Attached is the CAISO proposal to FERC seeking approval of its Grid
Management Charge (GMC).  This charge recovers the CAISO's costs of
operation.  The CAISO proposes to unbundle the GMC into three cost
"buckets," one of which would recover the CAISO's costs associated with Grid
Operations (vs. market functions).  The Grid Operation costs total
approximately $71 million or 45 percent of total CAISO costs, and would be
applied to all load including QF/cogeneration load "behind the meter."  If
the charge is not/cannot be applied directly to QFs, then it is likely to be
passed through to the utilities which will then attempt to recapture the
costs from QF/cogenerators.

Recently, IEP distributed an email asking the membership whether anyone was
sufficiently concerned regarding this policy and/or the cost impacts to fund
IEP's intervention in this matter.  We noted that we had been involved over
the past year attempting to negotiate a compromise with the CAISO, but to no
success.  Now, the issue is squarely at FERC.  To date, IEP has not received
a response to that email.

At this juncture, IEP is not planning on filing a response to the CAISO's
GMC filing, other than perhaps a pro forma intervention (1-2 pages) so as to
remain a party to the proceeding.  An intervention such as this would not
entail arguements as to why the CAISO's proposal is wrong and
counterproductive.  If any IEP member is interested in funding a more
active, aggressive intervention opposing the CAIOS filing, please let me
know ASAP but not later than Mondag, November 20.  Interventions are due
November 22.  "Paper Participation" in this proceeding, excluding any
negotiations for settlement/appearances at FERC, etc, could approach $20,000
in costs.

----- Original Message -----
From: Gregory Maxim <GM@eslawfirm.com>
To: Jan Smutny-Jones (E-mail) <smutny@iepa.com>; Steven Kelly (E-mail)
<steven@iepa.com>; Katie Kaplan (E-mail) <kaplan@iepa.com>
Cc: Douglas Kerner <DKK@eslawfirm.com>; Andy Brown <ABB@eslawfirm.com>; Eric
Janssen <EricJ@eslawfirm.com>
Sent: Thursday, November 16, 2000 12:52 PM
Subject: CAISO's Grid Management Charge FERC filing


> Please find enclosed our memo summarizing CAISO's Nov. 1 filing with FERC
> requesting approval of an unbundled Grid Management Charge.  IEP's
> membership will be interested in this filing because CAISO proposes to
> assess portions of the GMC to QFs with "behind-the-meter" load (i.e.
on-site
> or over-the-fence load).  Please let us know how we should proceed in this
> matter, as interventions and protests are due on Nov. 22, 2000.
>
>  <<001116_IEP_ISO Grid Man Charge.doc>>
>
>
> Gregory Maxim
> Ellison, Schneider & Harris L.L.P.
> 2015 H Street
> Sacramento, CA 95814
> (916) 447-2166
> gm@eslawfirm.com
>
> CONFIDENTIALITY NOTICE:  This communication and any accompanying
document(s)
> are confidential and privileged.  They are intended for the sole use of
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>
>

 - 001116_IEP_ISO Grid Man Charge.doc