Price cap aand Oversight Board frivolities
---------------------- Forwarded by Susan J Mara/SFO/EES on 09/08/2000 08:09 
AM ---------------------------


Carl Imparato <cfi1@tca-us.com> on 09/07/2000 11:07:54 PM
Please respond to cfi1@tca-us.com
To: smara@enron.com
cc:  
Subject: [Fwd: FW: You should look at this -- Reuters on $100/MWh price caps 
for ISO and PX]


More bad stuff on the way...

Carl

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Reply-To: <fpickel@tca-us.com>
From: "Fred Pickel" <fpickel@tca-us.com>
To: "Richard Tabors \(E-mail\)" <tabors@tca-us.com>,        "Scott Englander 
\(E-mail\)" <sle@tca-us.com>,        "Narasimha Rao \(E-mail\)" 
<nrao@tca-us.com>,        "Judith Cardell \(E-mail\)",        "Ellen 
[Banaghan] Wolfe \(E-mail\)" <ellen@tca-us.com>,        "Carl Imparato 
\(E-mail\)" <cfi1@tca-us.com>
Subject: FW: You should look at this -- Reuters on $100/MWh price caps for 
ISO and PX
Date: Thu, 7 Sep 2000 23:45:44 -0400
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Oh  boy!? What a mess.
?

?Frederick H. Pickel,  Ph.D
?Vice President
?Tabors Caramanis &  Associates
?Los Angeles, California
?& Cambridge,  Massachusetts
?email: fpickel@tca-us.com
?alternate email:  fred.pickel@ALUM.mit.edu
?tel +1 (323) 937-7920
?
-----Original Message-----
From: Sam Van Vactor  [mailto:svv@econ.com]
Sent: Thursday, September 07, 2000 7:44  PM
To: Lisa_G_Urick@calpx.com
Cc: Dona K.  Lehr
Subject: You should look at this


?  

By Nigel Hunt

?? LOS  ANGELES, Sept 7 (Reuters) - The cap on wholesale power prices in 
California  could be cut for the third time this year, this time to $100 per 
megawatt hour  after starting the year at $750 per MWh.

?? The  state's Electricity Oversight Board (EOB) is to make a request to the 
California  Independent System Operator (ISO) within the next few days on the 
issue  following a resolution by the state's lawmakers last week.

?? "We will  make a formal request within the next few days," EOB Executive 
Director Gary  Heath said.

?? An  assembly joint resolution approved last week called on the EOB to 
direct the ISO  to "show cause why the price caps in the ancillary services 
and real-time energy  markets should not be lowered to $100 per megawatt-hour 
immediately and continue  until at least March 31, 2001."

?? The cap  currently stands at $250 per MWh after previous cuts from $750 to 
$500 and $500  to $250 amid growing consumer unrest about skyrocketing 
electricity bills and  allegations of possible price gouging by generators.

?? The  assembly resolution says the EOB should report back to the 
legislature by  December 1, 2000.

?? There was  heavy criticism of the ISO, which controls most of the state's 
power grid, by  lawmakers this year at its governing board twice rejected 
resolution to cut the  cap to $250 from $500 before finally agreeing to such 
a move.

?? Heath  noted the EOB at a meeting last week decided not to approve the 
appointment or  reappointment of 13 members of the ISO board and 12 members 
of the California  Power Exchange's governing board.

?? "We are  trying to place people who are a bit more mindful of the 
implications of board  decisions on Californian consumers," Heath said.

?? Existing  board members will remain in office until replacements can be 
appointed.

?? Heath  said that some individuals who were rejected may eventually be 
approved and the  EOB was rather making a statement about the performance of 
the two boards.

?? "The  board was making a very clear statement that we are not satisfied 
with the the  efforts of the ISO or PX governing boards to proect Californian 
consumers,"  Heath said.

?? Wholesale  power prices in California soared to record levels during a 
heatwave in June and  many customers in San Diego faced a tripling in their 
electricity bills.

? Supporters of  cutting the cap believe the power market is not "workably 
competitive" and  prices rose to excessive levels during the heatwave, 
putting an unfair burden on  both ratepayers and shareholders of investor 
owned utilities.

?? Opponents  have been led by independent power producers who have argued a 
lower cap could  make it more difficult for the state to import power at 
times of shortage.

?? Emergency  legislation signed into law by Calif. Gov. Gray Davis on 
Wednesday imposed a  price cap on how much San Diego residents should pay 
which was less than a third  of the current "free market" rate.

? Customers of  San Diego Gas and Electric, a unit of Sempra Energy <SRE.N>, 
had been  exposed to market based prices under the terms of California's 
power  deregulation.

?? Rates for  customers of California's other two investor owned utilities, 
Edison  International's <EIX.N> Southern California Edison and PG&E Corp.'s  
<PCG.N> Pacific Gas and Electric, are frozen.

?? A  spokesman for the California ISO was not immediately available for 
comment.

?? ((--Los  Angeles bureau + 1 213 955 6752))