Message-ID: <33260441.1075859548633.JavaMail.evans@thyme> Date: Mon, 29 Nov 1999 03:44:00 -0800 (PST) From: elizabeth.sager@enron.com To: david.portz@enron.com, leslie.hansen@enron.com, genia.fitzgerald@enron.com, christian.yoder@enron.com Subject: Negative publicity on EEI contract Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Elizabeth Sager X-To: David Portz, Leslie Hansen, Genia FitzGerald, Christian Yoder X-cc: X-bcc: X-Folder: \Elizabeth_Sager_Dec2000\Notes Folders\Sent X-Origin: Sager-E X-FileName: esager.nsf FYI ---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 11/29/99 11:43 AM --------------------------- "Andy Katz" <AKatz@eei.org> on 11/29/99 10:21:32 AM To: Elizabeth Sager/HOU/ECT@ECT cc: Subject: Fwd: FW: Dow article from this morning This is the article I mentioned. Andrew S. Katz, Senior Attorney Edison Electric Institute 701 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Voice: 202-508-5616 Fax: 202-508-5673 e-mail: akatz@eei.org Received: from semsei01.SouthernEnergy.Com (atles6.southernenergy.com [208.147.220.20]) by mail.eei.org; Mon, 22 Nov 1999 16:59:52 -0500 Received: from atles6.SouthernEnergy.Com (atles6.SouthernEnergy.Com [10.0.1.247]) by semsei01.SouthernEnergy.Com (8.9.3/8.9.3) with ESMTP id QAA09538 for <AKatz@eei.org>; Mon, 22 Nov 1999 16:43:08 -0500 (EST) Received: by atles6.SouthernEnergy.Com with Internet Mail Service (5.5.2232.9) id <XLJ6LYC0>; Mon, 22 Nov 1999 16:43:07 -0500 Message-ID: <7912AEBADCF1D211BDBB0050040E9F50ABABB3@atles7.SouthernEnergy.Com> From: "Edmonds, Sonnet" <sonnet.edmonds@SouthernEnergy.Com> To: "'Andy Katz'" <AKatz@eei.org> Subject: FW: Dow article from this morning Date: Mon, 22 Nov 1999 16:33:47 -0500 MIME-Version: 1.0 X-Mailer: Internet Mail Service (5.5.2232.9) Content-Type: text/plain; charset="iso-8859-1" Have you seen this? Obviously, I ended up speaking to that Dow Jones reporter late last week, at the request of our media relations dept. I was horribly misrepresented. Virtually all of the reporter's questions were about the factual differences between the EEI and WSPP contracts and this is what the article ended up looking like. > -----Original Message----- > From: Brown, Steve > Sent: Monday, November 22, 1999 11:51 AM > To: Edmonds, Sonnet > Subject: FW: Dow article from this morning > > You are mentioned in this Dow Article. > > -----Original Message----- > From: Markham, Robert F. > Sent: Monday, November 22, 1999 11:28 AM > To: Brown, Steve; Soto, Oscar > Subject: FW: Dow article from this morning > > > > =DJ Power Points: EEI Contract - Will This Dog Hunt > Nov 19 15:20 - CM - Dow Jones Capital Markets Report > > > By Mark Golden > A Dow Jones Newswires Column > > NEW YORK (Dow Jones)--"Et tu, Sonnet?" > The Edison Electric Institute unveiled Wednesday a standardized master > agreement for trading power, but there's already a standard contract - the > one written by the Western Systems Power Pool. > There are several ways to characterize this battle: East versus West; > power marketers versus utilities; and, even, Southern Co. versus Southern > Co. A power struggle has begun, despite the fact that most traders, > preschedulers and trading managers aren't even aware of the new contract. > Southern Co. (SO) Vice President Bobby Campo has been a leader in WSPP > since the organization's inception and has been chairman of its contract > committee for four years. Yet Southern Co. Energy Marketing's chief > counsel, Sonnet Edmonds, is a leader in the rival-contract faction. > Will EEI, along with its comrade, the National Energy Marketers > Association, manage to dethrone the WSPP contract or crash? WSPP's raison > d'etre is to manage and promote use of its contract, which is traded > extensively in the West and has gained proponents in the East. > "I'm not real excited about it right now," Campo said of the new > contract. "The EEI contract is being done by contract people and lawyers. > We - operators and power marketers - worked on our contract for years > before we brought in the lawyers. It (the new contract) may die from a > lack > of interest from participants, but EEI has the ability to keep it alive." > It isn't clear if the big power marketing companies will get the ball > rolling by asking counterparties to switch to the EEI contract. Edmonds > hopes that Southern Co. will do so. > "Management hasn't given the official word yet, but we participated in > its development, so I imagine we'll use it at some point," she said. > Enron Corp.'s (ENE) general counsel also worked on the EEI contract, but > the company hasn't made a decision to actually use it. > Entergy Corp.'s (ETR) general counsel, Christopher Bernard, led the > effort to develop the new contract as head of NEM's standardized contract > committee. But Entergy's Jim Kenney is chairman of WSPP's executive > committee. Entergy's power trading managers, meanwhile, haven't even read > the new contract yet. > Duke Power Co. (DUK), an NEM member, is looking at it, a spokesman said. > Enron and Southern Co. aren't NEM members, though they serve on its > contract committee. > Several sources said American Electric Power (AEP) has agreed to be the > guinea pig, and plans to switch to the EEI contract with counterparties on > eastern U.S. trades. A spokesman for the utility couldn't confirm or deny > that rumor because Paul Addis, president of AEP Energy Services, has > imposed a vow of silence on AEP's traders. > There are elements of the EEI contract that power marketers may like. > One > innovation is a new product called "Firm (No Force Majeure)," which > requires the payment of liquidated damages for failure to deliver - no > excuses, no force majeure, just send a check. > The new contract also has two other firm products. "Firm (Liquidated > Damages)" is closest to the WSPP firm product, but it defines force > majeure > more strictly than WSPP. "Firm (LD-System Reliability)" explicitly allows > a > selling utility to curtail deliveries without paying liquidated damages if > necessary to maintain native load. Of particular interest to traders of > eastern U.S. electricity is the fact that the EEI contract defines what an > "into" product is. > WSPP has debated the introduction of such products, but in the end has > tried to come up with a single, agreed-upon product for trading. > "EEI has created a lot of different types of firm products, but that can > create problems. Many people have said 'no, we want one firm product'," > said WSPP's counsel, Michael Small, of Washington, D.C., law firm Wright > and Talisman. > So why didn't the EEI group just work with WSPP to get changes made to > the existing standard? Too much bureaucracy, according to Southern's > Edmonds. > "Changes to the WSPP contract require approval from 90% of the members, > after working through the operations committee and the executive > committee. > Then the changes have to be filed at Federal Energy Regulatory > Commission," > Edmonds said. > Coincidentally, WSPP's executive committee is meeting Friday in San > Diego > to discuss what changes are needed in the definition of its firm product. > Western utilities are pushing hard for "firm" to mean backed up by > reserves > of generating assets or previously purchased power. In other words, some > utilities want to eliminate short positions from power markets. > At least one power marketing company, which didn't want to be named, > will > switch to the EEI contract if that change gets made to WSPP. > For the EEI contract to fly, not only will the lawyers at the big > trading > companies need to make it their companies' standard, but traders will have > to convince utilities to abandon most, if not all, force majeure claims. > Many municipal utilities and rural electric cooperatives are forbidden to > do so by state regulations. > For traders, though, the biggest adjustment to make if the EEI contract > does take off will be more social than professional. The semi-annual > meeting of the WSPP's operations committee is as much fun as any blatant > boondoggle should be. The serious work of a handful of committee members > is > a small hook on which hangs the revelry of hundreds of power marketers, > brokers and utility staffers. As it stands, non-committee members must > have > a hard time convincing bosses that their presence is necessary at the > meeting. > How on earth will traders justify going if the WSPP contract is no > longer > used? Can EEI throw a good party? And how will the Gucci-loafered EEI > executives from Washington handle $1,000 dares to go naked in a bar? > Such are the questions now vexing America's electric utilities. > -By Mark Golden; Dow Jones Newswires; 201-938-4604; > mark.golden@dowjones.com > > (END) Dow Jones Newswires 11-19-99 > 1520EST