Message-ID: <12069863.1075846362720.JavaMail.evans@thyme> Date: Tue, 12 Dec 2000 13:37:00 -0800 (PST) From: leslie.lawner@enron.com To: steven.kean@enron.com Subject: Re: Draft Talking points about California Gas market Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Leslie Lawner X-To: Steven J Kean X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Notes inbox X-Origin: KEAN-S X-FileName: skean.nsf What I meant by the term "electric disconnect", which I thought was catchy but may have been inartful, was simply that supply and demand signals were screwed up. This is the "Shelly Corman" argument, which may or may not have any factual basis, but I put it in there to have it in front of people for discussion. Steven J Kean 12/12/2000 02:07 PM To: Jeff Dasovich/NA/Enron@Enron cc: Christi L Nicolay/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Janet R Dietrich/HOU/ECT@ECT, Jeff Dasovich/NA/Enron@Enron, Jeffrey T Hodge/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@Enron, Leslie Lawner/NA/Enron@Enron, Mary Hain/HOU/ECT@ECT, Maureen McVicker/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Shelley Corman/ET&S/Enron@Enron Subject: Re: Draft Talking points about California Gas market Given the way the numbers came out, I guess we don't need the talking points, but we should still try to get to the bottom of this because we will be called on to comment to regulators and media. Unless we have strong evidence to the contrary, it seems to me that wholesale markets are working .... they are open and they are competitive. On the other hand, retail gas markets suffer from the same problems as electric markets ... they are not open, customers don't have effective choices and price signals don't get through, so there is no demand response when prices rise. On the points raised in the attachment, I'm still not sure I follow point 4. Also what does" electric disconnect" mean? Jeff Dasovich Sent by: Jeff Dasovich 12/12/2000 02:40 PM To: Mary Hain/HOU/ECT@ECT, Janet R Dietrich/HOU/ECT@ECT, Jeffrey T Hodge/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron, Maureen McVicker/NA/Enron@Enron, Leslie Lawner/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@ENRON, Shelley Corman/ET&S/Enron@ENRON cc: Subject: Re: Draft Talking points about California Gas market Leslie: Looks good. Just a couple of comments: 1. General May want to point out that the roots of California's current gas woes are the same ones causing the electric problem---combined effect of California's "import-based" energy policy and the state's failure to invest in in-state infrastructure. California imports about 25% of its electricity, but about 80-90 percent of its gas supply. California has failed to invest in the in-state infrastructure necessary to support increased gas demand over the last decade. So we've got an interstate pipeline superhighway to the border and a dirt road of in-state transportation once you get into California. The last bullet seems to suggest that manipulation may be taking place. Can we support that suggestion, and is it one that we want to make necessarily? If we do suggest that manipulation may in part explain current prices, do we need to propose ways to eliminate it? Otherwise, seems that we may be giving FERC ammunition to take action without trying to "steer" that action in the right direction. Maybe I'm reading too much into the bullet. 2. Specific Competition for gas coming to California has increased significantly. The midwest (via Alliance) is competing away Canadian gas. The Southwest (Nevada, Arizona) is competing away supply from the Southwest before it hits the California border. Mary Hain@ECT 12/12/2000 11:58 AM To: Jeff Dasovich/NA/Enron@Enron cc: Subject: Draft Talking points about California Gas market ---------------------- Forwarded by Mary Hain/HOU/ECT on 12/12/2000 10:07 AM --------------------------- To: Janet R Dietrich/HOU/ECT@ECT, Jeffrey T Hodge/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron, Maureen McVicker/NA/Enron@Enron cc: Subject: Draft Talking points about California Gas market We thought it would be good to basically give Chair Hoecker talking points with any numbers that Enron provides. We will visit on these later today when the numbers are ready (before 3:00). Comments? ---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 12/12/2000 10:38 AM --------------------------- From: Leslie Lawner@ENRON on 12/12/2000 11:56 AM To: Christi L Nicolay/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@ENRON, Rebecca W Cantrell/HOU/ECT@ECT, Ruth Concannon/HOU/ECT@ECT, Stephanie Miller/Corp/Enron@ENRON, Phillip K Allen/HOU/ECT@ECT, Jane M Tholt/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron cc: Subject: Talking points about California Gas market Here is my stab at the talking points to be sent in to FERC along with the gas pricing info they requested for the California markets. Let me or Christi know if you have any disagreements, additions, whatever. I am supposed to be out of here at 2:15 today, so if you have stuff to add after that, get it to Christi. Thanks.