Can everyone help Tom respond within Congress to this message?  Tom, also be 
forewarned that FERC intends to announce their "proposed remedies" on Nov 1 
with about 15 days for response.  We need you guys to be ready for messaging 
this politically.

Jim

----- Forwarded by James D Steffes/NA/Enron on 10/24/2000 01:03 PM -----

	Tom Briggs
	10/24/2000 12:32 PM
		 
		 To: James D Steffes/NA/Enron@Enron, Mary Hain/HOU/ECT@ECT
		 cc: 
		 Subject: Cal-ISO Wants Pwr Generators To Forward Bid 70% -Sources

It seem sthat the Cal Iso has lost its mind.  Cynthia and I have been trading 
phone calls with Bilbray's staff to schedule a meeting.  In the event we can 
get one, can I have help rebutting this stuff.  It seems that the England and 
Wales Pool, which effectively compelled 100% bidding in the day ahead market 
was still frought with gaming between the day ahead market and the within day 
balancing market.  
----- Forwarded by Tom Briggs/NA/Enron on 10/24/2000 11:22 AM -----

	Cynthia Sandherr
	10/24/2000 10:32 AM
		 
		 To: Tom Briggs/NA/Enron@Enron
		 cc: 
		 Subject: Cal-ISO Wants Pwr Generators To Forward Bid 70% -Sources

Tom:  when we meet with Congressman Bilbray's staff, is this something we 
should bring up and have a position on....I would assume yes......but wanted 
to close the loop.....
--

Cal-ISO Wants Pwr Generators To Forward Bid 70% -Sources
Copyright , 2000 Dow Jones & Company, Inc.



By JASON LEOPOLD
     Of DOW JONES NEWSWIRES



     LOS ANGELES (Dow Jones)--The California Independent System Operator is
expected to file a petition with federal regulators Friday seeking authority
to force generators to bid 70% of their supply into the forward market in an
effort to reduce wholesale power costs in the state, according to a source
familiar with the issue.

     An official with the state's Electricity Oversight Board confirmed the
details of the filing.

     The filing calls for FERC to set a "just and reasonable" rate for a
large fraction of suppliers' capacity, while remaining supply would be able
to earn market-based rates, according to the source.

     In addition, major out-of-state generators would have to enter into
forward contracts at FERC mandated rates for "a significant portion of their
expected sales."

     ISO Chairman and Chief Executive Terry Winter will hold a news
conference Friday morning that will focus on possible solutions to lower
wholesale energy costs. He is expected to announce how bidding into the
forward market will stabilize high wholesale power costs.

     The state's Public Utilities Commission is expected to make a similar
filing with federal regulators in the near future, sources said.

     In addition, forcing generators to bid into the forward market is a
measure that would reduce market power in the state and would protect a
majority of utilities served by the generators from the cost impact of
market power, the ISO has said in prior meetings.

     Market power is a term used by economists to describe how generators
can influence power prices. According to an ISO report, market power
occurred this past summer because tight power supply and concentration of
generation ownership "allowed suppliers to be pivotal at relatively high
demand periods."

     About 50% to 60% of the power purchased this past summer was done in
the spot market, an unusually high percentage, according to the ISO.

     In order to mitigate market power, the filing calls for utilities to
enter into two-year forward contracts with generators to shield against the
daily market price fluctuations.

     Regulatory constraints associated with forward contracting was a "key
source of high (power) costs in the summer of 2000," according to an ISO
report.

     The ISO action will be taken without approval from a the grid
operator's board of governors. Usually, a majority of the board is required
to approve such an action.

     EOB Official Surprised By ISO Action



     The announcement of the ISO's expected filing came as a surprise to
Gary Heath, executive director of the state's Electricity Oversight Board.
Heath told Dow Jones Newswires he was aware of the filing and news
conference.

     "We're trying to find out what's behind this," Heath told Dow Jones
Newswires. "We're not sure if they could do this without board approval. It
came as a surprise."

     Sources said the agency is holding the news conference in an attempt to
eclipse imminent structural changes to the ISO expected to be proposed by
the Federal Energy Regulatory Commission next month.

     FERC launched an investigation into California's troubled power market
this past summer based on allegations that the market isn't workably
competitive and participants manipulate the market. Energy officials have
blamed the ISO for this summer's power woes.

     -By Jason Leopold; Dow Jones Newswires; 323-658-3874;
mailto:jason.leopold@dowjones.com

     (END) Dow Jones Newswires 20-10-00

     0307GMT




Michael E. Nix
Michael E. Nix Consulting
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