Richard  --

FYI.

 -----Original Message-----
From: 	Alvarez, Ray  
Sent:	Wednesday, September 19, 2001 10:51 AM
To:	Shapiro, Richard; Robertson, Linda; Steffes, James D.
Cc:	Frank, Robert; Comnes, Alan
Subject:	An interesting point in time in the CA proceeding

Here is a snapshot of what is going on right now.  It is unusual.

According to ISO, they owe us $1MM (instead of us owing them $37MM)!!!!!
However, don't take this to the bank since Jan Acton of Charles River Associates believes that the ISO made a significant "coding" (ie mathematical formula) error with respect to uninstructed energy, that is behind most of this shift.  On the conference call held Monday, others also noticed discrepancies in the uninstructed energy category so it is likely the ISO will discover and fix the error.
We suspect there is game playing going on (in addition to errors in the data).  CERS went from having to refund $1.2billion, to zero.  Also, significant increases (unexplained) in neutrality charges have been observed. 
ISO asserts their calculations are correct despite the suspected errors and game playing.  However, they have not taken mitigation into account for "spot OOM" transactions.  The magnitude of this is unknown, but could be very large.  This makes the correctness of their data even more suspect.
Obviously, given the foregoing no one can agree to limit the scope of the proceeding through a stipulation excluding settlement disputes from the proceeding.  The numbers are huge as are the shifts or swings in liability with each iteration of new ISO numbers.
Absent agreement on the stipulation, Judge Birchman is scheduled to hear oral argument and decide the issue tomorrow.
Our main concern will be to keep consideration of issues 2 and 3 (refunds and offsets) together in the procedural schedule.

I am meeting with Dan Watkiss at noon to discuss strategy, and Gary Fergus will also be coming in for the hearing.  Another conference call with the ISO regarding their data will take place at 2PM.  I will follow up with another e-mail so as to keep you posted.

Ray