Message-ID: <1370946.1075851648088.JavaMail.evans@thyme> Date: Wed, 26 Sep 2001 13:47:33 -0700 (PDT) From: dominic.dimare@calchamber.com 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: quoted-printable X-From: DiMare, Dominic <Dominic.DiMare@calchamber.com> X-To: Dasovich, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JDASOVIC> X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Inbox X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst Jeff: Please include the Chamber of Commerce on the petition for re-hearing. Dominic.=20 -----Original Message----- From: =09Dasovich, Jeff [mailto:Jeff.Dasovich@ENRON.com]=20 Sent:=09Tuesday, September 25, 2001 9:05 AM To:=09Dasovich, Jeff; Delaney Hunter ; 'Lenny Goldberg' ; 'Jack M. Stewart'= ; 'John R. Redding (PS, NE) (E-mail)' ; 'Evelyn Kahl' ; 'Keith McCrea' ; '= Mike Kahl' ; 'Jeff Dasovich (E-mail)' ; 'Bill Booth' ; 'Dorothy Rothrock' ;= 'Ann Cohn' ; 'Jan Smutny-Jones' ; 'John Fielder (E-mail)' ; 'Barbara Barko= vich' ; 'Dominic DiMare' ; 'Karen Terranova' ; 'Marc D. Joseph' ; 'Art Cart= er' ; 'Bill Dombrowski' ; 'Derek Naten' ; 'John White' ; 'Robert Albergotti= (E-mail)' ; 'Diana Liebman (E-mail)' ; 'Linda Sherif (E-mail)' ; Mike Flor= io (E-mail) ; Phil Isenberg (E-mail) ; Tom McMorrow (E-mail)=20 Subject:=09RE: FERC To Examine Alleged Market Manipulation By Calif ISO. F= ERC Meeting in California on Monday. CSFB on PCG Proposal. I've been informed that the CSFB report on PG&E's reorg didn't make it firs= t time round. Trying again. =20 Best, Jeff << File: 092101PCG.pdf >>=20 -----Original Message----- From: =09Dasovich, Jeff =20 Sent:=09Friday, September 21, 2001 7:23 PM To:=09'Delaney Hunter '; ''Lenny Goldberg' '; ''Jack M. Stewart' '; ''John = R. Redding (PS, NE) (E-mail)' '; ''Evelyn Kahl' '; ''Keith McCrea' '; ''Mik= e Kahl' '; ''Jeff Dasovich (E-mail)' '; ''Bill Booth' '; ''Dorothy Rothrock= ' '; ''Ann Cohn' '; ''Jan Smutny-Jones' '; ''John Fielder (E-mail)' '; ''Ba= rbara Barkovich' '; ''Dominic DiMare' '; ''Karen Terranova' '; ''Marc D. Jo= seph' '; ''Art Carter' '; ''Bill Dombrowski' '; ''Derek Naten' '; ''John Wh= ite' '; ''Robert Albergotti (E-mail)' '; ''Diana Liebman (E-mail)' '; ''Lin= da Sherif (E-mail)' '; 'Mike Florio (E-mail) '; 'Phil Isenberg (E-mail) '; = 'Tom McMorrow (E-mail) ' Subject:=09FERC To Examine Alleged Market Manipulation By Calif ISO. FERC = Meeting in California on Monday. CSFB on PCG Proposal. FYI. =20 Thought folks might be interested in the following story. =20 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. Pe= rhaps, 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=20 Updated: Friday, September 21, 2001 04:53 PM ET By Jason Leopold Of DOW JON= ES NEWSWIRES=20 LOS ANGELES (Dow Jones)--Federal energy regulators may investigate whether = the operator of California's wholesale electricity market has been manipula= ting 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.=20 At issue is whether the California Independent System Operator has violated= its own market rules by purchasing expensive power secured by the state un= der contracts rather than cheaper power available in the spot market. The s= tate's need to sell off surplus power secured under those contracts has pro= ven embarrassing for Gov. Gray Davis, who signed $43 billion in deals to he= ad off a summer of spiking prices and blackouts that never materialized.=20 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.=20 The letter was sent to the ISO, the California Department of Water Resource= s - 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 th= e meeting.=20 "Recently we have become concerned that the scheduling and dispatch procedu= res of the California ISO, as they have had to change in the last nine mont= hs, are not well understood or are not well suited to the current market st= ructure," Wolfman said in her letter. "The purpose of the meeting is to dev= elop agreement between the ISO and those that participate in the scheduling= and dispatch (generators, utilities, CDWR) on appropriate practices and pr= ocedures."=20 ISO Procedures Need Explaining -FERC=20 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 wh= ich power plants to call into service and which suppliers to buy power from= .=20 If the ISO can't explain how it makes its decisions, FERC may conduct an au= dit of the organization and investigate the possibility it has manipulated = the market, Wolfman's office said.=20 "As discussed, FERC may schedule a technical conference and operational aud= it 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."=20 The ISO's operating rules generally call for it to purchase the cheapest po= wer first.=20 "The information that (generators) have provided all leads to a theory that= the CAISO is manipulating the market in order to purchase surplus DWR powe= r at high prices and protect Gov. Davis from political embarrassment," the = second letter says.=20 The ISO has said only that the market isn't operating as intended, and decl= ined to answer other questions about the allegations or discuss Monday's me= eting.=20 Generators Confused=20 Generators, including Mirant Corp. (MIR <http://quicken.excite.com/investme= nts/quotes/?symbol=3DMIR>, news <http://quicken.excite.com/investments/news= /?symbol=3DMIR>, msgs <http://quicken.excite.com/investments/discuss/?symbo= l=3DMIR>), Reliant Energy Inc. (REI <http://quicken.excite.com/investments/= quotes/?symbol=3DREI>, news <http://quicken.excite.com/investments/news/?sy= mbol=3DREI>, msgs <http://quicken.excite.com/investments/discuss/?symbol=3D= REI>), Williams Cos. (WMB <http://quicken.excite.com/investments/quotes/?sy= mbol=3DWMB>, news <http://quicken.excite.com/investments/news/?symbol=3DWMB= >, msgs <http://quicken.excite.com/investments/discuss/?symbol=3DWMB>), Duk= e Energy (DUK <http://quicken.excite.com/investments/quotes/?symbol=3DDUK>,= news <http://quicken.excite.com/investments/news/?symbol=3DDUK>, msgs <htt= p://quicken.excite.com/investments/discuss/?symbol=3DDUK>) and Dynegy Inc. = (DYN <http://quicken.excite.com/investments/quotes/?symbol=3DDYN>, news <ht= tp://quicken.excite.com/investments/news/?symbol=3DDYN>, msgs <http://quick= en.excite.com/investments/discuss/?symbol=3DDYN>), have bought apparently i= nexpensive 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 I= SO 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 p= articipants see.=20 DWR continues to buy out-of-market power regularly at the ISO's request, DW= R 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.=20 The out-of-market purchases appear to be expensive, however. According to t= he ISO's August market report, the average out-of-market price for peak hou= rs was $55.90 a megawatt-hour, compared with $26.49/MWh on the ISO computer= ized market. Brokered prices of western electricity have been lower than th= e out-of-market prices for months.=20 None of the companies mentioned was willing to comment on the record.=20 The meeting is scheduled to be held at the ISO's headquarters in Folsom, Ca= lif., and representatives from power producers, utilities and the state are= expected to attend. FERC will serve as facilitator, Wolfman said. The meet= ing isn't open to the public.=20 The meeting will begin with a presentation by the ISO on its practices and = operational procedures, followed by adjustments that may be needed to impro= ve the market.=20 "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 pra= ctices," Wolfman said in the letter.=20 -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjone= s.com <mailto:jason.leopold@dowjones.com>=20 << File: 092101PCG.pdf >> =20 ********************************************************************** This e-mail is the property of Enron Corp. and/or its relevant affiliate an= d may contain confidential and privileged material for the sole use of the = intended recipient (s). Any review, use, distribution or disclosure by othe= rs is strictly prohibited. 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