THE FRIDAY BURRITO 

Ben Zycher from the RAND Corporation used the following line in his talk at 
the WPTF General Meeting in Phoenix a few weeks ago. The story takes place in 
the good ol' days of the Soviet Union when Brezhnev was Premier.? Brezhnev 
and the rest of the Politburo one fine May Day were watching the tanks and 
missiles pass by the Kremlin Wall, when Leonid noticed in the middle of the 
parade a truck carrying a group of civilians.? He turned to Dmitri Ustinov, 
the Defense Minister, and asked, "Who are they?"? Ustinov replied, "Those are 
our economists.? You just wouldn't believe their destructive potential." 

This is appropriate for our time and our situation.? The economists descended 
upon us when the California market was designed, but we know not from where.? 
Aliens?? Since weaving conspiracy theories is a popular past time in 
Sacramento ("We just know they are gouging us, them bullies"), I believe that 
one must do the same by following the money.? I'm not talking about the 
campaign contributions in Gray Davis' pocket. The most money has gone from 
power sales in California to the Canadian Province of British Columbia.? It 
was a plot the Canadians hatched. I mean, look at Governor Davis.? He looks 
kind of BC-ish.? Skinny and lanky, wimpy hair, and a hesitation in his 
speech. He talks their language: a mix of misspelled French ("meet me at the 
centre"), English, and Eh(?).? One night in 1996, the BC government secretly 
sent us some economists by the truckload to destroy California.? The 
utilities probably paid for the bus tickets.? I happen to know that Frank 
Wolak, Chair of the ISO Market Surveillance Committee once lectured at a 
University in Vancouver, B.C..? What more evidence do you need?? The BC 
Government sent us cheap hydro power, sold at inflated market prices so that 
they could do what the citizens of California wanted to do with their budget 
largess ( build roads, schools, and hospitals. They didn't think we could 
figure out their plot, but we did.? Now is the time for California to 
counter-attack.? We'll send them some of our politicians, a bipartisan group 
including a few who can add, and some of our select energy thugs from the 
CPUC and the Blind Oversight Board. 

Speaking of times and situations, there was a time when discussing the ISO, 
words such as "communist" and "Nazi" were only uttered, by my pal, Carl 
Imparato,.? We would shake our heads, and chuckle at Carl's extremism.? We 
aren't laughing now.? The descriptors seem to arise again and again in polite 
conversation by a wider circle of people.? I watch with utter amusement 
(because the alternative is retching breakfast) at the demagoguery of the ISO 
Governing Board, the Market Despair Team, the Governor's office, and some 
members of the California Legislature. Like an audience watching a tragedy 
from hell, we scream aloud, "These people are crazy!"? And indeed, they are.? 
Mr. President is not helping us at all by continuing to wrangle over who gets 
the musical Chair at FERC ( Bubba Curt or Bubba Patrick.? Listen to us, Mr. 
President.? Let Bubba Curt keep the reigns for a year or two, and let Bubba 
Patrick take a seat at the table.? We need someone with a shockproof BS 
detector.? Someone who can honestly field a motion to dismiss the California 
ISO.? The time is long overdue to shoot this horse in the head. 

Not all is evil.? This week in Houston, the resource capital of California, I 
visited the trading floor folks at Dynegy, before attending the WTPF Board 
meeting.? The coolest thing I saw, besides all the neat gadgets on each 
trader's desk, was the coffee machine.? Brother Jolly Hayden showed me how to 
use it.? You pick the type of coffee you want.? The contents of the coffee 
are in a shot-glass sized plastic tub with a foil top.? I picked Venezuelan 
#6 Decaffeinated Waxy Crude.? The tub is placed inside the brewing machine, 
and the start button is pushed.? Presto, coffee drips from the spout into a 
waiting cup.? I asked Jolly, "How did the hot water get mixed into the ground 
beans?"? He removed the tub from the machine and showed me a pin prick hole 
made in the foil top, and another that was made at the bottom.? Is that neat, 
or what? 

I would like to buy a brewing machine just like the Dynegy coffee machine, 
but a little larger.? I would set up a booth in Sacramento, on the corner of 
11th and "L", and bark out to passing members of the Legislature, "Free space 
shuttle. Come and see life on other planets."? They would jump at the chance 
to visit other planets.? I would seat them in the machine, push the start 
button, and voila.? Dripping out would be the essence of democracy.? Don't 
worry about the holes needed at the top and the bottom.? They are already 
there, and quite enlarged. 

Back to my day at Dynegy.? Trade floors might seem similar across companies, 
but the small differences speak to the management style embraced by the crew 
and its leaders.? Each electric trading desk, for various parts of the 
country, is set up a little bit differently.? For example, some desks have a 
person doing asset-backed trading, but some don't.? When I arrived at 6 a.m., 
Houston time, the Eastern desk was busy in its trade day.? The Western folks 
hadn't arrived, yet.? Later, I sat with Randy LeForce of the Western desk.? 
"Captain LeForce, to you", he told me.? He could talk big because Dave 
Francis, who sits next to Randy, and hangs witty quotes from the ceiling 
above his head ("Even a blind pig could make money in this market"), was on 
vacation.? As the pace of the trading gathered steam, Randy kept an eye on 
all the different people working the Western trading desk.? The Captain 
worked it like a maestro. 

During my visit, some Dynegy folks came up to me, introduced themselves, and 
said how much they enjoyed the Friday Burrito.? I'll tell you what.? There 
are few things in life that give me as much satisfaction.? Complete strangers 
who tell you that something you do makes them feel good, well, it doesn't get 
any better than that.? Garrison Keillor, the well-known author of Lake 
Woebegone Days, and NPR radio entertainer once said a writer should have an 
audience.? Not everyone in the world should be in the audience, but an 
audience nonetheless of some people.? I now know what he means.? And the 
people I met on the trading floor felt like they knew me, and shared with me 
their thoughts and opinions on a lot of things.?? Often they asked me, "Are 
those California people really that crazy?" 

Since last week, you might have noticed the pace at the FERC has picked up, 
somewhat.? Last Friday the FERC issued an Order on possible refunds for 
alleged overcharges by parties selling to the ISO last January.? That was 
news worthy.? Then, on Wednesday, the FERC issued an Order to remove barriers 
to additional electric generation in the West.? The Order admits that it 
won't change the dire situation in the West, but these are steps in the right 
direction.? The FERC also issued on Wednesday a show-cause order to AES and 
Williams regarding the maintenance of RMR units that were called by the ISO 
in April and May of 2000.? That is a serious case that we must watch 
closely.? Also this week, the California Senate kicked off its own 
investigation (this will be the tenth such investigation of the California 
markets to uncover alleged price manipulation).? The Senate Committee will 
have subpoena rights, and if I understand it correctly, they plan to subpoena 
individuals.? Sounds like a Kangaroo Court and a Three-Ring Circus, to me. 
Thursday, Secretary Abraham stated in a congressional hearing that the West 
would certainly experience power outages this summer. Finally, an LA Times 
reporter asked me if I had heard that a small QF company had filed for 
seizure of SCE property to satisfy an outstanding debt.? That would be step 
one of the bankruptcy cha-cha.? All in all, a typical week among crazy 
people. 

Let's see what else we can talk about. 

Things in the People's Republic of California 
?@@@ PUC Updates Utility Liabilities 
?@@@ Be a Source for Energy Price Update 
?@@@ BPA Misquoted in the WSJ 

Things FERC 
?@@@ Market Monitoring Proposal 

Letters 

Jobs and People 

Odds & Ends (_!_) 
================================ 

Things in the People's Republic of California 
?@@@ PUC Updates Utility Liabilities 

My favorite regulator, the California PUC, issued an Order in the Utilities' 
Rate Stabilization case to re-open the record on utility audits.? Although 
the text of the order is unremarkable, the data tables bring up to date, as 
of March 8, the outstanding liabilities of PG&E and SCE. 

The PG&E commercial paper obligation due as of March 8 increased by $354 
million since January 31, for a total default amount of $790 million.? QF 
purchases increased by $280 million for the same five-week period, now 
totaling $651 million.? The ISO payments increased $934 million, now totaling 
$1.5 billion, and the direct access charge backs for negative PX credits 
increased $214 million, now totaling $433 million.? PG&E's total default 
amount is now $3.3 billion excluding amounts yet to be collected from PG&E 
customers for DWR purchases. 

The SCE balance is as follows: The commercial paper obligation that is due as 
of March 8 increased by $260 million since January 31, for a total default 
amount of $401 million. SCE defaulted on a significant amount of long-term 
debt principal and interest, roughly $249 million.? QF purchase defaults 
increased by $354 million for the same five-week period, now totaling $835 
million.? The ISO obligations decreased $1.1 million, and the direct access 
charge backs for negative PX credits increased $21 million, now totaling $25 
million.? SCE's total default amount is now $1.7 billion excluding amounts 
yet to be collected from SCE customers for DWR purchases. 

There is little question that the QFs are taking it on the chin, big time.? 
In the last five weeks, between January 31 and March 8, the defaulted 
payments to the QF owners from both utilities has increased $630 million.? 
The total QF default for both utilities as of March 8 stands at $1.5 
billion.? Does anyone wonder why 1500 MW of QF capacity has shut down in 
California?? Without these payments being made very soon, I would expect the 
amount of shut down QF capacity to easily double, or more.? Why would these 
projects produce without the promise of being paid? 

Things in the People's Republic of California 
?@@@ Be a Source for Energy Price Update 

Art O'Donnell, editor and associate publisher of the well-known and widely 
read California Energy Market (CEM), is looking for traders willing to 
participate in his survey in exchange for receiving an advanced copy.? The 
Survey is a regular feature in CEM. The information collected by Art is 
matched against the responses of the other people he interviews and some 
posted sources (Pricewaterhouse Coopers; BPA,s daily offerings, for 
instance).? It is written up in narrative form. The report goes out twice 
weekly, once on Wednesday afternoon/evening via e-mail as a courtesy to the 
respondents (because the week is pretty much done by then), and a rewrite on 
Friday that is e-mailed around 10 am, posted on the newsdata.com Web site, 
and published in the newsletter for general consumption. The Friday report 
also features a brief story about natural gas markets in the West 

The WPTF Board of Directors has allowed me to publicize this offering, and to 
explain that if your company is interested in participating, the information 
you provide to Art would be protected as confidential.? In Art's words, "The 
price survey is ( unlike some attempts at creating a tradable index number 
(e.g. McGraw-Hill,s Power Markets Week index or the Dow Jones indices), is 
more of a narrative about the state of the market d a pulse reading as 
opposed to a blood pressure number or an EKG. As such, I do not ask traders 
and schedulers for precise dollar figures or volumes associated with specific 
trades, but rather questions like, 'What,s Mid-Columbia going for today? What 
about off-peak? How has that changed since this morning? Oh yeah, why is 
that? Anything else I should know?'" 

The WPTF Board asked Art to explain how the information he collects would be 
protected since so many marketers and generators are under State data 
subpoenas.? Art replied, "The Constitution of the State of California 
provides for a blanket immunity against government intrusions for news 
gathering from confidential sources and unpublished information, something 
which we believe in strongly at Energy NewsData Corporation and which we are 
willing to go to jail to protect. So if, for instance, the Attorney General 
tried to subpoena me or anyone from my staff about power price information, 
we would 1) refuse to divulge anything other than the already published 
accounts, 2) send back a copy of the Constitution, 3) contact the attorneys 
for the Society of Professional Journalists, and 4) start preparing a benefit 
party to raise legal fees. " 

If you would like to participate in Art's survey, please e-mail him at 
aod@newsdata.com. 

Things in the People's Republic of California 
?@@@ BPA Misquoted in the WSJ 

In last week's Burrito, I referred to a Wall Street Journal article that 
portrayed a BPA trader as admonishing the DWR for accepting bids over market 
prices.? I was surprised when I received the following e-mail from BPA's 
David Mills.? His message to me copied a letter he sent to DWR's Ray Hart, 
explaining what he meant as opposed to what he was quoted as saying. 

Dear Ray: 
? 
As per our telephone discussion, I just wanted to reiterate a few things 
re:the Wall Street Journal article and the quotes attributed to me.? At no 
time during the interview with Ms Smith did I state that I thought that 
CDWR's offers were out of line with the prevailing market price in California 
or that your traders should check that price before entering the market.? The 
reporter was quite interested in the price difference between California and 
the MidC price here in the Northwest and when I asked I told her that 
currently that price delta was roughly $50-$100 MWhr, with MidC being lower 
than the CA prices.? I did not indicate to the reporter that I thought that 
CDWR was paying more than the California market price and was simply trying 
to make a comparison of price relativity between California and the 
Northwest.? Lastly, BPA has, on occasion, charged extra-regional entities 
less than the prevailing market price but has only done so to remain 
consistent with our own pricing strategies. 
? 
?I apologize for any misconceptions or miscommunications that may have 
resulted from this and look forward to a continuing working relationship 
between CDWR and BPA. 
? 
Things FERC 
?@@@ Market Monitoring Proposal 

FERC Staff issued a report with "Recommendations on Prospective Market 
Monitoring and Mitigation for the California Wholesale Electric Power 
Market."? WPTF members are taking this proposal very seriously, and we intend 
to provide comments on March 22.? If you are interested in a copy of the 
report, go to http://www3.ferc.fed.us/bulkpower/bulkpower.htm. 

General members are able to participate along with the Board members and 
other general members working on our response.? We have retained the services 
of Dr. Ben Zycher of the RAND Corporation to help us draft the policy 
issues.? He will be working with our counsel, Dan Douglass of Arter & Hadden 
to craft our reply. 

In short, our submission will point out the flaws in FERC's proposed 
methodology, and demonstrate the shortcomings of narrowly limiting the 
definition of producer marginal cost to operating variable cost.? Further, 
excluding measures of credit worthiness are an important missing variable in 
the FERC analysis.? Next week, I will include a short summary of our response 
in the Burrito. 

Letters 

I received a note from one of our legal beagles that drop me a line every now 
and then.? I don't have the facts of the case to which this person refers, 
but I hope the sender provides us with an update if a judgement should occur. 
"Universal Studios wants FERC to find that Universal owes no penalty to SCE 
for not interrupting its interruptible load (under a CPUC rate schedule) 
because SCE did not adhere to the FERC requirement in the Dec 15 order to 
schedule 95% of its load in the day ahead market ...... according to 
Universal, if SCE had done so, then it would have had to provide Universal 
power at below its cost.? SCE didn't and Universal; got interrupted and now 
Universal owes $$$$$$$$$$$$$."? Does anyone else know about this filing? 

Lind Guerry, veteran of the PX halcyon days, wrote, "Hi Gary.? Hope you're 
having a nice day.? Just wanted to let you know that I'm really enjoying the 
Burrito, and am so glad you're sending it to my home email.? I really got a 
kick out of the "Ten Reasons...."? It's hard to believe that our wonderful 
state is in such incompetent hands, isn't it?? And not only are they 
incompetent, they continue to remain so, with such regularity, you could 
probably make a killing marketing their incompetence as a laxative.? Do you 
think if we tried to do that, we'd get accused of exercising market power? 
Think of the power we'd wield, as the holder of the largest amount of 
incompetence!! "? 

Lind, we need a product name for the laxative idea.? Any ideas? How about 
Sane Away? 

Jobs and People 

The folks at Dynegy sent me a couple of job postings.? If your company has 
similar posting or job openings, or if you are reader looking for a new gig, 
drop me a line.? After all, it's free. 

Position Description: 

Dynegy's position has responsibility for the development of transmission and 
power markets in a geographic region of the U.S.? Duties are driven primarily 
by federal, regional, and state activities to restructure and deregulate the 
electric power industry, and the need for industry participants to develop 
and implement market structures, policies, and regulations that promote 
liquid and competitive transmission and power markets.? Significant activity 
within a region to reshape the structure and operation of the transmission 
grid is resulting from FERC Order 2000, which directs the establishment of 
Regional Transmission Organizations. Extensive travel (40%-60%, and higher at 
times) is highly probable. Primary goals of this position are to:1) Create 
more liquid and competitive transmission and power markets;? 2) Maximize the 
value of Dynegy's positions and assets by working closely with the trading 
and power groups to develop?? and implement commercial strategies that create 
and capture significant business opportunities; and 3) Provide timely and 
accurate information, market intelligence, and recommendations to clients. 4) 
Maximize the value of Dynegy's positions and assets by working closely with 
the trading and power groups to develop and implement commercial strategies 
that create and capture significant business opportunities; and 
recommendations to clients. 

Interested parties should contact Jolly Hayden at jjha@ngccorp.com. 

Odds & Ends (_!_) 

First, I would like to welcome WPTF's newest general member, Wellhead 
Electric.? Hal Dittmer is the founder and president of Wellhead.? I have 
known Hal for a couple of years, first as a client for my over priced 
consulting services, and later as a friend and source of all kinds of useful 
information.? Wellhead is one of those QF owners who are owed a boatload of 
money.? However, Hal's company is developing some new projects, and he is 
looking for prospective power buyers.? Hence, his interest in WPTF is 
obvious. Wellhead is WPTF's 31st member. 

Well, the Dynegy gang has been a source of comfort and joy to me this week.? 
They couldn't let me leave their abode without stuffing a song in my pocket 
that is a tribute to their creative skills.? Timely too.? Sing it to the tune 
of "California Dreaming", by the Mamas and the Papas. 

ISO California 
(to the tune of Hotel California)


On a dark Western highway 
No wind in my hair 
No rain for the hydro 
No NOX in the air 
Up ahead in the distance 
I saw a flickering sight 
The load grew heavy and the lights grew dim 
No relief in the night 
So we stood in the darkness 
Down at the Taco Bell 
And I was thinking to myself 
This could be Heaven or this could be Hell 
We lit up a candle 
No power in the Bay 
There were voices down the corridor 
I thought I heard them say? ( 

Welcome to the ISO California 
Such a lovely place 
Such a lovely place 
Such a lovely face 
Powering up for the ISO California 
What a nice surprise 
What a nice surprise 
Bring your alibis? ( 

Its mind is policy twisted 
Can,t stop consumption trends 
Got a lot of NIMBY boys 
Cisco calls friends 
How we sweat in the courthouse 
Sweet summer sweat 
Without the AC 
We try to forget 
So I called up the Gov,nor 
Please energize this line 
He said 
We haven,t built a new plant here since 1969 
Last thing I remember 
We were running for the door 
We had to find the passage back to the place we were before 
Relax said Judge Damrell 
California,s programmed to receive 
Go belly up any time you like 
But your power can never leave 
? 

[refrain] 

========================== 
Don't refrain.? Have a great weekend, y'all. 
gba 
?