I spoke w/ Bill Julian, Cmmr. Wood's Advisor, about the hearing that is being 
held on Friday, September 8 in San Diego.  There will be a morning panel and 
an afternoon panel.  The morning panel will discuss "pricing 
behavior/patterns" and the afternoon panel will provide 
explanations/refutations of the morning presentations.  I'm not sure yet who 
will be speaking, but I have inquired from Steve Weisman, who appears to be 
heading this effort.  

Do we want an Enron representative on the panel?  Who would be the best 
witness?

While this investigation has the opportunity to turn into a witch hunt, I am 
also concerned about the record being developed in such a way as to lead to 
the conclusion that Wood, or the legislature, have in mind.  This could mean 
an attempt by the Commission to assert more regulation in the market, assert 
more state (vs. federal) jurisdiction, build a case for collapsing the ISO/PX 
into one organization, or hang blame on generators and scheduling 
coordinators.

I think Tim and Mary's presentation would be very effective in showing the 
other (real) side of the story.

The following is an exerpt from the pre-hearing conference transcript held on 
8/28 from Cmmr Wood:

27               I am not going to sit here and say that it's not 

           28    an appropriate time to assign blame.  If there has been 

            1    wrongdoing, we will assign blame.  We will ferret out the 

            2    wrongdoers, and we will bring them to account to the 

            3    greatest of our ability. 

            4               But I think that, as Judge Wetzell pointed out, 

            5    the scope of this proceeding is quite broad.  We are not 

            6    only addressing the immediate issues, but we are also 

            7    addressing the underlying problems of this market which 

            8    clearly is not functioning, which clearly is broken. 

            9               We have to look at problems with the structure of 

           10    the market, we have to look at problems with the behavior of 

           11    market participants; and getting beyond the wholesale 

           12    market, we have to look at the interaction with the retail 

           13    market because, after all, that's where the pain actually 

           14    occurs.  That's what consumers themselves face.

           15               There are probably implications for the long-term 

           16    viability of California's utilities that are connected with 

           17    this proceeding, and we have to get into that.  And for that 

           18    reason, as well as the fact that the other utilities in 

           19    California are going to be coming out of the rate freeze at 

           20    some point in the future, we have to consider the statewide 

           21    implications of what we're doing. 

           22               So this is not just the San Diego proceeding, 

           23    although we are focused on events here in the San Diego 

           24    area.






Mona L Petrochko
08/30/2000 03:51 PM
To: James D Steffes/HOU/EES@EES, Harry Kingerski/HOU/EES@EES, West GA, Mary 
Hain@Enron, Richard Shapiro/HOU/EES@EES, Karen Denne@Enron, Peggy 
Mahoney/HOU/EES@EES, Mark Palmer/Corp/Enron@ENRON
cc:  
Subject: Comments on Wholesale Issues

Wood, the Assigned Commissioner in the investigation of wholesale electric 
markets, has asked for comments on the following questions by Friday, 
September 8.  We are an individual party to the case as well as a member of 
ARM and WPTF.  

This would be a good opportunity to get our version of what is wrong on the 
record.  The presentation that Tim and Mary put together for FERC will be 
helpful in answering these questions.  I will take a first cut at drafting 
response to be circulated by Tuesday of next week.  We can take liberties in 
providing responses that go beyond the question asked.

Market Structure:

Are the market conditions currently being experienced (price spikes and suppy 
shortages) inevitable under the current market structure?
Do generators and/or scheduling coordinators have market power?
Is there a need to mitigate such market power?
Which market participants or other entities are responsible for reliability 
planning?
Do California regulatory agencies have adequate jurisdiction to ensure 
reasonable prices and reliable service?
Do the structures and governance of the Cal ISO and PX adequately support the 
goals of providing reasonably priced and reliable service?

Market Rules:

Are there rules which allow or encourage unacceptable market outcomes?
What roles, if any, do underscheduling in forward markets, out of state 
transfers, uniform PX auction prices and ISO real-time and out-of-market 
purchases play in the outcomes being experienced?

Behavior of Market Participants:

What is working and not working in terms of price, reliability, information 
exchange, resource distribution, equity, service quality, and types of 
planned generation?