Message-ID: <11123622.1075861589887.JavaMail.evans@thyme> Date: Fri, 2 Nov 2001 16:59:35 -0800 (PST) From: alan.comnes@enron.com To: sarah.novosel@enron.com, d..steffes@enron.com, susan.lindberg@enron.com, l..nicolay@enron.com, jennifer.thome@enron.com, janel.guerrero@enron.com Subject: Market Based Rate (MBR) Position Piece for EPSA--Calll Notes and the Latest Draft Cc: ray.alvarez@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: ray.alvarez@enron.com X-From: Comnes, Alan X-To: Novosel, Sarah , Steffes, James D. , Lindberg, Susan , Nicolay, Christi L. , Thome, Jennifer , Guerrero, Janel X-cc: Alvarez, Ray X-bcc: X-Folder: \JSTEFFE (Non-Privileged)\Steffes, James D.\FERC\FERC MBR Proceeding X-Origin: Steffes-J X-FileName: JSTEFFE (Non-Privileged).pst On today's call: It is clear this paper's value is as much to get EPSA member's educated as it is to educate FERC staff. Julie S. was adamant the FERC staff need some input. I trust her judgement so I too support getting a "leave behind" to them even if EPSA's position is still evolving. I think we can support Craig Roach's advice, which is in the draft, to go for the Economic Capacity test, which is a simplified Delivered Price Test. As with any test, the devil is in the details but everyone on the call seems this test can be kept simple. Craig agreed to send me an example of such a test. Most of Jim's issues got raised in the call and will be incorporated in the draft. The tension/dilemma of trading off 1x, supplier-specific MBR certificate for a blanket MBR certificate to any participant in a properly structured RTO came up several times. Everyone recognizes that we'll need a replacement for hub-N-spoke before RTO's will obviate the need for certificates altogether. That being said, I still think we should support such a trade because it keeps a beneif of RTOs (everone gets MBR) highly visible. The highlight of the call was Huntoon's/Dynegy's request to raise the stranded costs created by changing the standard for MBR. Julie said it would not pass the laugh test but he would not back down. I tend to agree with Julie: if you built an asset on getting market based rates and because of a change in standards you are forced to cost-of-service, I am hard pressed to agree you have a valid stranded cost claim (i.e., you will still get return of and return on your plant). I think it is better to focus on the going-forward impact of bad tests (e.g., loss of investors, loss of market participants, etc.) Finally, all of Chriti's comments were essentially addressed between the 1st and 2nd drafts. Because the call got unwieldy, Julie allowed another round of comments, due mid-day Tues, with the hope of getting it out the door next week. Please review my attached comments by COB Monday. I would like to forward them onto EPSA late Monday. Alan