Message-ID: <18243401.1075859529384.JavaMail.evans@thyme> Date: Fri, 1 Dec 2000 06:28:00 -0800 (PST) From: christian.yoder@enron.com To: elizabeth.sager@enron.com Subject: Western Connection Interface (WIO) Cc: steve.hall@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: steve.hall@enron.com X-From: Christian Yoder X-To: Elizabeth Sager X-cc: Steve C Hall X-bcc: X-Folder: \Elizabeth_Sager_Dec2000\Notes Folders\All documents X-Origin: Sager-E X-FileName: esager.nsf Elizabeth, For various reasons, and from time to time, these new RTO-type things come to legal because we presumably have some special "corporate law" expertise about board compostition and by-laws. I'm not sure we do, but in any event, Steve and I have reviewed this three inch pile of paper and our conclusions are set forth below. If you would like us to do anything further, please let us know. ----cgy ---------------------- Forwarded by Christian Yoder/HOU/ECT on 12/01/2000 02:11 PM --------------------------- Steve C Hall 11/30/2000 05:17 PM To: Christian Yoder/HOU/ECT@ECT cc: Subject: Western Connection Interface (WIO) Christian, Earlier this week you asked me to review a stack of documents (proposals and draft bylaws) relating to the proposed Western Interconnection Organization. Conclusion: Based upon a quick review of the draft proposal, bylaws, and other materials, I see no major objections to Enron voting for the formation of the WIO. The reason to vote for this organization would be to facilitate the development of uniform reliability standards and efficient electric markets in the Western Interconnection. However, you should carefully consider the fact that the board of directors will be weighted towards transmission owners (who will have 8 of the 27 votes). Power marketers, generators, and load-serving entities will only have 4 votes. 14 directors establish a quorum and the board only requires a majority vote of directors present, so it is conceivable that, for example, 15 directors show up, 8 of which are transmission owners, and the transmission owners are able to pass any resoultion they wish. Related to this issue is the inability of one membership group, such as the power marketer's group, to be able to veto a proposal. It will take three membership classes acting in unison, plus two other votes, to defeat a proposed action by the board. Unfortunately, because I am not personally familiar with the internal dynamics of the WSCC membership, I am unable to offer any indication of the how much of a risk this presents. Background and Overview In General: The Western Interconnection Organization ("WIO") will be formed by consolidating the Western Regional Transmission Association, the Southwestern Regional Transmission Association, the Northwestern Regional Transmission Association, and the Western States Coordinating Council (WRTA, SWRTA, NRTA, and WSCC, respectively) into one organization. The WIO, a non-profit corporation, will assume and perform the functions of these organizations, and, eventually, those organizations will be disbanded. The principal responsibilities of the WIO will be as follows: *The WIO will be the primary authority for promulgating regional reliability, operating, and procedural standards. *The WIO will work to resolve conflicting regional reliability standards, and work to develop compatible and efficient practices throughout the Western Interconnection. *The WIO will have no authority over commercial practices (but may work to promote compatible, efficient markets). *Provide a process for resolving disputes arising out of WIO functions and between WIO members. Membership: Any entity meeting the criteria for membership in one of the following membership classes may be Member of the WIO. There are five classes of membership: (1) Business entities owning more than 1000 miles of transmission lines, (2) Business entities owning less than 1000 miles of transmission lines; (3) Business entities that do not own, control, or operate transmission or distribution lines, e.g., power marketers, load-serving entities, independent power producers; (4) End users of electricity; and (5) Representatives of States and Provinces in the Western Interconnection. *Each class elects four (4) directors. *All of the classes select seven (7) non-affiliated directors, for a total of twenty-seven (27) directors. Quorum: A majority of all members, including a majority in at least three classes. In the case of directors, there must be 14 directors. Board Decisions: A board decision requires a majority of the directors present. Standing Committees: There are three standing committees: the Planning Coordination Committee, the Operating Committee, and the Market Interface Committee. Committee Voting: For purposes of voting on recommendations to the board, committees are divided into three classes: (1) transmission providers, (2) transmission customers, and (3) States and Provincial Members (which is Class 5). In order to make a recommendation to the board, there must be a simple majority of votes from the transmission provider and transmission customer classes. Termination: The WIO can be terminated upon a vote of the majority of the members.