Message-ID: <22740960.1075855606542.JavaMail.evans@thyme> Date: Mon, 14 May 2001 02:05:00 -0700 (PDT) From: kristin.walsh@enron.com To: phillip.allen@enron.com, kevin.presto@enron.com, rob.milnthorp@enron.com Subject: Western Issues Cc: mark.davis@enron.com, mike.grigsby@enron.com, chris.gaskill@enron.com, scott.tholan@enron.com, lloyd.will@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit Bcc: mark.davis@enron.com, mike.grigsby@enron.com, chris.gaskill@enron.com, scott.tholan@enron.com, lloyd.will@enron.com X-From: Kristin Walsh X-To: Phillip K Allen, Kevin M Presto, Rob Milnthorp X-cc: Mark Dana Davis, Mike Grigsby, Chris Gaskill, Scott Tholan, Lloyd Will X-bcc: X-Folder: \Michael_Grigsby_Jun2001\Notes Folders\Notes inbox X-Origin: Grigsby-M X-FileName: mgrigsb.nsf Executive Summary: ? BC's NDP Leader Publicly Concedes Defeat to Liberals ? BPA seeks Federal Loan for Improvements, Future Fish Credits Limited ? Washington House Extends Aluminum Smelters' Power Re-Sale Rights by 1,500 MWs BC Elections According to our information, the BC government is preparing for the Liberal take this week. The election is slated for 16 May 2001 and it appears likely that we are looking at a near Liberal sweep -- they are currently leading 41% to 25% at the polls. There is about a three-week lead time between the general election on May 16th, the Final Count on May 29th, and the Return Day on June 7th -- so there will be a period of jockeying around some issues. The New Democratic Party (NDP) leader, Ujjal Dosanjh, has effectively conceded the election in a public announcement. Dosanjh is making public pleas to voters not to desert the NDP in favor of the Greens so that the NDP can retain official party status (4 seats). Dosanjh has stated that he "will be happy if the NDP gets 10 to 15 seats." The following are likely to be the key energy policy officials once the Liberal Party takes power in BC: ? Richard Neufeld, Minister of Energy, Mines and Northern Development (replacing NDP Minister Glenn Robertson) ? Dan Jarvis, Deputy critic on Energy, Mines and Northern Development Murray Coell, Minister of Environment, Lands and Parks (replacing Ian Waddell) ? John Van Dongen, Fisheries Neufeld, Jarvis, Coell and Van Dongen are currently Members of the Legislative Assembly (MLAs). While Gordon Campbell, the probable incoming premier, will have been effectively muzzled in the interim when it comes to talk about energy deregulation, the opposition will likely have plenty to say about it. The people we'll need to be looking at this regard are: Glenn Robertson - Minister of Energy and Mines, and Ian Waddell - Minister of Environment, Land & Parks. It appears certain that the Liberals will move to privatize at least some of the power crown corporations almost immediately. They have promised a balanced budget and a chunk of money to do it their way; they have made campaign promises about privatization to stir the economy; and they have tight back channels with the crown corporations' management who want "a straight privatization plan instead of coop approach to deregulation." Sources report that, if elected, the Liberals promise a referendum on land claims treaties with the local native Indians (or "First Nations"). These treaties result from overlapping claims to land and serve to block land development, forestry, mining, etc. While the NDP has been supportive of the First Nations land claims process while in office, the promised Liberal referendum would seem to suggest that the Liberals intend to backtrack and not recognize the First Nations' rights. In other words, there would be an increased impetus for mining and forestry. This development is surprising since the Liberals have traditionally enjoyed strong Indian support, and the land claims process was originally started under a Liberal government. If the Liberals press forward with a referendum on the process, there is the potential for violent flare-ups between the First Nations and the government. (These flare-ups have occurred in the past, though not recently.) BPA BPA is urging the White House to increase its authority to borrow from the federal Treasury by $2 billion to build over 20 new projects for 500-kilovolt transmission lines and substations online between 2003 and 2006. BPA officials hope the new borrowing authority will be included in a comprehensive energy strategy the Bush administration is expected to release next week, although federal officials have yet to give the final word on the BPA request. Energy Secretary Spencer Abraham, key members of Congress and the staff of Vice President Dick Cheney, who has taken charge of developing the administration's energy strategy, all have been briefed on BPA's proposal. BPA has been building a case for a budget item that officials say would be a significant boost to the region's power infrastructure in the near term. If the administration doesn't include it in its energy strategy, BPA officials say they will nevertheless press for the increased borrowing authority in Congress. BPA plans for the first time to use more "fish credits" than cash to meet its annual debt obligation, reducing its cash outlay by some $400 million. BPA had expected its borrowing authority to be sufficient until 2006, but given the energy situation, BPA could hit the ceiling by 2003. BPA will be spilling water over its dams as a part of the salmon protection plan. To make up for the shortfall, the agency will have to repurchase approximately $1.2 billion on the electricity spot market -- these costs will be passed on to energy consumers as a part of the subscription rate hike in October. Oregon Governor Kitzhaber is pushing for more spills. Steve Wright & other BPA officials are considering the effects of keeping water in the reservoirs as a safety net, should there be a cold spell next winter, which has precipitated a federal lawsuit from 12 environmental organizations against the National Marine Fisheries Service. Earthjustice Legal Defense Fund is leading this charge, a coalition which includes Trout Unlimited and the Sierra Club. The official line is they want to disallow the Federal Caucus and BPA from declaring a 'fish emergency' which would allow them to determine the amount of water spilled over the dams, among other things. However, by exercising a 'fish emergency', BPA becomes qualified for additional federal credits - which is probably the real source of contention here. Aluminum Smelters The bill passed by the House Energy Committee yesterday does extend the resale rights of the smelters to 1500 megawatts of power beyond the October 2001 termination date. BPA is negotiating, even though they have no legal obligation to serve the smelters. New attack ads paid for by the aluminum companies are running to build political pressure to continue to receive and resell 1500 megawatts of power beyond October 2001, in addition to receiving other payments for staying offline.