Message-ID: <7565042.1075844262272.JavaMail.evans@thyme> Date: Thu, 7 Jun 2001 06:32:00 -0700 (PDT) From: susan.mara@enron.com To: jeff.dasovich@enron.com, james.steffes@enron.com, richard.shapiro@enron.com, harry.kingerski@enron.com, paul.kaufman@enron.com, richard.shapiro@enron.com Subject: [Fwd: "Newest" Edison Bailout Plan Has A Familiar Sound -- NYMEX Attack] Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Susan J Mara X-To: Jeff Dasovich, James D Steffes, Richard Shapiro, Harry Kingerski, Paul Kaufman, Richard Shapiro X-cc: X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Notes inbox X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf Here is the Seetin e-mail. This is actually complaining about the "Fair=20 Plan' which came out last week. I have a call into Bob Levin at NYMEX. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 ----- Forwarded by Susan J Mara/NA/Enron on 06/07/2001 01:28 PM ----- =09Gary Ackerman =0906/07/2001 01:07 PM =09Please respond to foothillservices =09=09=20 =09=09 To: Sue Mara =09=09 cc:=20 =09=09 Subject: [Fwd: "Newest" Edison Bailout Plan Has A Familiar Sound] Return-Path: Received: from hitchcock.mail.mindspring.net ([207.69.200.23]) by=20 osgood.mail.mindspring.net (Earthlink Mail Service) with ESMTP id=20 thva29.agc.37kbi1v for ; Thu, 7 Jun 2001= =20 12:14:01 -0400 (EDT) Received: from augustus (augustus-z.mspring.net [207.69.231.21]) by=20 hitchcock.mail.mindspring.net (8.9.3/8.8.5) with SMTP id MAA11760 for=20 ; Thu, 7 Jun 2001 12:14:01 -0400 (EDT) X-MindSpring-Loop: gackerman@wptf.org Received: from unidial.com ([206.112.0.9]) by augustus (Earthlink Mail=20 Service) with ESMTP id thva28.l08.37kbpol for ; Thu, 7= =20 Jun 2001 12:14:00 -0400 (EDT) Received: from markseetin (cd-188-85.ra30.dc.capu.net [64.50.188.85]) by=20 unidial.com (8.9.3/8.9.3) with SMTP id LAA12926; Thu, 7 Jun 2001 11:42:52= =20 -0400 (EDT) From: "Mark Seetin" To: "Andrew Skaff" , "Assemblyman David= =20 Kelley" , "Brad Williams"=20 , "Caroline Katzin"=20 , "Casey Beyer"=20 , "Chuck Cole" ,= =20 , "Dan Skopec" = , =20 "Dan Walters" , "David Lazarus"=20 , "DAVID WARD" , = =20 "Dorothy Rothrock" , "doug John"=20 , "Evan L. Goldberg"=20 , "Gary Ackerman"=20 , "Gordon Rutledge" , = =20 "Gregg Ward" , "J. A. Savage"=20 , "Jack M. Stewart" , = =20 "Joe Paul" , "Keely Martin Bosler"=20 , "Linda L. Robertson"=20 , "Michael Kahl" ,=20 "Randy Poole" , "Richard Costigan III"=20 , "Roderick D. Wright"=20 , "Scott Govenar"=20 , "Tara L. Ord" , = =20 "Terrie Williams" Cc: "Charlie DeWitt" , "Robert Levin"=20 , "Neal Wolkoff" Subject: "Newest" Edison Bailout Plan Has A Familiar Sound Date: Thu, 7 Jun 2001 11:42:39 -0400 Message-ID: MIME-Version: 1.0 Content-Type: multipart/alternative;=20 boundary=3D"----=3D_NextPart_000_000F_01C0EF46.F48CEF00" X-Priority: 3 (Normal) X-MSMail-Priority: Normal X-Mailer: Microsoft Outlook IMO, Build 9.0.2416 (9.0.2911.0) Importance: Normal X-MimeOLE: Produced By Microsoft MimeOLE V5.50.4133.2400 X-Mozilla-Status2: 00000000 ? ? To:? Direct Access Coalition Members From:? Mark Seetin, New York Mercantile Exchange SUBJECT:? Hertzberg/ Edison =01&new=018 proposal is =01&de ja vu all over a= gain!=018 ? ?????? When it comes to having nerve, SoCal Edison takes second to no one.?= =20 The latest rescue proposal announced by Speaker Hertzberg has a familiar ri= ng=20 to it=01*--- like the dinner bell at the shark tank at Sea World.?=20 ? The Hertzberg memo and a Dow Jones story are included in this memo.? A=20 summary of the primary terms of Hertzberg/Edison=01,s plan is as follows: ? o???????? =01&Large=018 users of electricity (500 kw and up) would have dir= ect=20 access after two years. o???????? Residential and small businesses would be =01&re-regulated=018 o???????? The =01&ransom=018 for direct access is that businesses would be = required=20 to retire Edison=01,s $3.1 billion or so in debt=01*and that the obligation= would=20 =01&follow=018 them to the land of direct access ? Does anything sound familiar here (hint=01*think AB 1890 without the surplu= s=20 budget and electricity of 1995)??? Remember the 1995 CPUC action and 1996 A= B=20 1890?? SCE was a very active and influential player in that process.? Here= =01,s=20 a short review of AB 1890: ? o???????? Direct access would be allowed (projected to be about 1998) after= =20 the utilities stranded costs were retired.? (Note: At the time of the=20 bankruptcy of the PX in March 2001, direct access was not just elusive---it= =20 had been banned by the passage of AB =01) 1X in January.) o???????? The state created California Power Exchange was mandatory for the= =20 utilities=01*though by 1999 they began urgently to use alternatives, they w= ere=20 refused on at least four occasions by CPUC action, to use sources outside t= he=20 PX. o???????? Stranded costs, determined inside the PX pricing mechanism were= =20 applied to all transactions that occurred outside the PX, thus the obligati= on=20 =01&followed=018 those seeking an alternative market to the PX. o???????? The mandatory PX forced the market into a day-ahead pricing schem= e=20 that effective placed the vast majority of California electricity pricing= =20 into the volatile spot market.=20 ? If this were not California, one would have to say that this is=20 =01&unbelievable,=018 but the legislative/regulatory track record since 199= 5 in=20 California is consistent, if anything.? Adoption of this plan would not onl= y=20 mean that Californians did not =01&get the baby (direct access) after payin= g the=20 ransom (the Competition Transition Charge, CTC)=018 since 1996----BUT, they= =01,ve=20 been taken hostage themselves now, and another ransom is due.?=20 ? California Kafkaesque ??????????? Since the beginning of the deregulatory process in 1994-95,=20 California has taken a novel approach to its energy markets---Unfortunately= ,=20 that novel must have been written by Franz Kafka. ? ? ? Hertzberg/Edison Plan A Fair Plan for California Assembly Democratic Caucus ? What the California public believes about the energy crisis: ? Utilities are to blame. Out-of-state generators have made huge profits. We need to build more power plants to keep up with demand. Deregulation is a failure. The economy of the state is at risk. ? What the public wants in a solution to the energy crisis: ? Re-regulation (restore balance to system). Very small, if any, rate increases. Reliability of supply (no more blackouts). No permanent damage to environment, more emphasis on renewable sources. Penalties for those who gouged the state. Guarantee this won=01,t happen again. ? Themes of the Fair Plan: ? Federal role:? The feds have refused to obey the law to maintain fair &=20 reasonable rates. Restore fairness:? Solutions must protect residential and small business=20 users. Re-regulation:? Reassert our authority over California=01,s energy destiny. Stability & Reliability:? Increase supply and keep a lid on rates. ? ? Goals of the Fair Plan: ? Provide customers with reliable power and stable rates. Restore regulated utilities to credit-worthiness to enable them to resume= =20 role of energy supplier. Ensure that mega-users of electricity have direct access to independent=20 electricity providers to protect California=01,s economy. ? ? Many elements of the proposed Edison MOU remain unchanged, except for: Option to purchase the transmission system. Re-regulates service for all residential and small business consumers. Provides direct access to providers for mega-users above 500 kW. Mega-users pay DRC to cover SCE debt. ? Added elements to the MOU Transmission option at book value. Federal tax refund must be applied to debt. SCE purchases net short only for residences and small businesses, if=20 necessary. PUC retains jurisdiction over rates. EIX provides assurance to keep SCE creditworthy. ? ? Residential & Small Protection Plan=20 Protects 99.9% of all customers (those who never peak above 500 kilowatts)= =20 who utilize 81.5 % of load???????????=20 Will be served by SCE through native generation, bilateral contracts=20 (including QFs) and Sunrise Present average PUC bundled rate =3D 15.7 cents per KW hour=20 Under Fair Plan, average rate would be 14 cents per KW hour including AB1X= =20 payments ? Mega-Users Direct Access Plan Mega-users peak demand 500 KW or more represent 3,600 SCE customers and 18.= 5%=20 of total load Mega-users would gain direct access to the wholesale market ? Mega-Users Direct Access Plan (continued) Current average PUC rate =3D 12.98 cents/KW hour Fair Plan average wholesale price in 2003 =3D 12 cents per KW hour Mega-users would pay SCE=01,s $3.5 billion debt minus $400 million+ dollars= tax=20 refund from EIX DRC for debt and cost of electricity fits within existing PUC rates ? Dow Jones Story LOS ANGELES (Dow Jones)--A plan that would put most of the burden of rescui= ng=20 embattled Edison International (EIX) unit Southern California Edison on lar= ge=20 businesses "has possibilities" if it can gain stakeholder approval, said Bo= b=20 Foster, Edison's senior vice president of public affairs, during a conferen= ce=20 call Tuesday. ? The plan would have customers who use more than 500 kilowatt-hours a month = of=20 electricity finance the cost of power the utility must purchase, or have=20 purchased on its behalf, in the wholesale market. The "non-core" customers= =20 would=20 also help the utility recoup most of its $5.5 billion in unrecovered power= =20 costs=20 through a surcharge on their bills. ? "Core" residential customers would be protected from the wholesale power=20 market=20 as the primary beneficiaries of the low-cost power the utility generates=20 itself=20 or has secured through long-term contracts. ? Assembly Speaker Bob Hertzberg, D-Van Nuys, strongly supports the plan, and= =20 has=20 asked a former Sacramento mayor to help him take the temperature of Edison= =20 stakeholders "to see if the approach has merit or can be acceptable," Foste= r=20 said. ? "Some of the legislative leadership believes this is an attractive option i= n=20 both houses," Foster said. ? Business groups worry that the plan could cost the state billions in lost= =20 economic activity, because it may force companies to relocate to other stat= es. ? The core/non-core proposal is one of several being discussed by lawmakers a= s=20 alternatives to a memorandum of understanding reached between Edison and Go= v.=20 Gray Davis in April. The MOU, which would have the state buy the utility's= =20 transmission lines, has been pronounced dead by many in the legislature,=20 though=20 Edison and Davis' administration say they are still devoted to seeing it=20 through. ? ?