Message-ID: <30783480.1075851592479.JavaMail.evans@thyme> Date: Thu, 23 Aug 2001 06:06:50 -0700 (PDT) From: michael.tribolet@enron.com To: jennifer.thome@enron.com Subject: RE: California Rate Exposure Cc: d..steffes@enron.com, harry.kingerski@enron.com, jeff.dasovich@enron.com, robert.neustaedter@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: d..steffes@enron.com, harry.kingerski@enron.com, jeff.dasovich@enron.com, robert.neustaedter@enron.com X-From: Tribolet, Michael X-To: Thome, Jennifer X-cc: Steffes, James D. , Kingerski, Harry , Dasovich, Jeff , Neustaedter, Robert X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Deleted Items X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst Here is the PG&E 10-K disclosure, which does not help much. Under AB 1890, when the Utility has recovered its eligible transition costs, the conditions for terminating the rate freeze and ending the transition period will have been satisfied. At August 31, 2000, consistent with transition period accounting mechanisms adopted by the CPUC, the Utility credited its TCBA by $2.1 billion, the amount by which a negotiated $2.8 billion hydroelectric generation asset valuation exceeded the aggregate book value of such assets. Based on this credit, the Utility believes it recovered its eligible transition costs during August 2000. At August 31, 2000, there was a balance of approximately $2.2 billion of undercollected wholesale power costs recorded in the TRA. If the final valuation for the hydroelectric assets is greater than $2.8 billion, as the Utility expects, the Utility believes it will have recovered its transition costs possibly as early as May 2000. The undercollected TRA balance as of the end of the earlier determined transition period will be less than the $2.2 billion August 31, 2000 balance and could be zero depending on the ultimate valuation of the hydroelectric assets and when the transition period actually ends. Under current CPUC decisions and AB 1890, the Utility's customers are responsible for wholesale power purchase costs after the Utility has recovered its transition costs. In one of its March 27, 2001 decisions, the CPUC adopted TURN's proposal to transfer on a monthly basis the balance in each utility's TRA to the utility's TCBA. The accounting changes are retroactive to January 1, 1998. The Utility believes the CPUC is retroactively transforming the undercollected power purchase costs in the TRA into transition costs in the TCBA. However, the CPUC characterized the accounting changes as merely reducing the prior revenues recorded in the TCBA, thereby affecting only the amount of transition cost recovery achieved to date. The CPUC also ordered that the utilities restate and record their generation memorandum accounts balances to the TRA on a monthly basis before any transfer of generation revenues to the TCBA. The CPUC found that based on the accounting changes, the conditions for meeting the end of the rate freeze have not been met. The Utility believes the adoption of TURN's proposed accounting changes results in illegal retroactive ratemaking and constitutes an unconstitutional taking of the Utility's property, and violates the federal filed rate -----Original Message----- From: Thome, Jennifer Sent: Wednesday, August 22, 2001 6:07 PM To: Tribolet, Michael Cc: Steffes, James D.; Kingerski, Harry; Dasovich, Jeff; Neustaedter, Robert Subject: RE: California Rate Exposure 10 am CDT works for me. I can find a room up here unless you would rather meet on your floor, Michael. Jennifer -----Original Message----- From: Tribolet, Michael Sent: Wednesday, August 22, 2001 6:04 PM To: Dasovich, Jeff; Neustaedter, Robert Cc: Steffes, James D.; Thome, Jennifer; Kingerski, Harry Subject: RE: California Rate Exposure Can we do a 10am CDT, 8am PDT call? -----Original Message----- From: Dasovich, Jeff Sent: Wednesday, August 22, 2001 5:52 PM To: Tribolet, Michael; Neustaedter, Robert Cc: Steffes, James D.; Thome, Jennifer; Kingerski, Harry Subject: RE: California Rate Exposure Michael: Thanks very much for your help on this. Can we discuss first thing in the AM after all have had a chance to review? Best, Jeff -----Original Message----- From: Tribolet, Michael Sent: Wednesday, August 22, 2001 5:20 PM To: Neustaedter, Robert Cc: Dasovich, Jeff; Steffes, James D.; Thome, Jennifer; Kingerski, Harry Subject: RE: California Rate Exposure All: I changed the following: 1. Reduced total load from 185,000 GWh to 178,000 GWh. 2. Allocated the "costs" by utility based on total demand 3. Changed the DWR negative MTM on contracts from $7.5B to $9.55B 4. Added an undercollection of $.932 Billion for SDG&E (more below) I did not: 1. Add the Nuclear decommissioning as it is funded on balance sheet. I added the following: 1. Allocated the Bonds and Contracts on DWR share of Revenue Requirement %. 2. The CTC is the softest assumption. The utilities wrote off considerable Transition Revenue Account (undercollection) and Transition Cost Balancing Account Balance (primarily stranded cost) at year end. The Regulatory Asset for PG&E and Edison is assumed to be primarily TCBA at 6-30-01, but there is no footnote to absolutely corroborate this. The Undercollection for SDG&E is assumed at the Regulatory Asset balance at 6-30-01. This is due to the rate freeze having ended for SDG&E and therefore their TCBA should be recovered (reduced to zero). Results: One of the key driver to the utility-by-utility allocation is the difference between total volume and share of DWR costs. DWR allocated costs to have a uniform "rate" across the net short by utility. Thus those with a larger portion of their total demand (SDG&E and to a lesser extent PG&E) which is covered by DWR, have a higher unit cost across all rates for the Bonds and Contracts. Edison has the converse. Any changes in assumptions are welcomed. Regards, Michael << File: m010822.xls >> -----Original Message----- From: Neustaedter, Robert Sent: Tuesday, August 21, 2001 5:28 PM To: Tribolet, Michael Cc: Dasovich, Jeff; Steffes, James D.; Thome, Jennifer Subject: California Rate Exposure Michael, Jim has asked Jennifer and me to estimate the potential exposure (worst case) to the Company's book position for DA customers in California. Starting from the model you and Jeff developed we have added other possible categories of charges allowed by existing regulations. We would appreciate if you could please review the attached and provide us with any feedback. If available we would like to call you Wednesday morning to discuss. << File: direct access.xls >>