SC Settlement Contacts:


IMPORTANT NOTICE
Revised ISO Charge Matrix & Statement File Specification (V13.2) 

In compliance with recent FERC Order dated 6/19/01, ISO will make implement
changes in its Settlement System to support the following:

*	Credit Risk Adder; and
*	Emissions & Start-Up Cost Recovery.

Credit Risk Adder
The FERC Order put in place a price mitigation scheme for the energy markets
in the western United States.  It also directed ISO to add 10% to Market
Clearing Prices (MCPs)paid to generators for all prospective sales in its
market to reflect credit uncertainty.  The Credit Risk Adder is only used
for settlement purposes.  The ISO Scheduling System will continue to
determine MCPs using existing algorithms and the MCPs published in ISO's
OASIS will also reflect the unadjusted MCPs.  During the settlement
calculations, ISO will increase the following MCPs by 10%:
*	Dayahead and Hourahead MCPs for Ancillary Services (A/S); and
*	MCP for Real Time incremental energy.

The adder raises the MCPs, but does not affect the underlying settlement
formulation.  The only change made to the Settlement Files is the inclusion
of a new data field for the unadjusted MCP.

Emissions and Start-Up Cost Recovery
The FERC Order also directed ISO to exclude emissions and start-up fuel
costs from the calculation of ISO's mitigated Market Clearing Prices.
Generators can invoice ISO for such costs incurred as a direct result of ISO
dispatch actions.  ISO will implement two new charges:
*	Charge Type 591 - Emissions Cost Recovery; and
*	Charge Type 592 - Start-Up Cost Recovery.

These new charges serve as a mechanism for ISO to collect funds which will
be kept in trust accounts to pay the generators' invoices.  A rate will be
established by ISO for each charge.  For Emissions Cost Recovery, the rate
will equal that of the forecasted annual total of all emission costs,
incurred by Must-offer Generators as a direct result of ISO dispatch
instructions, adjusted for interest as may accrue in the Emissions Cost
Trust Account, divided by the sum of the forecasted in-state load served by
the ISO's transmission system.  For Start-Up Cost Recovery, the rate will be
determined similarly.  It will equal that of the forecasted annual total of
all start-up costs, incurred by Must-offer Generators as a direct result of
ISO dispatch instructions, adjusted for interest as may accrue in the
Start-Up Cost Trust Account, divided by the sum of the forecasted in-state
load served by the ISO's transmission system.  ISO plans to publish these
rates shortly.  The rates may be adjusted monthly based on ISO's latest
forecast.

Both charges will appear as monthly lump sums in the Scheduling
Coordinator's Settlement Statement for the last day of the trade month.
Detail breakdown of the charges incurred by the Scheduling Coordinator on a
given day will be provided in the statement for that day.  

Implementation Timeline
The Credit Risk Adder and the new Emission & Start-Up Cost Recovery scheme
went into effect on trade date 6/21/2001.  The statements for 6/21 will be
issued on 8/15/2001.

Comments & Questions
Attached for your review are drafts of the revised Charge Matrix and
Statement Files Specification (version 13.2).   

Questions and comments related to the attached documents can be directed to
Mr. C. P. Ng via email (cng@caiso.com).  ISO plans to finalize the
specification by 8/6/2001.

 <<File Spec - Version 13.2 - 072601 - Draft.doc>>  <<Charge Matrix
(Automated Chrg Types) - Version 13.2 - 072501 - Draft.xls>> 

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