Subject: Re: Comments on FERC November 1 order
From: [email-masked]
To: [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Wed, 15 Nov 2000 22:15:00 -0800 (PST)

Has anyone talked with Tim B about what Larcamp said -- ie the soft cap only 
applies to PX and ISO bids and not to any bilateral contracts including 
bilateral fwd contracts?  
----- Forwarded by Steven J Kean/NA/Enron on 11/16/2000 06:12 AM -----

	Donna Fulton
	11/14/2000 09:33 AM
		
		 To: Steven J Kean/NA/Enron@Enron
		 cc: Jeff Dasovich/NA/Enron@ENRON, Joe Hartsoe/Corp/Enron@ENRON, Mary 
Hain/HOU/ECT@ECT, Paul Kaufman/PDX/ECT@ECT, Richard Shapiro/NA/Enron@ENRON, 
Sarah Novosel/Corp/Enron@ENRON, Susan J Mara/SFO/EES@EES
		 Subject: Re: Comments on FERC November 1 order

Just to pile on with the issues, I will add a few thoughts of my own for 
issues that we might want to consider in our November 20 comments.   
Re: the application of the price cap to only PX and ISO, Commissioner Massey 
is not totally on board.  He specifically asked about capping the forward 
market.  He raised the idea that he had gotten from the San Diego hearing 
that there be an accepted forward contract for a specified timeframe (18-24 
months) and specified rate, and that all loads must buy a minimum percentage 
of their needs from this contract.
A staffer (Don Gelinas) asked whether the forward/bilateral market 
(presumably uncapped) could take care of investment recovery so that 
generation not be cancelled in California.
Dynegy and other marketers raised the issue of the test to be used by the 
Commission in reviewing transactions above the soft cap.  Specifically, what 
is opportunity cost?  As long as the test is not known until after the fact, 
there will be lack of secuity selling into the California and greater 
incentive to sell elsewhere.
Hobbs from Williams raised the possibility that if the Commission does not 
eliminate the soft cap (his preferred approach), that the cap should be 
temporary and escalating and there should be limited time for raising issues 
and retaining the refund liability (he suggested that the refund liability be 
only for one month).
Many, especially the utilities, raised their position that the Commission 
should not institute penalties only on the load.  They claimed this was 
one-sided and suggested if penalties were required, they needed to be applied 
to the supply side as well.  They also argued that the load could not meet 
the 5% test.
Massey had a concern at the end of the day that the Commission's 
encouragement of forward contracts will be stymied by the CPUC by their 
authority in reviewing prudence of the utilities' purchases.
Larcamp asked at the end of the day for information on the cost of generation 
before deregulation - normalized for gas prices and emmission prices of 
today.  The marketer on the panel added that we would need to include 
stranded costs.
There was almost no support for the single price auction in California.
The California politicians argued that the ISO Board structure needed to be 
changed, but that California had jurisdiction to change it, not FERC.  A 
Court battle was threatened.

	Steven J Kean
	11/13/2000 08:51 AM
		
		 To: Mary Hain/HOU/ECT@ECT
		 cc: Richard Shapiro/NA/Enron@Enron, Jeff Dasovich/NA/Enron@Enron, Susan J 
Mara/SFO/EES@EES, Joe Hartsoe/Corp/Enron@ENRON, Sarah 
Novosel/Corp/Enron@ENRON, Donna Fulton/Corp/Enron@ENRON, Paul 
Kaufman/PDX/ECT@ECT
		 Subject: Re: Comments on FERC November 1 order

There are a few other issues we need to look into:

Larcamp told Hartsoe and I after the meeting that FERC may clarify that the 
price caps and reporting obligations apply only to bids into the PX and ISO 
-- ie no bilateral transaction will be subject to the requirements.  He asked 
if knowing this would change any of our views (esp peaking plants, though I 
suspect it's already too late for that).  My gut reaction is that so long as 
the market continues to clear through the centralized exchanges this 
"exemption" for bilateral transactions won't matter much, but let's think it 
through.  Is EOL or APX an alternative?
Massey specifically asked us to address forward markets in our comments.  
Specifically, "has FERC done everything it can to encourage forward market 
development?"  In addition to any other points we might make, I think we 
should argue that "PJMing" the market won't facilitate and may even hinder 
forward market development.  Also, we should advocate actions by FERC that 
take away second-guessing by the CPUC in order to reduce utility fears about 
contracting forward.
We have to give the Commission a way out on price caps.  We need to think 
through whether there is something we can live with here, or we should take 
the approach I took in my testimony:  FERC should encourage the state to 
provide rate protection for selected customer classes by putting those 
requirements up for bid (ie get the utility out of the commodity business as 
much as possible).
Finally, on governence issues we should argue for a narrowe role for the ISO 
as a way of diffusing the emotional governence debate.  Analogy:  if the ISO 
is simply the air traffic controller all parties will simply be interested in 
retaining the most technically competent people (not hiring or appointing 
their lackies or friends).  So long as the ISO has a role in setting prices, 
acquiring supplies or running the market, it is destined to be controversial 
and highly politicized.  Those functions should be left to the market.

	Mary Hain@ECT
	11/10/2000 11:13 AM
		 
		 To: Steven J Kean/NA/Enron@Enron, Harry Kingerski/NA/Enron@Enron
		 cc: 
		 Subject: Comments on FERC November 1 order

---------------------- Forwarded by Mary Hain/HOU/ECT on 11/10/2000 09:20 AM 
---------------------------
________________________

To: Christian Yoder/HOU/ECT@ECT, [email-masked], Richard Sanders, 
Susan J Mara/SFO/EES@EES, Mona L Petrochko/NA/Enron@Enron, 
[email-masked], Paul Kaufman/PDX/ECT@ECT, James D 
Steffes/NA/Enron@Enron, Joe Hartsoe@Enron, Sarah Novosel/Corp/Enron@ENRON, 
James E Keller/HOU/EES@EES, Mike D Smith/HOU/EES@EES, Harry 
Kingerski/HOU/EES@EES, Dennis Benevides, Tim Belden/HOU/ECT@ECT, Robert 
Badeer/HOU/ECT@ECT, Jeff Richter/HOU/ECT@ECT, Alan Comnes/PDX/ECT@ECT, Steve 
Kean, Richard Shapiro, Tim Heizenrader/PDX/ECT@ECT
cc: [email-masked], [email-masked]
From: Mary Hain/HOU/ECT
Date: 11/09/2000 05:19:03 PM
Subject: Comments on FERC November 1 order

For purposes of our discussions, Alan and I have put together an outline of 
issues raised in the FERC meeting today that we might consider putting in our 
comments to FERC.  Our written comments would also include the issues we have 
already raised in our white paper and our oral comments at FERC.  Of course 
to the extent we have discussed things in our white paper we could simply 
cite the paper.  Given the potentially long list of issues to be addressed, I 
haved left a voice mail asking Seabron if he is available to help Alan.