UNITED STATES OF AMERICA
BEFORE
FEDERAL ENERGY REGULATORY COMMISSION

Pacific Gas and Electric Company		Docket Nos.  EC96-19-____	
San Diego Gas & Electric Company				 ER96-1663-00__
Southern California Edison Company

SUBMISSION BY
 CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION
OF
REVISED STAGING PLAN NO. 2

In compliance with the Commission’s order issued October 30, 1997 in the above-referenced proceeding, the California Independent System Operator Corporation (“ISO”) respectfully submits the ISO Revised Staging Plan No. 2 to advise the Commission of the revised ISO Operations Date.  The ISO is projecting operations to occur by March 31, 1998.  Pursuant to the Commission’s order issued December 23, 1997, the ISO will file a notice with the Commission at least fifteen days in advance of the actual ISO Operations Date. 
I.
BACKGROUND

	In its order issued July 30, 1997, the Commission instructed the ISO to file a staging plan proposing a plan to implement the remainder of the California restructuring proposal that would not be implemented on the ISO Operations Date.  Specifically, the Commission directed
the ISO and PX each to file with the Commission quarterly status reports regarding the status of any restructuring implementation, with particular emphasis on any significant changes in operations or timing that are anticipated, and we will respond as necessary.  The Commission clarifies that these status reports would be filed to inform the Commission and the parties; we do not intend to notice these reports for public comments.

	On November 21, 1997, the ISO filed Revised Staging Plan No. 1.   By notice submitted on December 23, 1997, the ISO informed the Commission of a delay in the commencement of ISO operations, which was scheduled for January 1, 1998.  In that notice, the ISO informed the Commission that it would notify the Commission of the new projected initial operations date prior to January 1, 1998.  On December 30, 1997, the ISO filed an additional notice with the Commission, advising the Commission of the Board decision to set the projected initial operations date of no later than March 31, 1998.  The ISO now submits Revised Staging Plan No. 2 in order to apprise the Commission, the parties to this proceeding, and the public at large of the current status of its implementation plans.
II.
NEW DATE FOR COMMENCEMENT OF OPERATIONS

	Under the ISO testing plan, the ISO expected to have sufficient data by this date to set a firm date for operations.  Testing has not, however, produced sufficient data at this time.  The full operation of the ISO and the California Power Exchange (“PX”) is of critical concern to the State of California, including the Public Utilities Commission, because the operation of the PX and ISO are a condition to retail competition.  Thus, the ISO has been directed to set as early a date as possible, but one that is sufficiently conservative to ensure successful operations.  Testing data is not yet sufficient to set a precise date. 
The Commission has directed the ISO to inform the Commission at least fifteen (15) days before the ISO Operations Date.  The ISO is mindful that the Scheduling Coordinator group has indicated a strong preference for beginning at the start of a calendar month, although a final decision on the start date will take into account many considerations, including the cost of deferring operations.  With these considerations in mind, the ISO has set an ISO Operations Date of no later than March 31, 1998.  Market Participants will have at least two weeks notice of the ISO Operations Date, given the Commission’s directive for advance notice of the ISO Operations Date.
	The start-up time includes approximately one to two months to identify and correct software problems and another month to do final market demonstration tests and to provide the advance notice to the Commission.  The ISO will continue its transitional control of the power grid, which commenced in December as part of pre-operational testing.
	The delay in the ISO Operations Date will affect some, but not all, of the dates in the ISO’s Staging Plan.  The ISO will defer all items scheduled for staged implementation by July 1, 1998 by three months.  Except for one instance, all October 1, 1998 implementation dates will remain as scheduled.  The ISO is delaying the implementation date for Real-Time Imbalance Energy charges being calculated on a 5-minute basis to January 1, 1999, given the complexities of software implementation of 5-minute schedules.

III.
CONCLUSION

	Wherefore, for the foregoing reasons, the California Independent System Operator Corporation respectfully submits Revised Staging Plan No. 2.

Respectfully submitted,

		_______________________________
		N. Beth Emery
			General Counsel
			California Independent System
 			Operator Corporation
		151 Blue Ravine Road
			Folsom, California  95603
			Tele:  916-351-2334
			Fax:   916-351-2350
			email: bemery@caiso.com

		________________________________	
						Fiona Woolf
						Amy S. Koch
						Cameron McKenna LLP
						2000 Pennsylvania Avenue, N.W.
						Washington, D.C. 20006
						Tele:  202-466-0060
Fax:   202 466-0077

Counsel for the California Independent	System Operator Corporation
	
Dated:  January 7, 1998

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the forgoing ISO Revised Staging Plan No. 2 upon each person designated on the Official Service List compiled by the Secretary in this proceeding.

Dated at Washington, D.C. on this 7th day of January, 1998.

							___________________________
							Amy S. Koch

ISO REVISED STAGING PLAN NO. 2
ISO System Functionality 
Staged for Implementation After the ISO Operations Date

ISO Operations Date

The ISO Operations Date shall be by March 31, 1998, as specified by the ISO in its notice filed with the Federal Energy Regulatory Commission at least fifteen (15) days prior to such date.
Settlements and Billing

1.	Imbalance Energy Settlement Period
Full Functionality
Real-Time Imbalance Energy charges will be calculated on a 5-minute basis (based on Energy price bids associated with Ancillary Services and Supplemental Energy).
ISO Operations Date Functionality
Real-Time Imbalance Energy charges will be calculated on an hourly basis.  The hourly charge will be calculated using the weighted average of twelve 5-minute prices.
Reason for Staging
Although the scheduling applications subsystem will calculate 5-minute prices and Energy quantities, the scheduling infrastructure subsystem will only be capable of passing a single value to the billing and credit subsystem on an hourly basis.  Metering data will also be passed in hourly increments until the Settlements system is ready to accept 5-minute metered quantities.  The Settlements system is highly complex.  Given the experience gained in pre-operational testing, the ISO has concluded that implementing this highly complex function will require a full nine months after the ISO Operations Date.
Implementation Date
January 1, 1998

2.	Calculation of Generator Meter Multipliers
Full Functionality
Transmission Losses will be calculated based upon ex-post Generation Meter Multipliers (GMMs) derived from measurements of actual metered quantities.
ISO Operations Date Functionality
Transmission Losses will be calculated based upon GMMs derived from Final Hour-Ahead Schedules.
Reason for Staging
Actual metered quantities will not be available to the software calculating GMMs, and the GMMs derived from Final Hour-Ahead Schedules will provide reasonable approximations of Transmission Losses until such time as actual metered quantities are available.
Implementation Date
October 1, 1998

3.	Allocation of Replacement Reserve Costs
Full Functionality
The ISO's Settlement system will allocate dispatched Replacement Reserve costs based on deviations between Scheduling Coordinators’ scheduled and actual Demand.  The ISO’s Settlement software will allocate undispatched Replacement Reserve costs pro rata to all Scheduling Coordinators based on actual Demand.

ISO Operations Date Functionality
The ISO's Settlement software will allocate dispatched Replacement Reserve costs based on each Scheduling Coordinators proportion of total Imbalance Energy (Generation and Load).  Undispatched Replacement Reserve costs will be allocated to all Scheduling Coordinators pro rata based on Scheduled Demand.  
Reason for Staging
The allocation of Replacement Reserves, based upon actual metered quantities (e.g., deviations in scheduled Demand versus metered Demand), will require significant modification to the ISO Settlements software.  
Implementation Date
October 1, 1998

Metering

4.	Access to MDAS
Full Functionality
Scheduling Coordinators, ISO Metered Entities, and authorized users will be able to request data from the ISO's revenue meter data acquisition and processing system (MDAS).  

ISO Operations Date Functionality

Only Scheduling Coordinators will be able to request data from MDAS.
Reason for Staging
For an interim period, the ISO software does not allow more than one party to access MDAS data while ensuring the security of the information.  Software changes will be required to accomplish full security and multiple-party access.
Implementation Date
October 1, 1998

5.	Profiled Meter Data*
Full Functionality
Scheduling Coordinators that submit profiled Settlement Quality Meter Data will be required to submit the cumulative Meter Data to which the Approved Load Profile was applied, the applicable Approved Load Profile and the dates and hours covered by that data.  The ISO will develop a procedure to verify the correct application of the Approved Load Profile to that cumulative Meter Data.
ISO Operations Date Functionality
Scheduling Coordinators will submit cumulative Settlement Quality Meter Data which will not include a flag indicating hourly time-stamped values or profiled values.
Reason for Staging
The ISO’s revenue meter data acquisition and processing system and the prescribed format for submitting Meter Data to the ISO will not permit the verification of Approved Load Profiles on ISO Operations Date.
Implementation Date
October 1, 1998

Real-time Operations

6.	Monitoring and Control
Full Functionality
The ISO will monitor and control the ISO Controlled Grid, as well as control those Generating Units providing Regulation, directly with the ISO's Energy Management System (EMS).

ISO Operations Date Functionality

The ISO will monitor and control the ISO Controlled Grid, as well as control those Generating Units providing Regulation, through existing utility control centers' energy management systems.
Reason for Staging
Based upon the aggressive timeline for developing and implementing the new California market and operational protocols, a second level of security has been planned until full implementation of the ISO's second phase of operation.  While the balance of the ISO's EMS functions are developed, the existing utilities' energy management systems infrastructure will provide the level of security necessary to accommodate the safe and reliable transition of all monitoring and control functions to the ISO.

Implementation Date
January 1, 1999

Transmission Assessment

7.	Transmission Assessment Tools
Full Functionality
Transmission capability assessment will use an on-line AC Optimal Power Flow model. Assessment includes Voltage Collapse Analysis, Available Transfer Capability, Transient Stability Analysis, and State Estimator.
ISO Operations Date Functionality
Transmission capability assessment will use existing off-line power flow models and existing system operating procedures.
Reason for Staging
The ISO's on-line transmission assessment tools have been planned for the ISO's second phase of operation.

Implementation Date
January 1, 1999

Intra-Zonal Congestion Management

8.	Intra-Zonal Congestion Management Performance and Tools
Full Functionality
Day-Ahead and Hour-Ahead Intra-Zonal Congestion Management will be performed and charges and adjustments will be determined using an on-line AC Optimal Power Flow model.

ISO Operations Date Functionality
The ISO will manage Intra-Zonal Congestion in Real Time using Adjustment Bids available from the Day-Ahead and Hour-Ahead scheduling process.

Reason for Staging
The ISO's Day-Ahead and Hour-Ahead management of Intra-Zonal Congestion requires Scheduling system processes that have been planned for the ISO's second phase of operation.

Implementation Date
January 1, 1999

Archiving

9.	Archiving Tools
Full Functionality
Bidding, price, and schedule data will be stored in a permanent Historical Information Management storage system.

ISO Operations Date Functionality
Bidding, price and Schedule data will be temporarily stored in system files.  System files have been sized relative to initial market activity to handle at least 90 days of activity.

Reason for Staging
The ISO's Historical Information Management system requires an information system that will be available after the ISO has commenced operations.  The deferral of the ISO Operations Date requires a deferral of this implementation.

Implementation Date
July 1, 1998

Scheduling

10.	Standing Schedules
Full Functionality
The ISO provides for the use of Standing Schedules by Scheduling Coordinators.  Standing Schedules are Schedules that are submitted once and are used until changed.
ISO Operations Date Functionality
Standing Schedules will not be accepted, but the ISO will support Scheduling Coordinators’ submission of Schedules seven days in advance.
Reason for Staging
Scheduling system software development limitation.  The deferral of the ISO Operations Date requires a deferral of this implementation.

Implementation Date
	October 1, 1998

Ancillary Services

11.   Ancillary Services Bid Evaluation and Pricing Algorithm
Full Functionality
The bid evaluation and pricing of the Ancillary Services of Regulation, Spinning Reserves, Non-Spinning Reserves, and Replacement Reserves will take into account applicable Usage Charges.
ISO Operations Date Functionality
The bid evaluation and pricing of the Ancillary Services of Regulation, Spinning Reserves, Non-Spinning Reserves, and Replacement Reserves will not take into account Usage Charges.
Reason for Staging
Scheduling system software development limitation.

Implementation Date
January 1, 1999

12.	Bidding into ISO Ancillary Services Auction from Outside ISO Control Area
Full Functionality
The Ancillary Services of Spinning Reserves, Non-Spinning Reserves, and Replacement Reserves can be bid into the ISO's auctions or self-provided from resources located outside of the ISO Control Area.

ISO Operations Date Functionality
No Scheduling Coordinator will be permitted to self-provide Ancillary Services (Spinning Reserves, Non-Spinning Reserves and Replacement Reserves) from resources located outside of the ISO Control Area unless those Scheduling Coordinators are using transmission service available under Existing Contracts.  No Scheduling Coordinator will be permitted to bid into the ISO's auctions for Ancillary Services (offer to sell) from resources located outside of the ISO Control Area.

Reason for Staging
Scheduling system software development limitation.  The deferral of the ISO Operations Date requires a deferral of this implementation.

Implementation Date
June 1, 1998

13. 	ISO to Make Available Operating Reserves to Cover Interruptible Imports and On-Demand Obligations
Full Functionality
Scheduling Coordinators will be able to self-provide, or purchase from the ISO, Operating Reserves required for Interruptible Imports and on-demand obligations.

ISO Operations Date Functionality
Scheduling Coordinators will not be able to purchase Operating Reserves associated with Interruptible Imports and on-demand obligations from the ISO.  Scheduling Coordinators must self-provide Operating Reserves to cover Interruptible Imports and on-demand obligations.  For those Scheduling Coordinators that are unable to self-provide these Operating Reserves, the ISO will support a “work-around” to allow these Scheduling Coordinators to notify the ISO of their requirements prior to the deadline for Day-Ahead Preferred Schedules.

Reason for Staging
Scheduling system software development limitation. The deferral of the ISO Operations Date requires a deferral of this implementation.

Implementation Date
June 1, 1998

14.	Ancillary Services Self-Provision and Bidding from the Same Resource
Full Functionality
Scheduling Coordinators will be able to self-provide and bid the same Ancillary Service from the same resource in a particular Settlement Period.  For instance, a Scheduling Coordinator with 100 MW of unloaded capacity available from a particular resource could self-provide its Spinning Reserve obligation (e.g., 25 MW) for the Settlement Period from the resource and bid the balance (i.e., 75 MW) of the same resource into the ISO's auction for Spinning Reserves for the same Settlement Period.

ISO Operations Date Functionality
Scheduling Coordinators will not be able to self-provide and bid Ancillary Services from the same resource in the same Settlement Period.
Reason for Staging
Scheduling system software development limitation.

Implementation Date
January 1, 1999

15.	Acquisition of Black Start Services
Full Functionality
The ISO will procure Black Start capability competitively through contracts (let on an annual or other basis), based on ISO location specific requirements.

ISO Operations Date Functionality
The ISO will procure its Black Start capability requirements from designated units that have such capability, based on ISO location specific requirements.

Reason for Staging
Sufficient time does not exist to implement a competitive procurement process for the ISO's Black Start requirements.  The ISO has identified the critical resources it believes are necessary to meet its Black Start requirements, including those required due to certain regulatory obligations, and will negotiate short-term interim agreements (expected to be no longer than 1 year) until a competitive procurement process can be implemented.

Implementation Date
January 1, 1999

16.	Acquisition of Voltage Support Services
Full Functionality
The ISO will procure additional Voltage Support capability competitively through contracts (let on an annual or other basis).

ISO Operations Date Functionality
The ISO will meet its Voltage Support requirements using the mandatory power factor range requirements of all Generators and will call on Reliability Must-Run Units if additional Voltage Support is required.
Reason for Staging
Sufficient time does not exist to competitively procure the ISO's Voltage Support requirements.  Reliability Must-Run Units will be available in those areas of the ISO Controlled Grid where Voltage Support will be required.

Implementation Date
January 1, 1999

17.	Non Spinning Reserve and Replacement Reserve Bids
Full Functionality
When selecting Generating Units bid into the ISO’s Non-Spinning Reserve and Replacement Reserve auctions, the ISO will require that a Generating Unit’s bid capacity must be less than or equal to the Generating Unit’s ramp rate times (i) ten minutes less the time required for synchronization, in the case of Non-Spinning Reserve, or (ii) sixty minutes less the time required for synchronization, in the case of Replacement Reserve.

ISO Operations Date Functionality
When selecting Generating Units bid into the ISO’s Non-Spinning Reserve and Replacement Reserve auctions, the ISO will require that a Generating Unit’s bid capacity must be less than or equal to the Generating Unit’s ramp rate times (i) ten minutes, in the case of Non-Spinning Reserve, or (ii) sixty minutes, in the case of Replacement Reserve.
Reason for Staging
Scheduling infrastructure and system software development limitation.

Implementation Date
January 1, 1999

Congestion Management

18.	Final Schedule Selection by ISO

Full Functionality
After the completion of Congestion Management, the ISO will select either (i) the first set (Preferred Schedules) of tentative allocations and prices or (ii) the second set (Revised Schedules) of allocations and prices.  The ISO will make its selection based on which of the two sets of allocations results in the lower total amount of Usage Charge revenues to the ISO for the hour.

ISO Operations Date Functionality
The ISO will select as Final Schedules the last set of Revised Schedules received and modified for Congestion.
Reason for Staging
Scheduling system software development limitation. The necessary design changes are being planned to accommodate the full functionality on a high priority basis. The deferral of the ISO Operations Date requires a deferral of this implementation.

Implementation Date
October 1, 1998

19.	ISO to Publish Results of Comparative Congestion Costs Based on Full System Optimization
Full Functionality
The ISO will perform its Congestion Management process while respecting the constraint to maintain Balanced Schedules in each Scheduling Coordinators portfolio.  For information purposes, the ISO will calculate and publish the cost of Congestion which would have been incurred if this constraint were relieved.

ISO Operations Date Functionality
The ISO will perform its Congestion Management process while respecting the constraint to maintain Balanced Schedules in each Scheduling Coordinator’s portfolio.  
Reason for Staging
Scheduling system software development limitation.

Implementation Date
October 1, 1998