**Wednesday, Jan. 29**

**FERC Open Meeting -- SSG-WI Seams Resolution**

Chairman Wood opened the meeting. Items were struck from the agenda.
First on the agenda was A4 -- SSG-WI Seams Resolution (for RTO West, the
Cal ISO, and WestConnect).

Bud Krogh introduced members of the SSG-WI panel. He then made clear
that SSG-WI is not a decision-making body; it is a discussion forum. He
also explained that Western RTOs are still in the development phase,
unlike the East. One advantage to this, however, is an opportunity to
solve seams problems before they become more difficult in later stages.
Lastly, he said the SSG-WI workgroups are in place today organized
around their respective issues and that as issues change the work groups
can change as needed.

Members of the SSG-WI panel each presented slides to the Commission.

\[The content of the panel members' presentation is not recorded.
Rather, the Commission's questions in response to the presentation are
recorded, along with panel members' answers to these questions.\]

During Elena Schmid's presentation, Chairman Pat Wood asked Ms. Schmid
about the process of creating a decision in the Cal ISO and SSG-WI. He
asked if decisions in these entities reflected a Cal ISO or other
particular company perspective, or a West-wide perspective. Ms. Schmid
responded that the varying degree of diversity of perspectives come from
ISO/RTO operational experience and it is difficult to say how other
perspectives will be brought to the table.

Chairman Wood asked if decisions came from employees of the three ISOs
or stakeholders. Ms. Schmid said decisions come from representatives of
the three as well as stakeholder input.

Chairman Wood asked who the representatives were. Mr. Krogh said they
were employees of the representative companies/filing utilities. Mr.
Krogh explained that in RTO West everyone is invited to participate in
stakeholder meetings. Frank Afranji added that workgroups are open too.
Mr. Krogh noted that the stakeholders on the Steering Group were
involved with the development of its structural organization. Rich
Bayless noted that we are trying to develop the Steering Group structure
carefully such that it adds to but doesn't invalidate the fragile
individual RTO stakeholder processes and participation.

Chairman Wood said he wanted to make sure someone was there looking at
interests other than a company or an RTO. He said there needs to be
someone saying this is good for the Western Interconnection, not just
"my company." Mr. Afranji explained that principals of companies speak
on behalf of RTO West at SSG-WI and together look out for the West.

Commissioner Nora Brownell commented that at best she sees the described
SSGWI process as having three visions instead of a common west wide
market vision. There is not a strong group with *a* single west wide
market design vision or authority. She said each of the three RTO market
designs need to be reconciled in some way. Ms. Schmid confirmed that the
three RTOs are starting from at least two different starting points.

SSG-WI is taking three designs each starting from different development
points and with varying methodologies and working to insure they fit
together. This is a different than starting out looking to design one
west wide market design for the West. Chairman Wood commented that his
fear was that the SSGWI process could lead to an "excuses, band aids and
work arounds" method of tying the RTOs market together where at best
there would be added and duplicative costs of the three systems plus an
overlay system to manage markets.

Chairman Wood again asked how RTO West and WestConnect decisions get
made presently, noting that Cal ISO already has a board set up to make
such decisions. Mr. Krogh said the filing utilities of RTO West make
final determinations, although a large stakeholder group is involved
before this final determination. Charlie Reinhold said there is an
interim group that makes decisions at WestConnect. Chairman Wood stated
that he was impatient to get the RTO independent boards seated.

Chairman Wood summarized his questioning by reiterating the need for
decisions made in the public interest for the West. He wanted a
region-wide perspective from decision makers. He said that it is in the
public interest for there to be an independent perspective for the
entire West that is independent from the individual RTOs. He said if
such a perspective was present in decisions, the Commission's job is
simple. If this perspective is not present, the Commission will have to
be intrusive.

Chairman Wood later asked if panel members had heard positive, negative,
or neutral feedback from non-jurisdictional entities. Mr. Reinhold said
non-jurisdictional entities were active in WestConnect. Mr. Krogh said
likewise, citing active participation from Bonneville, the City of
Seattle, and PUDs. Ms. Schmid added that Cal ISO cannot have a meeting
without the public's participation.

Rich Bayless said the concern in the Northwest from non-jurisdictionals
is they are afraid of getting inadvertently dragged into a market design
different than RTO West's. If resolution of the Seams via SSGWI means
all RTOs have to adopt the design of the RTO that is farthest ahead on
implementation of systems and methodology, the NW could loose promised
deference needed by the region in order for non-jurisdictional parties
to voluntarily join.

Commissioner Brownell asked if there was much involvement with state
Commissioners in CREPC. Mr. Krogh said state Commissioners are acting on
behalf of themselves, not in CREPC, in working out seams issues right
now. Shelton Cannon (FERC staff) agreed with Mr. Krogh. Mr. Cannon said
state Commissioners want to get involved, but there's not a sense of how
yet; they're keeping their powder dry. Mr. Cannon said we need to work
with the states to get a handshake with state Commissioners; we need to
aim, but we're not there yet.

Commissioner Brownell later asked if the SSG-WI seams process was
delaying RTO development. Mr. Bayless said he was not sure if SSG-WI was
*delaying* at the moment, although there might be concern down the road
especially if the implementation schedule in one RTO pushed that RTO
into implementing systems and software that might be incompatible with
SSGWI work group determined solutions to the seams problems later this
year.

Mr. Krogh said it was not the intent to delay. Commissioner Brownell,
however, asked if delay was happening in practice. Ms. Schmid said
SSG-WI was not delaying in the Cal ISO efforts to move forward with MD02
Implementation. Mr. Reinhold said that by dealing with seams issues now
it can only be more productive in the end. Mr. Afranji said without
SSG-WI there would be an incompatible market in the West. Commissioner
Brownell concluded by confirming there won't be an explanation of delay
in an RTO West filing because of work on SSG-WI.

Commissioner Massey asked Mr. Bayless what he meant by "dragged in" with
regard to market design. He asked if this meant "dragged in" to LMP. Mr.
Bayless said that it mean dragged into an unacceptable form of LMP. LMP
was a broad term and there were wrinkles between the types of LMP
methods proposed in the western RTOs, some of which create problems for
the NW and might cause large non-jurisdictionals to not join if they
were asked to accept.

During Steve Walton's discussion of major issues identified by
congestion management alignment workgroups, Chairman Wood asked if there
was a common way to make decisions on concrete details for locational
marginal pricing (LMP), congestion management, and other issues --
instead of three different decision making bodies. Could there be one
common way to make decisions for the West? Mr. Walton explained that
methods were being explored for information exchange and iteration
between the parties that would not be a formal overlay organization, but
rather a procedure that brought about convergence between the three
RTOs.

Chairman Wood also asked why WestConnect was basically the only ones
advocating a physical rights model. Why is the Commission not hearing it
in the rest of the country? Mr. Reinhold said he did not know why others
were different. Commissioner Massey later commented that WestConnect's
different model may be the toughest issue. Mr. Walton said that was one
major issue and another was the differences in wanting a full day-ahead
market. Chairman Wood reminded that FERC's condtional approval of the
RTOs was only conditional and that FERC could ask for modifications to
proposed market designs further in the proceedings.

Chairman Wood asked Mr. Walton if the congestion management alignment
workgroups could get back to SSG-WI on a regular basis. Mr. Walton said
they did.

On Planning, Chairman Wood said that he believed reliability planning
and economic expansion planning should be done by one organization. Dean
Perry explained that in the West SSG-WI performed regional economic
expansion planning and was working close with the WECC who coordinates
reliability planning. Mr. Perez explained that WECC performs a
coordination function for reliability projects; it does not do
reliability planning. Reliability planning is done by the individual
Transmission owners but coordinated by WECC. Mr. Afranji said
reliability planning in the future may be coordinated with the WECC but
the responsibility will reside with the RTOs. Chair Wood asked about the
SSGWI Planning role and Dean explained it would produce a regional
Planning Process immediately and a Regional Plan by the end of
September. Chair Wood asked if the plan would be recommended by SSGWI to
FERC and the states for implementation. Dean explained that it would be
more like a "Professional Staff recommendation" back to the RTOs for
what should or could be done. Chair Wood asked if it would involve more
than just planning across the seams and Dean answered it would be more
regional including major facilities within an RTO that effect another.

With respect to Market Monitoring, Chairman Wood asked when the Market
Monitoring Work Group would finish supplementing its recommendations.
Ms. Wallis replied that the work would likely be finished this spring,
but noted the possibility that the group might find that it cannot
finalize the recommendations until after the individual Western RTOs'
market designs have been completed. Even if the work group's
recommendations are finalized this spring, it is possible that the
Western RTOs will need to complete their market design efforts before
they can make their decisions regarding west-wide market monitoring.

In the CSIC discussion Chair Wood asked what "outlined" on slide 23
meant concerning the CSIC product to "Outline a common/open system for
wholesale electric transactions". Later Commissioner Brownell commented
that it saves customers money to utilize market design systems and
software already designed. She was concerned with the SSGWI direction
towards three separate but force fit together systems. She said she
would like to have cost estimates done comparing the cost to implement
the different market design systems (with overlay) versus the cost of
implementing an existing system for a common west wide single market
design. She also said the Commission knows the West is different, but
having said this, she asked if SSG-WI groups talked to the Northeast
about what they've done and what the West could do differently. She also
commented that on things that have worked in the past, there is no need
to reinvent the wheel, no need to cost customers money.

On Price Reciprocity Chair Wood said that the Commission understands
that FERC may have to be involved with resolution of fixed cost
allocation via 206 filings and is willing to do. Elena asked that FERC
may also need to be involved with allocation of costs for new
transmission that affects the whole region and Chair Wood said that FERC
can do.

In conclusion, Chair Wood said his vision was for someone or
organization who could "bring it all home" referring to a solid west
wide market design without problematic seams. Chairman Wood reminded the
SSG-WI panelists that when he took his job as Chairman, the West had
just blown up -- California and the areas it affected. He wants someone
in charge to make sure it doesn't happen again. He wants the SSG-WI
calendar's dates met, and will allocate FERC resources to watch over
SSG-WI. The SSGWI follow-thru needs to be equally robust as the plan.

Commissioner Massey said he hoped there were not issues that just can't
be resolved. He said he wants an early warning system to give FERC heads
up on the tough unresolveable issues as they are identified by SSGWI.
The Commission can be notified and try to resolve these issues.

Chairman Wood added that the Commission can be a screen and a vent for
SSG-WI to vent off steam. Mr. Krogh mentioned there had been
considerable venting to FERC staff. Chairman Wood said the venting had
made its way back to the Commission and this is healthy.

Chair Wood commented that perhaps it was time to reschedule a meeting
with Western CEOs and State Regulators similar to the previously Nov 4,
2002 meeting that was postponed

Last Chairman Wood suggested that maybe a FERC staff person could see
where things can work for all three RTOs, but he said he hoped that role
could be homegrown as well. He said its time to think specifics, not
just in general. He said he hopes people will step out and think of the
best interest of all three RTOs. He thanked us for our presentation and
said SSG-WI was off to a good start.