Monday,  December 11, 2000



To:  All PX Market Participants

From:     John Yurkanin
Chief Operating Officer

Re:  Loss of Continuity in PX Day Ahead Auction Due to ISO Rule Changes

The emergency tariff filing by the California ISO last Friday has had a 
negative
effect on the  PX day ahead auction market.  The mixture of soft and hard caps
results in a complete disconnect and unacceptable risk to all of our
participants and will probably not provide the ISO with its sought after
reduction in real time energy sales and procurement.  The overall effect will 
be
that supply will still defer to the higher realized price opportunity the ISO
offers.

The PX is petitioning Terry Winter of the ISO to immediately allow for
adjustment bids on any submitted schedule at any price relevant. The hard cap
retention on adjustment bids has resulted in a nullification of meaningful
forward bids in the day ahead auction.  This is not a software failure or 
issue
with the ISO; it is a policy issue that may have been overlooked in the ISO

?s
most recent emergency market response.

We all commend the ISO for its efforts in keeping the lights on and share 
their
concern of an overworked staff trying to procure energy.  But their recent
policy change will not help California and undermines a meaningful reference
price for spot markets.

In addition to asking the ISO to amend its emergency tariff the PX is also
filing directly today directly with the  FERC an emergency intervention to ask
for action to correct this market damaging outcome.   Your support of our
actions with both the ISO and the FERC would be most appreciated.