Message-ID: <23558339.1075846387113.JavaMail.evans@thyme> Date: Thu, 9 Nov 2000 04:14:00 -0800 (PST) From: steven.kean@enron.com To: jeff.dasovich@enron.com, sandra.mccubbin@enron.com, mark.palmer@enron.com Subject: Arena and Electric Dereg. Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: Jeff Dasovich, Sandra McCubbin, Mark Palmer X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Sent X-Origin: KEAN-S X-FileName: skean.nsf Just FYI. These guys did a great job on the polling here, but I can't speak to their other qualifications or their California ties. ----- Forwarded by Steven J Kean/NA/Enron on 11/09/2000 12:13 PM ----- "Michael D. Baselice" <mikeb@baselice.com> 11/09/2000 09:03 AM Please respond to "mikeb@baselice.com" To: "Ken Lay (E-mail)" <klay@enron.com>, "Steve Kean (E-mail)" <skean@enron.com> cc: Subject: Arena and Electric Dereg. 1. Thank you for all your support on the Arena Proposition. 2. The following article reminded me to pass along a note about a PR/PA firm in California who Baselice & Associates worked with this year in passing Prop 35 (a contracting out initiative). The firm is a full service firm named Woodward & McDowell. They have been active in California legislative and initiative battles for some 20 years and I highly recommend them if Enron is in search of support with the electric deregulation fight out there. Dick Woodward or Dave Fogarty can be reached at 650-340-0470. If you have any questions, please call. Mike MICHAEL BASELICE Baselice & Associates, Inc. 4131 Spicewood Springs Road Suite O-2 Austin, TX 78759 Phone: (512) 345-9720 Fax: (512) 345-9740 email: mikeb@baselice.com November 8, 2000 Calif Regulators,Grid Oper In Turf War Over Generation By JASON LEOPOLD Of DOW JONES NEWSWIRES LOS ANGELES-California's electricity regulators and power-grid operator are locked in a turf war over who has the authority to order new power plant construction next summer to ensure the state has enough juice on hand when demand soars. The California Public Utilities Commission says it can bring emergency power on line at a fraction of the cost that the Independent System Operator is expected to pay independent power producers for the same service. Under it's plan, PG&E Corp. (PCG) unit Pacific Gas & Electric Co., Edison International's (EIX) Southern California Edison unit and Sempra Energy's (SRE) San Diego Gas & Electric Co. were ordered to submit documents by the end of November stating whether they can build and operate "peaking" plants by June 1. The utilities weren't immediately available to comment. On the other hand, the ISO - which is on the verge of signing contracts for 440 peaking units with between 20 and 91 megawatts of electricity - says the commission's meddling could endanger any chance of additional resources coming on line in time. "Any further interference on the state level could destroy the plan altogether," said an ISO source close to the issue. "There is no guarantee the utilities will be able to pull this off by next summer. And if the whole project is scrapped, you can expect there will be blackouts." Interference by federal regulators has already cost the ISO two participants and nearly 600 megawatts in its peaking program. Calpine Corp. (CPN) and Enron (ENE) initially agreed to build peaking plants for the ISO next summer, but withdrew their offers after the Federal Energy Regulatory Commission proposed capping the clearing price for California's wholesale electricity market at $150 a megawatt-hour. The ISO, which operates one of the state's wholesale power markets and manages most of the high-voltage transmission grid, has already solicited and received bids from merchant generators for 1,800 megawatts of new peaking power for next summer. Burned by the summer's power crisis and facing an 8,000-MW shortfall next summer, the ISO put out a request for bids in August. The ISO's board voted Oct. 30 to enter into the contracts, which it estimated would cost about $250 million a year for three years. The state's Electricity Oversight Board, which oversees the performance of the ISO, and the Public Utilities Commission protested the decision on the grounds that the contracts were too expensive. The commission is also questioning whether there is even a need for peaking power next summer and, if there is, whether the ISO should handle the solicitation. "The question also arises as to whether the ISO - which is empowered only to operate the state's transmission system and which does not represent the state or its consumers - is the appropriate organization to plan, solicit and pay for the construction of new power plants across the state," the commission wrote in its Nov. 2 order. Ind the end, the decision is up to state regulators. If utilities can come up with a cheaper alternative and if the regulators determine that additional generation is needed by next summer, then they will follow through with the utilities proposal.