Exhibit 99.303
[CALIFORNIA ISO LOGO]
MEMO
To: ISO Board
From: Susan Schneider, Vice President, Client Services
Kellan Fluckiger, Vice President, Operations
CC: ISO Executives
Date: January 22, 1999
Re: UPDATE ON ANCILLARY SERVICE MARKET REDESIGN PROCESS
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This memo provides an update on the A/S Redesign Project based on the
Market Issues Committee Meeting yesterday, January 21. At that meeting,
the ISO staff presented a summary of the A/S Redesign Project in
accordance with the memo dated January 15 (attached).
Following management's presentation, several different views were
presented by the market participants and board members in attendance.
Requests were made by committee members for additional information to
help in the decision process on Jan 28th. A summary of these requests
appears below.
The January 15 memo is attached again for your review before the board
meeting on January 28. Also attached is the memo issued today on the
compromise proposal for uninstructed deviations. This latter item is on
the Market Issues Committee agenda for Thursday and is also part of the
package that will be brought to a vote at the Board meeting on
Thursday.
In order to meet the March 1 filing deadline, it is imperative that the
Board reach a decision on the entire A/S package at this board meeting.
REQUESTS FOR ADDITIONAL INFORMATION AND DATA MADE BY THE MARKET ISSUES
COMMITTEE TO THE STAFF:
o What is the right order of priority for each of the top 5 design
elements?
o If caps are taken away as a criteria (i.e. RMR not resolved), does
the management recommendation change?
o Provide a cost/benefit analysis of each of the 5 options.
o Provide more information as to how ISO management priorities were
reached.
o Resource questions
o Provide information on resource requirements on each of the 5
options. This should address questions such as "What is the
relative level of effort required for the 5 elements?" and "If the
rational buyer preprocessor is installed for summer and PSSA
(Product Specific Simultaneous Auction) was delayed, would that
free up resources to complete Inter SC AS trades?"
o Provide information showing where resource requirements for Y2K
will consume resources otherwise needed for A/S Redesign.
o Other Questions
o Provide a discussion of the replacement reserve option impact on
other markets and RMR scheduling. Include a response to the gaming
opportunity identified by the PX.
o Map the general A/S operating problems that the ISO believes
are/were caused by adverse market incentives, including which ones
have been resolved, which ones remain, and how the recommended
design options would resolve them.
o Provide more clarification of the replacement reserve option and
the rational buyer option, including the algorithms that will be
used for procurement. Also provide more description or examples on
allocation of costs.
Management will also strive to prepare answers to other questions raised by the
public at the meeting, many of which involve additional details on the 5 design
options.