ISO Market Participants:
In the Federal Energy Regulatory Commission ("FERC") June 19 order, the
California Independent System Operator Corporation ("ISO") was directed to
pay generators for air district mitigation fees associated with NOx
emissions as incurred by generators required to run in accordance with ISO
Dispatch Instructions.  The ISO specifically was ordered to develop an
emission allowance charge assessed against all in-state load served on or
through the ISO Controlled Grid in order to recover NOx emission mitigation
costs which would be used to pay eligible generators for such mitigation
costs.  In compliance, the ISO filed, on July 10, 2001, proposed Tariff
revisions to develop:
1.)	a rate for the emission allowance charge, 
2.)	an escrow account for monies collected; 
3.)	a process through which generators would submit to the ISO invoices
for emission mitigation fees; and 
4.)	a payment process through which the ISO would pay for such
mitigation costs.  
In a Market Notice posted on August 1, 2001, the ISO published the initial
emission allowance charge rate.  The ISO  has developed details of the
methodology and calculations used to develop this rate and posted this
information at http://www.caiso.com/docs/2001/07/12/2001071217521028555.html
<http://www.caiso.com/docs/2001/07/12/2001071217521028555.html> .
The June 19 FERC Order also directed the ISO to exclude start-up fuel costs
from the calculation of the mitigated market clearing price, and instead, to
pay generators for such start-up fuel costs, in the same way as the ISO is
to handle emission mitigation costs and fees.  In a Market Notice posted on
August 1, 2001, the ISO published the initial start-up fuel charge rate.
The ISO has modified the previously posted start-up fuel charge rate and
provided details of the methodology and calculation used to develop this
rate.  This information is also posted at
http://www.caiso.com/docs/2001/07/12/2001071217521028555.html
<http://www.caiso.com/docs/2001/07/12/2001071217521028555.html> .

CR Communications