Message-ID: <2898250.1075844236948.JavaMail.evans@thyme>
Date: Fri, 4 May 2001 07:19:00 -0700 (PDT)
From: aleck.dadson@enron.com
To: richard.shapiro@enron.com, james.steffes@enron.com, 
	linda.robertson@enron.com, tom.briggs@enron.com
Subject: Meeting with US Consulate Officials
Cc: john.lavorato@enron.com, rob.milnthorp@enron.com, paul.devries@enron.com
Mime-Version: 1.0
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: 7bit
Bcc: john.lavorato@enron.com, rob.milnthorp@enron.com, paul.devries@enron.com
X-From: Aleck Dadson
X-To: Richard Shapiro, James D Steffes, Linda Robertson, Tom Briggs
X-cc: John J Lavorato, Rob Milnthorp, Paul Devries
X-bcc: 
X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads
X-Origin: SHAPIRO-R
X-FileName: rshapiro.nsf

I met this morning with three officials from the US Consulate: Mitchell 
Optican (Political and Economic Affairs Consul ), Patrick Santillo (Trade 
Consul) and Peter Dykeman (Trade 
Specialist).                                     They expressed the view 
that, from their perspective, there was a very real risk that  restructuring 
in Ontario will not proceed quickly  because of the political complications 
coming out of California.  However, the Consulate has  also made a decision 
to do what it  can to protect US commercial interests here -  the two 
interests they identified were those of Enron and 
Sithe.                                 They were  eager to explore  whether 
there was an interim step or half way measure that would protect our 
interests while allowing the government to play out the political agenda of 
proceeding (and being seen to proceed) cautiously. I suggested that the only 
such measure would be a scenario under which the IMO administered spot  
market (including the market for wholesale industrials)  opened this November 
and the retail market followed in the  Spring. There are arguments in favour 
of this approach : greater confidence in IMO system readiness compared to the 
distributor EBT/CIS systems; greater commitment of the IMO to market opening; 
likely support from OPG  to this since it could secure access to NY and 
proceed with FERC marketer authorization application;  it would enhance OPG's 
announced divestiture program re 4000 MW;  and consumers/distributors could 
be protected through a smoothed price plus a deferral account mechanism 
pending full retail access.                                              I 
explained OPG's position in NY where OPG had obtained a waiver of the NYISO 
tariff's "reciprocity" provisions on the basis of Dave Goulding's assurances 
in February 2001 that the market would open this year.  They understood and 
agreed that it was easier and preferable for  the Consulate to raise with the 
gov't the real potential that OPG's access may be lost unless the wholesale 
market opens this year.                                 I have committed to 
outlining a plan that focusses on wholesale market opening this Fall and 
providing it to them next week.  The model will obviously have to be 
consistent with the "four guiding principles" enunciated by the Premier and 
Minister of Energy:  "protecting consumers and offering choice", creating a 
strong business climate with a reliable supply of electricity", "protecting 
the environment", and "encouraging new ways of doing business and supporting 
the search for alternative sources of 
power".                                                                       
                                                                              
     We are meeting again on Thursday to discuss with the Consul General 
"Poncho" Huddle.   They are prepared to: a) get it included in Governor 
Pataki's  statements when he meets with Harris at a NY/Ontario  economic 
summit in Niagara Falls/Buffalo in late June, b) have the  new Ambassador 
include it in an early speech in Toronto, and speak to the Premier and 
others, and c) press the issue with their own contacts in Energy and Finance 
in 
Ontario.                                                                      
                                                                 Please give 
me a call if you have any questions.  I will develop the model with input 
from Paul and Garrett and Seabron Adamson/Kevin Wellenius.