1 ISO terminology is complex and often misleading. A Stage 1 emergency occurs when the ISO does not meet its own reserve criteria. Stage 2 occurs when it cannot meet a 5 percent reserve margin. A Stage 3 takes place when it cannot meet at 1.5 percent reserve margin. An ISO emergency can take place even when local resources are available-so long as they have not been bid into its daily reserve purchasing.

2 Although the ISO has defended the poor operation of the units within its service territory, the simple fact is that these are standard units that have been in operation for many years. We would expect forced outage rates in the 5 percent area. Evidence from the ISO, as well as material from FERC, indicates that they units have averaged a 20 percent outage rate since May 22.

3 Since the ISO interprets a failure of the Power Exchange to match demand with sufficient supply as a capacity problem, the gap between supply and demand was treated as a load excursion or a plant outage. During many periods this summer, the gap between demand and supply at the ISO was as high as 30 percent of total requirements.

4 Editor's Note: The FERC touted its Dec. 15 order for returning control to the California PUC of some 25,000 MW of in-state, utility-owned generating resources, so that Southern California Edison and PG&E could use those plants to serve their own native load under cost-based regulation, without selling the capacity through the PX. However, in his concurring opinion issued Jan. 4 (see sidebar), FERC Chairman Hoecker said, "To date, California's major utilities are still selling electricity output and purchasing their requirements through the PX and ISO spot market, contrary to the [FERC's] order."

5 Various parts of the FERC order seem in conflict here. A literal reading indicates that the load forecast must be precise. Later, on p. 24, the order states "Second, we proposed that California market participants preschedule all resources and loads with the ISO and to limit their real-time energy purchases from the ISO to no more than 5 percent of their total load." While this makes more sense, it simply moves the real-time scheduling from the ISO to the IOUs. This issue needs to be clarified.

6 Even the most cursory review of ISO operations reveals amazing failures to manage day-to-day issues. ISO data shows that it has served almost 1,000 megawatts more load than it has generated in 2000. This almost certainly reflects a problem with data (ISO data collection appears fragmentary at best), but this type of slapdash management would not be tolerated in any other environment.

7 In November the ISO blamed its operating problems on a drought in Northern California, unseasonally low temperatures in the Pacific Northwest, and plant outages. Neither the drought nor the unseasonable temperatures actually existed. The plant outages still are unverified.

8 As with many ISO phrases, the meaning of RMR is obscured by the ISO's unique terminology. RMR resources are capacity resources-theoretically under the direct control of the ISO dispatchers. In practice, RMR resources often are not used efficiently, or often, not used at all.