Message-ID: <18088175.1075848174106.JavaMail.evans@thyme> Date: Fri, 20 Apr 2001 05:36:00 -0700 (PDT) From: jeff.dasovich@enron.com To: karen.denne@enron.com, james.steffes@enron.com, richard.shapiro@enron.com, sandra.mccubbin@enron.com, mpalmer@enron.com, skean@enron.com, janel.guerrero@enron.com, linda.robertson@enron.com, tom.briggs@enron.com, alan.comnes@enron.com, paul.kaufman@enron.com, sandra.mccubbin@enron.com, richard.shapiro@enron.com, james.steffes@enron.com Subject: CA legislature in doubt Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Karen Denne, James D Steffes, Richard Shapiro, Sandra McCubbin, mpalmer@enron.com, skean@enron.com, Janel Guerrero, Linda Robertson, Tom Briggs, Alan Comnes, Paul Kaufman, Sandra McCubbin, Richard Shapiro, James D Steffes X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf Karen: See highlited section of story below. PG&E's got it right. Recall that DWR was only buying power that it determined was "priced reasonably." Consequently, the net short wasn't getting picked up. That meant that the ISO would have to go to the real-time market to close the gap. The ISO would then charge the utilities for the power purchased. Recall that Bob Glynn referenced the $300 MM/month that continued to pile up on PG&E's balance sheet as one of the several reasons that PG&E put itself into bankruptcy. Now that PG&E's in bankruptcy, the state is now responsible for the full net short, and can't continue to sluff it off onto PG&E's balance sheet. So it's therefore no surprise that the State's daily bill for power purchases has increased dramatically---just not for any of the bogus reasons cited by Governor Backbone. Best, Jeff ----- Forwarded by Jeff Dasovich/NA/Enron on 04/20/2001 12:31 PM ----- Ray Alvarez 04/20/2001 09:56 AM To: Steve Walton/HOU/ECT@ECT, Susan J Mara/NA/Enron@ENRON, Alan Comnes/PDX/ECT@ECT, Leslie Lawner/NA/Enron@Enron, Rebecca W Cantrell/HOU/ECT@ECT, Donna Fulton/Corp/Enron@ENRON, Jeff Dasovich/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Tim Belden/HOU/ECT@ECT cc: Subject: CA legislature in doubt FYI. Ray NGI's Daily Gas Price Index published : April 20, 2001 CA Governor, Regulators Push on, but Legislature Raises Doubts Two certainties prevailed in California's blighted energy landscape Thursday: wholesale power bills are getting bigger and state regulators are trying harder to salvage Gov. Gray Davis' deal with Southern California Edison Co. But in the state legislature from which the ultimate solutions must come there was growing skepticism, despite a series of meetings with the governor earlier in the week. While nervousness over the state's electricity bill and the prospect of insufficient power supplies this summer prevailed, Davis met with 25 members of California's congressional delegation at a Los Angeles airport hotel to press his case for federal actions to resolve the seemingly endless energy dilemma. The California Public Utilities Commission has ordered a statewide investigation of the contractual obligations of the almost 700 small (qualifying facility) QF generators toward the utilities, but most of the five-member commission's activity was focused outside its regular business meeting in San Francisco. CPUC President Loretta Lynch offered empathy toward Edison's financial plight and renewed pleas for federal regulators to provide wholesale price relief. "I have committed that the CPUC will expeditiously review those provisions of (Edison's proposed agreement) that require CPUC resolution, and I have taken steps to begin that process," Lynch said in a prepared statement released Wednesday. "In the meantime, I commit to reviewing on a priority basis any and all proposals that promote the financial health of California utilities and the interests of its consumers." Davis and some of the CPUC commissioners have been complaining that the cost of the state's daily purchases of wholesale power on the spot market have increased from about $50 million to more than $70 million daily since the April 6 bankruptcy filing of Pacific Gas and Electric Co., but the utility challenged the conclusion that the court filing caused the latest price increases. "While it is understandable, even laudable, that the governor would want to fully explain the downsides of utility bankruptcy, this claim is simply not accurate," said PG&E utility spokesperson John Nelson. He argued that the increase in state payments for power reflect that the state water resources department (DWR) now is covering all spot purchases, including the often costly real-time emergency purchases by the state's transmission grid operator, Cal-ISO. Thus, PG&E's spokesperson said the more likely cause of the increased power bill lies with recent moves by federal regulators and Cal-ISO, noting that the state grid operator should only sell to "creditworthy" entities. These moves were done independent of the PG&E bankruptcy filing, Nelson said. As the daily bill for power goes up, draining the state treasury more quickly, pressure mounts for a resolution to the utility financial situation. But the legislature has expressed skepticism toward the governor's proposed deal with Edison. State Senate Leader John Burton (D-San Francisco) told news media Wednesday that bankruptcy might be the best approach for Edison. In adopting the new investigations of QF generators, the CPUC's commissioners acknowledged that eventually the issue of back payments to the small generators needs to be addressed, particularly to a group representing up to 3,000 MW collectively.