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	"Ronald Carroll" <rcarroll@bracepatt.com>
	02/20/2001 06:47 PM
		 
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		 Subject: Fwd: SF Chronicle - Critics Say ISO Rookies Will Hinder Resolving 
Crisis


----- Message from "Tracey Bradley" <tbradley@bracepatt.com> on Tue, 20 Feb 
2001 18:42:24 -0600 -----
To:	"Paul Fox" <pfox@bracepatt.com>
cc:	"Andrea Settanni" <asettanni@bracepatt.com>, "Ronald Carroll" 
<rcarroll@bracepatt.com>
Subject:	SF Chronicle - Critics Say ISO Rookies Will Hinder Resolving Crisis
FYI -  This article has quotes from FERC Chairman Hebert.  He was highly 
critical of the "politicized control of transmission." 

Critics Say ISO Rookies Will Hinder Resolving Crisis

Carl T. Hall, Chronicle Staff Writer    Tuesday, February 20, 2001 
  

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Experience in the complicated world of energy didn't matter much when Gov.  
Gray Davis went shopping for a new set of policymakers to oversee the state- 
sponsored California Independent System Operator. 

Davis named five new members to the Cal-ISO board last month, replacing an 
unwieldy 26-member board whose members were selected to balance competing 
interests in electricity supply and transmission. 

The prior board was packed with longtime players in various industry and 
energy-policy arenas. But the board's reluctance to cap rates, among other 
things, led some to question its independence -- and eventually caused its 
demise when the Legislature moved to restructure the agency, based in Folsom, 
technically a nonprofit public-benefit corporation but in reality an arm of 
state energy policy. 

The new board includes only one member -- Mike Florio, senior attorney at The 
Utility Reform Network (TURN), a San Francisco-based consumer group -- with 
any significant background in the energy field. 

Florio, a perennial critic of Pacific Gas and Electric Co. and other 
regulated utilities, was among the original members of the Cal-ISO board 
Davis and the Legislature dumped. Now, he is the only veteran left, 
surrounded by eager rookies. 

"There will be a learning curve, no question," said Terry Winter, Cal-ISO's 
chief executive officer. 

Remedial training is under way, but critics fear that may get in the way of 
solutions to the fast-breaking state power crisis. 

Curt Hebert, chairman of the Federal Energy Regulatory Commission, also 
faulted the new board's close ties to Sacramento, saying that "politicized 
control of transmission" could deter suppliers from entering California and 
sour other states on the idea of regional cooperation. 

"The ISO should operate as a truly independent operator of the grid," Hebert 
said. "But initial signs are not encouraging. Legislation adopted that makes 
the ISO board a political arm of the governor, with five handpicked members, 
could prove to be detrimental in the long run." 

Other observers view the Sacramento connection as a plus. 

"I expect there will be better overall coordination with the state now," said 
Susan Schneider, a former PG&E executive who now advises industry clients as 
a principal at Phoenix Consulting. "There's been a bit of a disconnect." 

The new board members insisted that the governor had started them out with no 
marching orders other than to do what's in the public's best interest. And 
while Davis' board may not know its new business quite yet, its members boast 
some formidable resumes in other fields. 

In any case, they have little direct control over the most important policy 
matters being decided in Sacramento and Washington. But that's not to say the 
Cal-ISO board has no significant role. 

"The ISO is going to be an important gear in whatever machine ends up fixing 
this thing," said Eric Saltmarsh, general counsel at the state Electricity 
Oversight Board. 
 
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,2001 San Francisco Chronicle   Page A11