Message-ID: <14706747.1075846337285.JavaMail.evans@thyme> Date: Wed, 15 Nov 2000 09:28:00 -0800 (PST) From: robert.hemstock@enron.com To: rob.milnthorp@enron.com, john.lavorato@enron.com, derek.davies@enron.com, tim.belden@enron.com, john.zufferli@enron.com, steven.kean@enron.com, aleck.dadson@enron.com, richard.shapiro@enron.com, peter.keohane@enron.com, eric.thode@enron.com, mark.palmer@enron.com, tmclaren@gpc.ca, seabron.adamson@frontier-economics.com, tburns@gpc.ca, aleck.trawick@blakes.com, dpef@blakes.com Subject: Update - Alberta Power Pool Rule Changes Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Robert Hemstock X-To: Rob Milnthorp, John J Lavorato, Derek Davies, Tim Belden, John Zufferli, Steven J Kean, Aleck Dadson, Richard Shapiro, Peter Keohane, Eric Thode, Mark Palmer, TMcLaren@GPC.CA, seabron.adamson@frontier-economics.com, tburns@gpc.ca, aleck.trawick@blakes.com, dpef@blakes.com X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Canada X-Origin: KEAN-S X-FileName: skean.nsf Dale McMaster called this afternoon to advise that the Power Pool Council agreed to delay any decision on the recently proposed rule changes (importers excluded from setting pool price and dispatch risk) for a period of two weeks. During this two week period Dale has been asked to obtain stakeholder input into ways to address concerns about whether the spot price in the Alberta Power Pool is a product of interaction among competitiors in a efficient market. In our discussions with the Power Pool and ADRD today and yesterday Enron expressed its willingness to work with the Power Pool to provide feedback on suggested rule changes but has also made it clear that we do not agree with the premise that there is a "problem" that requires "emergency" amendments to the Pool rules. Our position has been that Alberta is short supply, and significant changes to the rules and/or market design will only discourage new generation development. Dale McMaster had just left the Power Pool Council meeting when he called and had not yet put much thought into how to define the issue he has to address and what the process will be. We discussed the process and it appears he will likely receive comments from stakeholders at large and also assemble a small committee of 4-5 stakeholders (which would include Enron) to work with the Power Pool to consider possible changes to the Pool rules. Dale said he would try to pull together a "terms of reference" document that would define the mandate of the small committee by tomorrow. After my call with Dale McMaster, Peter Keohane and I spoke to Aleck Trawick and we have asked Blakes to assist us in three areas: 1) Once the terms of reference of this small committee are released (and assuming Enron is asked to participate on the committee) Blakes will assist us with preparing a letter that states that Enron's participation does not represent acknowledgement or agreement that the Power Pool Rules must be amended to address the concerns of some stakeholders about real time pricing in Alberta and that Enron's participation on the committee is on a without prejudice basis; 2) Enron needs to obtain the final memo from Frontier Economics in which Frontier provides its opinion on how the proposed rule changes: i) would introduce price discrimination into the Alberta electricity market, ii) would be contrary to the development of an efficient, fair and openly competitive market for electricity, iii) would compromise the independence of the Power Pool, and iv) would have the expected effect of artificially depressing the real time price of electricity in Alberta. Once Blakes receives a copy of the Frontier Economics memo, they will prepare a memo for Enron advising: i) whether the two week process of consultation by the Power Pool is in accordance with the standards required of the PPC as an administrative tribunal operating in Alberta; and ii) whether such rule changes offend the provisions of the EUA; 3) Blakes will advise Enron of the possible avenues of recourse (i.e. appeal to the AEUB, and/or legal action in the Court of Queen's Bench) in the event the proposed rule changes (or similar changes) are approved by the PPC at the end of this two week period. GPC and Eric Thode will also be consulted on this issue and obviously input from all those within Enron working on this project will be sought prior to any decision being made to pursue any possible legal remedies. Please advise if you have any comments. Regards, Rob