Message-ID: <30330093.1075854499533.JavaMail.evans@thyme> Date: Sun, 17 Dec 2000 10:38:00 -0800 (PST) From: david.delainey@enron.com To: richard.shapiro@enron.com, james.steffes@enron.com Subject: NYPSC Interim Pricing Report on ISO Cc: kevin.presto@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: kevin.presto@enron.com X-From: David W Delainey X-To: Richard Shapiro, James D Steffes X-cc: Kevin M Presto X-bcc: X-Folder: \David_Delainey_Jun2001\Notes Folders\All documents X-Origin: Delainey-D X-FileName: ddelain.nsf Guys, I assume you are keeping an eye on "California East". Any help you can give Kevin would be much appreciated. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 12/17/2000 06:36 PM --------------------------- Enron North America Corp. From: Kevin M Presto 12/15/2000 07:39 AM To: David W Delainey/HOU/ECT@ECT cc: Subject: NYPSC Interim Pricing Report on ISO ---------------------- Forwarded by Kevin M Presto/HOU/ECT on 12/15/2000 07:40 AM --------------------------- Enron North America Corp. From: Kevin M Presto 12/15/2000 07:32 AM To: James D Steffes/NA/Enron@Enron cc: John J Lavorato/Corp/Enron@Enron, Dave Delainey, Mark Dana Davis/HOU/ECT@ECT, Tom May/Corp/Enron@Enron Subject: NYPSC Interim Pricing Report on ISO This NY cap proposal must be prevented. The proposal is essentially cost-based regulation. Obviously, if the proposal below was adopted by NY, Enron's ability to make money is greatly diminished. In addition, it has significant effects on the rest of the market in terms of regulatory uncertainty in the forward markets. In the past, FERC has ruled to make caps consistent in all 3 NE regions (NY, NE, and PJM), which leads to quasi caps in the rest of the Eastern Interconnect. Jim, We need an action plan ASAP. Please coordinate with Dana, Tom May, and myself. ---------------------- Forwarded by Kevin M Presto/HOU/ECT on 12/15/2000 07:22 AM --------------------------- Tom May@ENRON 12/14/2000 06:13 PM To: Mark Dana Davis/HOU/ECT@ECT, Kevin M Presto/HOU/ECT@ECT cc: Narsimha Misra/NA/Enron@Enron, Robert Stalford/NA/Enron@Enron, Gautam Gupta/HOU/ECT@ECT, Larry F Campbell/NA/Enron@Enron Subject: NYPSC Interim Pricing Report on ISO FYI. In the interest of all the developing markets, I think that we need to make a full court press to ensure that this does not get enough support to pass at the committee level in New York. I will arrange a meeting with regulatory to plan our response. Tom. ---------------------- Forwarded by Tom May/Corp/Enron on 12/14/2000 06:09 PM --------------------------- From: Howard Fromer on 12/14/2000 04:30 PM To: Tom Dutta/HOU/ECT@ECT, John D Suarez/HOU/ECT@ECT, Doug Sewell/HOU/ECT@ECT, Richard Ring/HOU/EES@EES, Suneet Sharma/HOU/EES@EES, Gary Keevill/ECP/Enron@Enron, John Llodra/Corp/Enron@ENRON, Tom May/Corp/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT, Sarah Novosel/Corp/Enron@ENRON, Dan Staines/HOU/ECT@ECT, W David Duran/HOU/ECT@ECT, Richard Lydecker/Corp/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Steven J Kean/NA/Enron@Enron cc: Subject: NYPSC Interim Pricing Report on ISO Earlier today, the New York Public Service Commission released a 122 page draft report prepared by its staff evaluating the NYISO. The report concludes that the ISO must pursue a wide range of operational reforms and other consumer safeguards to "ensure a more efficient and stable electric market that will better protect consumers from dramatic price increases." The report culminates a months-long investigation begun by the PSC last summer in response to problems and price run-ups in the wholesale market. The major recommendations in the Report, some of which have already surfaced in recent ISO Committee meetings, would be devastating to a competitive wholesale market and would largely reregulate prices in New York. They include the following (taken directly from the PSC's Press Release): Reforming rules and procedures to improve the efficiency of the market and minimize opportunities for market manipulation, or "gaming," by owners of electricity generating facilities; Initiating a $150 per megawatt hour price cap on generators to maintain reasonable market clearing prices; Creating a "circuit-breaker" mechanism that will prevent market power abuses at levels below $150/MWH; Lowering price thresholds significantly to allow the NYISO to step in more quickly to investigate and mitigate price spikes; Granting the NYISO retroactive refund authority to return to consumers gains that generators improperly derive from market power abuse; and, Creating a strong deterrent against price abuses by penalizing generators who repeatedly use improper tactics to raise prices above competitive levels. The NYPSC, of course, has no legal authority to impose any of these recommendations. However, they are likely to muster support from the Transmission Owners, governmental entities and loads, that usually control enough votes to just pass a motion at an ISO Committee. This will set up a confrontation with the ISO Board, which is walking a delicate tightrope between maintaining its independence and supporting a competitive wholesale market on the one hand, and dealing with the politics of a hostile Administration in New York. Last summer, as you may recall, the Board rejected the $1000 bid cap pushed through by the PSC, voting instead for a $1300 cap. That action was set aside by FERC, which reimposed the $1,000 level and then made it applicable in New England as well so that there would be consistency among the three Northeast ISOs (PJM already had the $1,000 cap.) Thus, whether NY follows the lead of California is likely to be determined by FERC, and it will have to carefully consider the consistency concerns it raised last summer in ultimately deciding whether it's OK for New York to set price caps below its neighboring ISOs. Attached is a copy of the PSC's Press Release and Report. http://www.dps.state.ny.us/fileroom/doc8945.pdf