alliance info alert richardson ferc orders dear generation power marketing executive following summaries two significant activities occurred friday december 15 1 energy secretary richardson issuance emergency order richardson statement fpa section 202 c order posted doe web site http www energy gov hqpress releaseso 0 decpr pro 0309 html 2 ferc 12 15 00 final order fix california wholesale markets ferc order viewed california supplies ordered richardson richardson orders listed entities supply excess power california iso order effective soon iso certifies shortage ends 12 21 00 unless extended prices agreed supplier iso ferc set rate later fpa emergency power authority transferred doe 1977 said would december 13 u department energy secretary bill richardson found emergency exists california reason shortage electric energy issued emergency order section 202 c federal power act fpa requiring listed generators marketers provide power excess needs firm customers california iso statement richardson said threat reliability california grid requires long term solution short term power must keep flowing state avert blackouts 76 listed suppliers 12 hours iso certifies doe unable acquire adequate supplies market begin providing requested service iso iso must inform supplier subject order amount type energy services required 9 00 pm eastern standard time day services needed order directs iso allocate extent feasible requested services among subject entities proportion supplier available excess power order effective immediately terminate 3 00 eastern time december 21 2000 unless extended continue obtain supplies emergency authority iso must certify shortage doe headquarters every 24 hours terms provision electric energy services suppliers iso agreed parties agreement reached fpa emergency authority secretary richardson immediately prescribe conditions service refer rate issue federal energy regulatory commission determination later date agency accordance standards procedures prescribe supplemental order rates finds reasonable authority ferc set rates power supplied emergency order reasonable levels parties agree rate explicitly included fpa section 202 c doe organization act 1997 transferred emergency powers section ferc doe 76 entities identified order attachment entities provided power iso last 30 days entities ordered make arrangements generate deliver interchange transmit electric energy amounts may requested iso acting agent behalf scheduling coordinators source doe secretary richardson december 14 2000 statement order electric power daily december 15 2000 ferc de federalizes california markets adopts structural reforms summary december 15 order commission discussion special meeting today ferc unanimously approved eagerly awaited final order reforming california wholesale markets adopting major outlines november 1 proposed order sending back california responsibility addressing state related matters discussed time ferc deferred consideration retroactive refund issues well imposition region wide price caps ferc reiterated november 1 conclusions certain circumstances california ratepayers subjected unjust unreasonable power rates due california seriously flawed market structure rules conjunction tight demand supply conditions throughout west four commissioners supported order consensus based outcome appropriately balanced competing interests commissioner expressed reservations particular aspects order chairman hoecker comm breathitt expressed strongest endorsement comms hebert massey laid positions believed commission either reached gone far enough november 1 discussed highlights key actions 1 ferc adopted november 1 proposal eliminate effective immediately state mandatory requirement state investor owned utilities buy sell electricity px allow utilities purchase electricity forward contracts alternative mechanisms manage supply risks ferc terminated px rate schedules effective close business april 30 2001 effect chairman hoecker stated order de federalizes 60 percent california wholesale market established state restructuring law returning ratemaking authority company owned generation california public utilities commission cpuc 2 ferc modified effective period november 1 150 mwh soft cap proposal limiting application april 2001 whereupon comprehensive systematic monitoring mitigation program incorporates appropriate thresholds screen mitigation measures must place related move ferc ordered technical conference early next year develop program march 1 2001 measures place may 1 deadline major modification ferc revised refund conditions clarify certain refund conditions continue apply unless ferc issues written notification seller transaction still review refund potential transaction close 60 days proposed however supply bids excess 150 prohibited setting market clearing price bidders sellers bidding 150 mwh required report bids ferc confidential weekly basis provide certain cost support 3 ferc adopted november 1 proposal require establishment independent non stakeholder governing board iso iso governing board must relinquish decision making power operating control iso management january 29 2001 future order set procedures discussion state representatives board selection process 4 major modification ferc adopted 74 mwh price benchmark assessing prices five year energy supply contracts benchmark used assessing complaints regarding justness reasonableness pricing long term contracts facilitate prompt negotiation longer term power contracts reasonable rates ferc announced hold settlement conference market participants 5 ferc adopted november 1 proposal require market participants schedule 95 percent transactions day ahead market instituting penalty charge scheduling excess five percent hourly load requirements order discourage reliance real time spot market 6 ferc directed iso three investor owned utilities file generation interconnection standards 7 ferc affirmed longer term measures proposed november 1 order including submission congestion management design proposal april 2 2001 8 ferc deferred resolving key issues including establishing new iso board selection procedures developing appropriate market monitoring measures negotiating protective orders associated data collection 9 ferc reiterated november 1 call california policy makers resolve state issues 1 immediately implementing availability day ahead markets power purchases 2 development demand responses 3 siting generation transmission 4 assurance sufficient reserve requirements commissioner responses comm hebert reluctantly concurred calling final order missed opportunity among things send appropriate signals new generation siting conservation reiterating november 1 concerns hebert recounted remedial remedies maintained commission adopted expressing pleasure tone order balanced considerate bid certainly reversal role reserved state selection new iso board hebert nonetheless objected benchmark prices established order maintained appeared unreasonably low hebert faulted commission attempting reconcile instant order november 8 order approving ca iso emergency 250 mwh soft cap proposal hebert ended challenging cpuc encourage utilities forward contract including easing existing prudence review requirements comm breathitt endorsed order reiterating support progress towards open competitive markets noted order properly walked line taking competing interests account calling less ideal step right direction also concentrated remarks importance creating stability accomplished encouraging long term contracts implementation 150 mwh breakpoint additionally mentioned price 74 mwh benchmark presumed reasonable comm massey concurred prefaced remarks expressing sympathy california ratepayers stating felt market power exercised prices reasonable marketers profited much expense others market warned understood legal precedents federal courts poised grant cost recovery relief retailers would passed consumers positive side approved de federalization 60 market creation long term contracts however emphasized california regulators must take responsibility creating generation transmission long term comm massey hoped solutions could reached starting technical conference market would rules like pjm finally comm massey articulated would liked done differently stated disagreed fact enough evidence show market power existed pointed going investigation also disagreed 150 mwh breakpoint preferring instead hard price per generator commissioner said would set long term benchmark two years instead five would opened section 206 investigation west finally stated would liked address issue refunds chairman hoecker began comments saying commission forced act act quickly stakes high feels time state regulators markets act noted shrinking cal px responsibility cpuc fashion long term contracts hopefully exit situation least amount damage utilities regards suggestions regional price cap chairman stated would work due fact commission jurisdiction bonneville wapa public power producers spot market northwest however urge secretary richardson convene conference order address regional issues finally conceptually addressing california situation chairman stated competition deregulation fail california never competition california