Richard,

Here are a few comments on the CalPX letter to FERC outlining the difficulties in calculating PX refunds.  

1.  The PX claims it is a "neutral party in this proceeding" and is only a conduit for cash.  True for PX business, not true for CAISO obligations.  The CAISO holds SC's responsible for non-payment, not the SC's customers.  The PX was the SC for most of the transactions going through the day-ahead and hour-ahead market.  Therefore, the PX is primarily liable.  I'm not sure how this helps us, though, since the PX has no money.  

2.  Page 3, SC Data.  I was unaware that the CalPX acted as SC until February 28th---one month after it closed the doors on January 31st.  During this time, the CAISO was probably in violation of its Tariff, which requires SCs to be creditworthy.

3.  Page 5.  Commandeered contracts.  What is the status of the PX's claim against the State of California?  The State owes the PX, as representative for its Participants, the mark-to-market value of the contracts on January 31st, less amounts paid by CDWR to suppliers.  If the PX won't bring this claim, its bankruptcy trustee or the PX Participants should bring this claim against the State of Califonria.

4.  Pages 3 and 4.  $150 Breakpoint.  I asked Kit Blair in Volume Management to review this letter and he said that it was his view and the view of two other folks in VM that the PX is vastly overstating the difficulty in calculating the $150 breakpoint.  His view was that it should take hours or days, but not weeks.  However, I do not see how we get an advantage from accelerating the calculation of refunds.

Finally, according to reports from Credit and VM, the remaining PX employees are not exactly the "A-team."   I suggest we should ask FERC to require the PX to document its methodology for calculating refunds, so that we can review for errors.  Spot audits by independent auditors might be a good idea, too.

Steve