MD02 Revised Draft - Comprehensive Design Proposal and Timeline

Notice to Market Participants

The latest revision to the Market Design 2002 (MD02) proposal is now posted
on the ISO Home Page at http://www.caiso.com Current Issues, then Market
Design 2002. Or try this link:
http://www.caiso.com/docs/09003a6080/13/d1/09003a608013d13f.pdf .

Based on feedback at the focus group meetings and the ISO review of written
comments on the January 8 preliminary draft, the ISO has modified the
proposed MD02 timeline significantly.

The ISO held four separate focus groups in Folsom on January 14-17, 2002 to
discuss the proposal and to solicit feedback on the proposed MD02 package.
Over 100 individuals participated in the meetings, either in person or by
phone. They represented scheduling coordinators, investor owned utilities,
load serving entities, municipals, other control areas, and consumer
representatives. In addition, many interested parties submitted comments
last week. Two consistent messages the ISO received suggested that (1) the
timeline was too aggressive and (2) the Available Capacity (ACAP) proposal
needed additional work and explanation.

In response to these concerns, the ISO has modified the timeline:

* The Board will receive a status report at its regularly scheduled
meeting on February 7, 2002, but will not vote on the comprehensive design
package until its March 14 meeting. The ISO plans two separate filings at
FERC, one in late March and one on May 1, 2002.

* The ACAP proposal will likely not be included in the Phase 1 FERC
filing in late March.

Please see the revised MDO2 draft proposal now posted on the ISO website for
more specifics regarding the schedule for advancing the proposal to the ISO
Board of Governors and the FERC. The ISO requests that any additional
comments from the public be submitted by Thursday, January 31, 9 a.m. (PST),
so they can be included in the Board discussion. (Note the Thursday
deadline is an extension of the original Wednesday deadline discussed in
earlier messages) Please submit to Byron Woertz at bwoertz@caiso.com.

Again, the ISO would like to thank those who attended the MD02 focus groups
and/or submitted written comments. The ISO will keep you posted on further
opportunities for review and feedback on details of the MD02 design.

CR Communications