E-MAIL AND ATTACHMENT RECEIVED BY PATTI KROEN FROM TOM JEREB ON 2/27/04 AND DISTRIBUTED TO THE 2105LG COLLABORATIVE:

 

Patti,   Please distribute this to the UNFFR Collaborative group for Monday's discussion.

 

Proposed settlement language regarding additional future signatories.  Here is my proposed language regarding Section 4.12 which deals with Addition of Signatory to the Settlement.  I have made it short.

 

4.12  Upon the request by an individual, entity or agency to become a signatory to this Settlement, the Parties shall proceed in accordance with the provisions in Paragraph 4.8,  Amendment for Settlement.

 

FYI and background information.  Our Rock Creek-Cresta ERC group (many of the same individuals in the UNFRR collab.) developed the language below to address joining the ERC.  It is a part of the ERC's three page "Procedures for Public Participation ".

 

"Joining the ERC - An interested party may become a member of the ERC if that party 1) agrees to participate in good faith in the ERC as an advisory member for one year, 2) expresses the intent to sign the Settlement Agreement at the end of the advisory period, and 3) is accepted by all signatures to the Settlement Agreement."

 

There is no general language in the Rock Creek-Cresta Settlement Agreement which addresses additional signatories.

 

 

 

Additional information regarding Emergency/ISO

 

At our last collaborative meeting, PG&E proposed modifying the definition of "Emergency" to include "System Emergencies declared by the ISO."  PG&E's attorney originally proposed this language in reaction to language in Appendix A, Section 2 (Recreation River Flow Management), para. 3(C)(1), which purported to limit PG&E's right to postpone recreational flows in the event of an ISO declared Stage II alert to only one weekend per month.  PG&E's attorney did not believe this statement appropriately reflected PG&E's obligation to respond to ISO orders during ISO declared System Emergencies.

 

Certain collaborative participants were concerned that including the definition of "System Emergencies" within the definition of "Emergency" would provide PG&E with too much flexibility to deviate from the Settlement requirements.  PG&E agreed to prepare a short description of the ISO procedures, including PG&E's obligation to respond to ISO orders during System Emergencies.  A copy of PG&E's write-up is attached.  As described in the write-up, the ISO is a FERC-jurisdictional entity.  PG&E, as a participating generator in the ISO Controlled Grid, is obligated to comply with the ISO Tariff, including provisions that require PG&E take actions as directed by the ISO as necessary to preserve or control the reliability of the ISO Controlled Grid. 

 

Although PG&E does not agree that including the phrase "System Emergencies declared by the ISO" would materially change the current definition of "Emergency" in the Settlement, it nevertheless proposes the following alternative language:

 

*            "Emergency:  An event that is reasonably out of the control of the Licensee and requires Licensee to take immediate action, either unilaterally or under instruction by law enforcement or other regulatory agency staff, to prevent imminent loss of human life or substantial property damage, or to preserve or restore the reliability of the ISO Controlled Grid." 

 

In addition, PG&E continues to assert that the language in App. A, Section 2, para. 3(C)(1) discussed above should be deleted from the Settlement, as it arbitrarily limits PG&E's ability to respond to ISO directives.

 

See everyone on Monday.

 

Tom Jereb

 

 <<ISO Summary.doc>>

CALIFORNIA INDEPENDENT SYSTEM OPERATOR (ISO)

RULES APPLICABLE TO GENERATORS

 

• Pursuant to FERC Order 888, FERC established, authorized and implemented the specific oversight of the ISO, and declared that the ISO would be FERC-jurisdictional and operate under standards and procedures that are subject to FERC approval.  Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, FERC Stats. & Regs. ¶ 31,036 at 31, 730 (1996). 

 

• In 1997, FERC approved the ISO Tariff.  See 81 FERC 61,122 (October 30, 1997).  FERC determined that the ISO Tariff “will affect the terms and conditions under which suppliers and consumers [will] be able to participate in the California market,” and will “affect the rates, terms and conditions of service to consumers outside of California where energy is transmitted from or through California.”  Id. at 61, 451.

 

• PG&E supplies electricity to the California market and the ISO controlled transmission grid.  Accordingly, PG&E is a “Participating Generator” under the ISO Tariff, which is defined as, “A Generator or other seller of Energy or Ancillary Services through a Scheduling Coordinator over the ISO Controlled Grid . . . .” See ISO Tariff, App. A.

 

• The ISO Tariff sets forth the relationship between the Participating Generators and the ISO.  See generally ISO Tariff § 5.  In order to schedule energy with the ISO, generators must enter into a Participating Generator Agreement (“PGA”) with the ISO.  The PGA requires generators to comply with the ISO Tariff and provides that the ISO may terminate the PGA if a generator fails to remedy any material default under the ISO Tariff.  The ISO Tariff requires, among other things, that “[e]ach Participating Generator shall take at the direction of the ISO, such actions affecting such Generator as the ISO determines to be necessary to maintain the reliability of the ISO Controlled Grid.”  Id. § 5.1.3.  (emphasis added).  These actions include “compliance with the system operation requirements set out in Section 2.3 of the ISO Tariff.”  Id. § 5.1.3(a).

 

• Section 2.3.2 of the ISO Tariff describes how the ISO manages “System Emergencies.”  A “System Emergency” is defined as follows:

 

Conditions beyond the normal control of the ISO that affect the ability of the ISO Control Area  to function normally including any abnormal system condition which requires immediate manual or automatic action to prevent loss of Load, equipment damage, or tripping of system elements which might result in cascading outages or to restore system operation to meet the minimum operating reliability criteria.  (ISO Tariff, App. A, emphasis added).

 

 

• Section 2.3.2.1 of the ISO Tariff provides that, “The ISO shall, when it considers that conditions giving rise to a System Emergency exist, declare the existence of such System Emergency.  A declaration by the ISO of a System Emergency shall be binding on all Market Participants until the ISO announces that the System Emergency no longer exists.”  (emphasis added).  The term “Market Participant” includes entities that buy, sell, transmit or distribute energy in the ISO Controlled Grid.  See ISO Tariff, App. A.  Section 2.3.2.2 provides that, “In the event of a System Emergency, the ISO shall take such action as it considers necessary to preserve or restore stable operation of the ISO Controlled Grid.”  (emphasis added). 

 

• The ISO Tariff sets forth procedures for the resolution of disputes arising under the ISO Tariff and PGAs.  See generally ISO Tariff § 13.  Disputes that are not resolved through negotiation or specified alternative dispute resolution procedures may be appealed to FERC or a court of competent jurisdiction.  ISO Tariff § 13.4.  FERC orders resulting from appeals are subject to judicial review pursuant to the Federal Power Act.  ISO Tariff § 13.4.5.