Below is a summary of my SWPTF, CAISO and SW IOU's meeting 10 days ago.  The 
meeting was very positive and it looks like we are getting traction on 
getting the SW IOU's to join the CAISO as an option to continuing with DSTAR.

Call me if you have questions

Tom Delaney    602-321-5017
---------------------- Forwarded by Tom Delaney/Corp/Enron on 06/21/2000 
02:45 PM ---------------------------


Carl Imparato <cfi1@tca-us.com> on 06/19/2000 02:37:50 AM
Please respond to cfi1@tca-us.com
To: zalaywan@caiso.com, eschmid@caiso.com, crobinson@caiso.com, 
vkasarjian@caiso.com, tom.delaney@enron.com, marcie.milner@enron.com, 
smara@enron.com, scott.miller@gen.pge.com, curt.hatton@gen.pge.com, 
dcn@netwrx.net, rreilley@coral-energy.com, steve.huhman@southernenergy.com, 
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cc:  

Subject: Update on Discussions between CAISO and DSW Parties


The purpose of this e-mail is to update the recipients on the status of
the discussions that have been taking place, between the CAISO and
Desert Southwest market participants and transmission owners, on the
possible merger of the California and Desert Southwest regions into a
single RTO.

On June 5, a meeting was held in Phoenix to discuss the terms under
which various parties would seriously consider a proposal for
consolidation of California and the DSW under a single RTO operated by
the CAISO.  This was the second meeting that was held to discuss this
idea.  Represented were the CAISO, APS, PNM, TEP, EPE, TNP, APSES,
NewEnergy, Enron, Calpine, PG&E Gen, Southern, Duke, Cal PX, and DOE.

The issues that were discussed included the CAISO's ability to implement
the major components of the DSTAR commercial model, the changes that
would need to be made in the CAISO's governance and internal structure,
and costs.

The parties at the meeting were generally in favor of:  (i)
consolidating the existing control areas into a single control area as
soon as possible, (ii) migrating to a common set of market protocols on
a fairly rapid basis, (iii) creating a single, independent, RTO
governing board with no bias in favor of either California or the Desert
Southwest region, and (iv) migrating from a regional advisory committee
structure to a single advisory committee structure as soon as possible,
to avoid balkanization and accelerate convergence.  Most parties felt
that there were, at this time, no "show-stoppers" on most of the issues.

For many of the participants, the most significant outstanding questions
were: (i) the costs (both $/MWh and cost shifts) that Desert Southwest
parties would incur under the consolidation scenario, and (ii) timing -
i.e., whether the necessary implementation, governance and
organizational changes could be put into place by a target date of June
2001.

It was agreed that the next step was for the CAISO, working with
interested parties, to provide a tentative implementation cost (both
with and without consolidation of DSW control areas, but in both cases
with independent procurement and operation of ancillary services).

The agreed-upon Action Plan was as follows:

June 9: CAISO to develop list of questions which need to be answered to
enable it to develop a cost estimate

June 16: CAISO to respond to the list of questions generated at the June
5 meeting

June 16:  CAISO to be provided with responses to the CAISO's list of
questions

June 16: Transmission owners to provide to the CAISO their definition of
the scenario(s) that they desire the CAISO to consider in developing its
cost estimate

July 10: CAISO to provide cost estimate

July 20: Meeting in Phoenix to discuss the cost estimate, address any
additional questions, and discuss the viability and possible contents of
a Memorandum of Understanding (MOU)

July 31:  Decision from all interested parties regarding their desire to
move forward

August 15: Assuming a positive outcome on July 31, meeting to discuss
finalization of an MOU which would address the commitments of the
parties, market structure, changes in governance, organizational goals,
priorities and structures, etc.

Status:  The first four items above are close to completion.   The CAISO
has sent a list of technical questions to Carl Imparato and he is
completing a response.  The CAISO is completing its response to the list
of questions it received on June 5.  The interested transmission owners
have defined the scenarios that they wish to see considered by the
CAISO.

When all of these documents are finalized, which I expect to occur in
the next 2-3 days, I will forward them to all of the addresses.

If you have any questions, please give call me at 510-558-1456.

Carl Imparato