Message-ID: <10861720.1075848062200.JavaMail.evans@thyme>
Date: Mon, 21 May 2001 13:02:00 -0700 (PDT)
From: jeff.dasovich@enron.com
To: skean@enron.com, james.steffes@enron.com, richard.shapiro@enron.com, 
	sandra.mccubbin@enron.com, karen.denne@enron.com, mpalmer@enron.com, 
	michael.tribolet@enron.com, susan.mara@enron.com
Subject: Follow-up with Hertzberg on Core/Noncore
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X-From: Jeff Dasovich
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Hertzberg called.  We very briefly discussed the scenarios that he asked us 
to build for him.  I've attached the file.  the supporting spreadsheets are 
not included.  If folks would like them, let me know.  Please keep the file 
confidential.  

Hertzberg wanted to see what happened to rates for large (noncore) customers 
if the small (core) customers' share of past utility debt is shifted to 
noncore customers.  
Our analsis shows that noncore rates approach Loretta's recent rate increases 
when approximately 50% of core's share of utility past debt is shifted to 
businesess (i.e., to noncore).  (In fact, Edison's rate in this scenario is 
below the Lynch rate, while PG&E's is modestly above.)
Increasing the cost shift above the 50% level would start to push rates 
significantly above the Lynch rates.  
Note, however, that in its recent submission to the PUC, DWR's asserts that 
it's revenue requirement is substantially higher than the revenues support by 
the Lynch rate increase, suggesting that Lynch will have to increase rates 
again soon. 
In addition, Loretta's rates also do not reflect past utility costs, which 
will require yet additional increases.
I expect to have another conversation with the Speaker later this evening or 
tomorrow to discuss the scenarios in more detail  (he would still like to put 
100% of the IOUs past debts on noncore in exchange for getting a competitive 
market and out from under Loretta).
I will report back after we've spoken.
All ideas, suggestions, etc. regarding the attached spreadsheet are welcome 
and appreciated.

Best,
Jeff