Subject: RE: California Update--11.26.01
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Tue, 27 Nov 2001 07:36:31 -0800 (PST)

Thanks, Lamar.  The ARM coalition's attorney is drafting the comments, which should be ready for review later this morning.  The comments will deal exclusively with the rules governing the DA suspension and won't address the contracts issue--comments on Carl Wood's demand to see the contracts will come later in the week, or first thing next week.
 
With respect to the positions in the comments, it's a composite of the positions of many ESPs and their customers.  Appears that some ESPs in the ARM group may want to assign customers to another ESP, which is why those comments are there.  Also, some customers want to be classified as DA in perpetuity, irrespective of their contract terms--which is why renewal, or the ability to change to another ESP, will get a lot of play.  And as you know, UC is being very aggressive in our planning meetings about facility-adds.
 
We could file separately, but the combined push for 1) establishing liberal suspension rules and 2) keeping contracts out of the Commission's hands will come from other folks and is likely to be pretty strong.  Not sure that separate comments would get us any additional value.  Let us know what you think.
 
In addition, Carl Wood isn't very interested in balancing suspension rules with the need to review contracts.  He's taking a "chain saw" approach.  He claims that he wants to see the contracts in order to determine whether he can re-set the suspension date retroactive to July 1, which the rest of the Commission currently does not seem to support.  In short, he appears hell-bent on trying to get his hands on people's contracts.  At this point the industry seems pretty solidly united in its opposition to giving them to him.  
 
We're contacting the other Commissioners to determine whether Wood is out on his own on the contract issue--our sense at this point is that he may not have any support from other commissioners.  We'll let you know as soon as we find out.
 
I'll forward the draft ARM comments to you and Kevin later this AM.  If you have any other quesitons, let us know.
 
On the cost allocation issues, that's on a slightly slower track, but in the same forum.  Edison's position is the one they proposed to us in negotiations, which we rejected--1) all customers pay for Edison's undercollection (bundled and DA alike), 2) all customers pay for stranded DWR long-term contracts (bundled and DA alike).   The advice letters regarding implementation of the DA suspension don't offer any real detail on allocation and those issues will be hard-fought over during the first part of Q1.  That's the status thus far.  We'll know more on December 12th, when the Commission will hold another hearing on how it plans to address these issues over the next 60-90 days.
 
Best,
Jeff

-----Original Message----- 
From: Frazier, Lamar 
Sent: Mon 11/26/2001 7:59 PM 
To: Dasovich, Jeff 
Cc: Smith, Mike D.; Keeney, Kevin; Mara, Susan; Steffes, James D.; Blachman, Jeremy 
Subject: Re: California Update--11.26.01

Jeff,

Thanks for the update.  

Kevin and I are on point to provide input for Origination to the proposed Wednesday filing.  Please be sure to send drafts to Kevin and myself ahead of time.  I think we need to be careful to recognize that if on one hand we propose liberal rules for the administration of the Suspension of DA that we are careful not provide Com Wood for a reason/justification for requiring full disclosure of DA contracts (i.e. provisions for adding new facilities, roll-overs, etc.).  I am also somewhat cautious about proposing that ESP's have the right to assign contract amongst each other.  The logistical nightmares of perfecting that may not be worth our wild promoting to the CPUC. 

Finally, and maybe I have some of this activity confused but the Utilities issued "Draft Advice Letters" regarding how they planned to implement the suspension of DA.  I believe it was in those Draft Letters that they (I know for sure that SCE did) provided a sneak preview of how it intended to allocate surcharges and settle negative CTC payment issues.  What is the status of that activity and how and when will Enron's position be submitted to the CPUC/Utilities? 

Regards,

Lamar

From:   Jeff Dasovich/ENRON@enronXgate on 11/26/2001 07:19 PM

To:     David W Delainey/ENRON@enronxgate, Janet Dietrich/ENRON@enronxgate, Mike D Smith/ENRON@enronxgate, Vicki Sharp/HOU/EES@EES, Lamar Frazier/HOU/EES@EES, Kevin Keeney/HOU/EES@EES, Dan Leff/ENRON@enronxgate, Tim Belden/ENRON@enronXgate, Stephen Swain/ENRON@enronXgate, Alan Comnes/ENRON@enronXgate, Susan J Mara/ENRON@enronXgate, James D Steffes/ENRON@enronXgate, Richard Shapiro/ENRON@enronXgate, Jeremy Blachman/ENRON@enronxgate, Jeff Richter/ENRON@enronXgate, Christopher F Calger/ENRON@enronXgate, David Parquet/ENRON@enronXgate

cc:      

Subject:        California Update--11.26.01

Rules governing suspension of DA and threats of retroactive suspension

??????? We have helped assemble a coalition of ESPs and business customers to get the most liberal rules possible (e.g., customers can renew DA contracts, customers can add facilities if contract permits, ESPs can assign contracts to other ESPs with consent of customer, ESP and customer can modify existing contract provisions.)

??????? The ESP coalition that we're a part of will file comments on Wednesday on how the suspension rules ought to work.

??????? Retroactively suspending DA remains on the table for debate and remains a threat. But support at the Commission for retroactivity has diminshed considerably and most think that the likelihood of retroactivity is low at this point.  

??????? One Commissioner--Carl Wood--continues to express support for pushing the date back, however.

Ruling Issued by California Commissioner requiring market participants to submit their DA contracts to the Commission by first week of December for review.

??????? Commissioner Wood is openly and ideologically opposed to consumer choice and competition and continues his attempts to roll back choice.

??????? Wood issued a ruling "requiring" ESPs and customers to submit their contracts to the PUC for review to determine among other things whether the DA suspension date should be retroactively pushed back to some date prior to Sept 20.

??????? We are working with the same group of business customers and ESPs to oppose Wood's order.

??????? Today, the group agreed to the following:

1) Overall, customers and ESPs will not submit contracts to the California Commission (though there may be a small group that breaks ranks).

2) The group will jointly ask the full Commission to overturn Wood's ruling requiring submission of contracts on the grounds that the ruling is illegal. The group will likely file the joint appeal by the end of this week or first thing next week.

3) In addition, folks will submit separate comments on or around Dec. 3rd to the Commission regarding:

a) the legal reasons to support the argument that the commission doesn't have the legal authority to ask parties to turn over contracts, and,

b) the policy reasons to support the argument that the Commission doesn't need specific contracts, or contract language, to implement the suspension of DA effectively.  

Edison's Proposal to Implement the Settlement It Reached with the PUC in Order to Avoid Bankruptcy.

??????? A local consumer group ("TURN") protested Edison's filing. 

??????? TURN told the Commission that the proposal requires signficantly more time, scrutiny and analysis than Edison would allow under its proposed schedule.

??????? We're likely to support TURN's suggestion that considerably more time and scrutiny are required since Edison's proposal could have a significant effect on EES' book in California.

Will distribute additional information as it happens. If you have any questions, don't hesitate to contact us.

Best,

Jeff