Subject: Status Report
From: [email-masked]
To: [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Tue, 5 Dec 2000 08:51:00 -0800 (PST)

Here is today's status report:

FERC

 Megawatt Daily reports that requests for rehearing before FERC have
been filed even though the November 1, 2000 draft order is not yet final.
Cal PX said they could not implement the software necessary to run the soft
caps by January 1st.    The City San Diego requested rehearing on the issue
of whether FERC has the authority to order refunds.  The City of San Diego's
Friday filing said the SDG&E had $800M in its "balancing account" that it
would be seeking from ratepayers.  The City argued that because their were
not just and reasonable rates, the filed rate doctrine is not called into
question.

Charles Dick

 I spoke with Charles Dick about his personal availability.  He told
me that he understood we were asking for a personal commitment from him.  He
has one matter that is set for arbitration in June, 2001 that will take a
significant amount of this time.  He has other matters, but is willing to
personally commit the time necessary for this engagement.  He had the same
approach as in the interview- not selling himself, but being completely
responsive.

David Noonan

 David called to tell me he had left messages for Richard but they
had not connected yet.  In part, it was because David was in deposition.  We
discussed conflict issues at some length.  In the copper cases where he
represents SCE, they have a 1.5% and 3% share of the damages at issue.
Thus, he is not acting as longstanding SCE counsel.  He said that he did not
believe that he could get a written forward looking waiver, since the
general counsel does not see this representation as a current conflict.  He
agreed, however, that he would be able to confirm that in the event that
Enron and SCE become adverse, while he would not be able to represent either
entity in that litigation, if he is still representing them in the copper
litigation, SCE would not claim that his continued representation of Enron
in the non-adverse matters was a violation of the duty of loyalty.  David
was going to continue to try and connect with Richard.

Larry Ruff

 Larry has reviewed the preliminary data that we were proposing to
release to the PUC.  In particular, I asked him to take the view of a
regulator and use the data to show market power, withholding electricity,
etc.  He told me that the data was not all that helpful in any of those
regards.  First, he found the same anomalies later in the year with respect
to energy purchased and energy sold.  He also had some questions about the
identity of various counterparties used in the system.  He found that the
data did not include price by the hour -- instead only the 24 hour
aggregate.  To the extent that we want to understand what happened during
peak periods, we would need the detailed data.  We also discussed finding
out what sources of public market data were available to understand what was
happening in the market to compare the Enron data with.  Larry has completed
the initial quick look that we asked for.  He will be in Australia for the
next few months.  We have made arrangements for encrypted email etc. to be
available so that we may consult with him as needed.

Tariffs and FERC related Materials

 Jean asked for the reference to the legal requirement to submit a
balanced schedule etc.  Peter Meringolo from our office gathered this
material earlier and we include it below.  We also enclose Ron Carol's brief
that he sent us that challenges the penalty provisions of the ISO tariff.
That litigation has been ongoing for a number of years.

 The requirement for EPMI to submit a balanced schedule is found in
the ISO tariff at section 2.2.7.2:

  A Scheduling Coordinator shall submit to the ISO only
Balanced Schedules in the Day-Ahead Market and the Hour-Ahead Market.  A
Schedule shall be treated as a Balanced Schedule when aggregate Generation,
Inter-Scheduling Coordinator Energy Trades (whether purchases or sales), and
imports or exports to or from external Control Areas adjusted for
Transmission Losses as appropriate, equals aggregate forecast Demand with
respect to all entities for which the Scheduling Coordinator schedules in
each zone.  If a Scheduling Coordinator submits a Schedule that is not a
Balanced Schedule, the ISO shall reject that Schedule provided that
Scheduling Coordinators shall have an opportunity to validate their
schedules prior to the deadline for submission to the ISO by requesting such
validation prior to the applicable deadline.

 The ISO Market Monitoring & Information Protocol ("MMIP") sets forth
the standards for Anomalous Market Behavior.  See MMIP 2.1.1.

  Anomalous market behavior, which is defined as behavior that
departs significantly from the normal behavior in competitive markets that
do not require continuing regulation or as behavior leading to unusual or
unexplained market outcomes.  Evidence of such behavior may be derived from
a number of circumstances, including:

  withholding Generation capacity under circumstances in which
it would normally be offered in a competitive market;

  unexplained or unusual redeclarations of availability by
Generators;

  unusual trades or transactions;

  pricing and bidding patterns that are inconsistent with
prevailing supply and demand conditions, e.g., prices and bids that appear
consistently excessive for or otherwise inconsistent with such conditions;
and

  unusual activity or circumstances relating to imports form
or exports to other markets and exchanges.

 The MMIP also prohibits Gaming.  See MMIP 2.1.3.

  'Gaming,' or taking unfair advantage of the rules and
procedures set forth in the PX or ISO Tariffs, Protocols or Activity Rules,
or of transmission constraints in periods in which exist substantial
Congestion, to the detriment of the efficiency of, and of consumers in, the
ISO Markets.  'Gaming" may also include taking undue advantage of other
conditions that may affect the availability of transmission and generation
capacity, such as loop flow, facility outages, level of hydropower output or
seasonal limits on energy imports from out-of-state, or actions or behaviors
that may otherwise render the system and the ISO Markets vulnerable to price
manipulation to the detriment of their efficiency.

 The ISO MMIP allows the ISO to do any of the following, among other
things, as a result of an entity's Anomalous Market Behavior or Gaming:

* "impose such sanctions or penalties as it believes necessary and as
are permitted under the ISO Tariff."  See MMIP 7.3.

* refer "to such regulatory or antitrust agency as it sees fit to
recommend the imposition of sanctions and penalties."  See MMIP 7.3.

* publicize "in whatever medium it believes most appropriate" the
"activities or behavior of Market Participants in the ISO Markets [revealed
to] have the effect of, or potential for, undermining the efficiency,
workability or reliability of the ISO Markets to give or to serve such
Market Participants an unfair competitive advantage over other Market
Participants."  See MMIP 2.3.2.

Ron Carroll's FERC Brief on MMIP's

 <<FERCbrief.doc>>

Projects Under Way

 Collection of Basic Business & Professions Code 17200 cases
 Summary of 397(b) Cases (Change of Venue Because of Local Prejudice)
 Basic fact summary incorporating Steve Hall's material
 Summary of Contracts and Draft Contracts that might be relevant
 Resolving Data Issues
 Locate Voice Recognition Software if the process used by Robin's
firm does not work
 Follow-up on status of Tape Sampling.

Thanks
Gary

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