Electric Power Alert - PowerPlus Service

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California Gov. Davis Decries Cal-ISO FERC Filing To Raise Price Cap

In what California Governor Gray Davis is calling "an outrageous assault on 
the consumers and businesses of California," the California Independent 
System Operator (Cal-ISO) petitioned FERC Dec. 8 to implement a $250 per 
megawatt hour (MWH) "soft cap" on the real-time energy market, replacing the 
previous $250 "hard cap." The move has led the Governor to call for swift 
draft legislation to dismantle the ISO.

FERC approved the petition the same day, immediately allowing bids beyond 
$250 MWH using a "soft cap" which provides for higher bids from power 
merchants "if they submit verifiable costs." The Nov. 1 order had suggested a 
$150 soft cap, while the Governor had advocated a $100 price cap.

The ISO made the move as California faced a Stage Two Emergency -- and one 
day after the state's first ever Stage Three Emergency. The ISO claims the 
action was necessary to address a shortage of bids in the ISO market and the 
serious under-scheduling of electricity in forward markets. They claim the 
new bids create incentive to sell power in the market, and allows the ISO to 
compete better for regional energy in the western United States.

The late filing was immediately slammed by Davis, who said he met earlier in 
the day with ISO staff who did not disclose that anything was afoot. In a 
statement, he declared that this was the work of "a federal agency answerable 
to no one and an unaccountable entity that acted without the authorization of 
its board of directors." He demanded that the current ISO be dismantled, and 
called on Congress to investigate.