Ron,
I believe there is a problem with the
Underscheduling of Load Section.  If your changes are the result of EES's
request, I think it is backwards.  In other words, EES is ok with the
penalties on load, but wants a 10% spread because it is hard to manage
within the narrow band for smaller entities.  I do not believe we should
suggest in the alternative anything for generators.  I believe the comments
should be no penalty for generators for the reasons stated in Alan's
affidavit (last draft I saw this morning).

Thanks
Gary



3. The Proposed Penalty on Underscheduling Of Load
Should Not be Extended to Generators

The Commission proposed to impose a penalty charge for deviations in excess
of five percent of an entity's hourly load requirement of two time the ISO's
real time energy cost for any purchase of balancing energy during the hour.
November 1 Order at 26.  Under these circumstances, while Commenters do not
object to the imposition of a penalty on loads, as proposed, we urge the
Commission to resist any calls that such penalties also be imposed on
sellers of electricity.  Under the cost causation principle, the penalties
should be assessed solely on those entities that cause the underscheduling.
As has been widely observed, the primary cause of the underscheduling
problem this summer has been caused by loads.  Thus, under the cost
causation doctrine, the Commission was correct to impose the underscheduling
penalty on loads but not generators.
In addition to the foregoing, imposing penalties on generators will create
incentives for generators to sell real-time power in markets outside of
California.  This will increase the need for the ISO to make out-of-market
("OOM") calls.  Comnes Affidavit at __ (describing that if a penalty is
placed on load, scheduling coordinators will have an incentive to remove the
power the real-time market and into day-ahead or forward markets).  For all
of these reasons, we urge the Commission to affirm its determination to
impose the underscheduling penalties on loads but not generators.
If the underscheduling penalty is to be applied to LOAD, we request
that it be applicable only for deviations in excess of ten percent of a
LOAD's total hourly requirement.  This is appropriate because because small
Scheduling Coordinators (smaller than the PX or ISO) have less diverse loads
and are subject to greater unforeseen swings.  Scheduling within a band of
95% accuracy would thus be very difficult for many to achieve.

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