Message-ID: <9658906.1075846701841.JavaMail.evans@thyme> Date: Wed, 6 Dec 2000 01:23:00 -0800 (PST) From: jeffery.fawcett@enron.com To: jeff.dasovich@enron.com Subject: Textbook case of Leadership... not Cc: susan.scott@enron.com, mbaldwin@igservice.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: susan.scott@enron.com, mbaldwin@igservice.com X-From: Jeffery Fawcett X-To: Jeff Dasovich X-cc: Susan Scott, mbaldwin@igservice.com X-bcc: X-Folder: \Susan_Scott_Dec2000_June2001_1\Notes Folders\Discussion threads X-Origin: SCOTT-S X-FileName: sscott3.nsf I've got Bilas's "winter of discontent." What a buffoon. It takes more guts than a train robber to, on one hand, propose a spineless, ineffective approach to dealing with what are now recognized as serious flaws in the current regulatory structure, and in the same breath, go to the court of public opinion and whine about a gas market spinning madly out of control. Apparently, he's also setting the table for possible intervention in the market by state lawmakers or regulators if we get any more "out of whack." Are you going over to see Bilas today with Mike Day, et al.? Are we to assume by Bilas's wishy-washy statements to the media that the Comprehensive Settlement is still on the table? Thoughts, please. Natural Gas Intelligence, Wednesday, December 6, 2000 CA Officials See Potential Gas Supply Problems Some state officials already are dubbing the upcoming heating season as California's "winter of discontent" as continued high wholesale natural gas prices are driving up consumer bills and state regulators look at options for unbundling Southern California Gas Co.'s transmission and storage system. According to other state energy officials he talks with, Richard Bilas, commissioner at the California Public Utilities Commission, said, "We could have some real problems." Bilas, the former energy commissioner and immediate-past president of the CPUC, has proposed a modest unbundling of SoCalGas' system, given the current energy price volatility, in a proposed settlement decision now being reviewed. Action on the proposed decision could come Dec. 21, but observers predict alternate orders will be offered by some of Bilas's colleagues on the five-member CPUC, and that could push into next year final action. If gas prices continue at their precedent-setting levels, California likely will be intervening at the Federal Energy Regulatory Commission as it already has been doing regarding last summer's electricity price spikes, Bilas said. "There are a lot of things the state can do, but whether they are done is a matter of philosophical and political judgment," he said. "If gas prices get totally out whack in the view of a number of state decision-makers, there is likely to be intervention on behalf of the state into gas pricing. And I don't know if any of that serves the public well in the long run, but this is a short-run political problem." As for his proposed decision on settlement for the unbundling of the SoCalGas's system, Bilas is unsure at this point if it will stimulate a more robust core aggregation market --- now almost a decade old --- with added volumes and marketers. He said he needs to hear from participants in the market in response to the proposed decision, which basically adopts the more modest compromise of three different settlements filed with the CPUC. "I'll know better where this proposed decision is going in another two weeks after I have talked with the other commissioners and some of the parties," said Bilas, noting that the pending gas settlements should be the last major changes in California's gas market for awhile, unless the state legislature decides to get involved as it has on several occasions in the past three years. "Everything to do with gas matters statewide is on the table and I am not going to make any predictions," Bilas said during a telephone interview in which he expressed concerns about both natural gas and electricity issues in California in the coming year. He said the supply-demand imbalance for the state's electricity market needs long-term solutions, but he thinks short-term political answers will win out. Bilas said the recent state energy commission conclusion that California's electricity needs can be met with the existing plants underway or proposed could pan out, but only if an unlikely combination of three factors converge: all the plants now on the drawing board actually get built, no major electric or gas transmission bottlenecks occur, and energy prices stabilize. "Even if all of the proposed plants came on line in two years rather than three, I think we still would have problems," he said. "Let's face it, demand for electricity in the Pacific Northwest and California is growing like crazy. So, until there is something done on the demand side, so we get some demand responsiveness, just attacking the supply side I don't think is going to do it."