Message-ID: <8925062.1075861469521.JavaMail.evans@thyme> Date: Mon, 24 Sep 2001 21:02:18 -0700 (PDT) From: mflorio@turn.org To: jeff.dasovich@enron.com Subject: Re: FERC To Examine Alleged Market Manipulation By Calif ISO. FERC Meeting in California on Monday. CSFB on PCG Proposal. Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Mike Florio X-To: Dasovich, Jeff X-cc: X-bcc: X-Folder: \JDASOVIC (Non-Privileged)\Dasovich, Jeff\Deleted Items X-Origin: Dasovich-J X-FileName: JDASOVIC (Non-Privileged).pst If these guys are manipulating the market they certainly aren't doing a very good job of it. Can't you send some folks over to give them a few lessons???? MIKE P.S. The attachment didn't come through. At 07:23 PM 9/21/2001 -0500, you wrote: >FYI. >Thought folks might be interested in the following story. >In addition, I've attached at the end for those that are interested a >CSFB report on PG&E's POR announced yesterday. >Very much enjoyed working with this group on a solution for California. >Perhaps, given were things stand, we'll have another shot at helping get >the market, California energy policy, and Edison, back on their feet. >Best, >Jeff > >FERC To Examine Alleged Market Manipulation By Calif ISO >Updated: Friday, September 21, 2001 04:53 PM ET By Jason Leopold Of DOW >JONES NEWSWIRES >LOS ANGELES (Dow Jones)--Federal energy regulators may investigate >whether the operator of California's wholesale electricity market has >been manipulating its power-purchasing practices to reduce the costs of >power the state purchased under long-term contracts, according to >documents obtained Friday by Dow Jones Newswires Friday. >At issue is whether the California Independent System Operator has >violated its own market rules by purchasing expensive power secured by >the state under contracts rather than cheaper power available in the >spot market. The state's need to sell off surplus power secured under >those contracts has proven embarrassing for Gov. Gray Davis, who signed >$43 billion in deals to head off a summer of spiking prices and >blackouts that never materialized. >The Federal Energy Regulatory Commission will hold a meeting in >California Monday to address generators' complaints. The energy >companies say that the California ISO's purchasing decisions are >difficult to comprehend and out of line with the market, according to a >letter sent by Andrea Wolfman, lead FERC counsel for market oversight >and enforcement. >The letter was sent to the ISO, the California Department of Water >Resources - which has been buying power in lieu of the state's >struggling utilities since mid-January - and several generators, all of >which were to attend the meeting. >"Recently we have become concerned that the scheduling and dispatch >procedures of the California ISO, as they have had to change in the last >nine months, are not well understood or are not well suited to the >current market structure," Wolfman said in her letter. "The purpose of >the meeting is to develop agreement between the ISO and those that >participate in the scheduling and dispatch (generators, utilities, CDWR) >on appropriate practices and procedures." >ISO Procedures Need Explaining -FERC >The ISO's main responsibility is keeping power supply and demand in >balance on the state's electrical grid. As part of that job, the ISO >determines which power plants to call into service and which suppliers >to buy power from. >If the ISO can't explain how it makes its decisions, FERC may conduct an >audit of the organization and investigate the possibility it has >manipulated the market, Wolfman's office said. >"As discussed, FERC may schedule a technical conference and operational >audit of CAISO," a second letter from FERC's market oversight and >enforcement division states. "This unprecedented examination of CAISO >operations could lead to the belief that complaints by generators of >market manipulation and other practices by the ISO should be >investigated." >The ISO's operating rules generally call for it to purchase the cheapest >power first. >"The information that (generators) have provided all leads to a theory >that the CAISO is manipulating the market in order to purchase surplus >DWR power at high prices and protect Gov. Davis from political >embarrassment," the second letter says. >The ISO has said only that the market isn't operating as intended, and >declined to answer other questions about the allegations or discuss >Monday's meeting. >Generators Confused >Generators, including Mirant Corp. (MIR >, news >, msgs >), Reliant >Energy Inc. (REI >, news >, msgs >), Williams >Cos. (WMB , >news , msgs >), Duke >Energy (DUK , >news , msgs >) and Dynegy >Inc. (DYN , >news , msgs >), have >bought apparently inexpensive power in the ISO's spot market only to >find weeks later that the price was much higher. That's because, >according to the allegations, the ISO is letting DWR supply expensive >power into the market as "out-of-market" purchases that aren't averaged >into the real-time prices that ISO market participants see. >DWR continues to buy out-of-market power regularly at the ISO's request, >DWR operations chief Pete Garris has said, but those purchases are being >made in the spot market and are never being satisfied by power from >DWR's long-term contracts. >The out-of-market purchases appear to be expensive, however. According >to the ISO's August market report, the average out-of-market price for >peak hours was $55.90 a megawatt-hour, compared with $26.49/MWh on the >ISO computerized market. Brokered prices of western electricity have >been lower than the out-of-market prices for months. >None of the companies mentioned was willing to comment on the record. >The meeting is scheduled to be held at the ISO's headquarters in Folsom, >Calif., and representatives from power producers, utilities and the >state are expected to attend. FERC will serve as facilitator, Wolfman >said. The meeting isn't open to the public. >The meeting will begin with a presentation by the ISO on its practices >and operational procedures, followed by adjustments that may be needed >to improve the market. >"The objective is to develop a written set of procedures that is agreed >to by all the market participants and that is consistent with good >utility practices," Wolfman said in the letter. >-By Jason Leopold, Dow Jones Newswires; 323-658-3874; >jason.leopold@dowjones.com > > > >********************************************************************** >This e-mail is the property of Enron Corp. and/or its relevant affiliate >and may contain confidential and privileged material for the sole use of >the intended recipient (s). Any review, use, distribution or disclosure by >others is strictly prohibited. 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