Message-ID: <2577719.1075859788654.JavaMail.evans@thyme> Date: Mon, 5 Mar 2001 08:58:00 -0800 (PST) From: christian.yoder@enron.com To: elizabeth.sager@enron.com, mark.haedicke@enron.com, richard.sanders@enron.com Subject: Legal consequences of dry year Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Christian Yoder X-To: Elizabeth Sager, Mark E Haedicke, Richard B Sanders X-cc: X-bcc: X-Folder: \Mark_Haedicke_Jun2001\Notes Folders\All documents X-Origin: Haedicke-M X-FileName: mhaedic.nsf At various times during the recent scramble to cope with the California crisis, we found ourselves shaking our heads in disbelief, often saying something like: "can you believe this? two months ago, we had no idea the PX would be melted down!" We have tremendous resilience in responding to sudden legal emergencies, but I am wondering if there is any way we can pro-actively plan for what is almost certain to be a further extension of this crisis in the west. I have just come out of a Portland floor meeting where a number of presentations were made, one of which was by Tim Heizenrader, our fundamentals guru, on the hydro situation in the west. This is the driest year in a hundred years. In a few months we are going to have the equivalent of all the nuculear plants in the west shutting down on the same day. It is hard to not get kind of hysterical about this legally. Do we just have to sit here like the proverbial deer with this bright light shining in our eyes, or is there something we can do to prepare? If we could have seen the first phase of the California crisis, what might we have done differently? We can clearly see another phase coming at us, but what do do now, while we have all this time, is the big quetion. I honestly think we should give this some priority now, while we may have time to do something about it. The reason I think we should engage our better minds on this now is, that I tested the traders out on this a time or two (not Tim, who usually thinks a lot more strategically than others) and the basic answer they give to the question: what are we going to do if BPA can't deliver us our firm power?" is: "Oh, we've sold it as firm, if they don't deliver we have liquidated damages, we'll be kept whole." This nonchalant answer is, at one level, the truth, but, are we just going to shrug our shoulders and hope the LD's work out? ----cgy