
Date: Mon, 11 Dec 2000 05:29:00 -0800 (PST)
From: alan.comnes@enron.com
To: tim.belden@enron.com, christian.yoder@enron.com, jeff.richter@enron.com,
robert.badeer@enron.com, john.forney@enron.com, greg.wolfe@enron.com,
mary.hain@enron.com, mwood@stoel.com, elizabeth.sager@enron.com,
steve.hall@enron.com
Subject: Bullet Summary of the ISO's Amendment No. 33 (December 8 Filing)

After I wrote this I was forwarded Steve Hall's summary.  There's some=20
redundancy but hopefully, this provides a few more details.    Also, Mary H=
.=20
and I are informed that on Friday the FERC issued an order that appears to=
=20
approve the ISO=01,s request in full.

Bullet Summary of the ISO's Amendment No. 33 (December 8 Filing):

The following is a summary of the filing made by the ISO.

1) ISO=01,s $250/MWh Soft Cap
a) Summarized: ISO Claims its proposal is identical to the FERC proposed so=
ft=20
cap but raises the soft cap level to $250 from the $150/MWh proposed by the=
=20
FERC: =01&The ISO would replace the current cap on Imbalance Energy bids wi=
th an=20
interim =01&soft=018 price cap based on the price mitigation proposal in th=
e=20
Commission=01,s November 1 Order. The ISO=01,s scheduling system will not r=
eject=20
Energy bids priced in excess of the $250/MWh price cap, but will evaluate=
=20
those bids in price merit order. However, if the ISO issues Dispatch=20
instructions to Scheduling Coordinators for Energy that has been bid in=20
excess of the $250 soft cap, those bids will not set the Market Clearing=20
Price for Imbalance Energy. Rather, those Scheduling Coordinators will be=
=20
paid in accordance with their bids.=018

b) Refund risk and cost documentation above $250. =01&Imbalance Energy abov=
e the=20
level of the soft price cap would be subject to refund, based on subsequent=
=20
review by the Commission. It also should require Scheduling Coordinators th=
at=20
submit such bids to supply supporting cost information to the Commission, a=
s=20
well as to the ISO and to the California Electricity Oversight Board so tha=
t=20
they may bring questionable bids to the Commission=01,s attention.

i) Appears to imply that the proposed reporting requirement is supplemental=
=20
to what was requested by the FERC. See p. 8

ii) Regarding production costs:  fuel, taxes, emission credits, startup cos=
ts=20
are all listed as costs.  However, no mention of noncontiguous scheduling=
=20
costs or reasonable profit.

iii) Quasi safe harbor on opportunity costs:  In a footnote to cover letter=
,=20
ISO states it will particularly scrutinize any opportunity costs in excess =
of=20
10% of the production costs or $25/MWh, whichever is lesser.

c) Useful quote: =01&In light of current fuel prices and the ISO=01,s recen=
t=20
experience in receiving less than a thousand MW of Imbalance Energy bids at=
=20
prices of $150 or less in many hours, the ISO believes that a $150 soft cap=
=20
would be tantamount to procuring all Imbalance Energy on an as-bid basis.=
=018

d) Effective date: 4 p.m. PST 12/8/00.=20

e) Term of this soft cap:  lesser of 3 mo (3/8/01) or whenever the Commissi=
on=20
supercedes it by its own order.

f) Applicable tariff sections.  Section 2.5.23.2 and .3.  See attachments=
=20
A1/B1 to the filing.


2) Participating Generator Penalties
a) Summary: =01&the ISO proposes in Amendment No. 33 to assess penalties ag=
ainst=20
Participating Generators that refuse to operate in response to an ISO=20
Dispatch instruction during a System Emergency or when the ISO is acting to=
=20
avoid an imminent or threatened System Emergency. They would be charged an=
=20
amount equal to twice the highest price that the ISO paid for Energy for ea=
ch=20
hour in which the Participating Generator failed to respond. In addition, i=
f,=20
during that hour, the ISO curtailed Load to manage a System Emergency other=
=20
than Load that has not been designated by agreement or regulation as=20
interruptible, the Participating Generator would pay an additional penalty =
of=20
$1000/MWh for the Energy that it failed to deliver.=018
b) Allowed excuse:  The penalties would not apply if the Participating=20
Generator has notified the ISO (within the hour of instruction), and=20
subsequently demonstrates (documentation within 72 hours) , that its=20
Generating Unit, System Unit or System Resource was physically unable to=20
operate or that operation would violate a legal restriction that could not =
be=20
waived.

c) Applicable tariff sections. Amends portions of 5.6.1 .2 and .3. See=20
attachments A2/B2 to the filing.

d) Effective date: Same as the ISO=01,s new soft cap: 4 p.m. PST 12/8/00

e) Term:  I did not see any sort of sunset provision.

3) Load Imbalance Penalties

a) Summary: =01&Scheduling Coordinators who rely on that  market to serve t=
heir=20
Loads the ISO=01,s costs of obtaining Energy through bids above the propose=
d=20
soft price cap or through out-of-market Dispatches when bids are=20
insufficient. Specifically, those costs would be allocated to Scheduling=20
Coordinators in proportion to their Demand that appears unscheduled in=20
real-time (underscheduled Load) and Generation that is scheduled but does n=
ot=20
appear in real-time, except to the extent that the underscheduled Load or=
=20
undelivered Generation is balanced within the Scheduling Coordinator=01,s=
=20
portfolio.=018  The costs of dispatching units that have bid above the Mark=
et=20
Clearing Price for Energy to Scheduling Coordinators in proportion to their=
=20
Net Negative Uninstructed Deviations (in essence, the amount by which their=
=20
metered Demand exceed their metered Generation). Cover letter, p. 10.=20

b) Net Negative Uninstructed Deviation (NNUD) defined: =01&The real time ch=
ange=20
in Generation or Demand associated with underscheduled Load (i.e., Load tha=
t=20
appears unscheduled in real time) and overscheduled Generation (i.e.,=20
Generation that is scheduled in forward markets and does not appear in real=
=20
time). Deviations are netted for each BEEP Interval, apply to a Scheduling=
=20
Coordinator=01,s entire portfolio, and include Load, Generation, Imports an=
d=20
Exports=018


c) Applicable tariff sections. Amends portions of  11.2.4.2.1.  See=20
attachments A3/A3/B3 to the filing.

d) Effective date:  For loads scheduled for  12/12/00.  (Essentially, loads=
=20
scheduled on 11/11 for next day).

e) Term:  I did not see any sort of sunset provision.


4) Useful Info from the Detmers Declaration

a) =01&During the recent 7-day period from December 1, 2000 through Decembe=
r 7,=20
2000, planned Generating Unit outages have averaged roughly 4,000 MW. Durin=
g=20
this same 7-day period, forced or unplanned outages of generating have be=
=20
very high, averaging approximately 7,000 MW. =01&
b) =01&For example, for the last four days (December 4, 2000 to December 7,=
=20
2000) we have purchased 255,000 MWh of OOM Energy. The cost of these=20
purchases were approximately $167 million. MWh.=018  (Equivalent to an aver=
age=20
OOM cost of $655/MWh.)
