Message-ID: <30476861.1075851656069.JavaMail.evans@thyme> Date: Wed, 10 Oct 2001 13:14:05 -0700 (PDT) From: steve.swain@enron.com To: d..steffes@enron.com, michael.tribolet@enron.com, jeff.dasovich@enron.com Subject: RE: Enron's Advocacy in California Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Swain, Steve X-To: Steffes, James D. , Tribolet, Michael , Dasovich, Jeff X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Inbox X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst Jim, We can talk at greater length if you want, but the quick answers to your questions are: 1. PX Credit: Make it simple and transparent. Best outcome would be no credit -- DA pays T&D costs only, as they appear in the tariff. Period, end of story. 2. The UDC Financial Hole: The more relief we can get from these items, the better. Duh. The small surcharge ($10) is currently factored into in our curves, so the hope is that whatever ultimately emerges from the sausage factory, the ultimate amount that they try to stick on DA customers is < $10. If our contract language ends up protecting us further, all the better, but I would prefer that not to be our last resort. > -----Original Message----- > From: Steffes, James D. > Sent: Tuesday, October 09, 2001 7:43 PM > To: Swain, Steve; Tribolet, Michael; Dasovich, Jeff > Subject: Enron's Advocacy in California > > Steve -- > > As you can see from the e-mail chain, we are now at a > decision point on where we want to go with PG&E and SCE. > With the progress of the PG&E bankruptcy and the SCE > Settlement with the CPUC, it is important that we are all on > the same page. > > Basically we need to make sure that our advocacy is > consistent with our expected outcomes at the CPUC and with > the nature of your business (both current and hopefully going > forward). > > 1. Do you have a preferred outcome on the PX Credit mechanism? > 2. Our advocacy on allocation of Utility Undercollection, > CDWR long-term contracts, and Bonds to pay off CDWR current > costs is that if a customer never was on DA they should be > "free" of all of these costs. Following from that logic, we > want to argue that customers who cause these buckets of costs > for limited periods of time should only pay for those > periods. We need to discuss the probable outcome of the > assignment of these costs and Bob Williams' ideas on the > "tax" passthru. > > I have attached Mike Smith's matrix on the outcome for each > bucket of $$. > > Let's talk very soon. We are potentially moving forward with > a SCE strategy. > > Jim > > << File: CA Surcharge Matrix 10-09.doc >> > > > > -----Original Message----- > From: Steffes, James D. > Sent: Tuesday, October 09, 2001 7:00 PM > To: Williams, Robert C.; Dasovich, Jeff; Mara, Susan; Wu, > Andrew; Smith, Mike; Sanders, Richard B. > Subject: RE: $.01 surcharge as "tax" > > The EWS West Power URM desk will need to determine the $$ at > stake and help us manage our financial exposure and the > appropriate policy response. It's their $$. So far, my > understanding from the desk is that our current policy > recommendations (as outlined in the Mike Smith memo) are the > "preferred" outcome - I'll reconfirm. > > Jim > > -----Original Message----- > From: Williams, Robert C. > Sent: Tuesday, October 09, 2001 5:25 PM > To: Dasovich, Jeff; Mara, Susan; 'mday@gmssr.com'; Steffes, > James D.; Wu, Andrew; Smith, Mike > Subject: RE: $.01 surcharge as "tax" > > We could not do that. On the other hand, if we advocate that > it should only apply to those who directly benefitted, and > the CPUC adopts that reasoning, we would be shooting our tax > argument in the foot. I think you are right that we need to > understand the implications, both financially and > contractually, of the options before the Commission. > > -----Original Message----- > From: Dasovich, Jeff > Sent: Tuesday, October 09, 2001 5:20 PM > To: Williams, Robert C.; Mara, Susan; 'mday@gmssr.com'; > Steffes, James D.; Wu, Andrew; Smith, Mike > Subject: RE: $.01 surcharge as "tax" > > Thanks. One other question, which seems like a legal > question. Assume that Enron openly advocates for the PUC to > apply the charges to all customers, including ours, > understanding that our customers neither benefited from or > caused the charges. If the PUC does it, and we go back to > our customers and claim that an indirect tax has been > applied, are we in any kind of bind for having pushed for it? > I'm hoping that the answer is no. Thanks for the info. > > Best, > Jeff > > -----Original Message----- > From: Williams, Robert C. > Sent: Tuesday, October 09, 2001 5:11 PM > To: Dasovich, Jeff; Mara, Susan; 'mday@gmssr.com'; Steffes, > James D.; Wu, Andrew; Smith, Mike > Subject: FW: $.01 surcharge as "tax" > > a legal memo follows > > -----Original Message----- > From: Williams, Robert C. > Sent: Thursday, August 02, 2001 9:16 AM > To: Mellencamp, Lisa; 'jklauber@llgm.com' > Subject: FW: $.01 surcharge as "tax" > > > > -----Original Message----- > From: Williams, Robert C. > Sent: Friday, July 27, 2001 5:47 PM > To: Sharp, Vicki > Subject: $.01 surcharge as "tax" > > A typical clause reads as follows: > > " 'Taxes' means any and all new or existing governmental or > quasi-governmental taxes, assessments, levies, duties, fees, > charges and withholdings of any kind or nature whatsoever and > howsoever described, including gross receipts, franchise, > sales, use , property, excise, capital, stamp, transfer, > employment, occupation, generatiion, privilege, Utility Taxes > [separately defined to include "any and all franchise, > utility, regulatory, BTU or energy, gross receipts, > administrative services, municipality, and utility user taxes > and similar taxes and energy resource and municipal land use > surcharges and other similar surcharges"], regulatory, BTU, > energy, consumption, lease, transaction, license, filing, > recording, and activity taxes, levies, duties, fees, charges > and withholdings, together with any and all penalties, fines, > interest, and additions thereto, but excluding any taxes on > the net income of EESI or any affilitates." > > Under the contracts the Buyer is usually responsible for > taxes "applicable to Power at or after the Delivery Point" > (the meter); the Seller is usually responsible for taxes > "applicable prior to the Delivery Point." The surcharge > would seem to be applicable "at the Delivery Point." > > Support for the argument that the surcharge is not a "tax" > under the contracts: > > 1. The CPUC refers to it as a "rate increase" > > 2. It was not imposed by a governmental body (such as a > state, county, or municipality) > > 3. When first implemented, all proceeds went to the utilities > > 4. It appears that a portion of the proceeds may > continue to go to the utilities > > Support for the argument that the surcharge is a "tax" under > the contracts: > > 1. Since the "frozen tariff" remains in place it is > disingenuous to refer to it as a "rate increase" > > 2. It now appears that the proceeds will go to a > governmental entity, the DWR > > 3. The definition of "taxes" under the contract is > broad and includes surcharges of all types > > 4. To the extent the $.01 surcharge is to pay for > generation for bundled customers, those on direct access > receive, if anything, only an indirect benefit, which is > similar in effect to a tax and not to a rate increase