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
e Energy (DUK
news
(DYN
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
<< File: 092101PCG.pdf >>