UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

						)
California Independent System		)	Docket No.  ER99-2730-000
	Operator Corporation		)
						)

ANSWER OF THE
CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION 
TO REQUEST FOR CLARIFICATION AND REQUEST FOR LEAVE TO ANSWER AND ANSWER TO REQUEST FOR REHEARING

	On July 19, 1999, Western Power Trading Forum (“WPTF”) filed a Request for Rehearing and Clarification of the Commission’s June 17, 1999, order on the California Independent System Operator Corporation’s (“ISO”) filing to implement a Grid Management Charge (“GMC”) to be effective July 1, 1999. 
Pursuant to Rule 213 of the Commission’s Rules of Practice and Procedure, 18 C.F.R. § 385.213 (1998), the ISO hereby submits its Answer to one of the issues raised in the Request for Clarification.  In its Request for Clarification WPTF asks the Commission to modify the ISO’s GMC formula to exclude from the GMC Distributed Generation that is located on certain distribution systems not controlled by the ISO.  (WPTF Request at 25-26.)  WPTF’s requested clarification is an attempt to implement one aspect of unbundling in advance of the timeframe established by the Commission in the June 17 Order. The request must be rejected.
	In addition, pursuant to Rules 212 and 213 of the Commission’s Rules of Practice and Procedure, 18 C.F.R. §§ 385.212 and 385.213 (1998), the ISO requests permission to submit as part of this pleading an answer to WPTF’s Request for Rehearing for the limited purpose of correcting a misstatement that WPTF relies upon for one of its arguments.
I.	ANSWER TO REQUEST FOR CLARIFICATION
WPTF seeks “clarification” of the June 17 Order with respect to one of the categories of transactions excluded from the GMC.  WPTF asks that the Commission confirm that the exclusion from the GMC for volumes within the ISO Control Area, but not on the ISO Controlled Grid, applies to Distributed Generation located on certain distribution systems.  (WPTF Request at 25.)  The request should be rejected because WPTF’s interpretation of the GMC is incorrect.  The exclusion from the GMC referenced by WPTF was developed in connection with the original GMC as a specific, short-term response to protect holders of existing contracts.  Whether this exclusion should apply to other market participants or should be dropped entirely is precisely the type of question that is to be resolved in the unbundling process.  The June 17 Order held that these unbundling issues are to be reviewed in connection with the GMC filing to be effective January 1, 2001.  They are not to be decided summarily by disguising them as issues that merely involve simple clarifications.  
That the question whether Distributed Generation should be excluded from the GMC cannot be resolved summarily is demonstrated by the fact that a closely analogous issue is currently pending in another proceeding before an Administrative Law Judge.  In Pacific Gas and Electric Co., et al., Dkt. Nos. ER97-2355-002, et al., Enron raised an argument almost identical to the one it and WPTF advance here.  In Pacific Gas and Electric Enron claimed that Distributed Generation on the three UDCs’ distribution systems does not implicate the use of the ISO Controlled Grid and therefore should be exempt from taking service under the ISO Tariff.  The ISO has opposed Enron’s position because the ISO does provide services for such Distributed Generation.  Resolution of that dispute, which raises the exact same concerns as are raised by WPTF’s request for “clarification” of the applicability of the GMC to such Distributed Generation, revolves around factual determinations that the Commission has found require a hearing.  WPTF cannot sidestep such review here by branding its issue a “clarification.”  The requested “clarification” should be rejected.
II.	ANSWER TO REQUEST FOR REHEARING  

Notwithstanding Rule 213(a)(2) and 713(d)(1), 18 C.F.R. §§ 385.213(a)(2) and 385.713(d)(1), the Commission has accepted answers to requests for rehearing that assist the Commission's understanding and resolution of the issues raised in a rehearing request, or clarify or shed light on those issues. WPTF has relied upon a misstatement to support one of its arguments for rehearing.  The ISO requests permission to submit this Answer for the limited purpose of correcting that misstatement.  Acceptance of the ISO’s Answer will assist the Commission’s understanding and resolution of the rehearing request.  It will not delay the Commission’s consideration of that resolution.  Accordingly, the Commission should accept this limited Answer. 
WPTF’s request for rehearing argues that if the Commission relied upon the stakeholder process as a basis for supporting its June 17 Order, it relied upon a misunderstanding of the process.  (WPTF Request at 18-20.)  This is because WPTF claims that the stakeholder process has “terminated.”  (Id. at 19.)  That is simply not true.  As WPTF is fully aware, the stakeholder process continues.  In fact, on the same day that WPTF filed its Request for Rehearing in which it made the argument that the stakeholder process had terminated, the Unbundling Steering Committee met in a previously scheduled meeting for almost the entire day.  Enron (through its representative) attended and actively participated in that meeting.  The focus of the meeting was to discuss the steps that need to be taken to develop an unbundled rate for implementation by January 1, 2001.  The next meeting is scheduled for August 19, 1999.  The unbundling stakeholder process is ongoing and seeks to develop an unbundled GMC that all parties can find acceptable.  WPTF's claim to the contrary is simply false.

III.	CONCLUSION
	For the foregoing reasons, the Commission should (i) reject WPTF’s Request for Clarification regarding whether Distributed Generation on the UDCs’ distribution systems should be excluded from the GMC and (ii) evaluate WPTF’s rehearing request consistent with the above discussion of the correct status of the stakeholder process.

Respectfully submitted,

_____________________________	______________________________
N. Beth Emery				Edward Berlin
Vice President and General Counsel	Kenneth G. Jaffe
Roger E. Smith				Scott P. Klurfeld
Regulatory Counsel				Swidler Berlin Shereff Friedman, LLP
The California Independent System	3000 K Street, N.W.
	Operator Corporation		Washington, D.C.  20007-5116
151 Blue Ravine Road	                      
Folsom, CA  95630 				 Attorneys for the California Independent 
							System Operator Corporation

Dated:  August 3, 1999

CERTIFICATE OF SERVICE

	I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding.

	Dated at Washington, D.C. on this 3rd day of August, 1999.

______________________________
Kenneth Smith
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W.
Washington, D.C.  20007-5116
202/424-7500