IN THE UNITED STATES OF AMERICA
BEFORE THE 
FEDERAL ENERGY REGULATORY COMMISSION

Pacific Gas & Electric Company 	)	Docket No. ER97-2358-000

Prepared Direct Testimony of
Stephen T. Greenleaf
On Behalf of the California Independent System Operator Corporation

Q.	PLEASE STATE YOUR NAME, TITLE AND BUSINESS ADDRESS.
A.	My name is Stephen T. Greenleaf and I am the Director of Policy for the California Independent System Operator Corporation (ISO).  My business address is 151 Blue Ravine Road, Folsom, California 95630.

Q.	PLEASE DESCRIBE YOUR PRESENT RESPONSIBILITIES AT THE ISO.
A.	As Director of Policy, my responsibilities include the development and implementation of the ISO’s regulatory policies and positions.  My responsibilities also include the preparation of testimony and exhibits before regulatory agencies and state and federal legislatures on issues of importance to the ISO.
Q.	PLEASE DESCRIBE YOUR EDUCATIONAL AND PROFESSIONAL BACKGROUND.
A.	I received my Bachelor of Arts in Economics from the State University of New York at Buffalo in May 1985.  In May of 1997, I received a Master of Science in Environmental Sciences from the John Hopkins University in Baltimore, Maryland.

Between January, 1989 and February, 1990, I worked in the Division of Applications in the Office of Electric Power Regulation at the Federal Energy Regulatory Commission (FERC).  From 1990 to 1996, I was employed in the Division of Litigation in the Office of Electric Power Regulation at FERC.  Between April 1996 and February 1998, I was employed in the Division of Opinions and Systems Analysis at FERC.  In February 1998, I accepted my current position at the ISO.

Q.	HAVE YOU PREVIOUSLY TESTIFIED IN REGULATORY PROCEEDINGS?
A.	I filed testimony in the following FERC proceedings:
	Appalachian Power Company, Docket No. EL89-53-000 et al.;
	Canal Electric Company, Docket No. ER90-245-000;
	Jersey Central Power & Light Company, Docket No. ER91-480-000;
	Florida Power & Light Company, Docket No. ER93-465 et al.;
Northeast Utilities Service Company, Docket Nos. ER95-1686-000 & ER96-496-000;
San Diego Gas & Electric Company, Docket No. ER98-496-000 and ER98-2160-000; and
Southern California Edison Company, Docket No. ER98-2355-000.

Q.	WHAT IS THE PURPOSE OF YOUR TESTIMONY?
A.	The purpose of my testimony is to support the inclusion by Pacific Gas & Electric Company (“PG&E”) in its Transmission Revenue Balancing Account Adjustment (“TRBAA”) of $2 million for costs associated with the ISO’s use of certain PG&E facilities.

I.	PLEASE DESCRIBE THOSE FACILITIES.
II.	 As stated in the testimony of PG&E’s witness Hitson (see Exh. No. ___ (BJH-1) at 24), these facilities include computers, terminals and communications equipment, system monitoring equipment and building space.  These facilities are part of PG&E’s Energy Management System (EMS).

III.	WHAT USE DOES THE ISO MAKE OF PG&E’S FACILITIES?
A.	The ISO uses these facilities to monitor the real-time performance of various elements of PG&E’s electric system and to control generation and transmission facilities.

Q.	IN HIS PREPARED DIRECT TESTIMONY, MR. HITSON STATES THAT THE ISO WILL NOT PAY DIRECTLY FOR THESE FACILITIES OR THEIR USE.  IS THIS CORRECT?
A.	Yes.  The ISO declined to compensate PG&E directly, through lease payments, for the use of these facilities.  The ISO determined that it was more appropriate for PG&E to collect the costs associated with its EMS facilities through its access charge.

Q.	WHAT IS THE REASON FOR THE ISO’S DETERMINATION THAT IT IS MORE APPROPRIATE  FOR PG&E TO COLLECT THE COSTS ASSOCIATED WITH ITS EMS FACILITIES THROUGH ITS ACCESS CHARGE?
A.	If the ISO were to compensate PG&E for the use of its EMS facilities, the ISO would recover these costs by including them as part of its annual operating costs collected through its Grid Management Charge (“GMC”).  Consequently, all customers who pay the GMC would pay a portion of the costs of PG&E’s EMS facilities.  Because the costs are associated with the management of PG&E’s facilities, the costs should be assigned to those who are benefitting from those facilities, i.e., those who pay the PG&E transmission access charge.

Q.	IS THIS TREATMENT CONSISTENT WITH THE APPROACH TAKEN BY SAN DIEGO GAS AND ELECTRIC COMPANY (“SDG&E”) AND SOUTHERN CALIFORNIA EDISON COMPANY (“EDISON”)?
A.	Yes.  It is my understanding that both SDG&E and Edison propose to recover the costs of their EMS facilities through their access charges, not through lease payments from the ISO, which the ISO would then recover through its GMC.

Q.	DOES THE ISO SUPPORT THE INCLUSION OF THE COSTS OF THESE FACILITIES IN PG&E’S TRBAA?
A.	Yes.  In fact, the ISO’s Finance Committee on September 10, 1997, approved inclusion of these costs in PG&E’s transmission access charge.  (See Exh. No.___ (STG-2)).  In this way, PG&E’s customers will continue to pay the costs of PG&E’s EMS facilities, consistent with the treatment of similar costs proposed by SDG&E and Edison.

Q.	THANK YOU.  THERE ARE NO FURTHER QUESTIONS.