Market Participants:

  At the May ISO Governing Board meeting the Board directed
Management to bring back to the Board a recommendation on the "parameters
and process" for proceeding with a competitive solicitation (Valley-Rainbow
RFP) to determine if there are cost-effective and reliable alternatives to
SDG&E's proposed Valley-Rainbow transmission project. The specific Board
motion can be found at:
http://www1.caiso.com/pubinfo/BOG/documents/motions/20000525/Board/SDGEValle
yRainbow500KVProject.htm
<http://www1.caiso.com/pubinfo/BOG/documents/motions/20000525/Board/SDGEVall
eyRainbow500KVProject.htm>  and additional information on the project can be
found at http://www.caiso.com/thegrid/planning/sdge500kvtrans.html.
<http://www.caiso.com/thegrid/planning/sdge500kvtrans.html>
  These matters are scheduled to be addressed at the August 1
Board meeting. Attached is a memo that outlines ISO Management's preliminary
thoughts and recommendations on how to structure the process for conducting
and the parameters of the Valley-Rainbow RFP.  Please provide us your
thoughts and feedback on these matters no later COB Friday, July 21.  Please
send your comments to: sgreenleaf@caiso.com <mailto:sgreenleaf@caiso.com>
and btheaker@caiso.com <mailto:btheaker@caiso.com> . While the
recommendations outlined below are clearly a work-in-progress, it is
imperative that we receive your substantive feedback early so that we can
develop a fair and reasonable final recommendation. Thanks for your time and
consideration.

   <<000711 STG Valley-Rainbow - Market Participants.rtf>>

  Steve Greenleaf
  Director, Regulatory Affairs

  Brian Theaker
  Manager, Reliability Contracts

 - 000711 STG Valley-Rainbow - Market Participants.rtf