Message-ID: <10191242.1075846676529.JavaMail.evans@thyme>
Date: Tue, 28 Nov 2000 01:27:00 -0800 (PST)
From: jeffery.fawcett@enron.com
To: jeff.dasovich@enron.com, sscott3@enron.com, mbaldwin@igservice.com
Subject: Let the witch hunt begin...
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CPUC sees market abuses, claims overcharges
California regulators told FERC in a filing they have sufficient evidence o=
f=20
market power
abuse to warrant additional investigation.
In response to FERC=01,s request for comments on proposals to repair Califo=
rnia=01,
s wholesale
power market, the California Public Utilities Commission (CPUC) also argued=
=20
retail electricity
consumers had been overcharged by up to $4 billion by independent=20
generators.  The CPUC
did not name any specific generator.

=01&The CPUC=01,s preliminary staff analysis =01* conducted under similar c=
onditions=20
of imperfect
data and inadequate time =01* suggests that claims of tight supply and incr=
eased=20
costs, while
real, are overstated and explain less of the increased costs than FERC staf=
f=20
concludes,=018 the
CPUC says.

The CPUC=01,s filing cites FERC=01,s own assertion that California=01,s who=
lesale=20
market structure
provided the opportunity and potential for market power abuses. However, th=
e=20
CPUC disagrees with FERC=01,s conclusion that insufficient evidence exists =
to=20
prove actual abuses occurred.  Claiming that FERC=01,s own investigation in=
to=20
market manipulation was incomplete, the California regulators charge =01&th=
at=20
market power played a much greater role in the summer=01,s prices than appe=
ars=20
to be acknowledged in the [FERC] Staff Report.=018

California regulators, conducting their own investigation into market power=
=20
abuses, examined
the impact of increased costs due to higher-than-normal natural gas prices,=
=20
as well as
increased expenses related to obtaining limited environmental permits.
=01&The CPUC=01,s preliminary analysis shows that as much as $4 billion of=
=20
[California Power
Exchange] costs are attributable to market power for the period between Jun=
e=20
and September,=018 the state regulators reported. =01&FERC should set heari=
ngs on=20
this issue.=018

More generally, the CPUC criticized FERC=01,s Nov. 1 order, claiming that i=
t=20
=01&fails to provide
meaningful relief to Californians who =01( have spent billions more for pow=
er in=20
recent
months than ever before, paying prices that are not justified on the basis =
of=20
industry costs or
any other measure.=018

In addition, the CPUC=01,s comments on the major aspects of the FERC report=
 were=20
similar to
those of other market participants also filed last Wednesday. The CPUC said=
=20
FERC should take
interim measures to allow for immediate price relief for California=20
consumers, that the $150/
MWh =01&soft cap=018 suggested in the order would not hold prices down effe=
ctively,=20
and that fines on purchasers that do not forward contract the majority of=
=20
their load were one-sided.