Jim,
I presume that both filings, the one on third party guarantees, and the one on lower credit ratings, were approved by FERC. Both were approved by the Board and both are in the ISO Tariff, the first is ammendment 36 and the second ammendment 29. I could not find the actual FERC order in the millions of hits in the very imperfect search engine of the CAISO. Please advise. Regards,
ALF


From:	James D Steffes/ENRON@enronXgate on 11/02/2001 05:01 PM
To:	Alberto Levy/SA/Enron@Enron
cc:	 

Subject:	RE: California - Credit Worthiness requirements

Was the amendment approved by FERC?

Jim

 -----Original Message-----
From: 	Levy, Alberto  
Sent:	Friday, November 02, 2001 4:53 PM
To:	Ibrahim, Amr
Cc:	Ogenyi, Gloria; Kingerski, Harry; Gottfredson, Bryan; Canovas, Guillermo; Steffes, James D.
Subject:	Re: California - Credit Worthiness requirements

Amr,
The situation with the California ISO is complicated by the fact that they recently had to face a loss of creditworthiness from PG&E and Southern California Edison. In an ammendment to the the ISO Tariff, the ISO proposed revisions to the tariff that would in effect waive the sanctions ot the ISO Tariff's creditworhiness requeriments for certain entities that were creditworthy as of January 3, 2001 but were about to lose the Approved Credit Rating that established their creditworthiness. This only applies to purchases using their own generation and transmission, but opened a pandora box in the evaluation of creditworthiness for market participants in California. In addition, the ISO Tariff did not have procedures in place to admit guarantees from third parties to back energy, ancillary services and grid management charges. A process was incorporated to this effect recently to allow SCE and PG&E buy power backed by California Department of Water Resources.
In any event, each Scheduling Coordinator (SC), Utility Distribution Company (UDC) or Metered Subsystem (MSS) must maintain an approved Credit Rating or provide in favor of the ISO one fo the following forms of security for an amount to be determined by the SC, UDC or MSS in the form stated in the Tariff:
An irrevocable and unconditional letter of credit confirmed by a bank or financial institution reasonably acceptable to the ISO;
An irrevocable and unconditional surety bond posted by an insurance company reasonably acceptable to the ISO;
An irrevocable and unconditional guarantee which has and maintains an Approved Credit Rating;
A cash deposit standing to the credit fo an interested bearing escrow accoint maintained at a bank or financial institution designated by the ISO;
A certificate of deposit in the name of the ISO from a financial institution designated by the ISO; or
A payment bond certificate in the name of the ISO from a financial institution designated by the ISO;
Letters of credit, guarantees, surety bonds, payment bond certificates, escrow agreements and certificates of deposit shall be in such form as the ISO may reasonably require from time to time by notice to SC, UDCs or MSSs. SCs, UDCs or MSSs that do not maintain an approved credit rating will not be allowed to submit a schedule to the ISO, and the ISO will reject any schedule submitted if the security amount is not deposited. If an outstanding liability exceeds 90% of the required security amount, a notification by the ISO will be issued to cover the security within 15 days.
As of March 13, 2000, an approved credit rating with respect to market obligations, is defined as an entity maintaining at lest an A2/P2 (or equivalent) short-term issuer credit rating or a A3/A- (or equivalent) long-term credit rating from a national credit rating agency. Market obligations are Imbalance energy, Ancillary Services, Grid Operations Charge, Wheeling Access Charge, High Voltage Access Charge, Transition Charge, Usage Charges and FERC Annual Charges. I suppose day-ahead energy charges are also included since the dissolution of the PX, although I could not find an explicit reference to this issue in the regulations.
SCs, UDCs or MSSs  must maintain A1/P1 (or equivalent) short-term issuer credit rating for the Grid Management charges, or the charges the ISO makes to fund its operations.
If you have any questions, please let me know. Regards,
ALF