Subject: Project Stanley - Immediate Amendment to Alberta Market Surveillance Rules
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Mon, 10 Jul 2000 12:29:00 -0700 (PDT)

Priveleged and Confidential

The Alberta Department of Resource Development (ADRD) released a draft Market 
Surveillance Amendment Regulation today which contains proposed amendments to 
the current Market Surveillance Regulation that will be in force prior to the 
PPA Auction later this month.   A number of changes have been made in 
response to: (i) concerns raised by potential Power Purchase Arrangement 
Bidders about PPA Owners intentionally witholding capacity,  and (ii) other 
apparent deficiencies with the original MSA Regulation.  We may wish to use 
the opportunity to informally  advocate for a specific change to the MS 
Regulation (Enron Canada will be filing formal written comments on other 
unrelated issues) that would mitigate one of the risks of a negative outcome 
on Project Stanley.

I understand that Blakes has undertaken a review of the EUA or Market 
Surveillance Regulation to determine what sanctions could result from a 
negative outcome on Project Stanley and therefore they can confirm whether I 
have identified all the applicable sections of the EUA and Regulations that 
address this issue.  Based on my quick review I see a conflict between the 
Market Surveillance Regulation and the Power Pool Rules.

Section 15 of the current Market Surveillance Regulation provides the Power 
Pool Council with the authority to impose sanctions on market participants 
that are found to be in contravention of the Electric Utilities Act, the 
Regulations, the rules of the power pool, etc.  There are four specific 
sanctions including: (i) fine, (ii) imposition of terms and conditions on the 
market participants activitives, (iii) direction to the market participant 
not to engage in certain activity, and (iv) direction to the market 
participant to pay the costs of an investigation and hearing.  None of these 
specific sanction include suspension or revocation of a market participants 
Power Pool Registration.  

In contrast to Section 15 of the Market Surveillance Regulation, Section 
9(1)(d) of the EUA authorizes the Power Pool Council to change the rules of 
the Power Pool.  Rule 2.5.3 of the Power Pool Rules allows for the Power Pool 
Council to revoke a Participant's registration for having contravened the 
Power Pool Rules.  

I believe it is necessary to at least consider whether Enron Canada should 
call Sid Carlson (the ADRD Official responsible for the Market Surveillance 
Amendment Regulation) and verbally advocate for an amendment to the Market 
Surveillance Regulation that would serve to expressly remove any conflict 
between the MS Regulation and the Power Pool Rules in relation to the 
authority of the Power Pool Council to revoke a participants registration.  
An amendment that would limit the authority of the Power Pool Council to the 
four sanctions in the MS Regulation would have the postive effect of 
eliminating the risk of Enron Canada being suspended from the Power Pool (and 
therefore remove one of the risks inherent in Enron Canada's participation in 
the PPA Auction).    

Admittedly, there is also a risk that our raising the issue could backfire 
and result in the ADRD entrenching such authority of the Power Pool Council 
into the Regulation and therefore deprive Enron Canada of arguing (in the 
event of a negative result on Project Stanley) that the Power Pool Council 
does not have the authority to revoke Enron Canada's Participant 
registration.   Aleck advises that the IMO in Ontario has the authority to 
revoke the registration of a market participant and he is of the view that it 
is reasonable for the Power Pool Council in Alberta to have recourse to such 
a sanction.   I understand from Dalton McGrath that Blakes is of the view 
that there is a very low probability of Enron Canada being sanctioned by way 
of suspension or revocation of its Power Pool registration in the event of a 
negative outcome on Project Stanley.  

While I appreciate there are pros and cons to saying anything on this issue, 
the MS Regulation is not frequently amended and the prospect of there being 
another opportunity to influence its amendment in this regard prior to the 
resolution of Project Stanley is very remote.   It is for this reason that I 
raise the matter now as the ADRD has indicated it will accept comments only 
until 12:00 p.m. Wednesday July 12.  

Regards,

Rob