Message-ID: <19858000.1075851639479.JavaMail.evans@thyme> Date: Fri, 7 Sep 2001 17:30:32 -0700 (PDT) From: susan.mara@enron.com To: pr <.palmer@enron.com>, karen.denne@enron.com, jeff.dasovich@enron.com, alan.comnes@enron.com, legal <.hall@enron.com>, d..steffes@enron.com, ray.alvarez@enron.com, richard.shapiro@enron.com Subject: FW: Cal-ISO Violating Fed Law By Making Utils Buy State Pwr Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Mara, Susan X-To: Palmer, Mark A. (PR) , Denne, Karen , Dasovich, Jeff , Comnes, Alan , Hall, Steve C. (Legal) , Steffes, James D. , Alvarez, Ray , Shapiro, Richard X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Inbox X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst See story below -----Original Message----- From: Andy Brown [mailto:ABB@eslawfirm.com] Sent: Friday, September 07, 2001 5:00 PM To: 'Sue Mara' Subject: FW: Cal-ISO Violating Fed Law By Making Utils Buy State Pwr what I mentioned. Also, during the meeting (and during next Tues' FERC call) I mentioned that we need more info from companies for pursuing a complaint. We have some other elements now with these articles. We've also asked to meet with price waterhouse coopers on the CAISO audit (Alan called about that & we've traded voicemail.) Things will get pretty curious. Have a wkend. ABB Andrew B. Brown Ellison, Schneider & Harris, LLP 2015 H Street Sacramento, CA 95814 Phone: (916) 447-2166 Fax: (916) 447-3512 mailto:abb@eslawfirm.com CONFIDENTIALITY NOTICE: This communication and any accompanying document(s) are confidential and privileged. They are intended for the sole use of the addressee. If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon the communication is strictly prohibited. Moreover, any such inadvertent disclosure shall not compromise or waive the attorney-client privilege as to this communication or otherwise. If you have received this communication in error, please contact the sender at the internet address indicated or by telephone at (916)447-2166. Thank you. -----Original Message----- From: cwilson@gcpn.com [mailto:cwilson@gcpn.com] Sent: Friday, September 07, 2001 4:15 PM To: duke_press_conferences@porternovelli.com Cc: sbrown@gcpn.com Subject: Cal-ISO Violating Fed Law By Making Utils Buy State Pwr |---------------------------------------------------+----------------------- | | | | | Cal-ISO Violating Fed Law By Making Utils Buy | (Embedded image moved | | State Pwr | to file: | | | pic07321.pcx) | | | | | | | |---------------------------------------------------+----------------------- | | | | | Updated: Friday, September 7, 2001 06:17 PM ET | (Embedded image moved | | | to file: | | | pic27420.pcx) Email | | | this article to a | | | friend! | | | (Embedded image moved | | | to file: | | | pic29668.pcx) | | | Printer-friendly | | | version | | | | | | | |---------------------------------------------------+----------------------- | | | | | | | | | | |---------------------------------------------------+----------------------- | | | | | | | | By Jason Leopold | | | | | | | | | Of DOW JONES NEWSWIRES | | | | | | | | | LOS ANGELES (Dow Jones)--California's grid | | | operator may be in violation of federal | | | regulations by forcing utilities to buy expensive | | | power the state secured under long- and | | | short-term contracts in place of electricity that | | | is available from their own low-cost power | | | plants. | | | | | | | | | The California Independent System Operator, the | | | agency that operates the real-time electricity | | | market and maintains reliability of the grid in | | | the state, has given priority during the past | | | three months to power the state Department of | | | Water Resources locked in under the $43 billion | | | of long-term contracts before utilizing | | | electricity from low-cost power plants, according | | | to several executives at the agency. | | | | | | | | | | | | | | | | | | Greg Fishman, an ISO spokesman, said "there are | | | times, this doesn't happen much, when because of | | | varying ramp rates, we take a bid out of | | | sequence, meaning when one plant has a bid of | | | let's say $50 a megawatt-hour and another has a | | | $60 bid, we may take the $60 bid because it would | | | take longer to deliver the $50 power." | | | | | | | | | Fishman said the "market is not working as it is | | | designed to." | | | | | | | | | "Since the demise of the California Power | | | Exchange, we, the industry, have been forced to | | | make the market function given the tools that we | | | have," Fishman said. "The PX was a major portion | | | of the market. Without it, we are left trying to | | | put the market back into shape given the current | | | players in the market." | | | | | | | | | However, the ISO's federal tariff states that the | | | agency must use the cheapest electricity | | | available in the wholesale market before | | | dispatching the more expensive electricity to | | | generators and retail customers. | | | | | | | | | "The ISO shall dispatch generating units...to | | | meet its imbalance energy requirements based on | | | order of energy bid prices," reads a section of | | | the rules approved by the Federal Energy | | | Regulatory Commission. "The ISO shall not | | | discriminate between generating units, system | | | units, loads and system resources other than | | | based on price and the effectiveness (location | | | and ramp rate) of the resource concerned to | | | respond to the fluctuation in demand or | | | generation." | | | | | | | | | Fishman acknowledged that the "market is not | | | working as it is designed to," but he said the | | | ISO would not respond to specific questions | | | related to the possibility that the agency has | | | violated its federal tariff or other issues | | | related to the operation of the ISO market. | | | | | | | | | "We are looking into a variety of issues | | | surrounding that dysfunction and in due course we | | | will answer those issues," he said. | | | | | | | | | Agency Fails To Reveal Price Data For DWR Power | | | | | | | | | Moreover, the ISO has failed to disclose on its | | | web site the price of the DWR power, which is | | | also required under federal regulations. | | | | | | | | | Jan Smutny-Jones, executive director of the | | | Independent Energy Producers Association, a trade | | | group representing large and small power | | | producers, said there is "absolutely no | | | transparency in the ISO market. No one knows what | | | they're paying for." | | | | | | | | | The DWR, which started buying power in lieu of | | | California's ailing utilities in January, signed | | | $43 billion in long-term supply contracts over | | | the past six months at prices that now exceed the | | | spot market price for electricity. | | | | | | | | | The DWR at times has had a surplus of electricity | | | and has sold some of it into the spot market at a | | | $115 million loss over the last three months. As | | | a result, the ISO has ordered the Mohave | | | Generating Station, a coal-fired power plant in | | | Nevada capable of producing electricity at | | | roughly 2 cents a kilowatt-hour, to reduce output | | | at the facility, Fishman said. | | | | | | | | | The 1,500-megawatt Mohave unit is majority owned | | | by Edison International (EIX, news, msgs) unit | | | Southern California Edison. | | | | | | | | | Fishman said last week that the ISO is | | | investigating the circumstances that led the grid | | | operator to order the units to "ramp down." | | | | | | | | | -By Jason Leopold, Dow Jones Newswires; | | | 323-658-3874; jason.leopold@dowjones.com | | | | | |---------------------------------------------------+----------------------- |