A/S

---------------------- Forwarded by Neil Bresnan/HOU/EES on 07/03/2001 09:42 AM ---------------------------

"Almeida, Keoni" <KAlmeida@caiso.com< on 08/02/2001 03:42:25 PM
To: "Bresnan, Neil" <nbresnan@enron.com<
cc:
Subject: A/S

To answer your question about negative prices for A/S, there should be no
negative price. The ISO has identified specific days and hours in February
where the prices for ancillary services are erroneous. These erroneous
prices are generated when the HA Requirement for a particular service is set
to zero, which has occurred due to SC over-self-provision of the ancillary
service requirement in the DA. Similarly the quantity should not be
negative. Even if there is over self provision, the DA requirement (which
is ISO's need to procure A/S) should be zero instead of negative. The DA
requirement should be capped by a floor of zero. Similarly, the HA
requirement cannot be negative.
The question about having a zero quantity with a price associated is related
to the software calculations when folks are overselfproviding.
The procurement for operating reserves is 5% of all load being served by
Hydro and 7% of all load being served by other. Not 5 plus 7 of the total
load. For example, T load = L hydro + L other so we take only 5% of
the L hydro and add that to 7% of L other this will equal to the amount of
the operating reserves we procure. This can average out to 6%.

Here are some questions and answers that you will find helpful:
* Are self provided ancillary services (on a SC required basis)
sequential; excess spin rolls into nonspin requirement for the SC (if
offered
as nonspin).

NO, If an SC self provides 130 MW of SPIN capacity yet the calculated
market requirement is only 100MW, the self-provided amount of 120 MW will
be accepted for SPIN and none of the EXCESS 30 MW of capacity considered for
other A/S services.

Please Note if in this example the SC's SPIN obligation is calculated to be
90 MW, the over self provided portion (100MW - 90MW) = 10 MW would receive a
payment. In this example there is an additional 20 MW of EXCESS above the
total market requirement that "gets left on the table" which will receive no
compensation.

* If self provision reserves are offered in excess of the total
quantity required for the total market, will the ISO take them all anyway or
will the offerings be truncated and perhaps roll into a subsequent service
(if offered as self provide in that service).

NO, As in the above answer. The total Self provided quantity will be
accepted and there would be no reduction of the preferred schedule even if
this amount is ABOVE the total market requirement.

Also, check out M-402 and M-421 at the following link:
http://www.caiso.com/thegrid/operations/opsdoc/marketops/

Keoni Almeida
California Independent System Operator
phone: 916/608-7053
pager: 916/814-7352
alpha page: 9169812000.1151268@pagenet.net
e-mail: <mailto:kalmeida@caiso.com<