm.com<, "Ken Hoffman \(E-mail\)" <khoffman@caithnessenergy.com<, "Kent Burton \(E-mail\)" <kburton@covantaenergy.com<, "Kent Palmerton \(E-mail\)" <kent.palmerton@williams.com<, "Marty McFadden \(E-mail\)" <mmcfadden@covantaenergy.com<, "Michael L. Hawkins \(E-mail\)" <hawkins@2000energy.com<, "Nam Nguyen \(E-mail\)" <nam.nguyen@powersrc.com<, "Paul Desrochers \(E-mail\)" <pdesrochers@thermoecotek.com<, "Paul Wood \(E-mail\)" <pwood@covantaenergy.com<, "Paula Soos \(E-mail\)" <psoos@covantaenergy.com<, "Rachel King \(E-mail\)" <rachel.king@elpaso.com<, "Rich Dyer \(E-mail\)" <rich_dyer@covantaenergy.com<, "Roger Pelote \(E-mail\)" <roger.pelote@williams.com<, "Ross Ain \(E-mail\)" <ain@worldnet.att.net<, "Scott Harlan \(E-mail\)" <harlans@epenergy.com<, "Steve Ponder \(E-mail\)" <steve_ponder@fpl.com<, "Steve Schleimer \(E-mail\)" <sschleimer@calpine.com<, "Susan J Mara \(E-mail\)" <smara@enron.com<, "Ted Cortopassi \(E-mail\)" <tcortopassi@covantaenergy.com<, "Tom Hartman \(E-mail\)" <tom_hartman@fpl.com<, "Tony Wetzel \(E-mail\)" <twetzel@thermoecotek.com<, "Ward Scobee \(E-mail\)" <wscobee@caithnessenergy.com<, "William Hall \(E-mail\)" <wfhall2@duke-energy.com<, "Thomas R. McMorrow \(E-mail\)" <tmcmorrow@manatt.com<, "Carol Hudson \(E-mail\)" <carol@iepa.com<, "Jan Smutny-Jones \(E-mail\)" <smutny@iepa.com<, "Katie Kaplan \(E-mail\)" <kaplan@iepa.com<, "Sandra Moseley \(E-mail\)" <sandra@iepa.com<, "Steven Kelly \(E-mail\)" <steven@iepa.com< cc: Subject: Cal-ISO/FERC -2: Companies Allegedly Gamed Power Market Cal-ISO/FERC -2: Companies Allegedly Gamed Power Market Updated: Friday, June 8, 2001 05:29 PM ET Email this article to a friend! Printer-friendly version LOS ANGELES (Dow Jones)--The California Independent System Operator has filed a motion with federal energy regulators asking that four major power suppliers in California be stripped of their ability to charge market rates because they have allegedly gamed the wholesale electricity market. Duke Energy (DUK, news, msgs), Dynegy Inc. (DYN, news, msgs), Mirant Corp. (MIR, news, msgs) and Reliant Energy Inc. (REI, news, msgs) have been identified by the ISO as exercising market power - the ability to influence electricity prices - in California's wholesale power market. The ISO, which manages the state's high-voltage transmission system, recently made a similar filing against AES Corp. (AES, news, msgs) and Williams Cos. (WMB, news, msgs), claiming those companies have profited excessively in California by exercising market power. The ISO wants the Federal Energy Regulatory Commission to revoke generators' authority to charge market-based rates for their power supply. Tom Williams, spokesman for Duke Energy, said the company had just received the FERC filing and is reviewing the allegations. "We've obviously just got the filing and we're reviewing it and we are going to respond with our own FERC filing. But we're also gratified that market forces are at work in California and prices have come down," Williams said. Richard Wheatley, a spokesman for Reliant, said the ISO's allegations are "nothing new." "It's similar in nature to issues and allegations that have been raised against other generators," Wheatley said. "The ISO is incorrect in asking for emergency relief. The situation in California remains to be an imbalance between supply and demand. The blame game prohibits lasting solutions from being reached and the business climate in California will be affected by finger pointing." Steve Maviglio, press secretary to Gov. Gray Davis, said the governor "strongly supports any attempt to bring prices down for Californians and to break the grip a handful of generators have on the electricity market." The ISO has asked FERC to terminate by June 28 Dynegy's ability to charge market prices for power from its Southern California power plants and to schedule a hearing to determine rates based on the energy company's production costs. The grid operator also wants Dynegy to refund billions of dollars, retroactive to May 1, "of the difference between cost-based rates...and the market revenues actually received." Similar requests were made with FERC against Duke, Reliant and Mirant. "The ISO has submitted compelling evidence that the exercise of market power is more pervasive than the commission has acknowledged...," according to the filing. In the filing, generators have also been accused of "megawatt-laundering," in which suppliers sell power out-of-state that is resold to California at a higher price. California consumers have spent $7 billion for wholesale electricity in 1999, $27 billion in 2000 and could pay as much as $50 billion this year. Charles Robinson, the ISO's chief counsel, said he is "optimistic" the state will prevail "in one forum or another and will be able to get the relief we're seeking." He said FERC should implement an "effective" market mitigation plan that will put the brakes on skyrocketing wholesale power prices. FERC set up a market mitigation plan, which went into effect June 1, to stabilize wholesale power prices when operating reserves dip below 7%. Robinson said that plan wasn't good enough. Wholesale power prices were at a seven-month low Thursday, due in part to the new FERC plan, cooler temperatures, low natural-gas prices, and conservation measures, energy officials said. Every three years, FERC reviews generators' ability to charge market rates for electricity. Generators were first allowed to charge market rates three years ago, but it is unclear whether FERC has ever stripped suppliers from their right to charge market prices.
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