Message-ID: <7598232.1075851616219.JavaMail.evans@thyme> Date: Tue, 25 Sep 2001 09:04:39 -0700 (PDT) From: jeff.dasovich@enron.com To: jeff.dasovich@enron.com, '.'delaney@enron.com, '.''lenny@enron.com, '.''jack@enron.com, '.''john@enron.com, '.''evelyn@enron.com, '.''keith@enron.com, '.''mike@enron.com, '.''jeff@enron.com, '.''bill@enron.com, '.''dorothy@enron.com, '.''ann@enron.com, '.''jan@enron.com, '.''john@enron.com, '.''barbara@enron.com, '.''dominic@enron.com, '.''karen@enron.com, '.''marc@enron.com, '.''art@enron.com, '.''bill@enron.com, '.''derek@enron.com, '.''john@enron.com, '.''robert@enron.com, '.''diana@enron.com, '.''linda@enron.com, '.'mike@enron.com, '.'phil@enron.com, '.'tom@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: Dasovich, Jeff X-To: Dasovich, 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 Barkovich' ' , ''Dominic DiMare' ' , ''Karen Terranova' ' , ''Marc D. Joseph' ' , ''Art Carter' ' , ''Bill Dombrowski' ' , ''Derek Naten' ' , ''John White' ' , ''Robert Albergotti (E-mail)' ' , ''Diana Liebman (E-mail)' ' , ''Linda Sherif (E-mail)' ' , 'Mike Florio (E-mail) ' , 'Phil Isenberg (E-mail) ' , 'Tom McMorrow (E-mail) ' X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Sent Items X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst 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 =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 , news , msgs ), Reliant Energy Inc. (REI , news , msgs ), Williams Cos. (WMB , news , msgs ), Duk= e Energy (DUK ,= news , msgs ) and Dynegy Inc. = (DYN , news , msgs ), 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 =20 << File: 092101PCG.pdf >>