Message-ID: <9319494.1075858675364.JavaMail.evans@thyme> Date: Fri, 11 May 2001 20:31:00 -0700 (PDT) From: mday@gmssr.com To: 'richard.sanders@enron.com, richard.b.sanders@enron.com Subject: FW: Direct Access Legislation and the impact on Settlement Discus sions with UC/CSU Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: MDay <MDay@GMSSR.com> X-To: 'Richard.Sanders, Enron' <Richard.B.Sanders@enron.com> X-cc: X-bcc: X-Folder: \Sanders, Richard B (Non-Privileged)\Sanders, Richard B.\EES Neg CTC X-Origin: Sanders-R X-FileName: Sanders, Richard B (Non-Privileged).pst resending message > -----Original Message----- > From: MDay > Sent: Friday, May 11, 2001 3:27 PM > To: 'Kristen Bird'; 'awu@quinnemanuel.com'; 'Richard.Sanders, Enron'; > 'Robert.C.Williams@ENRON.com' > Cc: JBennett > Subject: Direct Access Legislation and the impact on Settlement > Discussions with UC/CSU > > Richard Sanders and Bob Williams asked that I provide the following brief > memo in order to summarize wherer the legislative efforts are at this time > and how they might impact settlement discussions. > > With the close of the first extraordinary session today, a second > extraordinary session will open on Monday and all the existing but > unpassed bills will be reintroduced--so we are told. That means there > will continue to be at least 2 bills which would substantially protect the > rights of customers to choose direct access, although both contemplate > that under varying circumstances the customer could be required to pay an > exit fee. > > What is relatively likely is this: > > A direct access bill will pass this session. It will likely create the > following situation: > > Any customer who has not been on direct access continuously since before > January 17, 2001 will have used some power purchased by DWR while being > charged bundled utility rates far lower than the actual cost. If these > customers (like UC) eventually elect to return to direct access they WILL > be required to pay the shortfall that has accrued while they were on > bundled service. > > Other stranded costs which may be incurred by DWR after the customer > leaves bundled service for direct access may also be passed on in an exit > fee. This would include stranded contract costs if DWR has contracted for > more long term power than it has customers, as well as any costs related > to the bond financing intended to pay for the long term power contracts. > We HOPE that the legislation will have a provision excusing the customers > from such an exit fee if DWR has not purchased all the net short power by > long term contracts and DWR can match its supply to the new lower demand > simply by reducing daily spot purchases. > > UC would potentially face the first type of exit fee in any event, it may > face the second, although there is a possibility of a short "open > enrollement" period following passage of the bill, which would allow > customers to switch to DA immediately without paying the second type of > exit fee. > > There may be other exceptions to the exit fees for customers who install > self generation or distributed generation. This might affect a few UC > campuses, but not all. > > At least one of the bills might give the CPUC enough discretion to permit > it to impose onerous conditions on direct access and thereby prohibit it. > However, this provision is strongly opposed by many customer groups and we > believe it can be defeated. > > We do not know when the direct access legislation will be adopted. We > hope within the next month. We will keep you advised, and please feel > free to call for an update at any time. > > Mike Day