By agreeing to pay only for "reasonable" offers, DWR left itself a loophole 
big enough to drive a truck through:

"DWR will assume financial responsibility for
all purchases by the ISO in its ancillary services and imbalance energy
markets based bids or other offers determined to be reasonable. Such
determination of reasonableness will be made by DWR on a case by case basis
and communicated to the ISO."  (Emphasis added.)






Susan J Mara@ENRON
04/16/2001 09:06 AM
To: Christian Yoder/HOU/ECT@ECT, gfergus@brobeck.com, 
jalexander@gibbs-bruns.com, James D Steffes/NA/Enron@Enron, Ray 
Alvarez/NA/Enron@ENRON, Paul Kaufman/PDX/ECT@ECT, Jeff 
Dasovich/NA/Enron@Enron, Alan Comnes/PDX/ECT@ECT, Richard 
Shapiro/NA/Enron@Enron, Michael Tribolet/ENRON@enronXgate, Steve C 
Hall/PDX/ECT@ECT, Jubran Whalan/HOU/EES@EES, Neil Bresnan/HOU/EES@EES, Tim 
Belden/HOU/ECT@ECT, Harry Kingerski/NA/Enron@Enron
cc:  

Subject: CAISO Notice: Market Notice re: Credit Issues

FERC finally got resolved what CA could not. I believe this also takes care 
of our credit issue on the ISO's demand response programs.

Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854
----- Forwarded by Susan J Mara/NA/Enron on 04/16/2001 08:47 AM -----

	"Fuller, Don" <DFuller@caiso.com>
	Sent by: "Happ, Susan" <SHapp@caiso.com>
	04/13/2001 04:21 PM
		 
		 To: ISO Market Participants 
<IMCEAEX-_O=CAISO_OU=CORPORATE_CN=DISTRIBUTION+20LISTS_CN=ISO+20MARKET+20PARTI
CIPANTS@caiso.com>
		 cc: 
		 Subject: CAISO Notice: Market Notice re: Credit Issues

Market Notice re Credit Issues

In response to the FERC order of April 6, 2001 re the issue of
creditworthiness, the California Department of Water Resources (DWR) has
authorized the ISO to make the following statement. To the extent (and only
to the extent) that a purchase is not otherwise paid by any party or payable
by another party meeting the credit standards set forth in the ISO Tariff
(another "Qualified Party"), DWR will assume financial responsibility for
all purchases by the ISO in its ancillary services and imbalance energy
markets based on bids or other offers determined to be reasonable. Such
determination of reasonableness will be made by DWR on a case by case basis
and communicated to the ISO.  All bids into the ancillary services and
imbalance energy markets will be deemed to be contingent on the acceptance
of financial responsibility by DWR, to the extent not paid or payable by
another Qualified Party.  Unless a supplier is otherwise notified, any bid
accepted by the ISO will be deemed to have the financial support of another
Qualified Party or DWR as specified in this notice.  In addition to the
foregoing, DWR will assume financial responsibility for all purchases
resulting from the issuance by the ISO of emergency dispatch instructions,
to the extent not paid or payable by another Qualified Party.  Payment for
such purchases shall be made according to the rate specified in the ISO
Tariff for emergency dispatch instructions.  The ISO and/or DWR reserve the
right to rescind or modify the foregoing arrangements at any time and for
any reason, including a successful rehearing or appeal from the April 6
order.

As the FERC determined in its February 14 order that DWR is a creditworthy
counterparty, the ISO believes that the foregoing arrangements meet the
requirements of FERC's April 6 Order. Accordingly, the ISO expects that
suppliers will honor their obligations under the ISO Tariff and related
agreements to respond to ISO dispatch instructions.

Don Fuller
Director, Client Relations
California ISO
Phone: 916-608-7055
E-Mail: dfuller@caiso.com