Alan,
I think you have identified the most pressing issues. Certainly the ability to go long or short into R/T will be important and hopefully the CISO will follow through on its efforts to "strive for simplicity and transparency." Any idea what the penalties for being long or short in R/T might be?  In the CISO's proposal the first two "goals" for the real time market appear to be at odds with each other. Also, I think we should push to rid ourselves of 10-minute dispatch at tie points. I understand the CAISO keeping the ADS in-state but it has not worked at tie-points. Feel free to let me know if you have any questions.

Thanks for the update.

Bill

 -----Original Message-----
From: 	Comnes, Alan  
Sent:	Thursday, January 03, 2002 2:52 PM
To:	Belden, Tim; Badeer, Robert; Mallory, Chris; Lackey, Chris; Richter, Jeff; Hall, Steve C. (Legal); Blair, Kit; Gilbert, Scotty; Williams III, Bill; Calger, Christopher F.; Heizenrader, Tim
Cc:	Nicolay, Christi L.; Steffes, James D.; Dasovich, Jeff; Novosel, Sarah
Subject:	California ISO Market Re-Design 2002 (MD02)

	The California ISO has begun a comprehensive redesign of its markets.   FERC ordered CAISO to submit a proposal to FERC by 5/1/02. CAISO is trying to implement changes by this summer and certainly no later than when price controls terminate on 9/30/02.  CAISO's proposed changes are intended to solve long-standing problems such as the lack of price resolution (and resulting gaming opportunities) and problems purportedly related to the "crisis" of 2000/2001 (e.g., lack of capacity commitments made on the part of load). Some of the changes being considered include:

Increased price resolution via either:	
	A move to full-nodal model with security constrained dispatch (i.e. PJM),
	An increase in the number of zones, or
	A combination of the two: nodal for relieving congestion, zonal for scheduling load and pricing traded energy.
A requirement that load make forward commitments for capacity
residual forward unit commitment (for times when voluntarily commited capacity is insufficient)
Creation of an hourly day-ahead energy market.
Combining A/S procurment with CM
"Damage control" price caps

One of our key needs as an energy trading co.  is a need for the market to allow participants to enter R/T either short or long.  This is allowed in PJM.  Also, we will need to be on the defensive against the ability of CAISO to impose price controls.

Please review the attached and let me know (1) other design elements you would like to see (or not see) at the CAISO, and (2) your interest in participating in this process going forward.  Note that a more detailed proposal will be out next week and there will be stakeholder meetings during the week of 14 January.  We may not be able to get someone there in person but will definitely, at a minimum, listen in.

 << File: MD02 Design Elements.pdf >> 

Stakeholder Meeting Dates and Times:

		ISO Market Participants:

		As indicated in the December 20, 2001 CAISO Notice, the ISO
will be hosting several Focus Group Meetings to discuss, "Market Design 2002
Design Draft".   These meetings will take place at the Hilton Garden Inn,
121 Iron Point Road, Folsom, California 95630 (916) 353-1717.  

		The meeting dates, times, and targeted groups for these
meetings are:

*	January 14, 2002, 9:00 a.m. - 2:00 p.m.:		Load-Serving
Entities

*	January 15, 2002, 9:00 .am. - 2:00 p.m.:		Generators
and Marketers

*	January 16, 2002, 9:00 a.m. - 2:00 p.m.:		Municipal
Utilities

*	January 17, 2002, 9:00 a.m. - 2:00 p.m.:		Other
Control Areas