Message-ID: <4191154.1075844214344.JavaMail.evans@thyme> Date: Fri, 1 Jun 2001 10:37:00 -0700 (PDT) From: peter.styles@enron.com To: brendan.devlin@enron.com, richard.shapiro@enron.com Subject: Belgian power- EFET Meeting with the CREG/Union Miniere feedback Cc: bruno.gaillard@enron.com, nailia.dindarova@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit Bcc: bruno.gaillard@enron.com, nailia.dindarova@enron.com X-From: Peter Styles X-To: Brendan Devlin, Richard Shapiro X-cc: Bruno Gaillard, Nailia Dindarova X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\All documents X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf FYI re your meeting with Ristori next Wednesday. Obviously Bruno can give more background. And I have met the UM people with Philip previously. ---------------------- Forwarded by Peter Styles/LON/ECT on 06/01/2001 05:25 PM --------------------------- From: Philip Davies/Enron@EUEnronXGate on 06/01/2001 02:36 PM GDT To: Paul Mead/LON/ECT@ECT, Ross Sankey@/O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=BFC3C3AD-85CCEF7-8625653F- 620E04@EX@EUEnronXGate cc: Bruno Gaillard/Enron@EUEnronXGate, Raphael Brun/LON/ECT@ECT, Peter Styles/LON/ECT@ECT, Jonathan Pietila/Enron@EUEnronXGate, Simon Brod/LON/ECT@ECT Subject: RE: EFET Meeting with the CREG/Union Miniere feedback Ross, Paul We had good feedback from Union Miniere on the Belgian situation yesterday. Apparently the Febeliec press release on the competitive situation in Belgium went down very badly in the government. Febeliec got a letter back saying that the govt was "disappointed and unhappy" with the letter, noting that the govt priorities were the Belgian presidency of the EU, the finances of the communes (whose finances are of course completely wrapped up with Electrabel's extraction of revenues from captive customers) and something along the lines of "preserving the traditions of Belgian electricity supply". Furthermore, there are suggestions of veiled threats (not from the government directly, but from those working closely with govt) of "retribution" ( taxes/environmental burdens) -presumably if Febeliec don't lay off. Also confirmed Bruno's CREG feedback that border issues are not a priority. UM however is going to persist. Senior management (Marcel Goetstouwers, VP of Purchasing & Transportation) wants us to go back next week and present to him why exactly we can't commit to delivering firm on the Belgian grid next year and what it takes for us to be able to do so. He intends to use this material in his upcoming meeting with the Minister. We have of course been explaining all along the difficulties, but it has taken their recent Belgian tender (in response to which they received no offers apart from their Electrabel offer plus our OTM option) for him to take the issues seriously. UM is also talking again about complaints to the Commission, which they may actually do now (possibly). Our OTM option remains on the table and we can discuss it again after their visit to the Minister. Against this background, the CREG refusal to meet with Enron is obviously symptomatic of the general attitude of the govt. EFET Belgium needs to take this into account in moving forward. (Bruno - why not get some feedback directly, and independently, from Febeliec - and see if it confirms or not UM's report.) On the test sale to Electrabel on the Belgian grid, I will take this forward with Jonathan on his return on Tuesday. Following the recent pressure/letters from us on the issue to CPTE, they had indicated ARP trading on the grid would be in place by 1 July but this has since slipped to Sep or Oct, and of course, there is no CPTE commitment on paper anyway (a promised press release on the subject is probably being saved for the announcement of the nomination of the TS0, expected 21 July). It will be interesting to see if Electrabel still give us a price, since there have been CPTE/Electrabel discussions on the matter since we raised it. Philip -----Original Message----- From: Mead, Paul Sent: 30 May 2001 20:37 To: Sankey, Ross Cc: Gaillard, Bruno; Davies, Philip; Brun, Raphael; Styles, Peter Subject: Re: EFET Meeting with the CREG - Elect. and Gas Just to clarify, we can buy from Electrabel in Belgium, but are told we can not SELL to them in Belgium. Perhaps an even more crazy situation! BTW, we intend to challenge this by doing a deal and just submitting a schedule. Philip, what is the status of this? PM Ross Sankey@ECT 30/05/2001 18:45 To: Bruno Gaillard/Enron@EUEnronXGate @ ENRON cc: Paul Mead/LON/ECT@ECT@ENRON, Philip Davies/Enron@EUEnronXGate@ENRON, Raphael Brun/LON/ECT@ECT@ENRON, Peter Styles/LON/ECT@ECT@ENRON Subject: Re: EFET Meeting with the CREG - Elect. and Gas << OLE Object: StdOleLink >> Bruno, As you say not unexpected! Were they quoting the govt in terms of their intentions to not open the market? How does this approach play in terms of the Belgium presidency? As a simple example, we face the ludicrous situation that CPTE allows us to wheel power through Belgium from Fr to NL (et vv) but refuses to allow us to buy from or sell to Electrabel - with significant implications for the Dutch as well as Belgium markets, given Electrabel's strong position in both markets. In that this is a cross border issue the EU ie TREN and/or COMP should take more interest.......but probably only if prodded by the Dutch to conisder it more of a priority (and pigs might fly on that one?)? Obviously position of TREN key on this - what hot buttons can we press (assuming Dutch do nothing)? Is there action that could be taken or threatened against Electrabel (although this would obviously need to be justified by lengthy and difficult abuse investigation or such like). Is the reported Electrabel/Distrigas "concert" another angle to raise with TREM/COMP? Could CPTE be fined? Regards, Ross From: Bruno Gaillard/Enron@EUEnronXGate on 30/05/2001 18:10 To: Ross Sankey/LON/ECT@ECT, Paul Mead/LON/ECT@ECT, Philip Davies/Enron@EUEnronXGate, Raphael Brun/LON/ECT@ECT cc: Peter Styles/LON/ECT@ECT Subject: EFET Meeting with the CREG - Elect. and Gas The meeting yesterday with the CREG was very disappointing although not surprising. We met Christine VANDERVEEREN - President and Department for dispute settlement, Thomas LEKANE - Director of the technical operation of the electricity market, Jean-Paul PINON - Director of the technical operation of the gas market, and Fran?ois POSSEMIERS - Director of gas price control. The attitude of Ms VANDERVEEREN was one of resignation and apathy, Mr. LEKANE was very defensive (and did not seem to understand the issues i.e. did not understand the exchanging of energy blocks), M. PINON was the only one that seemed pro-active, open and wiling to listen to market participants, and Mr. POSSEMIERS did not say anything. Electricity We presented the situation - no access to market/transit, quasi monopoly situation at the detriment to consumers, no wholesale and retail market, no wholesale trading allowed. We insisted that in the short -term, capacity should be available on a UIOLI bases, block exchanges should be put in place ASAP. They indicated that only the strict minimum was going to be implemented in the short run. In particular, at the end of the meeting M. Vanderverren told me that the government had no intention of opening up the market for competition and that their only intention was to focus on internal market issues, and not border issues, to insure the transposition of the directive to fend off the Commission's latest infringement action. The CREG is still operating under the "we have no power" mode. The tension between the CREG and the ministry is obvious and politically motivated. The CREG gives the impression that they are subject to the ministry's power, they are only acting as an administrator for the ministry in providing advice on proposed legislation. The CREG continues to claim that they are not able to impose any rules or regulation on CPTE as CPTE is not the nominated TSO. They also seem to fend off any offer for us to consult on any issues other than draft decrees and certain "indicative plans" that are envisage (see below). Status of TSO designation: The TSO should be nominated on 21/7. All important decrees will be passed by the 20/7. This includes the grid code, tariff related decrees (need precisions), and a new decree requiring licensing for intermediaries (including suppliers and traders). Regarding this issue, the CREG is against additional licences but see this requirement unavoidable (due to political will), and asked that we provide them with comments once the proposed decree is available (with the condition that there will be very little time to provide for comments) Grid Code According to a prior conversation I had with the secretary cabinet, the grid code should be issued by the end of June at the latest. They are still considering including a concentration process on specific issues. EFET will be scheduling a meeting with the cabinet shortly. Border capacity allocation: It seems that the only change in allocation that they are considering is one that would implement auctions by 2002 (this what they consider to be the short term solution). In the long term Leanne explained that the preferred solution would be market splitting. They are not considering any type on UIOLI procedure in the immediate (despite our stressing that this should be easily implementable). Trading Arrangements: We also insisted on the need to implement ASAP block exchange procedures. It seemed that Lekane did not understand the issue and implied that his comments on the grid code did not envisage that because of the limited time they had to offer comments to the ministry. (Again in previous conversation with the energy cabinet they are considering to include that notion and are possibly looking to ask for a formal consultation process) Envisaged Consultation: Electric: Decree on licences, Projected demand for the next ten years - projected imports, exports and transits - need for production Gas: Projected demand for the next ten years - the need for flexibility, competition, .... New Grid Code: Changes to the existing proposed grid code to incorporate the new law. Next steps: EFET decided to try meet with the Energy cabinet within two weeks. Is Envisaging meeting with Christopher Jones by the end of the month. Enron is continuing to actively talk with the Energy Cabinet (next issue to discuss are UIOLI capacity allocation, trading arrangements). June 6 Meeting with DGTREN to expose barriers in BE market. (At the end of the CREG meeting I asked that they meet with Enron and the responded that they did not have the time) Bruno