Message-ID: <11191295.1075848060229.JavaMail.evans@thyme>
Date: Mon, 11 Dec 2000 09:00:00 -0800 (PST)
From: jeff.dasovich@enron.com
To: paul.kaufman@enron.com, skean@enron.com, leslie.lawner@enron.com
Subject: Pricing for CA IOU's Core Gas Customers
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X-From: Jeff Dasovich
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Paul:  Here's additional info for the "curtailment" data that we're pulling 
together.

Utility Pricing for Core Gas Customers

Prior to the month in question, the utility forecasts gas prices based on 
NYMEX monthly prices.  So for example, based on November's forecast, the 
utility sets prices to be charged to core consumers in December.

When December's over, the utility compares forecast prices with actual 
prices.  If the forecast was too low, and there's an undercollection, the 
utility will increase January's price forecast by "just enough" to make up 
for the December undercollection.  If prices were too high and there's an 
overcollection, the utility will reduce January price forecast by just enough 
to refund the overcollection.

If the overcollection/undercollection is very large, the utilities have 
generally spread out the "true-up" over several months to avoid "rate shock" 
one way or the other.  However, under the current circumstances, the 
utilities may be less willing to spread it out, and may wish to recover the 
entire undercollection in the following month.  In short, there's at least a 
one-month lag in customer prices to account for differences in forecasts 
versus actual.