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					Exhibit 4
                                                 Exh. No. I-SO-4
                                                  Page1 of161




                        CALIFORNIA         IS0



                 ANALYTICALSUPPORTFORCALIFORNIAISO
                  GRIDMANAGEMENTCHARGEFOR  2002
                    (USING 2002PROPOSEDBUDGET)




                          October26,2001




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                                                                                         Tableof Contents
I. OVERVIEW OF COST ALLOCATION                                                                  PROCESS . . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . . .. . . . . . . . .. . . . . . . . .. . . . .. ..*......... 3
  OPERATINGAND MAINTENANCEBUDGET COSTS . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. . .3
  CAPITAL COSTS: DEBT SERVICEAND CASH FUNDEDCAPITAL EXPENDITURES. . . . . . . . . . .. . . . . . . .. . . . . . . . . .. . . 6                                    .
  REVENUECREDIT/DEFIENCY . . . . . . . . . . .. . . . . . .. . . . . . . . . .. . .. . . . . . . . .. . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 6
                          .
  SUMMARYOF COST ALLOCATIONRESULTS. . . . . . . .. . .. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .._................................... . .7
II. ALLOCATION                          METHOD SUMMARY . .. . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . 9

Ill. UNBUNDLED                          SERVICE CATEGORY                                           DESCRIPTIONS . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . .. II

IV. COST CENTER (DEPARTMENT)                                                             DESCRIPTIONS                                   . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
                                                                                                         . .. . . . .. . . .. . . .. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . .. . . . . . . .. . . . .. 12
                                                                                                              ...........................................................................                                                                  13
                                                                                                              ...........................................................................                                                                  17
                                                                                                   ...................................................................................                                                                     29
                                                                                                   ..................................................................................                                                                    .42
                                                                                                              ...........................................................................                                                                  46
                                                                                                              ...........................................................................                                                                  57
V. OPERATING                         RESERVE CALCULATION                                                 ...............................................................................                                                                     61

VI. CAPITAL                   BUDGET PROJECT ALLOCATIONS..                                                                      ..................................................................                                                           63



APPENDIX A

Cost Allocation                     Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131




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-.’   1. OVERVIEWOF COST ALLOCATIONPROCESS
      This section providesan overviewof the cost allocationmatrix, a table which summarizesthe California
           s
      ISO’ 2002 operatingbudgetaccordingto the three unbundledservicecategories:

               l   ControlArea Services,abbreviatedas “CAS”
               l   CongestionManagement(previouslyknown as “Inter-ZonalScheduling”),abbreviatedas
                   TONG”
               l   AncillaryServicesand Real-TimeEnergyOperations(replacing“Market Operations”),
                   abbreviatedas “ASREO”

      A descriptionof the three categoriesfollows in the next section,“IS0 UnbundledServiceCategory
      Descriptions.”The third service category“AncillaryServicesand Real-TimeEnergy Operations”         replaces
      the previous“MarketOperations”   category. The cost allocationmatrix lists all IS0 costs that are elements
      of the grid managementcharge, includingoperatingcosts and debt service,and the effect of the operating
      reserve.

                                                                 and
      The operatingcosts are organizedaccordingto “cost centers”’ are groupedaccordingto categories
      called“DepartmentalRoll-Ups.”For example,the followingcost centers: “1521 Grid Planning”,“1542
      OutageCoordination”,                                    are
                           and, “1543 OperationsEngineenng”, includedin the “OperationsDirect”
      DepartmentalRoll-up. The budgetedamountsfor each cost center are either directly assignedto the three
      unbundledservicecategoriesor are allocatedto the categoriesin the cost allocationmatrix.

      For FY2001,when the CaliforniaIS0 implementedan unbundledGrid ManagementCharge,directorsand
      managersfrom each cost center assignedtheir overall costs to the three unbundledservicecategories.
      Certaincosts relatedto departmentoverhead,overall corporateoverhead,or servicesthat benefit multiple
      departmentsand functionswere allocatedbased overall operatingcosts or headcount.

      For FY2002,The CaliforniaIS0 has refined and improvedthe process. The CaliforniaIS0 has developeda
      new budgetingtool for its 2002 OperatingBudgetwhich requiresmanagersand directorsof each cost
      center to assign each expenseline item within their cost center to the unbundledcategoriesor a general
                                                                                            of
      category.This refinementprovidesan enhancedlevel of accuracyin the documentation the allocation
      percentagesfor each cost center.

      Operating and Maintenance Budget Costs

      Cost centers are groupedaccordingto “Direct”and “Indirect” DepartmentalRollups. Cost centersthat fall
      within a “Direct”DepartmentRollup are allocatedby direct assignment. Cost centers that fall within an
      IndirectDepartmentRollup are allocatedby based on the resultsof the direct assignments. Descriptionsof
      the direct and indirectallocationmethodologiesare presentedbelow:

               DirectlyAssionedCosts:

      Directcosts are those that are directly relatedto one or more of the three unbundledservicecategories.
      Each expense line item within the directly assignedcost center is allocatedaccordingto ratios providedby
                     s
      the cost center’ manageror director. The costs are then totaled for each of the three unbundledservice
      categories. The total for each unbundledservice categorywithin the cost center is then divided by the total
      amount budgetedfor the cost center to arrive at the cost centers overall allocationpercentages.

                                                                      s
      I Cost centers are synonymouswith departments The California ISO’ Oracle based accountingsystem groups all
                   to
      costsaccording costcenters.
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Managersand directorsof cost centerswith directly assignedcosts also have the option to allocatea
percentageof their overallcosts to a “general” category. Costs in this categoryincludethose that support
several aspectsof the work done in their cost center. These costs are subsequently  spread over the three
unbundledservicecategories.

The simplifiedexamplebelow shows how costs for “Cost Center X ’ are allocatedto the three unbundled
serve categories. Note that the factors are providedfor each subcomponent these expenses. For
                                                                         of
example,each staff personin a departmentis directly assignedto the unbundledcategories,

        Step I: Managers provide ratios for each line item.

        Cost Center X              Total $s          % CAS %CONG %ASREO                  %General

        Salaries                   $100              25%      25%      25%               25%
        Travel                     $100              25%      25%      50%

        Step 2:Budgeted costs are totaled for each unbundled service category.

        Cost CenterX               Total $s          CAS $s CONG $ ASREO$ General $s

        Salaries                   $100              $25      $25      $25      $25
        Travel                     $100              $        $        $
        Total                      $200              tii      0::      $;z      $25

        Step 3: Allocation percentages for general dollars are calculated.

        Cost Center X              Total             CAS               CONG             ASREO

        Total amount:              $175              $50               $50               $75
        (WithoutGeneral)

        Allocation percentages     100%              28.57%            28.57%            42.86%
        (WithoutGeneral)

        Step 4: Genera/ dollars are allocated to the three unbundled service categories.
                General

                 CAS: $25 x 28.57% = $7.14
                 C~NG: $25 x 28.57% = $7.14
                 ASREO:$25 x 42.86% q $10.71

        Cost CenterX               Total $           CAS $             CONG $           ASREO $

        GeneralCosts               $25               $7.143            $7.143            $10.714

        Sfep 5: Costs are totaled for each unbundled service category.

        Cost Center X              Total             CAS               CONG              ASREO

        Total WithoutGeneral:      $175              $50               $50               $75

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           GeneralCosts                             $7.143           $7.143           $10.714
           Total                                    $57.143          $57.143          $85.714

           Step 6: Allocafion Percentagesare computed for the cost center.

           CostCenterX             Total            CAS              CONG             AS RT

           Total                    $200            $57.143          $57.143          $85.714
           Allocationpercentages    100%            28.57%           28.57%           42.86%


           Indirect Costs

Cost centersthat provideservicesthat cannot be directlyassignedto the unbundled   servicecategoriesare
allocatedin a differentmanner. Allocationfactorsfor these indirectcosts are developedusingfive
approaches:

      l    AllocatedBasedon Department   DirectCosts: Cost centersthat are directlyrelatedto specific
                       are
           departments allocatedbasedon those departmentsdirectcosts. For example,costs within the
           IndirectOperationsDepartmental Roll-upare allocatedaccordingto the Direct Operations
           Departmental                                          cost
                        Rollupallocationfactors. Correspondingly, centersincludedin the Indirect
           informationTechnology Departmental  Rollupare allocatedaccordingto the m      Information
           Technology Departmental Rollup.

      l    AllocatedBasedon SupervisedDepartments’  Costs: Cost centersthat are directlyrelatedto
                             which the cost centersupervisesare allocatedbasedon those departments’
           specificdepartments
           direct costs.

      l    Allocatedbasedon DirectOperatingCosts- Cost centerswhich involveservicesthat benefit
                                are
           multipledepartments allocatedbasedon total directoperatingcosts of those departments.For
                                                      servesthe entirecompany,and is thus allocated
           example,cost center 1631,Legal & Regulatory,
           accordingto ratiosof directoperatingcosts.

      l                                                                                       that
           AllocatedBasedon LaborDollarRatios: Cost centerswhich benefitmultipledepartments are
           moreclosely relatedto employeesthan overalldirect operatingcosts are allocatedbasedon labor
           dollarsratios. For example,1841,HumanResources,is allocatedto the three unbundled  services
           basedon labor dollar ratios,

      l    Allocatedbasedon Labor DollarRatios- Special- Cost center 1441,VendorManagement,      is
                                                                               for
           allocatedusing a modifiedlabor dollar ratio approach. The methodology this is shownin the
           cost allocationmatrix,and is describedlater in this document,

                                                 are
The cost centersand the allocationmethodologies listed in the table that follows,“AllocationDescriptive
Detail”. Note, however,that even these indirectcost centersmay, and have, assignedindividualcosts
directlyto the unbundledservicecategorieswhereappropriate.

                                                  s                          include:
Othercosts or revenueswhich are elementsof the ISO’ overall revenuerequirement

                                                                     Allocated:
  Interestrevenues                                                   OverallO&M allocationresults
  SC application& otherfees                                          OverallO&M allocationresults
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  WSCC SecurityCoordinationReimbursement                               100% CAS

Capital Costs: Debt Service and Cash Funded Capital Expenditures

The total budgeted debt service costs for 2002 (including the debt service coverage requirementof 25%)
                                                                             bond issuancesin 1998, and
are $60 million, representingprincipaland interest paymentsrelated to ear-tier
2000 of $337.5 million, and a planned2002 issuanceof $20 million.The CaliforniaIS0 was unableto issue
                                     s
bondsin 2001. As a result of CAlSO’ expectedinabilityto issue new debt when funds are neededin 2002,
$8.3 millionof the 2002 budgetedcapital expenditureswill be funded directlyfrom the GMC.

The allocationmethodologyused to allocatethe debt serviceand cash funded capital expendituresto the
three unbundledservice categoriesinvolveda detailed review of the contract milestones,and costs
associatedwith those milestones. IS0 Directorsand Managersperformedthis assignmentprocess,with
the assistanceof the IS0 financestaff.

Additionaldetails of this processand the proposed2002 capital projects are providedin Section VI of this
report.

Revenue CreditlDefiency

In additionto 2002 costs, the 2002 revenuerequirementincludesprior year costs and adjustmentsresulting
              s
from the ISO’ OperatingReserve. The calculationof the OperatingReserverevenuecredit or deficiency
for each unbundledservicecategoryis shown in SectionV of this report.




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Summary of Cost Allocation Results

The attachedcost allocationmatrix summarizesthese resultsand ratios that show the percentageof total
IS0 costs associatedwith the provisionof each of the three unbundledservicesoffered by the ISO. The
budgeted2002 allocationratios developedare as listed below. These are net allocationfactors,after the
applicationof the 2001 revenuecredit or deficiencyfrom the Operatingreserve.

         1.        CAS                               57.9%
         2.        CONG                              11.4%
         3.        ASREO                             30.7%

                                        s                           for
These ratios are then applied to the ISO’ overall RevenueRequirement 2002, resultingin a revenue
requirementfor each of the three unbundledservicecategoriesas follows (in thousands). The following
page providesan overviewof the total revenuerequirement.

         1.        CAS                               $ 141,826,806
         2.        CONG                              $27,787,3ao
         3.        ASREO                             $75,179.700
                   Total                             $244,793,886

After determiningthe revenuerequirementassociatedwith each of the three unbundledcategories,the
volumeforecastsfor each categoryare developed.The billingdeterminantsfor each categoryare as
follows:

         1.        CAS                               Gross ControlArea Load and Exports
         2.        CONG                              Net scheduledInter-Zonalflows per path,
                                                     ExcludingExistingTransmissionContracts
         3.        ASREO                             Purchasesand sales of AncillaryServices
                                                     and Real-TimeEnergywhether instructedor
                                                     uninstructed.Includes50% of self providedA/S.

The forecastedvolumesof the billing determinantfor each unbundledservicecategoryfor 2002 are as
follows (in thousandsof MWhs):

         1.        CAS                               246,487
         2.        CONG                              75,558
         3.        ASREO                             78,597

Finally, a unit charge per MWh is developedto recoverthe costs for the three unbundledservicecategories
by dividingthe revenuerequirementfor each of the three categoriesby the associatedbillingdeterminant
volumes,The unit chargesfor 2002 are as follows (in $ per MWh):

         1.        CAS                               .575
         2.        CONG                              ,368
         3.        ASREO                             .957

                                             of
A descriptionof the tasks and responsibilities each cost center, the resultsof their allocations,and any
commentaryrelatedto these allocationsis providedbelow in the section entitled“AllocationDescriptive
Detail.” The cost allocationmatrix and the descriptivetext, which is includedfor each cost center explains
the methodologyused for allocatingall operatingcosts.

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                            for                   consistsof the following(in thousands):
The overallrevenuerequirement 2002 of $244,793,886,


                Revenue Requirement ($ in ‘   0001
                Operating & MaintenanceBudget                                       177,465
                Financing Budget:
                                 Debt
                Principal-Existing
                                Debt
                Interest-Existing                                                    33,800
                Total Debt Service-NewDebt ($20 Millionin New Debt for 2002)         IO,711
                OperatingReserve(25%of Principal& Interest)                           3,513
                Subtotal,FinancingCollection                                         60,029

                Capital Project Funding (full CapEx Budget Funded)                    8,301
                Less: Expense Recovery Budget:
                            InterestEarnings                                        (1,350)
                            SC Application&.TrainingFees                               (15)
                            WSCC ReimbursementlNERC     Reimbursement               (1,245)
                 Subtotal,ExpenseRecoveryBudget                                      VI’
                                                                                    (‘ 9

                                          beforeRevenueCredit
                Subtotal,RevenueRequirement                                         243,186

                                         From Operating
                (RevenueCredit)/Deficiency             Reserve                        1,608
                             ReserveBalancevariesby ServiceCategory)
                   (12/31/2001

                Total RevenueRequirement                                            244,794




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        II. ALLOCATIONMETHODSUMMARY
        A description of the methods used to allocate specificoperating and debt service costs to the three
        unbundled service categoriesfollows. In this table, the cost centers are listed in the order in which
        they appear in the cost allocation matrix.

                        Cost Center                                                   Allocation Methodology

          1500          Operations - Direct
          1521          Grid Planning                                                 Direct Assignment
          1542          Outage Coordination                                           Direct Assignment
          1543          Loads and Resources                                           Direct Assignment
          1544          Real-TimeScheduling                                           Direct Assignment
          1545          Grid Operations                                               Direct Assignment
          1546          SecurityCoordination                                          Direct Assignment
          1549          OperationsTrainingGroup                                       Direct Assignment
          1554          Special ProjectsEngineering                                   Direct Assignment
          1555          OperationsSupportGroup                                        Direct Assignment
          1558          TransmissionMaintenance                                       Direct Assignment
          1561          SouthernArea Engineering                                      Direct Assignment
          1562          NorthernArea Engineering                                      Direct Assignment
          1563          CoordinatedOperations                                         Direct Assignment
          1565          Pre-Scheduling Support
                                       and                                            Direct Assignment
          1566          RegionalCoordination                                          Direct Assignment
          1559          OperationsApplicationSupport                                  Direct Assignment

          1500          Operations - Indirect
          1511          VP - Grid OperationsGeneral                                   DepartmentDirectcosts
          1547          Engineeringand Maintenance                                    SupervisedDepartmentcosts
          1548          OperationsSupportand TrainingGroup- General                   SupervisedDepartmentcosts
          1564          OperationsScheduling                                          SupervisedDepartmentCosts

          1700          VP Market Services
          1722                                                                        Direct Assignment
                        ApplicationSupport
          1723                                                                        Direct Assignment
                        Tariff and Contractimplementation
          1724                                                                        DirectAssignment
                        BBS - PSS
          1725                                                                        Direct Assignment
                        BBS - FSS
          1731                                                                        DirectAssignment
                        Contractsand Special Projects
          1741                                                                        DirectAssignment
                        Client Relations
          1752                                                                        DirectAssignment
                        Managerof Markets
          1753                                                                        DirectAssignment
                        MarketApplication& Testing
          1755                                                                        Direct Assignment
                        MarketSupportand Development
          1756                                                                        Direct Assignment
                        MarketQuality
          1757                                                                        DirectAssignment
                        Market Integration
          1700
          1711          Market Services- indirect                                     DepartmentDirectcosts
          1721          VP - Market Services                                          SupervisedDepartmentCosts
          1751          Billingand Settlements                                        SupervisedDepartmentCosts
'-- .
 ..                     MarketOperations

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       1400            Information Services - Direct
~_
       1424            Asset, Contract& ChangeMgmt Group                  Direct Assignment
       1441            Vendor Management                                  Labor Dollar Ratios - Special
       1461            RT OperationsApplicationsSupport                   DirectAssignment
       1462            Field Data Acquisition& Data Quality               DirectAssignment
       1467            Post OperationsApplicationSupport                  DirectAssignment

       1400            VP Information Services Indirect
       1411            Chief InformationOfficer- General
       1422            ApplicationDevelopmentServices                     DepartmentDirect Costs
       1431            User Support Services                              Direct OperatingCosts
       1432            TechnologyInfrastructure  Services-General         Direct OperatingCosts
       1442            ProductionSupportServices                          Direct OperatingCosts
       1451            informationSecurityServices                        Direct OperatingCosts
       1463            Corporate& OperationSystems                        DepartmentDirect costs
       1468            CorporateApplicationSupport                        Direct OperatingCosts
       1471            InfrastructureEngineering                          Direct OperatingCosts
                                                                          Direct OperatingCosts
       1600            Legal - Direct
       1641            MarketAnalysis
       1661            Compliance                                         DirectAssignment
       1662            Data Quality Group                                 Direct Assignment
                                                                          DirectAssignment
       1300            Finance- CorporateIndirect
       1311            CFO - General                                      SupervisedDepartmentCosts
       1321            Accounting                                         Direct Operatingcosts
       1331            Treasuryand FinancialPlanning                      Direct Operatingcosts
       1351            Facilities                                         Labor Dollar Ratios
       1361            Office Administration                              Labor Dollar Ratios

       1600            Legal: Chief Counsel- Indirect
       1611            GeneralCounsel- General                            SupervisedDepartmentCosts
       1631            Legal and Regulatory                               Direct Operatingcosts

       1800                                                  -
                       VP Corporateand StrategicDevelopment Indirect-
       1811            VP Corporateand StrategicDevt. - General           SupervisedDepartmentcosts
       1821            Communications                                     Direct Operatingcosts
       1831            StrategicDevelopment                               Labor Dollar Ratios
       1851            Office of StrategicServices                        Direct Operatingcosts
       1861            RegulatoryPolicy                                   Direct Operatingcosts

                       CEO / Human Resources- CorporateIndirectSalaries
       1111            CEO - General                                      Labor Dollar Ratios
       1841            Human Resources                                    Labor Dollar Ratios
       1651            Board of Governors                                 Labor Dollar Ratios




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              SERVICECATEGORY
 III. UNBUNDLED              DESCRIPTIONS
             of                                      by
A description the three categoriesof servicesperformed the IS0 is as follows:

1.                                                                          for
        Control Area Services (Grid Reliability): This categoryis responsible managingthe Control
        Area and the IS0 Controlled                                      safe,reliableoperationof the
                                   Gridto “keep the lights on,”i.e.,ensure
        transmissiongrid and dispatchof bulk powersupplies,including:

            performing operational studies;
            system securityanalyses;
            transmissionmaintenance   standards;
            system planningto ensureoverallreliability;
            integrationwith other ControlAreas;
            emergencymanagement;
            outagecoordination;
            transmissionplanning;and
            schedulingGeneration,                                              and        of
                                    imports,exports,and wheelingin the Day-Ahead Hour-Ahead
            actual operations.

2.      Congestion Management(previously known as “Inter-Zonal Scheduling”): This categoryis
                   for
        responsible dealingwith Congestion,   which exists when powerflowingon a transmissionpath
        exceedsthe transmissionpathcapacity. Congestion               is
                                                           management conductedby the IS0 during
        the schedulingprocessand resultsin the economicrationingof transmissionservicein orderto
        preventcongestion.



3.      Ancillary Services and Real-TimeEnergy Operations (previously known as “Market
                                                    for
        Operations”): This categoryis responsible providingfor ancillaryserviceand real-timeenergy
                                                                                       accessfor
        relatedservices,including,but not limitedto: providingopen and nondiscriminatory
        marketmakingactivitiesfor participants  throughAncillaryServicesauctionsand Energybalancing
        services, Postingof marketinformation;                     and                     of
                                                 Marketsurveillance analysis;administration self-
        provisionof ancillaryservices;Settlement,billing,and meteringrelatedto these;




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                         DESCRIPTIONS
IV. COSTCENTER(DEPARTMENT)


All IS0 cost centers are listed and describedin the following sectionof this report. For “Direct
              cost
Assignment” centers, allocationresults are listed.



 ll00 Chief Executive O fficer Division1
I’

1111     CEO - General

Description:

The CEO overseesand directs all operationsof the IS0 and reportsto the Boardof Governors.


Cost Allocation Methodology and Percentages:
                           are                    s
The costs of this department allocatedto the ISO’ three unbundled servicecategoriesbasedon the
                                                                                    s
approachnotedhere. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
                                                 which directlyassigntheir costs to the three
Matrix. Resultsare shown here only for departments
categories.

Allocatedbasedon LaborDollarRatios




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11300 Chief Financial Officer Division1

1311       CFO - General

Description:

The Chief FinancialOfficeroverseesdirectlythe activitiesof the Accounting(Controller)and Treasuryand
FinancialPlanninggroups, and the Facilitiesand Office Administrationfunctions, All of these are functions
which support all IS0 services.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon the
                                                                                   s
approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the three
categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

1321      Accounting

Description:

The IS0 AccountingDepartmentis comprisedof four areas of responsibility.Each area performsspecific
functionsthat enable the departmentas a whole to providethe best possiblefinancialaccountingservicesto
the ISO. Each area and a brief descriptionof its functionsis listed below:

 l                            Administration
      Controllership/Accounting

 Responsiblefor implementinginternalcontrol policiesand procedures.This area acts as the umbrellafor
 all other areas of the department.

 l    GeneralAccountingand FinancialReporting

Responsiblefor preparing,analyzingand distributingfinancialand managementreportsto variousinternal
and external users.

Responsiblefor coordinatingthe financial,operationaland settlementscontrol, and other audits.These
audits ensure that the IS0 is in conformitywith generallyacceptedaccountingprinciplesand is in
compliancewith certain establishedprocedures.

Responsiblefor preparingand submittingvarioustax returnsand other informationalfilings to federal, state
and local agencies,

Responsiblefor the integrityand maintenanceof the general ledger and fixed assets systems. Tasks
                      of
include reconciliations accountsand bank statements,preparationand input of journal vouchers,and
analysesof expenditures,

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 9 Cash and Credit

             for
Responsible processingpaymentsfor goods and serviceswhere a valid purchaseorder was placedwith
the invoicingvendor as well as for those goods and servicesreceivedby the IS0 which were not ordered by
                                            of
purchaseorder, includingthe reimbursement employeetravel expenses.

Assists in the market settlementprocess by collectingand distributingcash to the market players.This
responsibility includesthe settlementprocessfor GMC, market,FTR, FERC, SRA, emissions,start-up and
other types.

           for
Responsible the receiptof monies,banking interfacesand general cashieroperations.

 l    Purchasing

             for
Responsible obtainingproducts,services and travel for CaliforniaISO. Acts as authorizedagentsto
create and distributeformal purchaseorders to suppliers.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the three
categories.

Allocatedbased on DirectOperatingcosts

1331      Treasury and Financial Planning

Description:

The FinancialPlanningand Treasurygroup is responsiblefor the following:

 l Treasuryand Cash Management;
            Risk Management;
 . Insurance1
 . Debt administration;
 l Budgeting/FinancialPlanning;
 l Benchmarking;
 l GMCIRateslUnbundling  and;
 l AccountingSystem Supportand Maintenance

Cost Allocation Methodology and Percentages:

                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on the
                                                                                      s
approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
Matrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the three
categories.

Allocatedbased on Direct Operatingcosts



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1351      Facilities

Description:

The FacilitiesDepartmentis responsiblefor the physicalbuildingenvironmentof the CaliforniaISO. its role
is to provideand maintaina safe, comfortable,and efficientworkplacethat fosters teamworkand
collaborationin a highly reliablebuildinginfrastructure. This role can be brokendown into severalareas:

 l                                                                       staff and staff changesalong
     FacilitiesPlanning.This involvesthe allocationof space to accommodate
      with the redesign,modifications and furnishingof that space.

 l                                                                     infrastructureto accommodate
     Critical Systems.This involvesprovidingand ensuringhigh-reliability
      Informationtechnologyequipmentand operatingsystemshousedin the computerrooms and
      Dispatchcontrol center,

 l   BuildingMaintenance.This involvesthe maintenanceof the generaloffice areas and computerfacilities
                                          conditioning,buildingelectricaldistribution,structuralsystems,
      with respectto heating/ventilation/air
      etc.

 l   Housekeeping. This involvesjanitorial upkeepof the buildinginteriorsas well as the appearanceof the
      grounds and other exteriorelements.

 l                                             of
     PropertyLeases.This involvesadministration all existing propertylease agreementsincluding
      payments,landlord-tenantissues, and negotiationof changes.

 l   New Facility Development.This involvesthe planning,development,and transitioninto all newly
      acquiredIS0 properties,leasedor owned.

 l   Administrative.This involvestracking,reporting,and benchmarkingall IS0 Facilitiesactivitiesand
      costs.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on the
                                                                                       s
approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
Matrix. Results are shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on Labor Dollar Ratios

1361      Office Administration

Description:


The CorporateServicesDepartmenthas primaryresponsibilityover four distinctcorporatefunctions
consistingof PhysicalSecurity,CorporateSafety,Administrativeand Office SupportServices. The main
goal of the CorporateServicesDepartmentis to ensure a safe and secure work environmentand provide
the administrativeand office support necessaryfor IS0 employeesto performtheir jobs at the highest
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levelspossible.

                             for
PhysicalSecurity- Responsible providingphysicalprotectionof IS0 personneland property. This
                                                  of
includesworkplaceviolenceprevention,investigations criminalacts, executiveprotection,risk
management/threat assessment,life safety system monitoring,critical systemsmonitoringand medical
first responders.

Safety- Responsiblefor ensuringcompliancewith all aspectsof corporatesafety programincluding;risk
assessment,managementand mitigation,workerscompensation            administration, ergonomiccompliance
and other relatedsafety programs. Responsibilities  extend to all visitors, contractorsand employeeson
IS0 propertyor performingservicesdirectlycontrolledby the ISO. Also responsiblefor ensuring
compliancewith all applicablelocal, state, and federal safety laws and regulations.

              and                             for
Administration Office Support- Responsible facilitatingcorporatesupportfunctionsincluding,mail
services,shippingand receiving,receptiondesk, office supplies,office automationequipment,
conferenceroom set-up and managementand relatedoffice supportservices. Also responsiblefor ensuring
consistentpoliciesand proceduresare in place for corporateadministrativestaff.
Cost Allocation Methodology and Percentages:
Allocatedbased on Labor Dollar Ratios




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/I400 Chief Information Officer Division\

1411     Chief Information Officep General

Description:

                                                 for
The Chief InformationOfficer assumesresponsibility all IS0 informationservicesinfrastructure,
strategies,and key businessprocesses. Cost center 1411 is an executivefunction,thereforeincludedas
corporateoverhead.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on DepartmentDirect costs

1424     Asset, Contract & Change Mgmt Group

Description:

The IS Assets, Contracts,and ChangeManagement(“ACCM”)group is responsiblefor enterprise
programsand processesrelatedto managingtechnologyassets, Assets includehardware,storage
arrays,software licenses,and other IS-relatedservicesthroughtheir lifecycle.The IS-relatedservicesand
includehardwaremaintenanceand softwareupgradesand support. ACCM also managesthe Asset and
the Change Managementmodulesof an integratedmanagementtool.

ACCM managesand coordinatesthe processfor technologyrelatedcontracts,from biddingthe
requirements,constructingthe contractdocuments,negotiatingthe prices and terms, and administeringthe
resultingagreementfrom beginningto expiration.

ACCM coordinatesIS budgetdevelopmentand administration,  hardwarewarrantyand maintenance
contract management,softwarelicensing,maintenancecontract management,                       asset
                                                                        lease administration,
management,and technologylifecycleprocess,It tracks expendituresagainst budgetsand tracks invoice
paymentsagainst purchaseorders.

ACCM coordinatesactivitieswith procurement,provisioningand technicalsupport groups and prepares
lease/purchaserequisitions.It verifies invoiceaccuracyand administersprocessesfor approvaland
payment.

Finally,ACCM is responsiblefor the Change and ConfigurationManagementprocessesand promotes
corporate-wide compliancewith Change Management.The ACCM group also providesConfiguration
Managementsupport by providingthe frameworkfor each businessunit to controlthe deploymentof
modificationsto their existingsystemsoftwareand maintainingthe UNIX and NT customsoftwarerelease
repositories.



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In 2002, ACCM anticipatesthe followingtasks will be required:

 l    Lease equipmentpaymentsincludingrefreshesfor most serversand workstations       throughoutISO;
 l                                    for
      Procurehardwaremaintenance existingand new equipment;
 l    Arrangefor existingand new software upgradesand support renewal;
 l    Coordinateall of the Asset Managementpurchaseswithin ISO, concentratedon non-hardware       issues.
 l     Relationshipmanagerfor Oracle, Compaq,CompaqFinancialServices,Fleet BusinessCredit
       Corporation,De Lage Landen FinancialServices,Sun Microsystems,      Legato,iPlanet, GartnerGroup,
       SoftSmiths,Brokat,StructureConsultingGroup,Actuate, EPRI, Iron mountainData Security,and
       Via.
 l    Capital and operatingbudgetcoordinationfor fourteencost centersand three rollups.
 l    Accountinganalysisfor monthlyre-forecasting;  year-endforecastingfor consultantsand major
       contracts.
 l    Special analysesfor finance and accountingto assist corporatelevel fund allocationsto supportvarious
       discoveries.
 l    Preparationof Capital project requestsfor multiplegroups within ISO.
 l    Define and record internaldocumentdevelopmentand approvalprocesses.
 l    Tracks expendituresagainstbudgets;tracks invoicepaymentsagainst purchaseorders.
 l    Managesand coordinatesthe processfor technologyrelatedcontracts,from biddingthe requirements,
                                                                                              the
       constructingthe contractdocuments,negotiatingthe prices and terms, and administering resulting
       agreementfrom beginningto expiration.
 l    CoordinateIS budgetdevelopmentand administration,     hardwarewarrantyand maintenancecontract
       management,softwarelicensing,maintenance       contract management,lease administration, asset
       management,and technologylifecycleprocess.
 l    Verify invoiceaccuracyand administerprocessesfor approvaland payment.

Cost Allocation Methodology and Percentages:

                                                       s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
the approachnoted here. For this department,individualcontractcosts were associatedwith particularIS0
projectsor tasks, and assignedto the unbundlingcategoriesas appropriate. The resultsof the allocation
                                      s
processare shown in full on the ISO’ Cost AllocationMatrix. Resuttsare shown here only for departments
which directly assigntheir costs to the three categories,

Direct Assignment

             CAS                      CONG                             ASREO
             41%                      11.2%                            47.7%

1471       Infrastructure Engineering

Description:

                                                                     engineeringand
The InfrastructureEngineeringdepartmenthas two major responsibilities,
architecture.The SystemEngineeringand NetworkEngineeringgroups performthe detailed engineering
                                                                s
analyses requiredto expand,refresh or otherwiseenhancethe ISO’ productioncomputinginfrastructure
(systemsand networks).It overseesacquisition,configuration,and deploymentto productionof these
resources.The TechnologyArchitectureand InformationArchitecturegroups define the approaches
used to capture and representboth businessand softwaresystem information,determineand specify
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high-levelmodelingapproachesand guidelines,identifyopportunitiesfor the sharing and reuse of
information,lead the constructionof informationmodels,define a commonterminologybased on core
                                               s
businessconcepts,define and maintainthe ISO’ technologyinfrastructurearchitecture;and provide
directionand guidanceto vendorsof infrastructureproductsand services.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservice categoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISo’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on DirectOperatingCosts

[I430      Infrastructure Services Groud

1431       User Support Services

Description:

IT End User SupportServicesprovidescorporatewide computinginfrastructuresupport includingthe
following:

 l    PlatformSupport- EnterpriseNT Computinghardware,operatingsystem,and layeredproduct
       configuration,installation,testing, and maintenance, along with regularsystemadministrationduties to
       ensure the reliabilityand effective performanceof the computerplatforms.This includesboth servers
       and workstations,and the integrationof third party products.

 l                       -
      System Management Regularmonitoringof computinginfrastructurehardwareand software,along
       with databaseand applicationprocessesto ensureseven day a week and 24-houra day availabilityof
       platformsand businesssystems. This functionincludesthe escalation,notification,and
       documentationof system failures. In addition,systemengineersanalyzesystem activityand
                                                                                for
       performanceto providecapacitymanagement,includingthe recommendation short- and long-term
       computinginfrastructureenhancements. SystemManagementalso providesTivoli (system
                                                                          and
       monitoringsoftware)and NetViewdesign, development,implementation supportof the production
       and developmentenvironments.

 l    Help Desk and Desk Side Support- Installation,maintenance,and supportof the office automation
       infrastructure,includingsupport to internal users in the use of office automationtools, both hardware
       and software. In addition,the Help Desk providescentral call loggingand issue management       for
       office automation,internalcommunication   infrastructure,and facility related problemsand issues.

                also                  for
Responsibilities includeTape Management backupand recovery,and paging and cell phone
administration,


Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the

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three categories,

Allocatedbased on DirectOperatingCosts

 1432 Technology Infrastructure Services-General

Description:
                                                                         Services(TIS). End User
This is the general cost centerfor the Directorof TechnologyInfrastructure
SupportServices(cost center 1431),Vendor Management(cost center 1441),ProductionSupport
Services(cost center 1442)and InformationSecurityServices(cost    center 1451) report to this Director.
This cost center providesfor the cost of generalsupportincludingsuch items as the administrative
assistantand the general director level expenses.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on Direct OperatingCosts

1441     Vendor Management

Description:

                 s
This department’primaryfunction is to oversee all contractsand costs for the Technology
                                                                                 the
InfrastructureServicesgroup within IS. The group is responsiblefor administrating MCI contract
includingasset management,billing and vendor management. In addition,we providecontractand
                                                              (paging),AT&T Wireless(cell phones),
invoicingreview for Pacific Bell, Intercall,Arch Communications
lntemap (third party internetservices).

This group providesbudgetsupport,complianceand developmentfor all 5 cost centers within the TIS
department.

Vendor Managementoverseesthe contractwith MCI for the EnergyCommunication         Network(“ECN”)
which includesa high speed and high availabilityfiber optic statewidenetworkconnectingthe Folsom
and Alhambra IS0 sites, the Area ControlCenters,regionalsecuritycoordinators,and all Market
Participants. The ECN is utilizedto control the transmissionsystems,generators,and AncillaryService
                                        for
providers. It providesthe “marketplace” the direct Market Participants. In addition,it integratesall
power revenue meteringpoints and supportsthe consolidationof meteringdata.

                                              contract are allocatedbased on modifieddirect labor
The costs related to the MCI telecommunications
dollar ratio approach,as describedbeiow.


The MCI telecommunications  contract costs accountfor approximately$30.8 million, a majorityof the costs
in this cost center. The IS0 does not have, and has been unable to obtain from MCI, the information
necessaryto performa detailed Direct Assignmentof the costs of the MCI contract to the three IS0 service
categories, Making such an allocationwould require knowledgefrom MCI about the data needs of each of
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the three IS0 service categoriesand reliance on various aspects of the network services providedby the
MCI contract. As an alternative,the IS0 has estimated the costs of the major componentsof the MCI
services.

The MCI charges are viewed as falling under two broad categories:charges that are assessedfor services
utilized by all IS0 employees,and those that are assessedfor utilization by employeesin specific groups
such as Operations, Market Services, Compliance, and the Department of Market Analysis. The first
category includes the Voice Premises and Shared Network Services costs, totaling approximately$3.7
million per year. These MCI costs were allocatedto the three IS0 service categoriesbased on the total IS0
labor dollar ratios relatedto each cost category.

The second category,totaling approximately$27.1 million, was allocated,where possible, based on usage
factors. The followingsteps were used for the allocation.

                                                                             infrastructurecosts (that
First, about $1.8 million,or 22% of the Bandwidthand Wide Area Network(IOWAN”)
is, data backbone)were allocateddirectly to the ASREO OperationsFunction,as this capacity is set aside
for connectedentities.

For the remaining$25.2 million,the major functionalgroups in the IS0 that were utilizingthe Bandwidthand
WAN Usage (that is, access charges, Internet, redundancy),and Data Premises cost categories were
determined.For each functionalgroup in these departments,the appropriatelabor dollar ratios were utilized
to allocate the costs to the three IS0 service categories;and the remainingMCI Costs were then allocated
to each service category basedon the correspondingheadcount.

The results of the allocationprocedurefor MCI Costs are providedin the table below.




Cost Allocation

Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISo’ three unbundledservicecategoriesbased on
                                                                                         s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
Allocation Matrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories,

Allocated based on Labor Dollar Ratios- Special

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1442     Production Support Services

Description:

The ProductionSupportServicesDepartmentconsistsof the followingsupport units: UNIX
              Data Base Administration, NetworkOperations.
Administration,                       and

Althoughthese groups have differentskills sets, the commongoal of ProductionSupportServicesis
to provide24 x 7 availability,and secure reliablesystems,data bases,and networksto support all
businessfunctionswithin the ISO.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on DirectOperatingcosts

1451     Information Security Services

Description:

Accurateand confidentialinformationis criticalfor safe, reliablegrid operationsand efficient markets
through secure e-commerce. informationSecurityServices(“ISS”) is responsiblefor the securingand
safeguardingof information,whether in repositoryin the IS0 computersystemsor in transit via networks
and communication    systems. Activitiesthat supportthis continuousprocessare informationsecurity
policies,procedures,and standardsdevelopmentfor both internalusers and market participants. ISS is
also responsiblefor the education,awarenessand complianceof these policies,proceduresand
                                                        for
standards. As well, ISS providessecurity requirements the design, engineeringand implementation       of
security infrastructurefor existingand new applications,communication   systems,and e-commerce
solutions, Other activitiesISS providesare the monitoringand auditingof securitylogs, administration of
remoteaccess platformsand digital certificates,enablingapplicationsto use certificates,encryption
technologies,and respondingto and investigatingsecurity incidentsleadingthe Security Incident
ResponseTeam (SIRT). ISS also supportsbusinesscontinuityplanningand testing for the IS0 and
externalparties.

Cost Allocation Methodology and Percentages:

                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.
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Allocatedbasedon DirectOperatingcosts




1460     Corporate & Operation Systems Group/

1422     Application DevelopmentServices

Description:
ApplicationDevelopment                                is                   for
                          Services(“ADS”)department primarilyresponsible the development
and supportof virtuallyall IS0 production           systems,includingboth operations
                                          application                               and
             systems.The department composedof the followingsevenareas,four of which are
administrative                          is
headedby LeadApplicationEngineers:

 l   ControlSystems(2 staff, 1 contractor)
 l                        (1
     Markets& Scheduling lead,3 staff, 7 contractors)
 l                          (1
     Metering& Settlements lead, 2 staff, 11 contractors)
 l   EnterpriseSystems(1 lead, 3 staff, 6 contractors)
 l   Data Warehouse(1 lead, 5 staff, 3 contractors)
 l   Application            (1
                Architecture architect)
 l   ADSC Outsourced                                   9
                       Contract(1 accountmanager/lead, consultants)

         systemsresponsibilities
Operations                     include:

 l   Grid Planning
 l                    &
     Grid Engineering Maintenance
 l   Grid Control& Management    (EMS)
 l   Scheduling,                     and
                 OutageCoordination Reporting
 l   MarketExecution
 l   MarketSettlement,  Invoicingand Payment
 l   Meter Data Collectionand Validation
 l   Marketmonitoring,  Analysis& RegulatoryReporting
 l   Tariff and ContractCompliance
 l                                          and
     Disputeand IssueTracking,Management Reporting
 l   Data Warehouse

              SystemsResponsibilities
 Administrative                     Include:

 l   Enterprise                 (employeelife cycle, asset & changemanagement, desk)
               ServicesManagement                                            help
 l   HumanResources
 l   Budgeting
 l   EmployeeBonusCalculation

The department                                                     life
              engagesin all aspectsof the full systemsdevelopment cycle (SDLC),including
businessanalysis,requirements                                                    implementation,
                             definition,functionaland technicaldesign,development,
                        and               of             In
and ongoingmaintenance enhancement applications. addition,ADS is responsible the   for
           and              of                               life
development maintenance both the systemsdevelopment cycle (SDLC)methodology the        and
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definitionand extensionof the applicationarchitectureframeworkused by the enterprise.

Standardized componentarchitecturesand commontechnicalstandardshave been adopted,a
commonSDLC is near completionand the leadershipstructureis in placeto managethe full complement
of IS0 resourcesrequiredto fulfill the missionof the group.


Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

Allocatedbased on DirectOperatingcosts

1461      RT Operations Applications Support

Description:

RT OperationsApplicationsSupportis responsiblefor providingreal-timeas well as historical
operationaldata to DispatchOperationsand other relatedfunctionsfor the purposeof operatingthe
CaliforniaIS0 grid. Responsibilitiesincludethe maintenanceand operationof IS0 owned data acquisition
and databasesystems relatedto the deliveryand displayof operationaldata. RT OperationsApplications
Supportcost center ensuresoperationaldata meets or exceedsthe reliabilityand availability
              for
requirements the safe, efficientand reliableoperationof the IS0 grid. The delivery and presentation
of the operationaldata is in accordancewith all applicableIS0 technicalstandards,practices,
proceduresand policies. In additionto maintainingand operatingthe data acquisitionand database
systems,the RT OperationsApplicationsSupportcost center will maintainsthe existing and future
                                                                                       of
interfacesto IS0 internaland externalsystemsrelatedto the collectionand dissemination real-time
operationaldata.

RT OperationsApplicationsSupportBusinessDeliverables:

RT OperationsApplicationsSupportcost center providesthe followingservicesas they relate to the
collection,delivery and presentationof operationaldata:

 l    Cutoverto a new EMS system(ABBIBailey)at the end of the year 2001.
 l    Databasemaintenancefor the followingmajor systems- SCADA,Network,GOTS, Master IOC,
       SCADA IOC, STAR, ICCP,AdvancedApplicationsand PI.
 l    Applicationmaintenanceand supportfor the followingsystems- Data Acquisition,AGC, Resource
       Scheduler,Resourcemonitor,MDAS Onlineand PI.

 SpecificAreas of Support:

 AGC (AutomaticGenerationControl)-

 l                                       and
      Support Unit AGC Testing(Development Production)
 l    OperatingReserve
 l    Control PerformancePrograms(CPS)
 l    System Load Calculation
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 SystemInterfaces:

Meter Data AcquisitionSystems(MDAS)Interface
SchedulingInterface(Sl) interface
Plant Information(PI) System Interface
    s
Bill’ interchangeScheduler(BITS) Interface
SLIC Interface(Bailey System)

HardwareRelatedSystems:

 l Mapboard
 0 Western SystemsCoordinatingCouncil(WSCC)Workstations
 l ParticipatingLoad Agreements(PLA)
 l Energy ManagementSystem(EMS) DevelopmentRoom Systems
 l Energy ManagementSystem(EMS) ProductionRoom Systems
 l RemedialAction Scheme(RAS) Systems
 l GenerationControl Project(GCP) Systems(Developmentand Production)
 l Plant Information(PI) Systems

GenerationControl Project(GCP):

 l       Operationand Maintenanceof GCP Systems (Folsomand Alhambra)
 l       EMS Data AcquisitionSystems
 l       Supportof SMSC monitoring

 Applications:

 l Energy ManagementSystemAlarm Processing
 l GenerationControl ProjectAlarm Processing
 l Resourcemonitoring
 l ResourceScheduling
 l OperatingReserve
 l InterchangeScheduling
 0 Control PerformanceProgramsCalculations
 l System Load Calculations

 GeneralSupportof User Organizations:

 . Grid Ops
 l Operationsand Engineering
 l Market Compliance
 l Market Operations
 l Meter Data AcquisitionSystems(MDAS)
 l OperationsSupport& Training(OSAT)
 l InformationSystemsData Warehouse

 24X7 On Call Support:

     l   Energy ManagementSystemsystems
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 l    GenerationControl Project Systems
 l    Plant InformationSystems
 l    SystemInterfaces




Cost Allocation Methodology and Percentages:


                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
the approachnoted here. The resultsof the allocationprocessare shown in full on the IS03 Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

 DirectAssignment

                CAS                    CONG                      ASREO
                100%                    0%                        0%

 1462        Field Data Acquisition 8 Data Quality

Description:

                   of
The responsibilities the Field Data Acquisition& Data Qualitygroup are as follows:

 l    Supportingthe Remote IntelligentGateway(“RIG”)interfacesystem in the daily operationof power
       Generation,scheduling,and control of the IS0 ControltedGrid. The AutomaticGenerationControl
       (AGC) system simultaneously     controlsGeneratingUnit output to match resourcesto Load and
       maintainfrequency.GeneratingUnits offeringregulationservicesmust be capableof being controlled
       by the IS0 EMS. RIG interfaceunits meet the IS0 standardsfor transportingAGC signals. The IS0
       has the ability to send either set point or raise/lowersignals. Additionally,the RIG has multipleports
       to allow control to be switchedbetweenthe Generatorand the ISO.

 l    Verificationand processingof raw meter data into SettlementReady data, which the IS0 uses for
       generatingpreliminaryand final financialsettlementstatementsfor the Market Participants,Market
       Surveillanceand reports.

 l    ProvidingSettlementReady meteringdata for the IS0 billing system,including:

       -      Auditingthe IS0 meter inspectionprocessand providingengineeringjudgment relatedto
              proposedand existingmeteringsystems;
       -      Operatingand maintainingMeter Data AcquisitionSystems(“MDAS”)that directly acquire
              meteringdata from IS0 meteredentitiesand receivemeteringdata from SCs;
       -      Auditing meteringdata collection,storageand processingsystemsof the SCs;
       -                                                        for
              Maintainingthe meteringstandardsand specifications approvedmetersand metering
              systems.
       -      Coordinatingand approvingproposedmeteringsystem-engineering   designs.

Cost Allocation Methodology and Percentages:
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The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                    s
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.




DirectAssignment

           CAS                       CONG                     ASREO
               38%                    3%                       59%

1463     Corporate 8 Operation Systems

Description:

The Corporate& OperationSystemsgroup supportsReal-TimeOperationsApplicationSupport(1461),
Field Data Acquisition& Data Quality(1462), and Post OperationsApplicationSupport(1467).

Cost Allocation Methodology and Percentages:

                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservice categoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

Allocatedbased on DepartmentDirect costs

1467     Post Operations Application Support

Description:

The Post OperationsApplicationSupportand Administration (POASA)is responsiblefor supporting
                                                    to
applicationsand functionalityof systemsinterconnected variousOperationsSystemsplatforms.
                                       to
POASAprovidessystemsadministration the Meteringsystemsand systemsanalystssupportto the
Settlementsystems. This departmentdirectlysupportsASREO in providingtimely and
accuratedata.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Direct Assignment

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            CAS                     CONG                      ASREO
             0%                      0%                        100%

1468      Corporate Application Support

Description:

CorporateApplicationSupportand Administration(CASA)supportsbusinessapplicationsoftwarefor
Corporate& StrategicDevelopment(Human Resources,ProjectOffice, and Communications),        Finance
and Accounting,Facilities,Legal & RegulatoryAffairs, and informationServices.This team also supports
variousenterprise-wide applicationsincludingInternetand lntranet.

                     this
For new requirements, team is responsiblefor performingthe initial requirementsanalysis,
evaluatingproducts,and installing,configuringand customizingpre-packaged applicationsfor the stated
                                                   of
customers.For implementedsystems,responsibilities this team includeapplicationadministration,
problemmanagement,on-goingmaintenance,                      and
                                             enhancements, integrationof supportedsoftware.
Supportedsystemsincludebut are not limitedto the following:

 l Oracle Financials(Corporate);GeneralLedger,AccountsPayable,AccountsReceivable,Projects,
                                                                          Oracle Financials
     Purchasing,Fixed Assets, Oracle FinancialAnalyzer,and Cash Management,
     (Market);General Ledger,AccountsPayable,AccountsReceivable,and ElectronicData Interchange;
 0 Best! Software- lmperativHuman ResourcesManagementSystem;Payrolland Roles (self-service
    web application)
 l               -
   Documenturn EnterpriseDocumentManagementSystem
 l Internet& lntranet
 l Peregrine(a.k.a. Remedy)- Action RequestSystem;Help Desk, ChangeManagement,    Asset
     Management,Service LevelAgreement,TransmissionRegistry,ResourceRegistry,Settlement
     Dispute System,and more.
 l Rational- All SoftwareDevelopmentToolsets;RequisiteProand Cleat-Caserepositories

                                                               for
This team has customerrelationshipmanagementresponsibilities those departmentslisted above.
We primarilysupportthe “General”   departmentsof the organization.Some of the communicationaspects
                                                                                               s
of the Internetsite serve CAS and ASREO.Additionally,there are workflowapplicationsin Peregrine’
Action RequestSystemthat supportsboth CAS and ASREO.The Market Financialssystem is the only
systemdirectly supportingto ASREO.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

Direct OperatingCosts




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11500 VP - Grid Operations Division/

1511     VP - Grid Operations General

Description:

The VP Grid Operationsoverseesall aspectsof the IS0 Operationsdivisionand is responsiblefor the
                                                                   for
safe and reliableoperationof the power grid; assumesresponsibility ensuringthat transmission
standardsand reliabilityof electric operationsare maintainedat high levels;overseesor influences
                                              of
directlythe developmentand implementation numerousprocesses,proceduresand technologies
           to
necessary enable the deploymentof the IS0 organization;and assumesresponsibility the   for
              of
development operationsand engineeringcapabilitiesnecessaryto promotethe timely implementation     of
the IS0 activitiesconsistentwith applicableorders of regulatorybodies includingFERC orders, NERCand
WSCCpolicies.


Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocatedbased on DepartmentDirect costs

1521     Grid Planning

Description:

The IS0 Grid PlanningDepartmentis chargedwith reviewingthe ParticipatingTransmissionOwners
(“PTOs”)Bulk Power Program(a five-yearProgramis filed with the IS0 every year) and reviewingthe
                       for
studiesthe PTOs perfom7 connectingnew generatorsor Load to the IS0 ControlledGtid. The IS0
                 (if
recommendations any) are either implementedby the PTOs or the problemis resolvedvia dispute
resolutionprocesses.

Additionally,Grid Planningconductsstudiesto determineReliabilityMust-Run(“RMR”)contract
requirements,                                                                          Grid
              dual fuel generatorrequirementsand providessupportto OperatingEngineering.

Planninghas been involvedin the preparationof the new IS0 Reliabilitycriteria and conductsseveral
meetingsper year with stakeholdergroups,and is workingtoward commonfacility ratings(when
feasible).

Additionally,Grid Planningleads or supportsseveral Regionaland Nationaltechnical/engineering
groups includingthe WSCC,the Western Interconnection
CoordinationForumand NERC.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservice categoriesbased on
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                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
                                                            which directly assigntheir costs to the
AllocationMatrix. Results are shown here only for departments
three categories.

DirectAssignment

             CAS                      CONG                      ASREO
             100%                      0%                        0%

11530      Operations Scheduling Groupj

1542       Outage Coordination

Description:

OutageCoordinationperformsactivitiesrelatedto the following:

 l    Approvingor denying outage requeststo enable necessarymaintenanceto preservereliabilityof
       Generationand transmissionfacilitieswhile at the same time assuringreal-timeoperatingreliability.

 l    Long-termplanning(up to 12 months)for outage coordinationfor both Generationand transmission
       facilities,interfacingnew Generationand transmissionfacilitiesinto the existing IS0 ControlledGrid.

 l    Recording,maintaining,and reportingdata relatedto outages.

 l    Ensuringaccuratepath ratingsand integratedoutagesto ensure minimumreliabilitystandardsare
       adheredto. The coordinatorswork closelywith OperatingEngineersto help accomplishthis.

 l    Path ratings and allocationpercentagesare finalizedby the OutageCoordinators,then passedon to
       the inter-tieschedulinggroup. Additionally,these allocationsare passedon to ExistingContracts
       holdersand postedon the Internetas part of the ControlArea responsibilities.

 * When transfer paths are derated,congestioncan occur. Althoughthis processof mitigatingcongestion
                             above, it differs in that by allocatingthe reducedpercentagesto the
    is similar to “scheduling”
    schedulinggroup, congestionis pre-emptedby reducingscheduleson a scheduledbasis, which
    allowsfor better managementof congestion.

Cost Allocation Methodology and Percentages:

                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

             CAS                      CONG                      ASREO
             100%                      0%                         0%


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1544      Real-Time Scheduling

Description:


OperationsSchedulingis the primaryinterfacebetweenthe IS0 and its 11 adjacentControlAreas as
a part of the WSCC interconnection.Meteredand scheduledinterchangeis coordinatedon a pre-schedule,
Real-Time,and after-the-factbasis with the neighboringControlAreas. Direct and distinct
functionsalso are performedto enablethe IS0 markets,congestion,and settlementsprocess, All of
                                        to
these functionsrequire accommodations assurethat ExistingContractsare honored.

All interchangetransactionsmust be coordinatedwith adjacentand externalControlAreas within the
                                                                             and
limits of the IS0 jurisdictionaltransmissionsystem. This includesimplementing monitoringall
interchangeschedulesinto and out of the IS0 ControlArea regardlessif they are scheduledon Existing
TransmissionContract(“ETC”)or New Firm Uses (“NFU”)transmission. Interchange     scheduledon behalf
of all SCs must be reconciledto meet WSCC and NERC criteria.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISo’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

            CAS                     CONG                      ASREO
             75%                     15%                       10%

1564      Operations Scheduling

Description:

Real- Time Schedulinggroup consistsof a team of NERC and WSCC certifiedoperatorsworkingshift
                                                                              are
work in the Control Center in Folsomand Alhambra.PrimaryDuties/Responsibilities as follows:

 l    ImplementsReal-Timeinterchangescheduleswith adjacentControlAreas. Primarycontactwith
       ScheduleCoordinatorsfor all Real-Timescheduleissues
 l    monitorsand adjust interchangetransactionsas necessaryon Real-Timebasisto maintainschedules
       within path limitations.
 l    Coordinatewith Gen. Dispatch,GRC and CERS to obtain requiredimbalanceenergythough existing
       Market processesand Out of Marketsourcesas needed.
 l                                        of
      PerformAllocationand Implementation Real-Timeschedulecurtailmentsbased on Unscheduled
       Flow or Path derates.
 l    ProvidesControlArea and TransmissionProviderApprovalfor ElectronicTagging Systemin RealTime.
 l    ProvidesServicesas PSE for ElectronicTaggingto support CERS sales & exchangeson inter-ties.
 l                                                    scheduling
      Recordsand Logs informationpertainingto Inter-tie
 l                              for
      PrimaryIS0 responsibility compliancewith NERC Policy 3 and WSCC MORC Section3


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 Cost Allocation Methodology and Percentages:
                                                     s
 The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                         s
 the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
 AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
 three categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

1565      Pre-Scheduling and Support

Description:

                           and
The staff of Pre-Scheduling Supportcoordinatesand schedulesenergy resourcesto meet system
Load requirementsand pre-checksall scheduleswith adjacentutilitiesto ensure correct intertie
plans. Primarydepartmentcontact is with settlementsand billing departmentand client relations, We
                                                 and
serve as a liaison betweenreal-time,pre-schedule after-the-factstaff. We support CONGand ASREO
as neededwith these responsibilities.In additionwe maintainrecords
       s            s           s.
of ETC’ and ATC’ for the PTO’ This is a cumbersomeprocessthat requiresattentionto detail and
much manual intervention.


Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservice categoriesbasedon
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment

             CAS                    CONG                     ASREO
             75%                     15%                      10%

p40       Engineering and Maintenance Group]

1543      Loads and Resources

Description:

The Loads and Resourcesgroup is responsiblefor the followingactivities:

 l    PreparingControlArea and local area Load and resourceadequacyassessments;
 l    Engineeringsupport for environmentalissues impactingControlArea resources;
 l    Developingand maintainingvarious IS0 operatingprocedures;
 l    Participatingin WSCC committeesand workgroupsrelatedto interconnected   power systemoperations;
 l    Providingsupportfor ExistingContract,MSS and System Units, and other Schedulingissues;
 l    Providingengineeringsupportfor IS0 contractsissues (e.g., RMR contract,ParticipatingGenerator
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         Agreement(“PGA”),etc.)
    l                                                                             ADS”), Generator
        Providingengineeringsupportfor IS0 projects(e.g.,AutomatedDispatchSystem (‘
         Communication Project (“GCP”),etc.)
    l   SupportingEMS projectdevelopment.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

              CAS                    CONG                     ASREO
              100%                    0%                       0%

1547        Engineering and Maintenance

Description:

The Directorof Engineeringand Maintenancemanagesthe followingwork groups:
 l  TransmissionFacilities
 l  OperationsEngineering
 l  NorthernEngineering
 l  SouthernEngineering
 l  Loads and Resources
 l  CoordinatedOperations

                       of
    The responsibilities this departmentare:

l   Develop IS0 OperatingProcedures
l   Work with Outage Coordinationin analyzingclearances
l                                           for
    Preparesummerand winter assessments the local areas
l   Supportthe Real-TimeOperationand provideon-callservices
l   Reviewtransmissionplans, projects,and new Generationfor the local areas
l   Provide Engineeringsupportfor RMR and reliabilityGeneration
l   Preparedisturbancereportsfor the local areas
l   Participatein WSCC and RTO relatedactivities



Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservice categoriesbased on
                                                                                         s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
Allocation Matrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

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1558     Transmission Maintenance

Description:

                                                                and
TransmissionMaintenancemanagesthe creation,implementation, enforcementof IS0
MaintenanceStandards;providesfor high quality, safe, and reliableservice;and managesthe creation
                 of
and implementation this IS0 applicationfor SchedulingLoggingIS0 California.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

            CAS                      CONG                     ASREO
             98%                      0%                       2%

1561     Southern Area Engineering

Description:

SouthernArea OperationsEngineeringis responsiblefor the technicalsupportof the southernportionsof
                                                                              directlysupportthe
the area operationand Bulk systemoperations, Nearlyall Area OE responsibilities
categoryof ControlArea Services.

Core functionsof the Area OEs includethe following:Conductseasonaloperatingstudies, establish
seasonalOTCs and write procedures,support OutageCoordinationin the analysisof Transmissionand
Generationclearances,identifyand preparefor grid reliabilityconcernsof the upcomingseason
(includingproposingand managingshort-termprojects),provideongoing active participationin and
guidanceto, the Grid Planningprocess,provideon-call OE supportfor real-timeemergencies,represent
the IS0 in technical reliabilitygroupsand committeesof WSCC and regionalreliabilityforum.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

           CAS                      CONG                      ASREO
           100%                      0%                        0%

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          1562     Northern Area Engineering

          Description:

          NorthernArea OperationsEngineeringis responsiblefor the technicalsupportof the northernportions
                                                            directlysupportthe categoryof ControlArea
          of the IS0 Grid. Nearlyall Area OE responsibilities
          Services.

          Core functionsof the Area OEs includethe following:Conductseasonaloperatingstudiesand write
                                                    in
          procedures,support OutageCoordination the analysisof Transmissionand Generationclearances,
          identifyand preparefor grid reliabilityconcernsof the upcomingseason (includingproposingand
          managingshort-termprojects),provideongoingactive participationin and guidanceto, the Grid Planning
          process,provideon-call OE supportfor real-timeemergencies,and representthe IS0 in technicalreliability
     I_   groups and committees.
          Cost Allocation Methodology and Percentages:
                                                              s
          The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                                  s
          the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
          AllocationMatrix. Results are shown here only for departmentswhich directlyassigntheir costs to the
          three categories.

          DirectAssignment

                     CAS                      CONG                      ASREO
                     100%                      0%                        0%

          1563     Coordinated Operations
          Description:

          The CoordinatedOperationsGroup is responsiblefor identifyingissuesthat impactthe efficient
          operationof Grid Operations,especiallyas they interfacewith outsideentitiessuch as the CERS,and
          internalgroups such as MarketOperations,Market Quality,OSAT, Scheduling,Settlements,Legal,
                                              and
          Complianceand Outage Coordination, then developingsolutionsthat benefitall of CAISO.


          Cost Allocation Methodology and Percentages:
                                                             s
          The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                                 s
          the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
          AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
          three categories.

          DirectAssignment
-_
                      CAS                     CONG                      ASREO
                    * 90%                      2%                        7%
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~1550 Regional Coordination Group1

1546     Security Coordination

Description:

SecurityCoordination   monitorsreal-timesystemconditionsto observeand mitigatepotentialproblems
                                       in                            with
as well as react to systememergencies the WesternInterconnection, the primaryfocus on the
California-Mexico             of
                   Sub-region WSCC (CAISO,LDWPand CFE ControlAreas).SecurityCoordinators
                                                                                        with
havethe final authorityto directoperationsbefore,during,and after problemsor disturbances a
regionalimpact.

Cost Allocation Methodology and Percentages:
                           are                    s
The costs of this department allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                     s
the approachnotedhere. The resultsof the allocationprocessare shown in full on the 60’ Cost
                                                          which directlyassigntheir costs to the
AllocationMatrix. Resultsare shownhere only for departments
three categories.

 DirectAssignment

           CAS                      CONG                     ASREO
            100%                     0%                       0%

1566     Regional Coordination

Description:

RegionalCoordination                  includebeingan active interfacewith WSCC and NERC
                       responsibilities
committees,                  task                                    in             the
              subcommittees, forces and work groups;participating and influencing transitionof
both WSCC and NERCto their new organizations,    WECC and NAERO;trackingthe aforementioned
groups’  work and reportingto executivemanagement; WSCC and NERCcompliancereporting; RTO the
                                             with                                     in
effort includingseams issues and coordination both internaland externalorganizations supportof
CAS, CONG, and ASREO.

Cost Allocation Methodology and Percentages:


                           are                     s
The costs of this department allocatedto the ISO’ three unbundled servicecategoriesbasedon
the approachnotedhere. The resultsof the allocationprocessare shown in full on the IS03 Cost
                                                           which directlyassigntheir costs to the
AllocationMatrix. Resultsare shown here only for departments
three categories.

DirectAssignment


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             CAS                      CONG                     ASREO

              70%                      12%                       18%



(1560      Operations Support and Training Groud

1546       Operations Support and Training Group . General

Description:

                                                                                of
The Directorof OSAT is responsiblefor: overseeingpreparationand administration training across
all operationsgroups, other groups in the ISO, and MarketParticipants;providingsupportfor IS0 efforts
to interfacewith and incorporatemarkets and deregulationfrom an operationsperspectiveas they
developinside and outsidethe ISO; updating,creatingand maintainingall IS0 OperatingProcedures;
implementingEmergencyResponseprogramsand procedureswithin the IS0 and in coordinationwith
state and federal externalagencies;developingand maintainingEMS Displaysas requiredand requested
by Control Room personnel;providingpresentationdevelopmentand supportfor the Operations
organization;and providingbudgetdevelopmentand supportfor the OperationsDivision.

OSAT providestraining and supportto all groups within the OperationsDivision,to other departments
within the ISO, and to MarketParticipants,to ensure and enhancesystemreliabilityas well as to facilitate
and expand workablycompetitivemarkets. The primaryrole of OSAT is to providesupportto all
departmentswithin the OperationsDivision,includingthe developmentof training programs,dispatch
support and developmentof tools for operations(specialprojects).

Cost Allocation Methodology and Percentages:

                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentsthat directlyassigntheir costs to the three
categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

1549      Operations Training Group

Description:

The OperationsTraininggroup is responsiblefor identifying,creating,developingand facilitatingor
administeringappropriatetraining materialfor grid operations,marketoperations,scheduling,other IS0
groups, and Market Participants;procureand implementnecessaryhardwareand softwareto accomplish
this training;monitorthe activitiesof variousgroups internaland external,for example;operationssupport,
operationsengineering,NERC & WSCC personnelto supportthe variousoperations
training needs includingprocedures,reports, EMS needs,tools developmentand other support activities
as needed. Specificroles and responsibilities  include:

 l    Directingthe activitiesof the traineesto assure appropriatematerialand processesare createdto

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      accomplish                        other IS0 groups,and MarketParticipants;
                  trainingfor operations,
 l   Managing  supportfunctionsto assuretrainingon procedures,tools and othertrainingneedsare met for
      all operations                               and
                     groups,other IS0 departments, externalentities;
 l             and            the
     Preparing managing trainingbudget;
 l                 the
     Representing IS0 in WSCC, NERCand other forumsas required.



Cost Allocation Methodology and Percentages:
                           are                    s
The costs of this department allocatedto the ISO’ three unbundled servicecategories  basedon the
                                                                                  s
approachnotedhere. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
                                                 that
Matrix. Resultsare shownhere only for departments directlyassigntheir costs to the three categories.


DirectAssignment

           CAS                       CONG                     ASREO
            63%                       24%                      13%

1554     Special Projects Engineering

Description:

SpecialProjectsEngineering      providesreportsto FERC,NERC and WSCCon ControlArea Operations.
It providessupportto all groupswithinthe Operations     Division,to other departmentswithinthe ISO,and
                          to
to MarketParticipants, ensureand enhancesystem reliabilityas well as to facilitateand expandworkably
                                                                        is
competitivemarkets. The primaryrole of SpecialProjectEngineering to provideOperations
           with
personnel the best technology,                                         that
                                      tools and advancedapplications solve operatingproblems,improve
                                                                                                       and
grid reliabilityand facilitatethe accurateand timely reportingto variousregionalreliabilityorganizations
government    agencies.

                                 include:
Specificroles and responsibilities

 l                 of
     Management SpecialProjectsthat supportOperations;
 l                 of
     Development Wind Generation     Forecasting tools
 l                             of
     Creationand Maintenance Transmission    Maps and Geographic     data;
 l   Researchand Development                              of
                                -Analysis and Installation tools to improvegrid reliability;
 l                in                                                                  and
     Participating NERCand WSCC committeesand task forces relatingto Operations Scheduling;
 l   Field-testingproposedNERCand WSCC Compliance        Templates;
 l   Developing                        controlof DistributedGeneration
                 conceptsfor operational                                resources;
 l               and
     Developing directingR&D programssuch as the three-yearCERTSprogram;and
 l                                and
     DevelopingBoardDocuments Tariff languagefor proposedchangesin IS0 Operations            and
      Markets.

Cost Allocation Methodology and Percentages:
                           are                     s
The costs of this department allocatedto the ISO’ three unbundled servicecategoriesbasedon
                                                                                      s
the approachnotedhere. The resultsof the allocationprocessare shown in full on the ISO’ Cost
                                                           which directlyassigntheir costs to the
AllocationMatrix. Resultsare shown here only for departments
three categories.

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        DirectAssignment

                       CAS                     CONG                    ASREO
                        87%                     4%                      9%




        1555        Operations Support Group

        Description:

        The Operations                             for          the
                         SupportGroupis responsible supporting variousmarketand grid operations
        needsof the IS0 Real-Time  operationscontrolroomfloor and the Operations  businessunit. Includedin
                                                           and
        thesesupportfunctionsare emergencypreparedness responsecoordination,          emergencyevent
                    interconnected
        notification,             ControlArea, UDC and PTO agreement     support,AncillaryServicescertification
                                                of            for
        testing,creation,trackingand maintenance procedures Grid, Marketand Scheduling        Operations,
        variousreportingfunctionsincludingWSCC RMS data collectionand reporting,   development  and
                      of
        maintenance the IS0 businesscontinuityplan includingbusinessrecoverycontingency      procedures,  and
                                                                          include:
        othersupportactivitiesas needed. Specificroles and responsibilities

            l                of
                Management Operations     supportfunctionsto assurethat procedures,  tools, reporting,and other
                 supportneedsare met for all operations                               and
                                                       groups,other IS0 departments externalentities;
            l                          the
                Preparingand managing Operations      SupportCost Centerbudget;
            l                the
                Representing IS0 in WSCC, NERC and otherforumsas required;
            l   Identifyingand managing changesin the tariff, protocols,and marketdesignthat would improvemarket
                 and grid operations;
        .   l   State and federalagencyand intra-ControlArea entity communications  interdependency  support;
            l                            in                                               of
                Managingand participating projectsrelatedto the creationor enhancement IS0 operations,
                                                or
                 functions,processes,procedures communications.

            Cost Allocation Methodology and Percentages:
                                       are                     s
            The costs of this department allocatedto the ISO’ three unbundled servicecategoriesbasedon
                                                                                                  s
            the approachnotedhere. The resultsof the allocationprocessare shownin full on the ISO’ Cost
                                                                       which directlyassigntheir costs to the
            AllocationMatrix. Resultsare shown here only for departments
            three categories.

        DirectAssignment

                      CAS                     CONG                     ASREO
                       60%                     22%                      19%

        1559        Operations Application Support

        Description:
        OSATOperations    Applications Supports primaryrole is to providesafe, reliableelectrictransmission
...-.
  ...                              withinthe IS0 ControlArea at the lowestreasonable throughthe
        services,to all Californians                                                   cost
        development,                 and                                           and
                      enhancement supportof specializedcustomapplications expertsystemsdesigned

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     to improvethe efficiencyand effectivenessof IS0 real-timeoperators

      l                   with
          Communication other businessunits to insurethat OperationsSystemshas the abilityto maintain
           the functionalityof existingprocessesin supportof changesto interconnectedsystems.

      l               of
          Coordination OperationsSystemsand IS0 businessunits to direct the acquisitionof new systems
           and applicationsin supportof end user requirements.

      l                                                                                      for
          Activelyseek the replacementof existingsystemsas necessaryby providingspecifications RFls,
                                                                    test
           RFQs,or bid proposalsto implementchangesto development, and productionenvironments.

      l   Coordinatepersonnelfrom within the OperationsApplicationsdepartmentfor the development  of
           specificationsand bids for the procurementof new systemsor applications,and to provide
                         or                to
           improvements modifications existingsystemsand applications.

      l   Duringproject implementation, developlevelsof expertisefor OperationsApplicationssupportstaff and
           assurevendor complianceto projectdesign specificationsby maintainingconsistentstaff involvement
           in all phasesof projectdevelopment.

      l   Developstandardsand proceduresfor the testingof deliveredproductsto assure they meet all
           requirementsof the originalspecifications.

      l                        or              to
          Provideimprovements modifications existingsystemsand applicationsto supportend user
           requirementsthroughproject design,productdevelopment,coordinationof comprehensive       testing of
           deliverablesto assure all requirementsof the original specificationshave been followed.

      l   Coordinateprojecttransitionfrom factorydevelopmentand testing to a productionenvironmentby
           providingtrainingfor end-users,developinggeneralsystem informationfor all IS0 personnel,delivery
           of all applicablemanuals,and provideinterfaceinformationon vendorsfor OperationsApplications
           support personnel.

      l   EnsureOperationsApplicationsstaff adhereto IS0 change managementand configuration
           managementpoliciesand proceduresin supportof Grid Operationssystems,applicationsand
           databases.

     Cost Allocation Methodology and Percentages:
                                                        s
     The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                             s
     the approachnoted here. The resultsof the allocationprocessare shown in full on the ISo’ Cost
     AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
     three categories.

     DirectAssignment
                CAS                       CONG                      ASREO
                80%                        10%                       9%

     11570    Grid Operations Groud

:-   1545      Grid Operations

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Description:

The Grid Operationsgroup is responsiblefor the following:

 l Overseeingand performingall Real-TimeOperationsof the IS0 ElectricalGrid and ControlArea,
    includingmanagingall aspectsof the CaliforniaControlArea;
 l Ensuringreliable and safe operationof the IS0 ControlledGrid;
 l Ensuringreliableoperationincludesany authorityneededto maintaincontrol of the Grid, including
                          s                                  UDC’ in regardsto system reliability
    authorityover all PTO’ and Utility DistributionCompanies(‘     s”)
                              the
    and systememergencies, abilityto order must run generatingunits on-line, and manualLoad
    sheddingas needed;
 . CoordinatingLoad and system restorationafter any contingencyor major systemdisturbancein
    cooperationwith the WSCC SecurityCoordinator;
 l Declaring,when appropriate,a StatewideSystem Emergencyas detailedin the DispatchProtocol,
    suspendingmarketoperations,and settingAdministrativeprices for AncillaryServicesneededto
    resolvethe emergency;
 l Ensuringcompliancewith all WSCC, NERCcriteria, and IS0 protocolsand procedures;
 l Workingwith the WSCC SecurityCoordinatorto ensure compliancewith all policiesand operating
    proceduresapplicableto the Western Interconnection;
 l ControllingapplicableGenerationto meet inter-tieobligations,contributingto frequencycontrol, and
    meetingany emergencyresponses,and WSCC and NERC criteria to supportthe transmissionsystem
    and operationof the energymarket in the most reliable manner;
 l                            for
   Maintainingdocumentation Generationoperations;
 l ProcuringadditionalAncillaryServicesas necessary;
 l Managingoperationof eligible RegulatoryMust-Take,Must-Run,and RMR Generation;
 * DispatchinginterruptibleLoadsto maintainrequiredreserve levels during systememergencies;and
 l CoordinatingGenerationresourcesto meet system Load requirementsand satisfy contractual
    obligations,and respondingto systemfrequencydeviationsand voltage issues.

 Cost Allocation Methodology and Percentages:


                                                   s
The costs of this departmentare allocatedto the ISo’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

           CAS                      CONG                      ASREO
           80%                       10%                       10%




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11600 General Counsel Division/
1611      General Counsel - General

Description:

                                                               and
The GeneralCounselcost center (1611) reflectsthe administrative office supportfor the General
Counsel. The GeneralCounselGroup providesservice relatingto all the unbundledGMC categories.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

1631      Legal and Regulatory

Description:

                                       s              fall
The Legal & RegulatoryDepartment’responsibilities broadlyinto three functionalareas: legal,
 regulatoryand legislative. The majorityof the departmentscosts and resourcesare associatedwith the
regulatoryarea. In that area, the departmentdirectsthe preparationof pleadings,Tariff amendmentsand
other regulatoryfilings; developsfactual recordsand other supportingmaterials;communicatesand
                           s
advocatesthe Company’policy objectivesto regulatoryauthorities;reviewsand monitorsregulatory
                                            s
activitiesas they may affect the Company’objectives;respondsto regulatoryinquiriesand
                and
investigations; providesadviceand counselconcerningTariff and other regulatoryrequirements.
The departmentpursuesthese activitiesbefore both state (ElectricityOversightBoard, Public Utility
                                               and
Commission,CaliforniaEnergy Commission) federal (FederalEnergyRegulatoryCommission)
                                                                                 at
regulatoryauthorities, In the legislativearea, the departmenteducatespolicymakers the state and federal
                                  s
levelsconcerningthe Company’operations,practicesand policies;providescommentsand testimonyon
proposedlegislation;respondsto inquiriesfrom lawmakersand the state and federal executiveoffices, and
otherwisefacilitatescommunication    among Companymanagementand state and federal policymakers. In
the legal area, the departmentnegotiatesand drafts key vendorcontractsand other agreements,manages
                s
the Company’ litigationand otherwiseoverseesthe resolutionof disputes,and counselsmanagementon
contract,employment,intellectualpropertyand other generalcorporatematters.Additionally,the
departmentmaintainsthe corporaterecords,includingthe corporatebylaws,and Board minutes.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

Allocatedbased on DirectOperatingcosts




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1641       Market Analysis

Description:

The Departmentof MarketAnalysis(DMA) reviewsand monitorsthe efficiencyand effectivenessof
                                                       and
the IS0 markets(AncillaryService,CongestionManagement Real-Time),generatesperiodicreports
of marketperformance,investigatesobservedor reportedrule violationsand/or marketanomalies(e.g.
gamingbehavior),and developsand/or evaluatesproposedmarketdesign changes. Additionally,the
departmentconductsspecializedstudies and analysesand respondsto informationrequests,servingin
                         s
essenceas the Company’in-houseeconomicconsultants. Specificfunctionsof DMA include:


                                                       including:
 monitoringthe marketand reportingon market performance,

 l    Indicesof market performance,includingprices,competitivebaselinecosts, Loads,supply availability,
        outagesand bidding patterns
 l    Prices in related markets(such as naturalgas, emissions,surroundingareas,etc.)
 l    Level of imports/exports
 l    Ancillary Service Bid Sufficiency
 l    CongestionManagementMarketand Firm TransmissionRights
 l                        of
      Competitiveness the Market
 l    Investigatingand reportingon potentialgamingand marketpower abuses.
 l    identifying,reviewingand reportingdeliberateor inadvertentviolationsof market rules or contractsthat
        affect the efficiencyof the market.
 l    Performingspecialstudiesof the impactsof biddingbehavioron marketefficiencyand performance.
 l                                                                                       and
      Performingspecialstudieson marketefficiencyand performance,both independently at the
        requestof IS0 management,IS0 Boardof Governors,FERC and various outsideagencies.
 l    Respondingto numerousdata requests(includingsubpoenas).
 l    ReviewingIS0 rules and protocolsfrom a marketperformanceperspective,and recommending         specific
        changes in marketrules and protocols.
 l    Workingwith other areas of the IS0 to implementthese changesaffectingmarket performance.
 l    Supportingthe MarketSurveillanceCommittee,by completingspecial analysisto support reportingand
                             of
        recommendations the MSC to IS0 management.
 l    Reportingto FederalEnergyRegulatoryCommission,      CaliforniaPublic Utility Commission,Electricity
        OversightBoard and many other governmentaland regulatoryagencies.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

             CAS                      CONG                      ASREO
              14%                      21%                       65%




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1651     Board of Governors

Description:

                                                                and
                expensesfor Boardmeetings,Boardmembercompensation traveland
Boardof Governors
                   for
expensereimbursement Boardmembersto attendBoardmeetingsand performotherdutieson behalf
of the ISO.

Boardexpensesare consideredoverhead,and are allocatedto the three GMC servicecategories.

Cost Allocation Methodology and Percentages:

                           are                    s
The costs of this department allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                     s
the approachnotedhere. The resultsof the allocationprocessare shownin full on the ISO’ Cost
                                                          which directlyassigntheir costs to the
AllocationMatrix. Resultsare shown hereonly for departments
three categories.

Allocatedbasedon LaborDollarRatios

II660    Compliance Group]

1661     Compliance

Description:

                     of
The responsibilities the Compliance                fall
                                        Department broadlyinto two areas (reflecting     the
              of
combination two units duringa corporatereorganization):     operational             and
                                                                        compliance data quality.In
the first area,the department                         the
                               monitorsand measures operational                    (e.g.
                                                                     performance the deliveryof
                                                        of                    to
specificquantitiesof energywithinspecifictimeframes) marketparticipants ensurecompliance          with
contractual                and
             commitments other requirements.Additionallythe Department                       and
                                                                                implements calculates
authorizedpenaltiesand sanctionsfor instancesof noncompliance.Effortsin the past year have
focusedon encouraging                                          and
                         suppliersto followdispatchinstructions reducingthe under-scheduling      of
Load. In the area of data quality,the department  overseesprograms   designedto assurethat the meter
data on which financialsettlementsare basedis of sufficientlyhigh (i.e. reliable)quality. Theseprograms
includetrend analysis,for purposeof identifyingpotentialmetererrors,site visits for purposesof testing
participants’                                        for                                   to
              meter units, and trainingand assistance purposesof enablingparticipants comply
                                                                                            has
with self-auditrequirements.Apart from these activities,in recentmonths,the department assumed
                                 the
a substantialrole in developing IS0 DemandResponsiveness         programsand assuringthat the
performance   data usedfor settlementof transactions consummated   throughthese programsis accurate
and correct.




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Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment

           CAS                      CONG                     ASREO
            76%                      9%                       16%

1662     Data Quality Group

Description:
See descriptionunder 1661.
Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approach noted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment
           CAS                      CONG                     ASREO
            67%                      0%                       33%




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11700 VP - Market Services Division1


1711       VP- Market Services General

Description:

The VP of Market Servicessets policy, plans,directs, and coordinatesthroughsubordinateDirectors
the activitiesof the Client Relations,Settlements,MarketOperations,MarketQualityand Contractsand
SpecialProjectfunctionsof the ISO.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                      s
the approachnoted here. The results of the allocationprocessare shown in full on the W’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

Allocatedbased on DepartmentDirect costs

1731       Contracts and Special Projects

Description:

The Contractsand Special Projectsdepartmentis taskedwith:

 l    Developingand negotiatingcontractswith Market Participants;
 l    Assistingother Departmentsand Sectionsregardingcontracts,compliance,FERC matters,and other
       special projects.

Contractswork responsibilitiesinclude:

 l    Developmentof Agreementswith New Clients and ExistingClients;
 l    Developnew agreements;execute pro forma agreementsas neededto expandparticipationin the ISO,
       Interconnected ControlArea OperatingAgreements(“ICAOAs”)with other ControlArea operatorsthat
       have not yet executedthe ICAOA,and others;and
 l                                           of
      Assist in enhancingclient understanding IS0 agreementterms and conditions.

ContractActivitiesBased on RegulatoryDirectives:

 l    Amend agreementsas neededand file with FERC;
 l    Reviseand maintainthe standardpro forma agreements;and
 l    If FERC sets the agreementfor hearing,negotiatethe settlementof all interventions. If settlement
        cannot be reached,participateand providetestimonyfor the litigationproceedings.

 SpecialAgreements:

 l Determineif changesare neededto specialagreements,such as the TCA;
 . Develop,negotiateand administerSummerReliabilityAgreements;
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 l    Develop,negotiateand administerany subsequentreliabilityagreementsthat may be neededwith the
       changingmarketdesign;
 l                                 to
      Assist in crafting amendments the RMR agreementand obtain executedagreementsresulting
       thereof;and
 l    DevelopBlack Start, Voltage Support,and EmergencyAssistanceAgreements

             of
Administration Contracts:

 l                                   of
      Responsiblefor administration all contractsexecutedwith Market Participants,includingbut not
                                        deadlinestracking,and records management;
       limitedto contract interpretation,
 l    AdministerReliabilityMust-RunAgreements(“RMR”),includingbut not limitedto assistingSettlements
                                                                to
       in the monthlyinvoicingprocess,negotiatingamendments RMR Agreement,negotiatingsettlement
       for dual fuel issues,and developingrates; and
 l    Reviewoperatingproceduresand operatinginstructionsfor consistencywith the IS0 agreementsand
       IS0 Tariff.

SpecialProjects:

 l    Administeringthe ADR requirementsof the IS0 Tariff;
 l    Participatein FERC litigationregardingthe municipalutilities;
 l    Project leader for the Access Charge proceeding;
 l    Facilitaterelationshipwith State agenciesduring the Californiacrisis, includingCERS;
 l    Supportor lead teams on ExistingContractsissues;
 l    Maintaina library of all FERC orders impactingagreementsand the IS0 Tariff;
 l    Participatein FERC proceedingsnot initiatedby Contracts,includingcomplaints;
 l    Participatein CPUC proceedings,as needed;
 l    Responsiblefor IS0 Tariff search program;
 l    Responsiblefor Agreementtracking system;and
 l    Participatein the GeneratorCommunications    Projectthat establishesAGC requirementsfor
       generators;

Other ProjectsWork Requirements:

Supportof Other Departmentsas neededwhich may includethe Legal and RegulatoryDepartment,other
MarketService Departments Operations,MarketSurveillanceand IT.

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

             CAS                     CONG                     ASREO
              60%                     9%                       31%




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1741     Client Relations

Description:

The Client Relationsgroup is the primary businessinterfacebetweenthe IS0 and its clients (i.e., SCs,
                                                           and
transmissionowners,ParticipatingGenerators,municipalities, adjacentControtAreas):

 l Managethe overall businessrelationshipbetweenthe IS0 and each of its Clientsat all levels;
 l Facilitatethe businessrequirementsfor ParticipatingGenerators;
 l Resolveoperational,marketand tariff issueson behalfof Clients;
 l Certify and train Clients(SchedulingCoordinators,ParticipatingGeneratorsand others) for participation
    in the CAISO markets;
 . Managethe stakeholderprocessfor marketand operationalchanges;
 l Communicateeffectivelywith market participantson market,operationaland regulatoryissues,

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on the
                                                                                       s
approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
Matrix. Results are shown here only for departmentswhich directly assigntheir costs to the three
categories.

DirectAssignment

            CAS                      CONG                      ASREO
            37%                       9%                        53%

1720     Settlements]

1721     Billing and Settlements

Description:

Settlementand Billingfunctionsare performedfor all transactionsin the ControlArea. Information
regardingthese transactionsis forwarded,on a regularbasis to the ISO. Schedulinginfonnationfor
Day-Aheadand Hour-Aheadis validatedprior to Real-Timeoperationsto insurecompliancewith IS0 tariff
and protocols. Subsequentto the SettlementPeriod,operatingand billing data is compiledby the
Settlementsand Field Data Acquisitiondepartmentsin order to produce,in accordancewith the ISO’      s
paymentcalendar,both a preliminaryand a final settlementstatementfor each Market Participant.
Examplesof major billingand price componentsnecessaryfor determiningfinal billingare as follows:
marketclearing prices, bid prices,ex-post prices,and meteredinformationfrom generators,Loads,and
inter-tie points. These financialtransactionsinvolve billionsof dollars each year. PreliminaryStatements
and Final Settlementsare transmitteddaily in accordancewith the IS0 calendarto each Market Participant,
The monthlyGrid ManagementChargesare summarizedon Preliminaryand last Final Statementfor the
                                                                                         s
trade month. MonthlyPreliminaryInvoices,which summarizeall chargeson the month’ Preliminary
Statements,and monthlyFinal Invoices,which summarizethe differencebetweenthe summedPreliminary
Statementsand the summedFinal Statements,are sent to each Market Participantin order to collect and
pay for use of IS0 marketand ControlArea needs.

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L.
‘    This departmentsupportsall three service categories.

     Cost Allocation Methodology and Percentages:
                                                         s
     The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                              s
     the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
     AllocationMatrix. Resultsare shown here only for departmentsthat directly assigntheir costs to the three
     categories.

                                            costs
     Allocatedbased on SupervisedDepartments’

     1722     Application Support

     Description:

     The BusinessProcessDevelopment     group assuresthe best use of technologyto facilitatethe
                                                                                      s
     expedient,timely and accuratedeliveryof settlementstatementsand invoicesto ISO’ Market
     Participants.The group identifiespotentialissueswith existingbusinessprocesses/protocols  and
                                                                                              of
     assistsmanagementin formulatingsolutions. It facilitatesthe definitionand implementation new
     settlementprotocols/processes.It also serves as the ptimarydepartmentinterfacewith the Information
     Services(IS) Divisionto ensureadequatesystem,operationsupport and developmentservicesare in
     place to supportthe missionof the Settlements& BillingDepartment.

     The primaryfunctionsinclude:

                                                                                                to
      . Work with Departmentstaff to identifyand prioritizeprocessand technologyenhancements support
               s
          ISO’ Settlementsand Billingoperation.
      l monitor IS0 marketdesign activities,interpretTariff changes,define detail processrequirements,and
         determineautomationand implementation      strategies.
      l Prepare businessrequirementdocumentsfor systemdevelopmentprojects,facilitateand assist in the
          detail system design, monitorproject progressand test new systems/so&are to assurecompliance
         with businessrules.
      l Identifypotentialissues with existing businessrules and assist senior managementin formulating
          solutionsand new settlementprotocols.
      l As the primary IS liaison,assure adequatesystem resources,operationsupport and development
                                                          s
         services are in place to supportthe Department’operation.
      l Representthe Departmentin enterprisewide technologydevelopmentefforts.
      l Collaboratewith other MarketServicesand IS0 Departmentsto improvedata flows for effectiveand
          efficient businessoperation.

     Functionsare in support of all three service categories.

     Cost Allocation Methodology and Percentages:
                                                        s
     The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                             s
     the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
     AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
     three categories.

     DirectAssignment

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           CAS                       CONG                      ASREO
           14.3%                     6.9%                      78.8%

1723     Tariff and Contract Implementation

Description:

The RMR Settlementgroup, under the Managerof Tariff and ContractImplementation,     performsall
tasks associatedwith the validationof RMR invoicesprovidedby the RMR GeneratorOwners.In this role,
the RMR SettlementGroupdeals with, on almosta daily basis the IS0 dispatcherswho handlethe RMR
units,the RMR Generatorowners and the Participating    TransmissionOwnerswho is billed for such RMR
charges.The RMR Settlementgroup implementsall neededsettlementvalidationmodifications       brought
about by majoritydecisionsof the membersof the RMR ContractSchedule0 task force. Additionally,    the
RMR Settlementsgroup validatesinvoicesof the SummerReliabilityGenerators.The Managerof Tariff
and Contract Implementation  supportsthe efforts of the RMR Sefflementgroup in dealingwith both internal
and external RMR-relatedmatters,as well as assiststhe Directorof Settlementsin the developmentand
               of
implementation IS0 Tariff modifications,and other contractimplementation  issues.Becausethis group
dealswith a broad range of issues relatedto CAS and ASREO,we shouldbe consideredin both of these
categories,

Cost Allocation Methodology and Percentages:
                                                    s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                          s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentsthat directly assign their costs to the
three categodes.

DirectAssignment

            CAS                      CONG                      ASREO
             15%                      7%                        78%

1724     BBS - PSS

Description:


The PreliminarySettlementsgroup is responsiblefor the accuracyand timelinessof Preliminary
                                                   of
SettlementStatements,the correct implementation the necessarymanualwork-aroundto the existing
Settlementssoftware,and issuingthe PreliminaryInvoiceto Market Participants. The group coordinates
with the Operationsgroup to obtain informationnecessaryfor productionof correct Settlement
Statements,and investigatesthe Settlementimpactof proposedoperatingconditionsand client
suggestions. The group works with ApplicationSupportgroup and softwarevendorsto design,test,
and enhance Settlementsoftware. The group is responsiblefor maintainingand operatinga dedicated
billingsystem for Market Participants,ensuringtimely and accuratebills and paymentprocessingand
managingthe authorizedcredit limit for IS0 customers. The group maintainsthe Master File and is
responsiblefor Settlements’                                                       for
                             specificreviewof the tariff and makingrecommendations changingthe
tariff and protocols. The group supportsthe Grid ManagementCharge UnbundlingTeam and Firm
TransmissionRights Team.



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Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhichdirectly assigntheir costs to the
three categories.

DirectAssignment

              CAS                    CONG                    ASREO
              15%                     7%                      78%

1725       BBS - FSS

Description:

The departmentis responsiblefor the accuracyand timelinessof Final SettlementStatementsand
                       of                               to
correct implementation necessarymanualwork-arounds the existingSettlementssof&ware         and
issuingthe Final Invoiceto Market Participants.The group supportsthe Client Relationsand Market
                                                                              of
Qualitygroups in resolvingMarket Participantissues,and correct implementation approveddisputed
items. The group is also responsiblefor maintainingand operatinga dedicatedbilling systemfor Market
Participants,ensuringtimely and accuratebills and paymentprocessing. The group coordinateswith
Operationsto obtain informationnecessaryfor productionof comzctSettlementStatementsand supports
the TransmissionAccess Charge Team and the SettlementImprovement      Team. Settlementsalso handles
all data requests,discoveryrequirementsand FERC mandates,as they relateto Settlementsinformation.
Functionsare in supportof all three servicecategories.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO‘ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment

              CAS                    CONG                     ASREO
              15%                     7%                       78%

II 750     Market Operations Groud

1751       Market Operations

Description:


The Market Operationsgroup consistsof MarketOperations(1751), Managerof Markets (17X4, and
Managerof Applications(1753),Business Solutions(1755) and Market Integration(1757). The group is
responsiblefor conductingDay-Ahead,Hour-Aheadand Real-TimeMarkets,including:

 * Managinginter- and intra-zonalcongestionand makingchanges(via AdjustmentBids);
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 . Redispatchingschedulesto resolve congestionat the lowestpossiblecost to customers;
 l  Managingthe AncillaryServiceand imbalanceenergy markets;and calculatingthe marketclearing
     prices for spinning,non-spinning,replacementand regulation;
 l  Ensuringthat the SCs postingof requirementsregardingcongestion,losses and AncillaryServices,
     etc., is reliable;
 l  Ensuringcontinuousinterfacebetweenthe IS0 and the SCs that will allow SCs to make best use of
     transmissionresources;
 . Providingtechnicalexpertiseon the designof the Californiamarketrelatedto the bidding,scheduling,
     and settlementsystems;
 l  Reviewingmarket design and prices on a daily basis;
 l  Providingengineeringanalysisto support SCs, settlements,and daily operations;
 l  Providingtechnicalanalysis,input, and reviewof vendor supplieddesigndocumentsfor compliance
     with ISOdefined requirements;
 l  Ensuringthoroughtesting of vendor suppliedapplicationsby creatingtest objectives,conditions,and
     scriptsto be used for module;
 l  Designingand performingintegrationtesting;
 l  Documentingand managingvendor-supplied        schedulingapplicationsoftwarechangesin accordance
     with release managementprocedures;
 l  ConductingSC trainingand SC certificationtesting;
 l  Performingsoftware life cycle activitiesin supportof in-houseschedulingsoftwarerequirements
     necessaryfor marketreliabilityand accuracyas detailed in the FERCfiling and IS0 protocols;
 l  Administeringall interfaceapplicationsbetweenthe SI databaseand all other subsystems;
 l  Providingsystem administration  supportfor test and developmentenvironments;  and
  . Providingan advisoryrole to IS0 Market Surveillancegroup on market power issues.

 Cost Allocation Methodology and Percentages:
                                                    s
 The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                         s
 the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
 AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
 three categories.

                                       Costs
Allocatedbased on SupervisedDepartments’

1752      Manager of Markets

Description:

Markets

Grid ResourceCoordinators(GRCs)on this team are responsiblefor operatingall CAISO marketsfor the
                                                    s
Day Ahead, Hour Ahead and Real-timeoperations. GRC’ on this team author, review and maintainall
documentedproceduresand protocolsin accordancewith CAISOtariff and policies. This team is the
primaryinterfacewith Operations,

Functions:

 l    ForecastCAISO ControlArea Load requirements
 l                                           the
      Determinein coordinationwith Operations’ hourly AncillaryServicerequirementsand procurement
 l    FacilitateCongestionManagementmarkets

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 l    ProcureReal-TimeEnergy(BEEP)for CAISOsystem needs
 l    Log and procureOut-of-Marketenergy purchases
 l    Defineand documentMarket Operations’  procedures
 l                                                with
      Coordinateand plan marketservice requirements Operations’


 Cost Allocation Methodology and Percentages:


                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhichdirectly assign their costs to the
three categories.

DirectAssignment

             CAS                    CONG                      ASREO
              20%                    30%                       50%

1753      Market Application & Testing

Description:


The MarketApplicationand Testinggroup is responsiblefor conductingDay-Ahead,Hour-Aheadand
Real-TimeMarkets,including:

 l  Managinginter- and infra-zonalcongestionand makingchanges(via AdjustmentBids);
 l  Redispatching schedulesto resolvecongestionat the lowest possiblecost to customers;
 l  Managingthe AncillaryService and imbalanceenergy markets;and calculatingthe marketclearing
     prices for spinning,non-spinning,replacementand regulation;
 l  Ensuringthat the SCs postingof requirementsregardingcongestion,losses and AncillaryServices,
     etc., is reliable;
 l  Ensuringcontinuousinterfacebetweenthe IS0 and the SCs that will allow SCs to make best use of
     transmissionresources;
 l  Providingtechnicalexpertiseon the design of the Californiamarketrelatedto the bidding,scheduling,
     and settlementsystems;
 . Reviewingmarketdesign and prices on a daily basis;
 l  Providingengineeringanalysisto support SCs, settlements,and daily operations;
 l  Providingtechnicalanalysis,input, and reviewof vendor supplieddesign documentsfor compliance
     with ISO-definedrequirements;
 l  Ensuringthoroughtesting of vendor suppliedapplicationsby creatingtest objectives,conditions,and
     scripts to be used for module;
  l Designingand performingintegrationtesting;
 l  Documentingand managingvendor-supplied       schedulingapplicationsoftwarechangesin accordance
     with release managementprocedures;
  l ConductingSC training and SC certificationtesting;
  l Performingsoftwarelife cycle activitiesin support of in-houseschedulingsoftware requirements
     necessaryfor market reliabilityand accuracyas detailed in the FERCfiling and IS0 protocols;
  l Administeringall interfaceapplicationsbetweenthe Sl databaseand all other subsystems;

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 l Providingsystem administration                                             and
                                  support for test and developmentenvironments;
 . Providingan advisoryrole to IS0 Market Surveillancegroup on marketpower issues.




Cost Allocation Methodology and Percentages:
                                                    s
The costs of this deparlmentare allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                        s
the approachnoted here. The results of the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment

            CAS                     CONG                     ASREO
            20%                      30%                      50%

1755     Market Support and Development

Description:


                                                                       of
The Market Developmentand Supportgroup has the overall responsibility the SI applicationand all
other Market Application(i.e. RMR scheduling,OperatorInterface,ExistingTransmissionContract
application,and InterchangeTransactionScheduling)and Databasedevelopment,        support and security,
for support of Day-Ahead,Hour-Aheadand the Real-TimeEnergyMarkets. Also is responsiblefor
overseeingand administeringall interfaceapplicationsbetweenthe Sl operationaldatabasesand all other
subsystems(e.g.,. EMS, SA, BBS, BITS, etc.}. Providessystemadministration    supportfor test and
developmentenvironments.This positionensuresfacilitationof Marketsthrough reliable Market
applicationsand databases. All applicationsand interfacesmust be designedand operatedto increase
the transparencyand the efficiencyof the Markets. Workingwith SCs is criticalto the successof the
IS0 in providingneededinterfacesto facilitateMarkets.

Cost Allocation Methodology and Percentages:


                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

DirectAssignment

            CAS                     CONG                      ASREO
            29.6%                   10.4%                      60%

1757      Market Integration

Description:

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       Engineerson this Market Integrationteam are experts in marketengineering,informationand
                                                                                                  as
       schedulingdesign. They are responsiblefor verifyingall businessrequirementsare implemented per
       designof BusinessSolutions,MarketEngineeringand in accordancewith CAISOtariff. They providethe
       technicalexpertisefor ensuringall Market Systemsare integratedwith legacyapplications,processes
       and procedures. Engineerson this team also analyzethe operationaland financial impactsof market
                    and                          on
       functionalit)r provide recommendations new protocolsor proceduresbased on the analysis.



       Cost Allocation Methodology and Percentages:
                                                          s
       The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                              s
       the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
       AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
       three categories.

       DirectAssignment

                  CAS                      CONG                     ASREO
                   20%                      30%                      50%

       11760    Market Quality Group/

       1756     Market Quality

       Description:

       Market Qualityprovidesa centralteam in MarketServicesthat ensures the qualityof the “bid to book”
       markettransactiondata prior to the settlementsprocess. MarketQuality achievesthis by identifying,
       monitoring,recommending,implementing     and/orexecutingprocesses,procedures,systemenhancements
                              s
       and controls in the ISO’ businessprocessflow to ensure accuratemarkettransactiondata flows throughout
                                                                                      s
       the IS0 businessprocesses. The MarketQualityteam works togetherwith the ISO’ Operationsand
       MarketServicesbusinesspersonneland systemsto accomplishthis task. Since its
       inceptionin June 2001, MarketQualitybusinessprocesseshave been implementedin the followingareas:
         l  Technicaldispute analysisand resolution
         . Grid and Market Operationstransactionalreview and correction
         l  Meter data and RMR transactionalreview and correction
         l  Master File Data Coordination

        Specifictasks performedby the team includethe following responsibilities:

        l Developand deploy MarketQualitystandards,proceduresand controlsfor new and existing business
           processesincludingmarket,settlement,and metering
        a Continuallyreviewcurrent market,settlementand operationalprocessto ensure efficiencies;identify
            potentialproblemsand design qualityassurancesolutionsfor preventativeand/orcorrectiveactions.
        l                                on
          Identifysoftware inefficiencies businesssystems;work with businessownersto enhancesoftware
           efficiencyand design solutionsfor monitoringand quality control.
        l Identifypolicy issues,conductimpactassessmentand work with Client Relations,IS0 businesssystem
-_--        owners and policy office to get resolution.

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 l Reviewnew IS0 tariff and contract languageto ensure intentof agreementsis being met by software,
    manualprocessand floor procedures;ensure controlsand processesare in place to avoid relevant
    client disputes.
 . monitordisputes,resolvediscrepanciesand determine,developand deploy necessarychangesto
    businessprocess,proceduresand controlsto resolveissues.
 l Participatein Market and Settlementdesign teams in developingnew marketfunctionalitythat ensures
    the qualityof market and settlementinformationand transactionsthroughoutthe businessprocess.
 l Calculatebillablequantitiesand businesstransactionswhen necessaryto ensure valid resultsand
    quaiii settlementsdata.
 l Participatein Market and Settlementimplementation, testing and MarketSimulationof new Market
    functionalityfrom businessquality perspectiveas well as a customerperspective. Also, test potential
    problemscenariosto identifyshort and long term solutions.
 l Ensurethat Grid and MarketOperationstransactionalprocessesand proceduresadhereto the Market
    Qualitystandards,controlsand procedures. identifyareas where additionaltraining is required.

Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

DirectAssignment

           CAS                      CONG                      ASREO
            33%                      33%                       34%




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(1800 VP Corporate and Strategic De4

1811     VP Corporate and Strategic Devt. = General

Description:


This cost center containsthe costs of the VP Corporateand StrategicDevelopment.The VP Corporate
and StrategicDevelopment   overseesthe HumanResourcesDepartment,the Communications      Department,
                                                                          RegulatoryPolicyand the
and the PolicyOffice (the PolicyOffice is comprisedof StrategicDevelopment,
Officeof StrategicSupport- OSS).

Cost Allocation Methodology and Percentages:
                                                  s
The costs of this departmentare allocatedto the W’ three unbundledservicecategoriesbased on
                                                                                       s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
three categories.

                                      .Costs
Allocatedbasedon SupervisedDepartments’

1821     Communications

Description:

The Communications                                                     functionsof the ISO,
                     group is responsiblefor the CorporateCommunications
                                               and
includinginternaland external communications media relations:

 l Serve as PublicInformationCoordinators     during all electricalemergencies;hold news conferencesand
    coordinateprint, radio and TV news coveragefrom IS0 control room, playing an importantrole in
        maintainingreliabilityof the Grid by promotingconservation,
 l Developand distributenews releases,advisoriesand media kits, and serve as media spokespersons
    for the ISO.
 l Plan and executecorporatespecialevents;
 . MaintainIS0 SpeakersBureauand SpeechBank;
 . Reviewand analyzeexpenditures,operations,and workflowof the unit to maximizeoperational
    efficiencyof the organization;
 l Coordinatedevelopmentof businessplans, processes,and proceduresto manageinternaland external
    communications.

 Cost Allocation Methodology and Percentages:
                                                   s
The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                        s
the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
AllocationMatrix. Resultsare shown here only for departmentswhich directly assigntheir costs to the
three categories.

Allocated basedon Direct Operatingcosts



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      1841     Human Resources

      Description:

                                           is            for
      The HumanResourcesDepartment responsible healthand welfarebenefitsdesignand
      administration, compensation  designand administration, payroll,employeerelations,training,recruitment
      and employeeretention,   oversightof the staff augmentationfunctionthroughexternalcontractors,and
                                                           is
      employeerecordsmanagement.HumanResources an overheaddepartment;               HumanResources
      activities,tasks, and projectsserve employees            the
                                                      throughout organization.

      Cost Allocation Methodology and Percentages:
                                 are                    s
      The costs of this department allocatedto the ISO’ three unbundledservicecategoriesbasedon
                                                                                            s
      the approachnotedhere. The resultsof the allocationprocessare shown in full on the ISo’ Cost
      AllocationMatrix. Resultsare shownhereonly for departmentswhich directlyassigntheir costs to the
      threecategories.

      Allocatedbasedon LaborDollarRatios

      11830    Strategic Developmend

      1831     Strategic Development

      Description:

                   Policy Groupdepartment
      See Regulatory                    descriptionstated below.


      Cost Allocation Methodology and Percentages:
                                 are                     s
      The costs of this department allocatedto the ISO’ three unbundled  servicecategoriesbasedon
                                                                                             s
      the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
      AllocationMatrix. Resultsare shownhere only for departments which directlyassigntheir costs to the
      three categories.

      Allocatedbasedon LaborDollarRatios

      ~1860    Regulatory Policy Groud

      1851     Office of Strategic Services

      Description:

      See RegulatoryPolicyGroupdescriptionstatedbelow.




L-.




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       Cost Allocation Methodology and Percentages:
                                                          s
       The costs of this departmentare allocatedto the ISO’ three unbundledservicecategoriesbased on
                                                                                              s
       the approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost
       AllocationMatrix. Resultsare shown here only for departmentswhich directlyassigntheir costs to the
       three categories.

       Allocatedbasedon Direct Operatingcosts

       1861      Regulatory Policy

       Description:

       The StrategicDevelopment,  RegulatoryPolicyand Office of StrategicServicesareas collectivelyform
       the PolicyOffice (PO). The PO is the focal point for articulatingthe long-termstrategyof the CAISOand
       leadingthe developmentof CAISO policy positionsthat are consistentwith the businessand regulatory
       strategy. The PO shouldprovideconsidered,steady policyguidancefor daily operationsas well as a
       foundationfor respondingto unexpectedeventsand developments. In additionto leadingthe
       developmentof policy positions,the office will be active in ensuringthat these positionsare consistently
       communicatedinternallyand externallyin all forums(across CAISOdepartments,Board of Governors,
       regulatoryand legislativeenvirons,and engineeringvenuessuch as the WSCC, stakeholderforums).

       The PolicyOffice will often direct policydevelopmentwork but, other departmentsmust do much of
       the work. The PO is not a self-contained  work unit - policy must be developedfrom a broad array of
       perspectivesfrom within and outside of the company.“Directingwork”meansframingthe policy
       questionsand identifyingthe information/analyses   necessaryto properlyanswerthe questions,
       managingthe work processnecessaryto developinformation,final integrationof input, and written
       articulationof the policy. The PO shouldfacilitatecross-departmental   collaborationand initiateinteraction
       with other agencies.

       I. Mission Statement
                                                                  cooperationin the developmentand
       To articulateStrategicObjectivesand ensure interdepartmental
                       of
       implementation corporateand regulatorypoliciesand plans in a way that guides performanceof the
               s
       CAlSO’ Core Functions.
       II. General Roles and Responsibilities

       A.       Developlong-termStrategicObjectivesand plans, policies,and corporategoals.
       B.       Overseeprogram,pmject, and processmanagementfor the CAISO.
       C.       Overseethe alignmentof daily operations,regulatoryfilings and projectswith policiesand Strategic
                Objectives.
       D.       Maintainactive dialoguewith key policy makers,regulatoryagencies,regionalentities and other
                ISOS.
       E.       Serve as Liaisonfor Board of Governorsby, workingwith the CorporateSecretary,managingthe
                                      and
                Board communications administration;

       III. Specific Activities and Tasks

.-_’   ArticulateStrategicObjectivesand Plans

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1.                                                                          and
        Definecorporatevision for long term, taking regulatory,technological, politicalconsiderations
        into account;
2.      ArticulateStrategicObjectivesand envisionedcore functions;
3.      Define corporategoals to reflectthat vision;
4.                                                    of
        Overseethe developmentand implementation short- and long-termstrategicplansto achieve
        objectives(includesdefinitionof corporategoals);and
5.      Maintainactive dialoguewith RTOs and regionalentities.

Developpoliciesconsistentwith strategicobjectives:

        Identifyand prioritizemissingor erroneouspoliciesthat are not consistentwith strategicobjectives,
        based on businessimpact;
                                                 of
        Facilitatedevelopmentand implementation new and/or revisedpolicies,practicesand processes
        that supportobjectives;
        monitorand assess resultsof implementedpoliciesand make necessaryadjustmentsand
        changes.

                                                                                      s
Guide CAISO developmentactivitieswithin regulatorycontextto ensurethat the corporation’long-term
policy and strategicobjectivesare alignedwith regulatorypolicy:

1.      Maintainactive dialoguewith regulatoryagenciesand key policy makers;
2.                                                        in
        Maintainawarenessof all regulatorycommunications progress;
3.      Reviewand interpretregulatorydirectivesand determinepotentialimpactson current IS0
        operationsand strategicobjectives/plans;and
4.      Reconciledirectivesof various regulatoryentities;

Anticipateand facilitateresolutionof challengesfacingthe CAISO:

1.      Maintainawarenessof all work efforts plannedand underwayat the IS0 via projectcommunication
        materials,meetingminutes,email correspondence,    telephonecommunications,etc.; and
2.      Provideinsightto others relatedto Californiaissues and needs.

                                                       with
Guide CAISO marketdesign changesto ensure compatibility current IS0 marketdesign featuresand
strategicobjectives/plans:

1.      Ensure interdepartmental cooperationin developingreformsand design changesto CAB0
        markets;
2.      Assess proposedmarket changesfor consistencywith CAISO policiesand StrategicObjectives
        and compatibilitywith existing marketdesignfeatures,
3.      Compileinformationon and assessthe design and operationof other restructuredelectricity
        markets;and
4.      Maintainactive dialoguewith other ISOs and externalenergy marketexperts.

                                                      to
Developand overseeprogram,project,and processmanagement ensureorganizationaleffectiveness:

        Developand ManageCorporateInformationFlow;
        Developand managecorporatereferencerepositoryfor such items as StrategicObjectivesand
        plans, CAISO policies,electric marketdesign information,CAISO history,and other documents
        (e.g. FACT Sheets,PIR, ExecutiveSummaries,etc);
        OverseeProject SteeringCommitteeand provide Enterpriseresourceadministration     (assignment);


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4.      Developand maintainCAISOprojectmanagement                    and
                                                         methodology provideprojectand process
        management   coaching;
5.      Providestaffingfor and coachingto work efforts,as required;
6.                                                               for
        Reviewand/oroverseecreationof majorwrittendocuments releaseoutsideof CAlSO(e.g.
        reportexecutivesummaries,FACT Sheets,and letters);and
7.                          and
        Budgetdevelopment administration.
8.                                      and                            and
        monitorand assessmanagement staff to ensureeffectiveness recommend        organizational
        adjustments;

      togetherwith the Corporate
Manage,                                                  communications administration.
                                Secretary,Boardof Governor            and

Cost Allocation Methodology and Percentages:

                           are                    s
The costs of this department allocatedto the ISO’ three unbundled   servicecategoriesbasedon the
                                                                                     s
approachnoted here. The resultsof the allocationprocessare shown in full on the ISO’ Cost Allocation
Matrix. Resultsare shownhere only for departments which directlyassigntheir costs to the three
categorfes.

Allocatedbasedon DirectOperatingcosts,


V. OPERATINGRESERVECALCULATION
                          also
The 2002 revenuerequirement includesa provisionrelatedto the OperatingReserve.

                               s
Fromthe inceptionof the ISO’ operations,   funds collectedaboveand beyondthose neededto cover
budgetedoperatingexpenseshave been usedto fund the OperatingReserve. Thesefunds are collected
every year at the rate of 25% of budgeteddebt service(consistingof principaland interestpayments.)The
operatingreserveis targetedto build to a level equalto 15% of overallbudgeted operatingexpenses
(excludingdebt service).

The OperatingReserveis calculatedseparatelyby unbundled      servicecategory. At December31,2001, it is
            that
anticipated for ControlArea Servicesand Congestion                    a
                                                         Management, reservedeficiencyof $5 millon
                                                 a
and $2 millionwill exist. For ASREOOperations, revenuecreditof $2 millionwill be available. The
amountof the creditor deficiencydependson (1) actualcosts incurredby each servicecategoryduringthe
                                          for
year (2) revenueunderor over-collections each servicecategoryduringthe year and (3) other revenues
                                                                            in
such as IS0 fines, (4) use of the operatingreserveto fund capitalexpenditures 2001,and (5) reserve
balancesfor each serviceat the beginningof the currentyear.

           of                                                the
Calculation the 2001 OperatingReservebalances,and accordingly, deficiencyor revenuecredit
availablefor each servicefollows.




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           CalifornlaLsO
           Calculation of Available Revenue Credit for 2002
           sinvloo
                                                                                                                                                                                                  GS      STQNQ tS4X.T    TOW
                                                                                                                                                                                                  480%      9096  430%   two96




                                                                               19,519    97,377      225.414       lW.095      16.771    101,226    218,LXU                                       45.9%    77%    468%   lc009b

                                                                                  117       583        2.402         2.240        199      ml         3.64                                        615%     55%    33.0% lWU%




                                                                                                                   (83,956I   WVJ        (67,736   (163.8(10                                      51.3%    74%    41.4% lWG%



                                                                                                               r   mw          (S.sos)   Pm         (45.911                                       406%    120%    47.4% IWG96


                                                                                 8741     2.9Sl I      5.505




                                                                                                               --I--c7,248)     (513:                          a001 Section35 Filing Allocahon
                                                                                                                                                                ofPmpossd2Wl    DebtSsmce.
                                                                                                                                                                                                  565%     409b   39.5% IWO%




                                                                                        I
                                                                                                                                                                sxchrding CMR 112,829 is
                                                                                                                                                               sh&faIi offundmg avaihbls for
                                                                                                                                                               CAPExin2Wl     dustoiaabdityto
                                                                                                                                                               issue bonds.

                                                                                                                     2.mI        450                                                              480%     90%    430%   lW.o%


        14 Nethuxwss   hi GpsntIng   Resem    (SmmLhes     9-13)      I pa0      874     2951         5bO5         (Wan)        VI21      9991       4,191



        19EhdhgRescnrBzhcc(Lhe1plwLine14)                             17,Sm    3.844     17.141       38,SOS         4,718      1.127     18,775     24.62Q
        20 Loss: Resme Requiremsnt(lS% of2002 Budget. Lms 20)         14962    2,848      8.418       26.228        14,962      1,848      8,418     26.223
        21       FYZOO.? L+w?otmg Wrdget (net]                       99.747   18,985    X123        174,855          747
                                                                                                                   99‘        18,985     56.123    174,855     NctC&M Budget(cxchxsivc       of   57 0%   109%    32.1% lW.O%
                                                                                                                                                               interest eamings. wscc
                                                                                                                                                               collection, mdothtrrtvmuss)

        22 Equal,, Rovtnua Credd Av&ble      (Line 19 leas Lms 20)    2,558      997      8,722       l2,27l       P.249       (1.721)    10.3s7     0.608)




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 ---   VI. CAPITALBUDGETPROJECTALLOCATIONS

       Capitalcosts are groupedin the Cost AllocationMatrixaccordingto the sevencategoriesshownbelow:

                               (DirectAssianment):
               1. Infrastructure                                                  Infrastructure
                                                  Items includethe EMS , Scheduling            (Sl),
               Balanceof BusinessSystems(BBS),MDAS(MeterDataAcquisitionSystem),RMR (Reliability
               Must Run),MarketAnalysissoftware,User groups,startupcosts,and workingcapital. A brief
                           of
               description the systemsare as follows:

                       SchedulinnInfrastructure  61): St providesthe informationmanagement   servicesneeded
                       by the schedulingsystem. It includesthe hardware,  softwareand databasesthat allow
                       the IS0 to collect,validate,store,transfer,archiveand auditthe energyand ancillary
                                                      or
                       servicesschedulesnominated acceptedby the IS0 from SC’        s.

                       Shedulinn  Applications(SAL: SA is the applications                s
                                                                           used by the ISO’ scheduling
                       personnelto assessthe state of the transmission  system,to evaluatethe Preferred
                       Schedulessubmittedby SCs and to establishcommittedoperatingschedules. These
                       applications includecongestionand tinsmission management      softwarenecessary  to
                                                        and               the
                       assist in congestionmanagement to determine transmission           price associatedwith
                       the use of congestedinter-zonaltransmission  paths.

                       Balanceof BusinessSystems(BBS): BBS refersto the computerand other systemsto
                                                                            to
                       supportthe followingbusinessprocesses:1) Settlements calculatepaymentsowed
                       betweenthe IS0 and SCs for imbalances, congestionand ancillaryservices;2) Billing
                       and Creditto supportaccounting,invoicing,paymentand collectionof these payments;3)
                       Generalaccountingsystemsand administrative  functionsassociatedwith daily IS0
                       operations.

                       MeterData AcquisitionSystem(MDAS)- MDAS,also called Field DataAcquisition
                       (FDA),is usedto collect meteringdatafrom all generators othersconnecteddirectly
                                                                                  and
                       to the transmission lines,tie points and zonal interfacepoints. This refersto the
                       meteringstandards,data servers,interfaceequipment,      databasesand softwarethat
                       allow the IS0 to collectthat data.

              2. Infrastructure (AllocatedItems):This categoryincludesitems which are generallyused by all
              IS0 functions,and are allocatedbasedon the resultsof the total operatingcost allocation,labor
              dollar ratios,or specific Departmentresults. ExamplesincludeIssuemanagement     system
              (Remedy),SecuritySystem(CUDA),Corporate        AccountingSystem(Oracle),HR System,
              Imperitiv,etc.

              3. Startup(AllocatedItems):Theseinfrastructureitems are used by all IS0 functions,and are
                                                                                                      costs.
              allocatedbasedon eitherthe resultsof the operatingcost allocation,or total infrastructure

              4. OtherSoftwareand Enhancements
                                            (DirectAssignment):Items includedin this categoryinclude
                                         Load program,SAN/BBS, and are allocatedbasedon direct
              EMWMDASand the Participating
              assignment.

              5. 2000 and 2001 CapitalDebt Service: Items in this categoryinclude: WSIIBBS,
L.-           EMSICIMIFDA,                                                       land, and buildingcosts.
                             EMS, SAISIIBBS,facilities,furniture,office equipment,
              They are allocatedbasedon direct assignment, operatingcosts and labordollar ratios.
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        6. Budoeted2002 Capital Debt Service:The debt servicecosts relatedto the planned2002 bond
        issuanceare allocatedto the three unbundledservicecategoriesbasedon the resultsof the
        allocationof total bond spendingto date. In the future,these costs will be allocatedto the
        appropriatecategory,as funds are spent. Budgeted2002 capital items includeoperatingsystems,
        facilities,and corporatesystems.

7. 2002 Cash Funded Capital Expenditures:As with the 2002 debt service,the cash funded capital
expendituresare allocatedto the three unbundledservice categoriesbased on the resultsof the allocation
of total bond spendingto date, and includethe same items as above: operatingsystems,facilities,and
corporatesystems.


The support for the cost allocation related to the projects in the proposed 2002 capital budget
follows (support for items 6 and 7 above). Values of individual capital projects have not been
provided to prevent such data from being used in project bidding.




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                       2002 Capita/ Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2002 Operating Systems
 Pfoject Name             Systems redesign planning
 ReferenceNumber          21        Priority    1      Essential
 Functional Allocations
    CAS         CONG   ASREO Genera/           Total
   25%          25%       50%         0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 To be used for the planning and design of either changes to the current IS0
Market Structure or for changes to
 existing systems for a more open architecture.

 impacts if Project is Not implemented
 The current systems would remain the same and the cost for changes would
continue to increase.

 Impacted Systems                   Allocation Pet,

 Various                                 100%

                                         100%

 Expenditure Justification

 System redesign




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                       2002 Capital Budget Proposed Projects
 funding Method           2002 Bond Issuance Funded
 Category                 2002 Operating Systems
 Project Name             Load Following Service/ IO-min
 ReferenceNumber          36        Priority    1   Essential
 Functional Allocations
    CAS         CONG   ASREO General           Total
   50%           0%     50%     0%             100%

 Cost Allocation I Assignment Methodology
 Direct Assignment
 Overview
 Allows for specific Generating Units to receive signals to inc or dec based on
the IS0 system Load, with potential
 savings due to a decrease in regulation procurement needed to remain
compliant with NERC CPS2 criteria.


 impacts if Project is Not Implemented



 impacted Sys terns                 A/location Pet.

 SAISI                                   100%

                                         100%

 Expenditure Justification

 Grid reliability
 System redesign
 Market savings




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                      2002 Capital Budget Proposed Projects
 funding Method       2002 Bond Issuance Funded
 Category             2002 Operating Systems
 Project Name             Enhancement    of Settlement Rerun Tools
 ReferenceNumber      43           Priority    1   Essential

 Functional Allocations
   CAS       CONG     AWE0       General      Total
   0%         0%      100%          0%        100%

 Cost Allocation /Assignment Methodology
 Direct Assignment

 Overview
  There has been a huge increase in settlement reruns due to retroactive
settlement calculations, FERC mandates
  and previous settlement errors. IS0 has a rerun tool that was designed for
occasional use. It requires significant
  operator intervention. This project aims at improving the settlement rerun tools
in the following areas:
  - Achieve a higher degree of automation and minimize operator intervention.
  - Support rerun using results from a previous rerun.
  - Provide a robust archive mechanism for rerun data.
  - Maintain a record of all reruns and data changes made .
  - Provide a central data repository for all rerun data.



 Impacts if Project is Not implemented
 Without the improvements, IS0 will face increasing difficulty in maintaining its
rerun data. In the extreme cases,
 IS0 may lose track of previous rerun activities, causing errors in subsequent
reruns.

 Impacted Sys terns                 Allocation Pet.

 Settlement                              100%

                                         100%

 Expenditure Justification

  Internal productivity, cost savings, avoided costs
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 System redesign
 Market information/accuracy/analysis




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                      2002 Capita/Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Categofy                 2002 Operating Systems
 Project Name             Migration of Settlement Client Application to Web Based
Platform
 ReferenceNumber       42           Priority    I   Essential

 Functional Allocations
    CAS       CONG     ASREO Genera/           Total
    0%         0%      100%     0%             100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  The Settlement Client Application is used by IS0 staff to view and validate
settlement data. It is built on the
  PowerBuilder (Ver 5) platform and utilizes a proprietary software library. This
platform is obsolete and
  maintenance/enhancement       has become very costly and ineffective. The goal of
this project is to rebuild the
  application on an open and standard platform to minimize long term
maintenance cost and take advantage of
  potential improvements from a newer technology platform.

 Impacts if Project is Not implemented
 Without the migration, IS0 will continue to maintain the Settlement Client
Application on the existing platform. This          -
 will result in a much higher maintenance cost. Besides, due to the limited
knowledge pool, the existing platform
 may not provide the functionality desired by the users.

 Impacted Systems                   Alloca t/on Pet.

 Settlement                              100%

                                         100%

 Expenditure Jus tifka tion

  Internal productivity, cost savings, avoided costs

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CAISO infrastructure requirement




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                      2002 Capita/Budget Proposed Projects
Funding Method         2002 Bond Issuance Funded
 Cafegory              2002 Operating Systems
 Project Name          Integration of Settlement Workaround Tools
 ReferenceNumber       41          Priority    1   Essential

 Functional A/locations
   CAS       CONG ASREO General               Total
   0%         0%  100%     0%                 100%
 CosCAllocation/ AssignmenfMethodology
 Direct Assignment
 Overview
  The goal of this project is to integrate the existing Settlement Workaround tools
into the Settlement System,
  eliminating the manual work and associated human errors. Many of these tools
were designed to handle special
  settlement exemptions and corresponding allocations. These tools require daily
manual execution. There is no
  central storage for the data created by these tools. It makes it difficult to
audit/trace the charges generated by
  these tools. Such shortcomings will be overcome when these tools are
incorporated as an integral part of the
  Settlement System.

 lmpacfs if Project is Not lmplemented
 Without the integration of these manual tools, IS0 will continue to process
certain settlement charges manually,
 with a higher operation cost and higher probability for errors.

  Impacted Systems                  Allocation Pet,

  Settlement                             100%

                                         100%

  Expenditure Jusfification

  Internal productivity, cost savings, avoided costs
  Market information/accuracy/analysis

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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2002 Operating Systems
 Project Name             Control Area / BITS
 ReferenceNumber       40           Priorjty    1   Essential
 Functional Allocations
   CAS          CONG   ASREO General           Total
  100%           0%     0%      0%             100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  This project would provide Control Area check out utilizing similar technology to
the ADS dispatching System. This
  system would provide a GRID interface similar to the Transmission Scheduling
Interface in BITS, allowing only
  Control Areas to see permitted Transmission MW by Tiepoint. This system
would integrate with BITS to allow for
  Check out during Real-Time.

 impacts if Project is Not implemented
  If the project is not implemented, then IS0 will still continue checking out via
telephone.

 impacted Systems                   Aiiocafion Pet,

  Scheduling Application                 70%
 Scheduling Infrastructure               30%

                                         100%

 Expenditure Justification

 Grid reliability
  Market savings
  Internal productivity, cost savings, avoided costs



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                       2002 Capital Budget Proposed Projects
 Funding Method        2002 Bond Issuance Funded
 Category              2002 Operating Systems
 Project Name             Price Response to Dynamic Demand
 ReferenceNumber       39          Priority     1     Essential
 Functional Allocations
    CAS         CONG   ASREO General          Total
   50%           0%     50%     0%            100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  This project will allow for the submission of Load that is sensitive to price signals
in real-time, and will be
  responsive based on those price signals. This may improve the IS0 real-time
energy volume by allowing Loads to
  participate in the IS0 IO-minute energy market.

 impacts if Project is Not implemented



 impacted Systems                  Allocation Pet.

 SI                                      100%

                                         100%

 Expenditure Justification

 Grid reliability
 Continuation of started project




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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2002 Operating Systems
 Project Name       Firmness of import lost in inter SC energy trades; SC-SC
energy trades result in loss of
                    reserves

 ReferenceNumber          35       Priority     1     Essential
 Functional Allocations
    CAS         CONG   ASREO General          Totai
   25%          50%       25%        0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 This project establishes the firmness of an SC importing energy on an inter-tie,
even if the SC were to then trade
 the ancillary service obligation to another SC. Project designed to reduce the
loss of reserves associated with
  inter-SC trades

 impacts if Project is Not impiemenfed


 impacted Systems                   Allocation Pet.

 SAKsI                                   100%

                                         100%

 Expenditure Justification

 Grid reliability




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                            2002 Capita/Budget Proposed Projects
       Funding Method           2002 Bond Issuance Funded
       Category                 2002 Operating Systems
       Project Name             Enhance validation rules - Contracts Rules (ETC) - (RMR) etc
       ReferenceNumber          34        Priority    1    Essential
       Functional Allocations
          CAS      CONG     ASREO General            Tofai
         50%        0%       50%     0%              100%

       Cost Allocation /Assignmenf Methodology
       Direct Assignment
       Overview
        Migration of the ETC calculator to a Rules base engine to allow for accurate
      calculations of Existing Transmission
        Contract rights and capacities on existing Transmission paths. This would also
      include the integration of the
        Calculator with the Interchange Transmission Scheduling system (BITS). This
      would allow schedule to quickly
        identify the affects of curtailments on contract rights for schedule Paths.

       impacts if Project is Not impiemenfed
         The current system does not provide the ability to identify the relationship
      between Existing Contract and manage
        the affect of changes to associated relationships. Scheduling would not be able
      to identify affects of curtailment
        on contract paths.

       impacted Systems                   Allocation Pet

       Scheduling Application                  45%
       SVBBS                                   55%

                                               100%

       Expenditure Justification

       Grid reliability
*-’    Market savings

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  Market information/accuracy/analysis




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                      2002 Capital Budget Proposed Projects
Funding Method         2002 Bond Issuance Funded
Category               2002 Operating Systems
Project Name           Calculation of Ex-post GMMs
ReferenceNumber        33          Priorify    1      Essential

f unc tionai Aiioca dons
   CAS       CONG      ASREO General          Total
   50%          0%         50%       0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
                                                     s
 This project will provide for the development of GMM’ based on actual flows
rather than scheduled flows as
 determined by the Hour Ahead market. This allows for a more accurate
development of loss factors which are
 used in settlements calculations.

 impacts if Project is Not lmpiemented


 impacted Sys terns                 Allocation Pet.

 SllSA/BBS                               100%

                                         100%

 Expenditure Justification

 Internal productivity, cost savings, avoided costs
 Grid reliability
 Market information/accuracy/analysis




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                      2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 category             2002 Operating Systems
 Project Name             E-Tag
 ReferenceNumber          32       Priorify     1   Essential
 Functional Allocations
   CAS       CONG     ASREO General           Total
  100%        0%       0%      0%             100%

 Cost Allocation /Assignment IUethocfology
 Operating Costs
 Overview
  For enhancements to Electronic Tagging (E-tag) which is the NERC Policy 3
mandated communication protocol for
  the creation, distribution and approval of interchange transaction requests. The
California ISO, as a member of the
  WSCC, implemented an ETAG system for prescheduling in March of 2000 and
is preparing it for hourly real-time
  tagging in October of 2001. All WSCC members will be required to implement a
next generation (1.7) compliant
  system for the western interconnection by November 13, 2001. Although the
current system (1.6) meets the
  minimum requirements of NERC Policy 3, the current system configuration is
vulnerable to:
  ? Slow workstation response which hinders the processing of tags,
  ? Loss of ETAG functionality and market disruption due to single points of
failure, and;
  ? Security issues associated with the use of the NT server.



 lmpacfs if Project is Not lmplemenfed
 Unable to meet NERC Policy 3 mandate.

 Impacted Systems                   Allocation PCf.

 E-Tag                                   100%

                                         100%

 Expenditure Jusfificafion
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  Continuation of started project




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                      2002 Capital Budget Proposed Projects
funding Method           2002 Bond Issuance Funded
 Category                2002 Furniture/Facilities/Office        Equipment
Project Name             Leaseholds
ReferenceNumber          13           Priority   1   Essential

 Functional Alocations
   CAS         CONG      ASREO    General     Total
   0%           0%        0%       100%       100%

 Cost Alloca tion /Assignment Methodology
 Total Salaries
 Overview
  Provide for various leasehold improvement projects, as needed, to support IS0
staff residing in our Folsom and
 Alhambra locations. The costs for these individual improvements is generally
too small to merit preparation of
  individual requests.

 Impacts if Project is Not lmplemenfed
 Operational inefficiency and/ or reliability will be impaired if needed
improvements are not made to the physical
 facility as needed.

 lmpacfed Systems                     Allocafion Pet.

  Facilities                              100%

                                          100%

  Expenditure Justification

  CAISO infrastructure requirement
  Internal productivity, cost savings, avoided costs




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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2002 Furniture/Facilities/Office         Equipment
 Project Name             Office Equipment
 ReferenceNumber          12          Priority    1    Essential
 Functional Allocafions
    CAS         CONG   ASREO General             Total
    0%           0%     0%    100%               100%

 Cost Aliocafion / Assignmenf Mefhodoiogy
 Total Salaries
 Overview
  Provide additional equipment to assure an efficient work environment at the
     s
ISO’ Folsom and Alhambra locations.
   The amount of the budget and the cost of the individual items are so small that
the process for preparing a
  separate request for each individual need as it arises is not merited.

 Impacts if Project is Not Implemented
  Provides esential facilities equipment for reliable operations at all IS0 sites, as
the need arises. Without such
  equipment, reliability would be compromised.

  Impacted Systems                    Ailocafion Pci

  Facilities                              100%

                                          100%

  Expenditure Jusfiticafion

  CAISO infrastructure requirement




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                      2002Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Cafegofy                 2002 Corporate Systems
 Project Name             Brix Service Level Agreement monitoring Tools
 ReferenceNumber          I 13      Priority    1      Essential
 Functional Allocations
   CAS       CONG     ASREO General            Total
   0%         0%       0%    100%              100%
 Cost Allocation /Assignment Methodology
 Operating Costs
 Overview
 As the IS0 prepares the technical requirements for its Next Generation
Network, it is necessary to obtain an
  accurate representation of existing network performance to use as a standard
for future needs.

 lmpacfs if Project is Not lmplemenfed
 The ability to create viable Service Level Agreements for any future Wide Area
Networking contract will be limited


 impacted Systems                   Allocation Pet.

 Commumication        Network            100%

                                         100%

 Expenditure Justification

 Internal productivity, cost savings, avoided costs
 Grid reliability




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                      2002 Capital Budget Proposed Projects
 Funding Mefhod           2002 Bond Issuance Funded
 Category                 2002 Corporate Systems
 Project Name         Voice-over-IP “pilot”
 ReferenceNumber          114      Priority      1   Essential
 Functional Allocations
   CAS       CONG     ASREO General           Total
   0%         0%       0%    100%             100%

 Cosf Allocation /Assignment Methodology
 Operating Costs
 Overview
 The IS0 is currently looking to expand its office space into another portion of
101 Blue Ravine in Folsom. Network
  Engineering acknowledges this addition as an opportunity to explore the
possibility of using Voice over IP
 technology in the future. Using VolP could produce a return on the initial
investment by reducing the amount of new
  cable infrastructure that would need to be installed in a new building. A VolP
pilot would also allow Network
  Engineering to evaluate the viability of the technology for the future IS0
campus. There is also a possibility of
 leveraging the potential of a large VolP installation in the future against vendors,
who may be willing to help
  procure the pilot equipment a substantially reduced cost.


 lmpacfs if Project is Not Implemented
 The IS0 will not be able to make an knowledgeable               effort to converge voice and
data services to reduce cost.

 lmpacfed Systems                   Allocation   Pcf.

 Commumication        Network            100%

                                         100%

 Expenditure Jusfification

 CAISO infrastructure requirement

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 Internal productivity, cost savings, avoided costs




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                      2002 Capita/Budget Proposed Projects
 Funding Mefhod           2002 Bond Issuance Funded
 Category                 2002 Corporate Systems
 Project Name             Enterprise System monitoring - Tivoli Licenses
 ReferenceNumber          106       Prior@      1   Essential

 Functional Allocations
   CAS       CONG     ASREO General          Total
   0%         0%       0%    100%            100%

 Cost Allocation /Assignment Methodology
 Operating Costs
 Overview
 Tivoli License are required when new IS0 systems are introduced. System
monitoring provides an efficient,
 reliable and proactive tool to ensure mission critical systems are available , and
provides improved service levels
 to end users supporting and managing the market operations and all other
system currently being used by the ISO.
  Additional licenses are required to keep us in compliance with company
software user requirements..


 impacts if Project is Not lmplemenfed


 Impacted Systems                    Allocation Pcf.

 Tivoli                                  100%

                                         100%

 Expenditure Jusfificafion

 CAISO infrastructure requirement
 Internal productivity, cost savings, avoided costs
 Market savings




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                      2002 Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2002 Corporate Systems
 Project Name             Software Purchased - Non Project
 ReferenceNumber          124       Priority    1      Essential
 Puncfional Allocations
    CAS      CONG     ASREO Genera/            Tofal
    0%        0%       0%    100%              100%
 Cosf RHocation/Assignment Mefhodology
 Operating Costs

 Overview
 Software needed for systems that are not covered under other projects. Also
accommodates needed software
 purchases for all Non- project related items. All requests must be through
signed purchase requests before being
 charged to this project. Eliminates small Capital Requests since they can be
handled under this project.


 Impacts if Project is Not lmplemenfed
 Software purchases will be required to complete the full capital project request
process and forms for each item.


 Impacted Sys terns                 A/location Pcf.

 Various                                 100%

                                         100%

 Expenditure Justification

 CAISO infrastructure requirement




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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2002 Corporate Systems
 Project Name             Data Warehouse       Phase III
 ReferenceNumber          71        Priority    1      Essential
 Funcfional Allocafions
    CAS         CONG   ASREO Genera/           Total
    0%           0%     0%    100%             100%
 Cost Allocation /Assignment Methodology
 Operating Costs
 Overview
  In 2001, the framework and architecture of the Data Warehouse (DW) as a
single repository became a reality.
 Production hardware platforms were purchased and implemented in Folsom
and Alhambra, standardized
 mechanisms were built to extract data from the business transaction systems
nightly, a handful of data marts
 were built from the DW to support specific business applications and the
standard query and reporting software
 will be implemented by year end.

  In 2002, use of the DW is expected to explode. The foundation layer of data, the
Operational Data Store (ODS) will
  be expanded to contain all data from all transaction systems since start of
business, providing internal and
  external users (where appropriate) the capability to combine and integrate data
from nearly any source for
  reporting and analysis. Existing separate data repositories will be converted to
the DW, creating a single source
  for information across the enterprise. This project provides the consulting,
software and training resources to
  implement this expansion.


 impacts if Project is Not implemented
 Continued silos of information pulled from different sources, resulting in
conflicting information being provided to
 regulators, courts and participants in litigation.

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 Impacted Systems              Allocation Pet

 DW                                100%

                                   100%

 Expendirure Justification

  internal productivity, cost savings, avoided costs
 Regulatory requirement
 Market participant request




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                      2002 Capital Budget Proposed Projects
 funding Method       2002 Bond Issuance Funded
 Category             2002 Corporate Systems
 Project Name             Computer Equipment Purchases
 ReferenceNumber          123      Priority     1   Essential
 functional Allocations
   CAS       CONG     ASREO Genera/           Total
   0%         0%       0%    100%             100%

 Cost Allocation /Assignment Methodology
 Operating Costs
 Overview
 Hardware or equipment needed for owned systems that are not covered under
other projects. Also
 accommodates needed equipment purchases for all Non- project related items.
All requests must be through
 signed purchase requests before being charged to this project. Eliminates small
Capital Requests since they can
 be handled under this project.

 Impacts if Project is Not lmplemenfed
 Hardware and equipment purchases will be required to complete the full capital
project request process and forms
  for each item.

 Impacted Systems                   Allocation Pet.

 Computer Equipment                      100%

                                         100%

 Expenditure Jusfifkation

 CAL30 infrastructure requirement




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                       2002 Capita/Budget Proposed Projects
 FundingMethod            2002 Bond Issuance Funded
 Category                 2002 Other Systems
 Project Name             Server Rack Project
 ReferenceNumber          14        Prior@      1   Essential
 Functional Allocations
    CAS         CONG   ASREO General         Total
   45%          10%     45%     0%           100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 To meet infrastructure build out for raised floor purchase of computer equipment
racks and mount for system
 equipment

 Impacts if Project is Not implemented
 Approved projects will not be implemented or delayed

  Impacted Systems                  Allocation Pet,

  Computer Equipment                     100%

                                         100%

  Expenditure Justification

  CAISO infrastructure requirement




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                      2002 Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2002 Other Systems
 Project Name         PSYMETRIX - Grid Dynamics monitoring
 ReferenceNumber          102      Priority    1    Essential
 Functional A/locations
   GAS       CONG     ASREO     General       Total
  100%        0%       0%          0%         100%

 Cost A/location /Assignment Methodology
 Direct Assignment

 Overview
  Installation and evaluation of new technology for continuous measurement of
frequency, amplitude and damping
  modes which occur on the power grid in the O-4Hz band. Objective is improve
power system reliability by
  monitoring transmission system stability and power system stabilizer turning.
Measurement devices have been
  installed at the Vincent Substation and the Los Banos Substation on critical 500
Kv transmission lines. Subsecond
  data on the oscillations in the power flows are being sent to Folsom for
monitoring and analysis. Results to date
  indicate some damping issues and a need for further analysis of the PSS
devices at major power plants.

 Impacts if Project is Not implemented
 Project has already been initiated and work is in progress.    Preliminary results
show unexplained periods of poor
 damping which need further analysis.

 lmpacfed Systems                   A Ilocation Pc t.

 Psymetrix                               100%

                                         100%

 Expenditure Justification

  Grid reliability
  Continuation of started project
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                      2002 Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2002 Other Systems
 Project Name             Market Analysis System Enhancements
 ReferenceNumber          94       Priority     1     Essential
 Functiona/ Allocations
   CAS       CONG     ASREO General           Total
   10%       10%          80%        0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  The Department of Market Analysis is working to improve our ability to quickly
and effectively respond to market
  developments and requests for special analysis. The MMS enhancements are
to allow improved monitoring and
  analysis of energy transactions and scheduling, export/import patterns by
individual market participants, increased
   out-of-market purchases and involvement in regional energy markets by the
ISO. The project represents
  enhancements that are not included in the support by IT.

 Impacts if Project is Not implemented
 Without the MMS system enhancements DMA would not be able to effectively
perform core functions of monitoring
 the IS0 markets and responding to outside regulators, government entities,
and IS0 requirements in a timely
 manner.

 Impacted Sys terns                 Allocation Pet

 MMS                                     100%

                                         100%

 Expenditure Justification

 Market information/accuracy/analysis
 Regulatory requirement

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  Internal productivity, cost savings, avoided costs




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                      2002 Capita/Budget Proposed Projects
 funding Method       2002 Bond Issuance Funded
 Category             2002 Other Systems
 Project Name         All system ODS Implementation
 ReferenceNumber          72       Priority     1     Essential

 Functional Allocations
   CAS       CONG     ASREO General           Tofal
   20%       10%          70%        0%        100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  * Provide a single Operational Data Store.
  * Provide relief to production system as a repository of post operational day
information.
  * Provide an Audit trail of any adjustments to data.
  * Allow open access of data to all authorized parties.
  * Migrate settlement pushes from current operations systems to the ODS, to
capture adjustment to data.
  * Migrate Post Operational Day pushes from the operational systems to OASIS,
to capture adjustment to data.
  * Provide Interfaces to allow authorized users to make adjustment of data, and
have an Audit trail created.


 impacts if Project is Not implemented
 Data analysis and extraction would be limited to avoid severely impacting
Control system. Audit capabilities would
 be limited or non existing for data adjustments.

 Impacted Systems                   Allocation Pet

 Scheduling Application                   5%
 SI/BBS                                  80%
 DW                                       15%

                                         100%




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ExpenditureJus Mication

  Market information/accuracy/analysis
  System redesign
  Market savings
  Continuation of started project
  Regulatory requirement




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                      2002 Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2002 Other Systems
 Project Name         CERTS Technology Project
 ReferenceNumber          103      Priority    1   Essential
 Functional A/locations
    CAS      CONG     ASREO General           Total
   90%        0%       10%     0%             100%

 Cost Allocation /Assignment Mefhodofogy
 Direct Assignment

 Overview
 The Consortium for Electric Reliability Technology Solutions (CERTS) was
created to promote research and
 development targeted at improving grid reliability. Their objective is to develop
new tools, such as computer
 models, and energy-related environmental technology enhancements that will
benefit the IS0 and the energy users
  in California. Technology target areas include better Load forecasting and
other reliability planning and operational
 tools, advanced Generation, renewable energy systems, and end use efficiency.
Current project tasks include the
 installation of a Phasor Measurement system to monitor critical phase angles in
the California   and WSCC       Power    Grid; installation    of a new VoltageNAR
monitoring tool for real-time operations; delivery of a neural network Load
forecasting tool; and delivery of a power system simulator for dispatcher training.



 impacts if Project is Not lmplemenfed
 The State California Energy Commission is the major funding for this work.
They have committed approximately $3
                             s
 million for the initial year’ work with potential funding of $7 million over a 3 year
                   s
period. The ISO’ commitment is to
   provide data, personnel resources and computer hardware & software as
needed for the installation and testing
 of the new tools at the ISO. The $50,000 in funding for 2002 basically covers
the cost of anticipated workstations
  and servers that will be needed to meet our commitment. Lack of IS0 funding
would put the entire project at risk
 and we would lose a major opportunity to improve the tools needed for system
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reliability



  impacted Systems             Allocation Pet.

  System                            80%

  EMS                               20%

                                    100%

  Expenditure Justification

  Grid reliability
  Continuation of started project




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                      2002Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2003 Other Systems
 Project Name         Compliance Programs - Priority 2
 ReferenceNumber          83       Priority     2   Very Important

 Functional Allocations
    CAS      CONG     ASREO General           Total
   70%        0%       30%     0%             100%

 Cost Allocation I Assignment Methodology
 Direct Assignment
 Overview
 These priority 2 programs automate processes that currently exist in legacy
systems.
 impacts if Project is Not impiemented
 Without automation, staff will rapidly become overburdened and additional staff
will be necessary to implement
 new procedures.

 Impacted Systerns                  Ailocation Pet,

 CAP                                     52%
 DW                                      48%

                                         100%

 Expenditure Justification

 Regulatory requirement
 Grid reliability
 Continuation of started project




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                      2002 Capital Budget Proposed Projects
funding Method           2002 Bond Issuance Funded
 Category                2003 Other Systems
 Project Name            Audit Programs
 ReferenceNumber         84        Priority    2   Very Important

Funcfional Allocations
    CAS     CONG      ASREO General           Total
   30%       0%        70%     0%             100%

 Cost A/location /Assignment Methodology
 Direct Assignment
 Overview
This program allows for the automation of UFE calculation and other
audit systems.

impacts if Project is Not implemented
  Improper settlements charges in the form of over or under reporting resulting in
inaccurate distribution of monies.


 lmpacfed Systems                  A/location Pet.

 CAP                                    100%

                                        100%

 Expenditure Justiflcafion

 Internal productivity, cost savings, avoided costs
 Market information/accuracy/analysis
 Market savings




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                      2002 Capita/Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2003 Operating Systems
 Project Name             Develop Market Simulation Tools
 ReferenceNumber      49            Priority    2      Very Important
 Functional Allocations
   CAS         CONG   ASREO Genera/            Total
   0%           0%    100%     0%              100%
 Cost Al/ocation /Assignment Methodology
 Direct Assignment
 Overview
 Development of tools, both hardware and software, to aid in staff contingency
analysis of various market
 scenarios, to benchmark current market accuracy and to identify potential
system enhancements.

 Impacts if Project is Not Implemented


 impacted Systems                   Allocation Pc t.

 Scheduling Infrastructure               100%

                                         100%

 Expenditure Justificafion

 Market information/accuracy/analysis
 Market participant request




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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2003 Operating Systems
 Project Name             Support for metered subsystems (Municipal)/ Pseudo Unit
 ReferenceNumber       46           Priority    2   Very Important
 Functional Allocations
    CAS         CONG   ASREO     Genera/       Total
   75%           0%       25%       0%         100%

 Cost A/location /Assignment Methodology
 Direct Assignment
  Overview
  Pseudo systems today are representations of all resources behind the meter
and not metered to individual
  units/subsystems. This project will allow for EMS and Market visibility to
individual units in municipal subsystems
  as part of a system redesign effort to enhanced market visibility of resources.

 Impacts if Project is Not implemented


  Impacted Systems                  Aliocafion Pet.

  SI/SA/BBS                              100%

                                         100%

  Expenditure Jusfitkation

  System redesign
  Grid reliability




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                      2002 Capita/Budget Proposed Projects
 funding Method           2002 Bond Issuance Funded
 Category                 2003 Operating Systems
 Project Name             GCP Phase II - RIG to DNP Protocol Conversion
 ReferenceNumber          56        Priority    2   Very Important

 Functional Ailocations
   CAS       CONG     ASREO General            Total
  100%        0%       0%      0%              100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  Currently, there are approximately 25 RIGS that are candidates forconversion
to DNP. These original RIGS are
  using Channel Access with the new installations running DNP. Converting
these RIGS to Channel Access will
  reduce the maintenance of the RIGS by consolidating the RIGS into a single
protocol.

 impacts if Project is Not implemented
 Elevated maintenance costs will be incurred until such time that the Channel
Access RIGS are converted to DNP.


 lmpacfed Sys terns                 A/location Pet.



                                         100%

 Expenditure Justification

 Continuation of started project
 System redesign




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-
                           2002 Capita/Budget Proposed Projects
     Funding Method           2002 Bond Issuance Funded
     Category                 2003 Operating   Systems
     Project Name             FTR - Development
     ReferenceNumber       47           Priority    2   Very Important
     Functional Allocations
        CAS         CONG   ASREO General           Total
        0%          50%     50%     0%             100%

     Cost A/location /Assignment Methodology
     Direct Assignment
     Overview
     Development of new software for current annual FTR auctions, and the
    development of potential sub-markets,
     such as monthly, daily, or hourly FTR auctions.

     impacts if Project is Not implemented


     impacted Systerns                  Allocation Pet.

      FTR                                    100%

                                             100%

     Expenditure Justification

     Market information/accuracy/analysis
     Market savings
     Market participant request




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                      2002 Capital Budget Proposed Projects
Funding Method        2002 Bond Issuance Funded
 Category             2003 Operating Systems
Project Name              Market Stabilization
ReferenceNumber           51         Priority    2      Very Important

 Functional Allocations
   CAS       CONG     ASREO General             Total
   0%        25%          75%          0%        100%
 Cost Allocafion /Assignment Methodology
 Direct Assignment
 Overview
 Efforts involved in responding to FERC rulings for market stabilization, such as
development of proxy bid price
 calculation tools and reporting tools.

 impacts if Project is Not implemented


 impacted Systems                     A/location Pet.

 SIISAIBBS                                100%

                                          100%

  Expenditure Jus Mica f/on

  Regulatory requirement
  Market savings
  Market information/accuracy/analysis




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                      2002 Capital Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2003 Operating Systems
 ProjectName              Price Cap Enhancements
 ReferenceNumber          55       Priority    2      Very Important
 Funcfionai Allocations
   CAS       CONG     ASREO General           Tofai
   0%        25%          75%        0%       100%
 Cost ANocafion/Assignment Methodology
 Direct Assignment
 Overview
 Provide the IS0 the flexibility to change/modify           individual commodity price caps.
This is a regulatory mandate.
 impacts if Project is Not lmplemenfed


 impacted Systems                   Allocation Pet

 SUM/BBS                                 100%

                                         100%

 Expenditure Justification

 Regulatory requirement




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                       2002 Capital Budget Proposed Projects
 Funding Method           2002 Bond Issuance Funded
 Category                 2003 Operating Systems
 Project Name             Long Term Settlement Historical DB
 ReferenceNumber          90        Priority    2    Very Important
 Functional Allocations
    CAS         CONG   ASREO Genera/           Total
    0%           0%    100%     0%             100%

 Cost Allocation / Assignmenf Methodology
 Direct Assignment
 Overview
  The intent of this effort is to incorporate Settlements historical data (MHAP) into
the Data Warehouse architecture.
 While MHAP currently contains all Settlement transactions older than T-120, it
does not contain FERC re-run data
 which is written to a separate Re-run data base.

 impacts if Project is Not implemented


 impacted Systems                   Allocation Pet

 DW                                      100%

                                         100%

 Expendifure Justification

 CAISO infrastructure requirement
 Market information/accuracy/analysis




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                      2002 Capital Budget Proposed Projects
 Fund/ng Method           2002 Bond Issuance Funded
 Category             2003 Operating Systems
 Project Name         Ability to non-firm exports as Non-spin and Replacement
 ReferenceNumber          54       Prior@    2      Very Important
 Functional Allocations
    CAS      CONG     ASREO General         Total
    0%          50%       50%        0%     100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  This project will allow the IS0 to utilize non-firm exports of replacement and
non-spinning reserve as reserves that
   count towards the IS0 Control Area requirement in the event that these exports
are cut in real-time. This project
  requires additional mapping of the physical resource behind the export schedule
to remain consistent with the
  physical dispatch of intra-Control Area reserves.

 lmpacfs if Project is Not implemented


 impacted Systems                  Allocation Pet.

 SWSI                                    100%

                                         100%

 Expenditure Jusfificafion

 Market savings




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                      2002 Capita/Budget Proposed Projects
 Funding Method       2002 Bond Issuance Funded
 Category             2003 Operating Systems
 Project Name             FTR Annual Auction

 ReferenceNumber          50        Priority    2   Very Important
 Funcfional Allocations
   CAS       CONG     ASREO Genera/            Total
   0%        50%       50%     0%              100%

 Cost Aliocation /Assignment Methodology
 Direct Assignment
 Overview
 Project is designed to acquire additional auction software to operate FTR
auctions in a more efficient manner. Will
 provide for additional flexibility in posting, requesting bids, and better system
performance.

 Impacts if Project is Not Implemented


 impacted Systems                   Allocation Pet.

 FTR                                     100%

                                         100%




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Cafegory             2002 Operating Systems
 Project Name             Interface EMWCIM into SA
 ReferenceNumber          38       Priority     1   Essential
 Functional Allocations
   CAS       CONG     ASREO General           Total
  100%        0%       0%      0%             100%

 Cost Allocation /Assignment Methodology
 Direct Assignment

 Overview
 This project allows BEEP and/or other SA applications to provide the EMS
system Generation POPS and data
  sufficient for future EMS simulator systems. It provides for increase accuracy in
information flow between market
   software and Control Area systems.

 impacfs if Project is Not lmplemented



 impacted Systems                   Allocation Pet.

 SA                                      100%

                                         100%

 Expenditure Justifkafion

 Grid reliability
 Market savings
 Market information/accuracy/analysis




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Category             2002 Operating Systems
 Project Name             EMS Final Milestones 2001 Project
 ReferenceNumber          31        Priority    I   Essential

 Functional Allocations
   CAS       CONG     ASREO Genera/            Total
  100%        0%       0%      0%              100%

 Cost A//ocation /Assignment Methodology
 Direct Assignment
 Overview
 The replacement of the EMS system achieves the following objectives: Greater
EMS system stability resulting in
 improved reliability of grid operation; Implementation of middleware at the EMS
system interfaces to greatly
 increase the flexibility to connect to and to adapt to changes occurring with
external systems; Implementation of
 Network Applications to assess the operating condition of the California Security
Coordination area; and a
 generally more flexible, scalable and functionally rich system. $ for Final
Payment

 impacts if Project is Not implemented
 2001 Capital Project continuation - Contract Commitment - No choice

 Impacted Sys terns                 Allocation Pc t,

 EMS                                     100%

                                         100%

 Expenditure Justification

 Continuation of started project
  Internal productivity, cost savings, avoided costs
 System redesign



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                      2002 Capita/Budget Proposed Projects
 Funding Method       Cash Funded
 Category             2002 Operating Systems
 Project Name             Hour Ahead Data Analysis Tool- Enhancements
 ReferenceNumber          IO 1     Priority     1   Essential
 Functional Allocations
   CAS       CONG     ASREO Genera/           TOtd
   0%           25%       75%        0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 Complete the HADAT tool to allow it to work correctly with current operating
paradigms. The tool already assists
 operators in data input into SA but needs to be reworked to handle new analysis
requirements.

 impacts if Project is Not Implemented


 impacted Systems                   A/location Pc t.

 SI                                      100%

                                         100%

 Expenditure Jusfification

 Internal productivity, cost savings, avoided costs
 Market savings




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                         2002 Capita/Budget Proposed Projects
 Funding Method          Cash Funded
 Category                2002 Operating Systems
 Project Name            Day Ahead Data Analysis Tool - Enhancements
 ReferenceNumber         99        Priority     1     Essential

 Functional Alocations
      CAS       CONG     ASREO General        Total
      0%        25%      75%         0%       100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 This effort is intended to mirror the effort already expended on the HADAT Hour
Ahead analysis tool. Its purpose
 is to allow the efficient input of Day Ahead ancillary service parameters into the
SI ODB, and to allow for efficient
 allocation of ancillary service procurement at least cost. This tool will also assist
operators with Unit Commitment
 and Must-Offer wavier decisions.

 Impacts if Project is Not Implemented
 The operators are using best judgment in procuring ancillary services and
cannot process all potential savings
 from efficient allocation without some form of automation.

 impacted Systems                  Allocation Pet,

 SI                                      100%

                                         100%

 Expenditure Justification

  Internal productivity, cost savings, avoided costs
  Market savings




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Category                 2002 Operating Systems
 Project Name             Market Financials II i
 ReferenceNumber          95         Priority    1   Essential
 Functional Allocations
   CAS       CONG     ASREO       General       Total
   0%         0%      100%           0%         100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 Upgrade the instance of Oracle Financials supporting the Market from
application version 10.7 to 1 Ii. This is a
 highly customized instance of Oracle General Ledger, Accounts Payable and
Accounts Receivable. The requested
  funds are for consulting fees to ensure a smooth transition for the
customizations.

 impacts if Project is Not implemented
 If this project is not completed by June 2002, the IS0 will need to purchase a
costly extended support agreement
 with Oracle as the application version 10.7 will be de-supported as of June
2002. The extended support
 agreement is valid through December 2002. If the project is not completed by
December, support will not be
 available through Oracle Corporation for the applications.

 impacted Systems                    A/location Pet.

 Mkt. Fin.                               100%

                                         100%

 Expendifure Jusfification

 CAISO infrastructure requirement




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                       2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Category                 2002 Operating Systems
 Project Name             Buy back DA/HA, HA/RT
 ReferenceNumber          37       Priority     1   Essential
 Functional Allocations
   CAS       CONG       ASREO General         Total
  100%        0%         0%      0%           100%

 Cost Ailocafion /Assignment Methodology
 Direct Assignment
 Overview
 This project allows for an SC to re-procure Day Ahead ancillary services in the
Hour Ahead market, but at the Day
 Ahead MCP. This effort is due to the decreased activity of the HA markets.

 Impacts if Project is Not Implemented


 Impacted Systems                   Ailocation Pet,

 SA                                      100%

                                         100%

 Expenditure ./us tificafion

 Market savings




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 --
                              2002Capita/Budget Proposed Projects
        Funding Method        Cash Funded
        Category              2002 Operating Systems
        Project Name          Neutrality Unbundling
        ReferenceNumber       44          Priority    1   Essential

        Functional Aiioca tions
          CAS       CONG      ASREO General          Tofai
          0%         0%       100%     0%            100%

        Cost Allocation /Assignment Methodology
        Direct Assignment
        Overview
        IS0 collects Neutrality Charges (Charge Type 1010) to balance the payments
       and charges related to its Real-Time
        energy transactions. There were occasions in which the Neutrality Charges
       were higher than the limit specified in
         the IS0 Tariff. Market Participants are requesting IS0 to separate the
       components that make up the Neutrality
        Charges. Under this project, the various neutrality components will be identified
       and necessary changes will be
        made to the Settlement System to separate these components into different
       charges.

        Impacts if Project is Not impfemenfed
                                                             s
        Without the unbundling, many SCs are skeptical of ISO’ Neutrality Charges.
       The unbundling request may
        eventually become a FERC mandate which IS0 may be forced to take action.

        impacted Sys terns                Allocation Pet.

        Settlement                              100%

                                                100%

        Expendifure Justificafion

        Market participant request

-\-.
         Market information/accuracy/analysis


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                           2002 Capital Budgef Proposed Projecfs
      Funding Method       Cash Funded
      Category             2002 Operating Systems
      Pfojecf Name             Master File - Upgrade Need estimate
      ReferenceNumber      45            Prior@    I   Essential
      Functional Allocations
         CAS      CONG     ASREO General          Total
        25%       25%       50%     0%            100%

      Cost Allocation /Assignment Methodology
      Direct Assignment
      Overview
      Project of Master File Redesign
      1. Background

      The Master File (MF) is a database that stores the information of the
     Generation, intertie, Load point, congestion
      zone, demand zone, schedule coordinator, etc. It is common information shared
     among the SVSA, MDAS, BBS,
      RMR, ETC, SLIC, DMA, Compliance and other IS0 systems. It is critical to
     store the master file data accurately and
      audit the data changes easily.

      2. Current Problems

      The follows are the current problem of Master File database structure:

      Overwrite the Pmax value of a resource ID when update the Master File
      No seasonal function of Generation characters, such as Pmax.
      No relationship between PSP (Physical Schedule Point) and individual
     resources
      There are no record to refer the detail information for audit
      Open Master File to Schedule Coordinate

       It is necessary to modify and improve the master file structure according to new
     business requirements.
       First, the previous data (such as Pmax) will be overwritten when updating MF
     table. This will create potential
       problems for the must-offer compliance, settlement and other system since all
4-
     historical Pmax value will be
       overwritten after update. All systems retrieving generator data from Master File
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will be possible to get the
  inaccurate data.
  Secondly, the master file table in its current structure does not have functionality
to handle the seasonal data. This
  will result in inaccurate representation of a resource.
  Thirdly, there are many PSP in master file due to the requirements of meter and
schedule. The outage coordination
  (OS) group will need the individual unit ID with the relationship of PSP unit.
EMS group will need the relationship of
  PSP and individual unit as well for the Real-Time dispatch visibility. The current
MF design has no capability to refer
  the individual unit to PSP units. This will create potential problem for settlement,
Outage Coordination, EMS, Market
  Analysis group.
  Fourthly, without a log field when updating the MF tables, it is very difficult to
find out the detail information about
  the master file changes and have appropriate audit. Without the detail data, it
will spend much more time on
  settlement dispute process and audit process.
  Finally, it is necessary to open the Master File to Schedule Coordinator to
provide a better client services, which
  meet IS0 2001 goals. Through a secured website, SC can retrieve its own
generator data at any time. The current
  practice is to email SC the generator data on monthly base.

lmpacfs if Project is Not lmplemenfed




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                       2002 Capifal Budget Proposed Projecfs
 Like many systems at the IS0 the master-file was designed to meet the needs of
startup. Now 3 l/2 years later
 we have identified many issues that need resolution. Due to the way the Master
File links to multiple systems, it
 has become clear to the master file working group that the way to fix current
problems and ensure a flexible
 system for the future is to do a re-write of the entire system.

  Impacted Systems            Allocation Pet.

  Mkt. Fin.                       100%

                                 100%

  Expenditure Justification

  CAISO infrastructure requirement




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Category                 2002 Operating Systems
 Project Name             Enhance Remedy       MQ dispute tracking
 ReferenceNumber          92       friorify    1   Essential
 functional Allocations
   CAS       CONG     ASREO General           Total
   0%        50%       50%     0%             100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
  In June of 2001 Market Quality Started resolving technical dispute resolution. In
an effort to utilize a single dispute
 tracking tool throughout the company, Market Quality utilized the Remedy
system. The Remedy interface for
 dispute tracking has many limitations. Market Quality has identified several
areas where the Remedy interface can
   be enhanced to provide better tracking of disputes types, internal notifications
and reporting functions. The
 following is a list of general enhancements:
 Adjustment type field - to differentiate the types of tickets that have been
referred to settlements
  Projected Rerun date field - Rerun date if rerun adjustment type is chosen
 AR Notifier - Allows the notification feature to function each time a ticket is
referred or resolved
  Due Date field - Field for due date of ticket to Settlements for adjustment, auto
populate from payment calendar and
   add to ticket print out.
  Interchange ID field - Add a field that will track the interchange id per dispute
  Auto Update - Have a job run on a regular basis that will update BA ID’ and s
     s
CT’ from MasterFile
  Query list view - Add ‘   Referred To Individual’ to query view list
  User guide - Provide electronically, preferably thorough the application.
  Reason field - A compliment to status field that can further clarify the actions
required/purpose of referral
  Provide a better audit trail - Additional “Referred To” lines would help us follow
the path the ticket took between
  departments. Provide a referred to box and the reason it was referred. Needs
to be queried easily.
  Status field - Additional choices for the ticket status
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 Impacts if Project is Not Implemented
  Impact
 Inefficient management of disputes requiring resolution from Settlements
 Inability to monitor expected resolution date
 Notification system cannot be relied on as a means to indicate a status change
of a dispute
 Reduces the possibility of disputes being referred too late to Settlements for
resolution (post final dispute)
 Disputes cannot be managed or queried by Interchange ID
                                                              s         s
  Presently updated manually by privileged users only, ID’ and CT’ not current
 A query view containing ‘   Referred to Individual’ is only possible by creating a
customized report in Remedy,
  Inefficient means of tracking dispute progress
 Hard copy guide is not readily available to all users, guide does not provide
enough relevant information
 Categorizing disputes for assignment and resource management can only be
accomplished by reading through the
   comments and details
 The history of a dispute cannot be queried only viewed by visual scanning within
the audit window
  Remedy needs additional categories for dispute workflow, resolution,and
management




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                          2002 Capital Budget Proposed Projects
      impacted Systems              Aiiocation Pet.

      C.H.A.S.E                         100%

                                        100%

      ExpenditureJustification

      Market savings
      Market information/accuracy/analysis
      Internal productivity, cost savings, avoided costs




-’




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                            2002 Capifai Budget Proposed Projects
       Funding Method           Cash Funded
       Category                 2002 Operating Systems
       Project Name             Enhancements to Chase for MQ issues tracking
       ReferenceNumber          91       Priority     1     Essential
       Functional Allocations
          GAS      COiVG ASREO General              Total
         20%          20%       60%        0%       100%
       Cost Allocation / Assignmenf Methodology
       Direct Assignment
       Overview
        In a review of current department work processes, Market Quality Department
      has determined its current method
       for managing and auditing its actions on data quality issues and corrections are
      inefficient and cumbersome.
         It has been determined that Market Quality should obtain a more effective and
      efficient method of tracking issues
       and maintaining an audit trail on the resolution of these issues. This can be
      provided through the enhancement of
       the CHASE application, upon incorporation of additional requirements initiated
      by Market Quality.



       impacts if Project is Not Implemented
        If the CHASE enhancements cannot be implemented, staff will have to continue
      to use multiple MS Excel
        spreadsheets and/or MS Word documents to track data quality exceptions, e-
      mail communications to notify various
         business units of data quality issues, and shared drive folders to store
      supporting information and logs.
        In using this current issue management method, it is difficult to link data quality
      issues to disputes and/or system
        issues and to establish a clear audit trail of the issue resolution through all
      affected business units.


       impacted Systems                   Allocation Pet.
.-’




        C.H.A.S.E                              100%
      FIN 11101101                                                                        122
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                                  100%

           Jusfificafion
 Expenditure
 Internal productivity, cost savings, avoided costs
 Market information/accuracy/analysis
 Market savings




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                      2002 Capifal Budget Proposed Projecfs
 Funding Method           Cash Funded
 Category                 2002 Operating Systems
 Project Name             Automation Tools - Priority 1
 ReferenceNumber          74         Priority    I   Essential
 Functional Aliocafions
    CAS      CONG     ASREO Genera/             Total
   70%        0%       30%     0%               100%

 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 This project allow the development of internal tool that aid in the development of
compliance programs
 Impacts if Projecf is Nof Implemented
 Growth of compliance systems would cause current systems to be come
overloaded and result in inefficient
 operations

 Impacted Systems                    Allocation Pet.

 System                                  100%

                                         100%

 Expenditure Jusfification

 Regulatory requirement
 Grid reliability
 Market information/accuracy/analysis




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                       2002 Capital Budget Proposed Projects
  Funding Method          Cash Funded
  Category                2002 Operating Systems
 Project Name             Compliance Programs - Priority 1
 ReferenceNumber          73        Priority    1      Essential
 Functional AIlocafions
    CAS         CONG    ASREO Genera/          Tofal
   70%          0%        30%        0%        100%
 Cost Allocation /Assignment Methodology
 Direct Assignment
 Overview
 This program funds the development of programs that monitors      compliance
with the tariff. Participants that are
 found to be non-compliant are assessed according to the tariff.

 impacts if Project is Not Implemented
  Compliance will not be able to develop the necessary programs that are needed
to monitor the compliance with the
  tariff.

  Impacted Sysfems                  Allocation Pet.

  DW                                     45%
  CAP                                    55%

                                         100%

  Expenditure Justification

  Internal productivity, cost savings, avoided costs
  Regulatory requirement
  Market savings




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Cafegory              2002 Funiture/FaciIities/Office       Equipment
 Project Name             Fixtures & Furniture - conversion of contractors and new
employees
 ReferenceNumber          1I         Priority    1   Essential

 Functiona/ Allocations
   CAS         CONG    ASREO General            Total
   0%           0%      0%    100%              100%

 Cost Allocation /Assignment Methodology
 Total Salaries

 Overview
  Provide for various furniture acquisitions to support IS0 staff residing in its
Folsom and Alhambra facilities. The
  individual requests for workstation furniture to support new staff, for ergonomic
adjustments to existing
 workstations, and for misc. filing and accessories is too small to merit preparing
individual requests. The
  department will manage this budget.

 Impacts if Project is Not Implemented
 Without this project adequate furniture needed to support IS0 cannot be
obtained.

 impacted Systems                     Allocation Pet,

  Facilities                              100%

                                          100%

  Expenditure Justification

  CAISO infrastructure         requirement
  Internal productivity, cost savings, avoided costs




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                           2002CapitalBudgefProposedProjects
c




      FundingMethod        Cash Funded
      Category             2002 Funiture/Facilities/Of%ce Equipment
     Project Name    Additional 20,000 SF Space Build-Out- (Blue Shield) 101 Blue
    Ravine RD and 105 Lake
                     Forest

     ReferenceNumber       15          Priority     1    Essential
     FunctionalAllocations
        CAS         CONG   ASREO General          Tofal
        0%           0%     0%    100%            100%

     Cost Allocation /Assignment Methodology
     Total Salaries
     Overview
     This project will provide critically needed space for IS0 staff that have endured
    the lost of amenities, including
      conference rooms, lunchrooms, and file space. Despite continuing size
    reductions of workstations, there is not
     adequate space to house all 2001 headcount, let allow 2002 staff increases.

     lmpacfs if Project is Not lmpiemenfed
     There will not be enough workstation space for all staff. Conference rooms,
    lunchrooms, etc., will be totally
     consumed housing employees and consultants.

      ImpactedSystems                  Allocafion Pc t

      Facilities                             100%

                                             100%

     ExpenditureJus fifica don

     CAISO infrastructure requirement
      Internal productivity, cost savings, avoided costs




    FIN 1 l/01/01                                                                   127
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                      2002 Capital Budget Proposed Projects
 Funding Method          Cash Funded
 Category                2002 Corporate Systems
 Project Name         Access Security System- Migration to Win2K
         Number
 Reference               107       Prior@       1   Essential
 FunctionalAllocations
    CAS      CONG     ASREO     General     Tofal
    0%        0%       0%        100%       100%

 Cost Allocation /Assignment Methodology
 Operating Costs
 Overview
 Upgrade of Facility Security monitoring systems to work with Windows 2000.
 impacts if Project is Not lmplemenfed


 Impacted Systems                   Allocation Pcf.

 System                                  100%

                                         100%

 Expenditure Justification

 CAISO infrastructure requirement




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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Category                 2002 Corporate Systems
 Project Name         Tivoli Security - Risk Manager
 ReferenceNumber          108      Priorify     I     Essential

 Functional Allocations
   CAS       CONG     ASREO General           Total
   0%         0%       0%    100%             100%
 Cost Allocation /Assignment Mefhodology
 Operating Costs
 Overview
  Tivoli Secure Way Risk Manager is an enterprise-wide risk management
solution enabling organizations to centrally
   manage attacks, threats and exposures by correlating security information from
firewalls, intrusion detectors,
  vulnerability scanning tools and other security checkpoints. The solution
enables administrators to eliminate clutter
  such as false-positives, while quickly identifying the real security threats to help
administrators respond with
  adaptive security measures.

 Impacts if Project is Not implemented
 The IS0 will not be able to normalize enterprise-wide            security data for the
purpose of detecting common
 anomalies.

 lmpacfed Systems                   Allocation Pcf.

 Tivoli                                  100%

                                         100%

 Expenditure Justification

 CAISO infrastructure requirement
  Internal productivity, cost savings, avoided costs
  Continuation of started project

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                      2002 Capifal Budget Proposed Projects
 Funding Method       Cash Funded
 Category             2002 Corporate Systems
 Project Name         Internet Caching and Traffic Shaping
 ReferenceNumber      112          Priorify     I   Essential
 Functional Allocations
   CAS       CONG     ASREO General           Total
   0%         0%       0%    100%             100%

 Cost Allocafion /Assignment Methodology
 Operating Costs
 Overview
            s
  The ISO’ Internet access could be reduced by using an Internet caching or
traffic shaping device, that would
  cache often-used content (including bandwidth-intensive applications such as
streaming audio) or reduce the
  available bandwidth to specific, non-critical services. The net result could be the
reduction of Internet traffic,
                                                       s
  leading to cost reduction by downgrading the ISO’ current Internet bandwidth
        s
from it’ Internet service
  provider(s). An example would be the reduction of InterNAP service from the
current ‘                       Tier I”
          Tier 2” service, to a ‘
  service, resulting in approx. $46k in yearly savings. Finally, Internet caching and
traffic shaping may help to
  prevent the IS0 from exceeding contractual obligations and incurring financial
penalties.


 Impacts if Project is Nof Implemenfed
 Internet bandwidth capacity needs will increase, impacting future budgets

 lmpacfed Systems                  Allocafion Pet

 Commumication        Network            100%

                                         100%

 Expenditure Jusfification

  Internal productivity, cost savings, avoided costs

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CAISO infrastructure requirement




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                      2002 Capital Budget Proposed Projects
 Fundhg Method            Cash Funded
 Category             2002 Corporate Systems
 Project Name             Satellite Building Expansion (101 - BlueShield Space)
 ReferenceNumber          115       Prior&      1    Essential

 Functional Aiiocafions
   CAS       CONG     ASREO       Genera/    Tofal
   0%         0%       0%          100%      100%

 Cost A/location /Assignment Methodology
 Operating Costs
 Overview
 Due to space constraints, Facilities is investigating expanding into other office
space. This expansion will require
 voice and data hardware, as well as the cabling to support them.

 impacts if Project is Not lmpiemenfed
 No telecommunications          services will be available when personnel move to their
new offices

 lmpacfed Systems                   Allocation Pet

 Commumication        Network            100%

                                         100%

 Expendifure Justification

 CAISO infrastructure requirement
  Internal productivity, cost savings, avoided costs




FIN 1 l/01/01                                                                        132
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                      2002 Capital Budget Proposed Projects
 Funding Method           Cash Funded
 Cafegofy                 2002 Corporate Systems
 Projecf Name             OA and WeNet Network Refresh
 ReferenceNumber          116      Prior@     1   Essential

 Functional Allocations
   CAS       CONG     ASREO General         Total
   0%         0%       0%    100%           100%

 Cosf Allocation /Assignment Methodology
 Operating Costs
 Overview
 The OA and WeNet networks are comprised of Cabletron LAN switches that are
no longer sold or supported by
 the original manufacturer. Many components are “end-of-life” and can only be
replaced by a limited stock of used,
 refurbished equipment in case of hardware failure. In addition, the number of
ports currently available is less than
 the number of outstanding requests for connections, and far less than the
projected growth in additional ports
 over the next 2 years (the remainder of the MCI contract).

 Impacts if Project is Not lmplemenfed


 impacfed Systems                   Aliocafion Pcf.

 Commumication        Network            100%

                                         100%

 Expenditure Jusfificafion

 CAISO infrastructure requirement
  Internal productivity, cost savings, avoided costs
 Grid reliability




FIN 11101101                                                                133
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                                                                              Exh. No. ISO-
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                              2002 Capital Budget Proposed Projects
         Funding Method       Cash Funded
         Category             2002 Corporate Systems
         Project Name             New CAFM System
         ReferenceNumber      93           Priority     1   Essential
         Functional Allocations
            CAS        CONG   ASREO General           Total
            0%          0%     0%    100%             100%

         Cost Aiiocafion /Assignment Methodology
         Operating Costs

         Overview
          This project provides facilities with a facilities computer aided facilities
        management system (“CAFM” ) with which
          to integrate its existing databases and spreadsheets of space planning and
        maintenance information with data
          provided through the CHASE/ Remedy program. This will enable the Facilities
        department to respond quickly with
          enhance planning and analysis for changing organizational needs. In addition,
        it will enable Facilities to track
          maintenance activities that reduce the cost for excessive or ineffective vendor
        repairs, prompt us when
          preventative maintenance tasks are due, and better track costs in many
        categories.

         Impacts if Project is Not lmplemenfed
          Facilities would continue to struggle to meet the space planning needs of the
        IS0 under tight space constraints and
           in the face of preparing for a new campus. CHASE/ Remedy data could not be
        integrated into the departments
          databases to support decision making and cost tracking. The reliability of the
        preventative maintenance program
         would continue to rely on a series of unrelated documents and spreadsheets.

         impacted Sys terns                Allocation Pet.

          Facilities                             100%
--.A’                                            100%

        FIN 11101/01                                                                    134
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                                                       Page135of161

  Expenditure Justification

  Internal productivity, cost savings, avoided costs
  CAISO infrastructure requirement




FIN 11101101                                                     135
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                                                                                                                                                Exh. No. ISO-4, page 159 of 161

 CALIFORNIA IS0                                                                                                                                                                          AppendixA

 COST ALLOCATION MATRIX - 2002 BUDGET
WORKSHEET                    FOR ALLOCATION            OF COSTS                OF CERTAIN                   SUPERVISORY           DEPARTMENTS

                                 EXPENSES
                         OPERATING                                                                                                              SALARIES
        CostCenter1463OperatlngExpMses                                                                                                       1403
                                                                                                                                    CostCanter Salaries
                              Total                  CAS                        CONG                    NS and Real Time                                                     CAS                 CONG               ALSandRealTime



                                                                                                                                   I            I$      2.076.100 1 S       2.076.100 1 L                 -     1S




                                                                                                                                   I            Is                            497,560    I          66.4571                 736.071      I



    I                I                      I                          I                            I                         I


    I                             977.918 I                      -     I                  .         I          977.910.00 I



                                                                                                                                    I           I                   I                    I                      I                        I
    Total                                               3,232,7'72 1 S              66,726                      2,365,297 )             Total   1S      4,256,134 1 S        2,575,668 1 S          66,457 1 5             1,614,009 1
                                                                 57lcl                        l%l                       42%                                                  61%         1        2%            1         38%
             I4631                                                                                  I                                   1463    1
                         5        424,551           04.14%                      0.37%                        15.50%
                                                                                                                                   I            I$        374,751           05.22%               047%                   14.31%
                                                f            357,206       $            1558            6            65,767                                             $     319,359        $          1,773       $           53.619




    Total                $      $790,066        $       5,697,033          $        15,979              s            77,654             Total       5   3,477,077       $    3,365,234       S      15,979          s           75,064
                                                              96.38%                    6.26%                         1.34%                                                  97%                  0%                      2%
             1547                                                                                                                       1547
                    I$          1,449#247           90.30%                      0.28%                        1.34%                                  S     284.247           97.36%               0.46%                   218%
                                                t       I,425764           $            3,999           s            19,464                                             6      276,739       $          1,306       6            6,202




FIN 11lOlfOI
                                                                                                                                                     Exh. No. ISO-4, page 160 of 161

CALIFORNIA IS0                                                                                                                                                                            AppendixAS

COST ALLOCATION MATRIX - 2002 BUDGET
WORKSHEET                  FOR ALLOCATION           OF COSTS                 OF CERTAIN              SUPERVISORY            DEPARTMENTS

                   OPERATING EXPENSES                                                                                                            SALARIES


                                                                                                                              CostCenter



   I               IS         3.493.437I              2.200.232      1S         833.539I t                459.655I

                                                                                                       %                               1554                                   04% 4%
   I               I$
            1554                                   87%                         4%                                                                                                                                      11%
                                                                                                           93,746                         I          9    934.547                I
                                                                                                                                                                               491,904               25,527                   67,035




                                                                                                                             I         1559
                                                                                                                                                 I$       469,852
                                                                                                                                                                              79%
                                                                                                                                                                               373,330
                                                                                                                                                                                                  11%                  losb
                                                                                                                                                                                                                              46,187




   I               I                      I                          I                       I                          I     I                  I                   I                    I                   I                        I
    Total              I      6,159,532       t       4,176,502          6     1,173,765         t        807,265                      Total         $   3,122,351       5    2,214,115 $          572,102        s      336,<34
                                                           67.64%                   19.06%                 13.11%                                                             71%       I         18%                  11%

            1546                                                                                                                       1546      I
                       a        425.636           77.44%                      7.01%                   15.54%                                     IS        362,036           77.05%               7.81%               1514%

                                              $          329,626         $          29,845 9               66,165                                                        $     276,963        S      28,266       $           54.805


                                                                                                                                  C&Center1564




                                                                                                                                       Total         6   4,372,061       5    3,660,366       5     415,017       $      276,678
                                                                                                                                                                              84%                  9%                  6%
                                                                                                                                        1564
                                                                                                                                                     $     277,313           84.18%               9.4%                6.33%
                                              6            262,871       5          34,285       f             22,857                                                    I      233,440       $      26,324       $        17,549




FIN 11/01/01
                                                                                                                         Exh. No. ISO-4, page 161 of 161

CALIFORNIA IS0                                                                                                                                         AppendixA

COST ALLOCATION MATRIX - 2002 BUDGET
WORKSHEET              FOR ALLOCATION       OF COSTS          OF CERTAIN         SUPERVISORY       DEPARTMENTS

                           EXPENSES
                   OPERATING                                                                                     SALARIES

                                                                                                     costCenter
                                                                                                              1721




    Total          s      4,039,207   s       I,499270    s       199,007 5          2#i,OlO
                                                  37x2%             4.93%               57.96%
            1721
                   s       44Q379         36.67%               4.09%              60.24%
                                      s         162,766   $        21,606    $         257,163                                        s     139,057     s      19,410    s      227,112



    Cost Center1751




    Total          f      6.350,923   S       1,309,1%    s      1,667,471 $         3JO2302.265         TOM         S    40724,363   t    1,014,676    f    1277,703    f     2,431,905
                                                 22%                27.OPh              53.61%                                             21%               27%              51%
            1751                                                                                         1751
                   5        019,254       20.00%               30.00%             50.00%                             s     447,754        2O.Gil%           30.00%           53.00%
                                      S         163,651   $        245,776   S         409,627                                        S       89,551    s      134,326   S       223,677




FIN 1 l/01/01

				
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