Attached is a paper that was filed at the FERC by Paul Joskow and Ed Kahn.  I 
assume it was attached to SCE's comments in the FERC price caps proceeding.

This study appears to be the most definite analysis so far of the question: 
did market fundamentals or generator market power cause the price run-ups 
this summer?  Joskow/Kahn conclude that although much of the run up was due 
to gas prices and NOx costs, that the market was unworkably competitive; 
i.e., the cost run ups do not fully explain the price run ups.  Further, they 
provide what they claim is evidence that individual generators withheld this 
summer.

Joskow/Kahn state: "Moreover, there is considerable empirical
evidence to support a presumption that the high prices experienced in the 
summer of
2000 were the product of deliberate actions on the part of generators or 
marketers
controlling the dispatch of generating capacity to withhold supply and 
increase market
prices."  Biggest withholders in their analysis are: AES/Williams, Reliant, 
and Dynegy

Marketer/traders are largely but not completely spared criticism in their 
analysis.  Joskow/Kahn recommend that FERC staff undertake a study of the 
entire WSCC data to "Determine the role of marketers in the production and 
bidding behavior of the California generators." and to find out more why CA 
imports fell.

It will be interesting to see how the CA generators react to this study.

My initial read is that this is will be received as an important, influential 
work.  It will fuel the fire for more information release, especially by the 
UDCs and CA regulators--at least release of physical operational data.

I would be interested in your reaction to the study.  In terms of potential 
criticisms: I noticed that their gas prices might be low (used monthly 
average data rather than daily).  They also did not account for generator 
marginal profit or margin recovery to account for possible outages and 
noncontiguous schedules.   Finally, they do not examine the benefits that 
would have accrued had additional capacity come on line.

Alan Comnes