Subject: Re: Missouri genco bill issues and a proposed strategy
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 5 Apr 2001 02:29:00 -0700 (PDT)

Rick, here's the contact information.  We received a call this morning from 
our local MO political consultant Cagle that Ameren is applying extreme 
political pressure to move the bill.  It would be best for Ken to call Kinder 
on Friday, when Kinder is in his office in Cape Girardeau.  Number there is 
573-335-6611.
----- Forwarded by Kerry Stroup/NA/Enron on 04/05/2001 09:14 AM -----

	Kerry Stroup
	04/02/2001 02:17 PM
		
		 To: Richard Shapiro/NA/Enron@Enron
		 cc: James D Steffes/NA/Enron@ENRON, Janine Migden/NA/Enron@ENRON, Steven J 
Kean/NA/Enron@Enron
		 Subject: Re: Missouri genco bill issues and a proposed strategy

The best information we have at this point is that the bill will be 
considered on the Mo. Senate floor in a few weeks.  Roy Cagle, our political 
consultant in Jefferson City, is keeping tabs and will advise of any 
developments.  It would be best given current information for the call to be 
placed within the next week,  Senator Kinder can be reached at his Senate 
office at 573-751-2455.  On Fridays he works out of his office at the 
newspaper in Cape Girardeau, 573-335-6611.

Janine, I've forwarded you a briefing memo for Ken Lay.

	Richard Shapiro
	04/02/2001 01:24 AM
		
		 To: Kerry Stroup/NA/Enron
		 cc: James D Steffes/NA/Enron@Enron, Janine Migden/NA/Enron@Enron, Steven J 
Kean/NA/Enron
		 Subject: Re: Missouri genco bill issues and a proposed strategy

We can get Ken to make the call- when does it need to occour?

Kerry Stroup
03/30/2001 05:03 PM
To: Richard Shapiro/NA/Enron@Enron, James D Steffes/NA/Enron@Enron
cc: Janine Migden/NA/Enron@Enron 

Subject: Missouri genco bill issues and a proposed strategy

(from Barbara and Kerry)

Ameren UE has been successful in developing political support for a bill that 
would permit each Missouri IOU to transfer its generation assets to a genco 
at net book value.  The genco would enter into a five-year term purchased 
power arrangement with the utility, with subsequent minimum three-year term 
renewals.  Each utility transferring its generation assets would be required 
to establish a "dedicated supply" tariff for large customers, who could elect 
to obtain energy from alternative suppliers in a buy-through arrangement.  
Alternative suppliers would be required to sell dedicated supply to the 
utility in a wholesale transaction; the utility would transport the power to 
the large customers, who, from an operational perspective, remain native load 
customers of the utility.  

The Senate Commerce and Environment Committee has passed the bill, which will 
be considered by the Senate sometime in the next several weeks.  If the 
Senate passes the bill, the debate will resume in the House.  Legislators are 
interested in moving the bill because they believe it will improve 
reliability of supply in Missouri.  Ameren UE has postponed building 
generation, and will require an additional 800 MW for next summer.  In the 
wake of the California situation, the legislative interest is not in 
providing a competitive discipline to the marketplace.  Ameren has promoted a 
genco structure as necessary for mitigating the investment community's 
concern over regulatory risk associated with building new generation 
facilities under traditional rate of return regulation.

There are a number of problems with the bill. From a retail aspect, it will 
be difficult if not impossible to compete for large customers, who will be 
able to procure power from the utility at FERC established cost-based rates 
that are currently below market.  In its present form the bill does not 
include meaningful code of conduct provisions, and it permits the utility to 
enter into billing and metering "experiments" in which customers can be 
aggregated and sold utility services at unregulated rates.  Although the bill 
requires that rates for utilities establishing gencos must be reestablished 
in rate cases within twelve months prior to  the transfer of generation 
assets, it is unclear the extent to which rates will be unbundled.  Finally, 
alternative generation suppliers and their customers would be subject to 
balancing charges, which render physical transactions untenable at this time.

 From the wholesale perspective, the bill is unacceptable because incremental 
resources required to serve Missouri retail load are not required to be 
competitively procured.  An earlier version of the bill would have permitted 
competitive procurement of additional generation sources at the utility's 
discretion, but was removed at the request of the Missouri PSC staff, who are 
sensitive to the legislature's focus on the issue of reliability.

The bill is sponsored by President Pro-Tem Peter Kinder, who in the past 
introduced comprehensive legislation that required competitive procurement 
for customers not choosing alternative supply sources.  Although Senator 
Kinder told Barbara and Roy Cagle that he would support passage of a bill 
this year, he does not appear to be taking an active interest in the details 
of the legislation.

Senator Kinder belonged to the same fraternity at the University of Missouri 
as Ken Lay, though they didn't attend college together.  Senator Kinder has 
voiced his admiration of Ken Lay, and met him at the Republican Convention 
this year.  It might be possible to persuade Senator Kinder to improve the 
bill, if Ken Lay were to communicate personally with him.

We recommend that Senator Kinder be persuaded to alter the bill to require 
competitive procurement for incremental generation resources.  On the basis 
of our discussions with EES and ENA, it appears that taking steps to address 
retail market structure problems will not put us in a position to compete 
effectively for large customers in the short and mid term.       

Barbara and I will prepare briefing materials for Ken Lay, if you wish to 
proceed in this fashion.  Please advise.