IMPORTANT NOTICE

Attention:  Scheduling Coordinator (SC) Settlements Contacts and/or Accounts
Payable

Second Notice - The ISO will be faxing the initial monthly FERC Fee invoices
to Market Participants this afternoon.  The following notice outlines the
FERC Fee description, process and payment options for ISO Market
Participants.  Invoices will be faxed to each Market Participant Settlements
Contact or Accounts Payable/Receivable Contact.

FERC Fee - Market Notice

Introduction

FERC has authorized the ISO to collect FERC's annual charges from the
Scheduling Coordinators (SCs) that use the ISO grid starting January 1,
2001.  The annual fee is based on the product of the FERC fee and SCs'
metered demand (load and export MWhs).  The fee is currently estimated at
$0.021/MWh and is subject to change. Load associated with transactions that
do not use the ISO Controlled Grid will not be assessed the FERC fee.

In accordance with FERC's March 14, 2001 Order on Amendment No. 35 to the
ISO Tariff, 94 FERC ? 61,266, the California ISO has developed a procedure
for invoicing and collecting the FERC Fee from Market Participants.  The
California ISO has also developed a way in which entities that wish to claim
exemptions from this fee can provide the ISO with the appropriate data and
request that they be exempted from charges.

Process

One business day before the Preliminary Invoice for a trade month is issued,
the California ISO will issue a monthly invoice and data sheet to each
market participant for FERC Fees. Contained within the Invoice and data
sheet will be the SCs load and export data for the month, total exemptions
for load and export, FERC Fee rate, total FERC fee charges, and total
balance outstanding.  A daily GMC Details file is already issued to SCs and
can be used to verify metered load and export quantities.

Payment of the FERC Fee is not required on a monthly basis if an Approved
Credit rating is maintained, or financial security at a level sufficient to
cover the outstanding obligation is maintained as stated in Section 7.5.1.2
of the Tariff.  For those entities that elect to pay the FERC Fee on an
annual basis and meet the requirements to make annual payments, those
payments will be due 5 business days after the final invoice is issued after
FERC has issued the applicable FERC Fee rate in the following year.

Market participants that qualify to make annual payments must notify the ISO
Client Relations department if they will be paying on a monthly or annual
basis.  Please inform the Client Relations department of your decision
within one month of receiving your first invoice.  Any SC payments received
by the ISO will be held in an interest bearing account.  Interest earnings
will not be separately identified to the benefit of individual Scheduling
Coordinators.

A final invoice will be issued annually,  by fax, after the FERC announces
the final rate after April 30 of the following year.  This invoice will
contain the actual charge to the SC based on the FERC rate, finalized load
and export data, and will take into account any payments made during the
year.

To claim an exemption from the FERC Fee, an entity must provide data showing
that applicable load and export data was not associated with transmission
transactions over ISO controlled grid. SCs requesting exemption from the
FERC Fee need to provide their ISO Client Representative with the BAID,
location, interchange ID, and quantities of load and export that are to be
exempted. The ISO will assess the request for exemptions and will reflect
any approved exemptions in the subsequent month's FERC Fee invoice. Any
disputes concerning requested exemptions should be raised in the ISO's
settlement dispute process. The ISO will annually inform the FERC of the
total quantity of transmission transactions over the ISO Controlled Grid

Due to the fact that the FERC Fee invoices will be generated using
preliminary settlement's data, the load and export quantities may change
once the settlement's data is finalized.  Market Participants will see the
revised data for the prior month on the subsequent month's invoice and data
sheet.


Timeline

The ISO will issue  invoices for FERC Fees to Market Participants commencing
this afternoon.  The process and timeline described above will begin with
the April Preliminary Invoice.  The FERC Fee invoice for April 2001 will
contain invoices for January through April.

If you have any comments please contact your Client Representative.


Client Relations Communication
CRCommunications@caiso.com