input stringlengths 93 39k | output stringlengths 1 117 |
|---|---|
Rick: Just want to let you know that I missed the boat a bit in coordinating my reviewers with Paul.
In my first attempt to input them in the system, I hesitated including you for the simple reason that I'm certain you have countless other reviews to do already, and, frankly, I feel that you're an integral part of my review whether you're formally on the list or not.
When I went back to make my final additions to the list, the systerm was already closed--Paul had approved the first round, which I guess shuts it down.
| Reviews |
Steve: FYI.
Don't worry about the conference call, but thought it might b= e=20 useful to review the proposals prior to Monday's meeting.
See you Monday.
Happy Thanksgiving to all.
Best,
| Options the Governor's Considering |
Well, this shows the direction in which the "new" Commission is heading.
The very good news, though, is that TW's proposal was included in both settlements (now that's hedging!).
Thus, the benefits to TW were preserved under both proposals.
Congratulations.
That's fantastic--hard work that
| Bad Proposed Decision |
Greetings Professor: I'm in charge of managing our collective responses to this week's case and have been called out of town on business at the last minute.
As a result, if I make it to class at all tomorrow, I unfortunately won't make it until after the break.
While I think one of my teammates will bring a hard copy to class tomorrow, I wanted to plan for any mix-ups (contingencies?)
by emailing a copy as well.
Best,
| Global Industries Case |
Here's the proposal that we talked about yesterday that I'll distribute at tonite's meeting.
If you have any comments, just give a holler.
Hope things are getting back to normal in Houston.
Best,
| Proposed DA Amendments for CA Negotiations |
I'm assuming that we're not moving to fill the Sacramento position.
If this is correct, let me know and I'll get back to Costigan (who's the Assembly Republican leader's (i.e., David Cox's) Chief of Staff.
Best,
| Please see attached documents |
PLEASE KEEP THIS NOTE, AND THE INFORMATION CONTAINED IN THE NOTE CONFIDENTIAL.
As folks are aware, we have been engaged in closed-door negotiations for the past two weeks regarding a possible market-based solution to California's electricity crisis.
In the room are the major large customer groups, environmentalists, small customers (TURN), Independent Energy Producers, labor, the Western States Petroleum Association, and Enron.
The negotiations were convened by the Speaker of the Assembly (Bob Hertzberg).
When Hertzberg convened the meeting, he told the parties that he wanted to achieve a core/noncore structure, similar to the structure in place in California's gas market (i.e., large customers are required to buy gas from the market, with Direct Access available to all other customers).
In effect, "core" customers (rez and small business) would be served by the utilities' retained generating assets and QF contracts; and large customers would go to market.
The core/noncore structure would begin 1.1.03.
The negotiating group has struggled over the past two weeks, but is close devising a framework for core/noncore in Californis (but who pays for the utilities' past debts and the costs of DWR power purchased between January and today remain very contentious).
Unfortunately, with the release of the information regarding the DWR contracts last Friday, it is now clear that achieving a core/noncore structure will be very difficult unless something is done to mitigate the contracts.
The problem is that, if core is served by utility gen and QFs, and large customers are in the market, there is no (or very little) need for the DWR contracts.
Instead, they look like a signficant stranded cost.
Hertzberg and the negotiating group are looking to Enron for creative ways to address "the DWR contract problem" in order to prevent the contracts from 1) killing the core/noncore deal and 2) forcing California to accept a structure focused on a state power authority headed-up by David Freeman that does not include Direct Access.
Christian Yoder and Steve Hall are reviewing the contracts to analyze any "out clauses" that the buyer and/or the seller might have under the contract provisions.
(My cursory review of the contracts suggests that "outs" for the state are minimal or nonexistent.)
In addition, we've started batting around ideas about how the State might reform the contracts.
All this said, want to let everyone know that we have made it extremely clear that Enron fundamentally opposes any and all attempts to unilaterally abrogate anyone's contract rights.
We'd like to have a quick call tomorrow (30-60 minutes) to brainstorm some options that we can offer Hertzberg to handle the contracts and keep the core/noncore solution alive.
We'd like to try to have the the call at 1 PM PDT.
Please let me know if this works for you, and if it doesn't, please let me know if there's a time after 1 PM PDT that works for you.
Thanks,
| Call to Discuss Possible Options to Mitigate Effect of DWR Contracts--Privileged and Confidential |
Please don't use this yet.
Refinements are underway by Alan Comnes, but wanted to give you a flavor for how underwater the DWR contracts are (if marked to market today).
Jim's got it , too.
Based on recent curves, $21B of the DWR contracts are stranded.
Will give you the update once it's done (likely tomorrow).
Best,
| DWR's Stranded Costs |
Greetings: This item will be up for discussion in the California negotiations tomorrow beginning at 10 AM.
We're going to have a call to discuss it tomorrow from 9 AM to 9:30 AM PDT.
You will receive a call-in number shortly from Joseph Alamo.
If there are others who you think ought to participate, please feel free to invite them.
Thanks.
Best,
| Call to Discuss Possible Options to Mitigate Effect of DWR Contracts--Privileged and Confidential |
FYI.
Hit the wires almost immediately.
He handled it with great aplomb and delivered a very good speech.
He had the crowd (but for the pie throwin' types) squarely on his side.
Best,
| The Pie |
Per our conversation, here's a copy of the curves that need updating.
If possible, could you get them to me by tomorrow afternoon?
Sorry for the rush.
Gotta talk on Thursday.
I want to superimpose on the curves the rates that Loretta just put in place for 500 KW and above (for Edison and PG&E).
Can you do that if I get you the rates?
Thanks a million.
Best,
| Need Updates Electricity/Gas Curves |
Greetings: Hope everyone had a pleasant 4th.
I've read the respective Burton and Hertzberg language on amending AB 1X.
The Burton language looks cleaner and simpler, though there may be reasons to include some of the Hertzberg language, too.
I'm proposing to the group the following as potential amendments to the bond bill.
I would appreciate your feedback.
The amendments would be as follows: Customers who were on Direct Access when DWR started buying power (Jan.
17th?
), and are still on Direct Access when the bill passes, should be exempt from paying for the bonds.
In short, customers should not be forced to pay for power twice--once from
| Bond Leg Language, etc. |
Please take a look and see if you think it does what we're after.
I'd like to share with folks as soon as possible to try to get something in the bill.
Best,
| Amendment to Sher Bond bill |
Senate Majority Leader Eager to Push Energy, Environmental Issues James Kuhnhenn ?
07/06/2001 KRTBN Knight-Ridder Tribune Business News: Knight Ridder's Washington Bureau Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) ?
?
WASHINGTON--Eager to exploit public dissatisfaction with President Bush's
| Senate Majority Leader Eager to Push Energy, Environmental Issues |
Hertzberg (speaker of the CA Assembly) called a meeting yesterday afternoon of the group of market participants that have been negotiating the "core/noncore" proposal in California.
The purpose of the meeting was to brief us on their activities and their gameplan for trying to find a solution for California.
Here's a summary of the meeting.
Please keep confidential.
Work will be done over the weekend to put the core/noncore proposal in legislative language.
(We will be in the room.)
Work done by the "Plan B" group in the Assembly (Joe Dutra and Joe Nation) will also be put into legislative language over the weekend.
Because no proposal is "comprehensive," a complete legislative package will be created from the various pieces that have been worked on thus far (i.e., core/noncore, "Plan B," Edison MOU) In addition, there are Republican demands that Hertzberg will need to address (e.g., end the litigation) in order to achieve bi-partison support, which is what Hertzberg's shooting for.
To move the legislation, the plan is to establish a "conference committee," comprised of an equal number of Democrats and Republicans.
The committe would begin work on Monday and would attempt to finish putting a comprehensive bill together, vote it out of the Legislature and send it to the Governor for signing by Monday, July 16th.
July 16th is the deadline because that is the date that the PUC will issue its proposed decision regarding, among other things, how DWR's revenue requirement will be put into rates, whether Direct Access needs to be suspended, etc.
The PUC is issuing the draft on the 16th in order to give everyone 30 days to review and comment before the Commission votes on a final order on August 15th.
(The PUC will actually issue a "thought piece" on Monday the 9th and will use reactions to the "thought piece" to craft the develop the proposed decision it plans to issue on the 16th.)
All of this is still up in the air, however.
As of right now, the leader of the Senate (Burton) has not agreed to Hertzberg's gameplan and the Republicans, while interested, have not yet committed to join the process.
| California Update--Legislative Push Underway |
USA: UPDATE 1-PG&E utility gives Calpine debt priority status.
07/06/2001 Reuters English News Service (C) Reuters Limited 2001.
(changes 1st paragraph, adds details, company statement) SAN JOSE, Calif., July 6 (Reuters) - Independent power generator Calpine Corp. said on Friday that its contracts with Pacific Gas and Electric Co. will be altered, ensuring that Calpine will continue to supply power to the bankrupt California utility and that it will get paid more than $250 million for power already sold.
Calpine stocks rose more than 14 percent, or more than $5, to $43 after the announcement.
As part of the contract modification, the $267 million, with interest, that the utility, a unit of PG&E Corp , owes Calpine in past due receivables under the contracts, will be elevated to "administrative priority status," a claim which is paid before any other general unsecured creditors.
Calpine will get the money, in a lump sum, as soon as PG&E has a confirmed reorganization plan, which can take as long as four to six months from now, Calpine said.
The move is also a step in the process of untangling California's energy crisis, which stemmed from a flawed deregulation plan that has hit the state with a series of rolling blackouts.
Under the agreement, Calpine will continue to receive its contractual capacity payments, but it has also set up a fixed rate contract for the next five years of about 5.37 cents per kilowatt-hour.
The contracts are known as qualifying facility contracts because Calpine's power plants are qualifying facilities.
These types of facilities represent more than 20 percent of the state's power supply and sell power generated from renewable energy sources to the regulated utilities.
"Calpine is the first power company to modify its QF contract with PG&E to ensure that Northern California consumers will continue to benefit from these affordable and reliable energy resources," Calpine senior vice president James Macias said in a statement.
| PG&E utility gives Calpine debt priority status. |
The weekend of Dec 15, 16, 17.
Stinson Beach.
Glorious place on the beach.
Professional blue grass band.
Catered food.
Fun people (even Tom, Karen, David, Starr and Nina).
For Prentice's 30th birthday.
And it will just suck if you're not there.
Huge hugs, very wet kisses.
| You Must Come |
Below is an update from the weekend's activities.
The group negotiating the core/noncore proposal met over the weekend to attempt to put the proposal into legislative language/format.
The product produced thus far is generally sloppy and ill-drafted and the individual facilitating the group is working tonite to integrate the comments provided and discussions that took place today.
He will distribute a new draft by noon tomorrow (PDT).
The plan as it currently stands is to deliver a product to Hertzberg by COB tomorrow (Monday).
As expected, some in the group are attempting to "recontract" certain portions of the original deal, but those attempts are generally at the margin.
The DWR contracts remain a key impediment to any deal.
Senator Burton has still not definitively committed to a conference committee to produce a bill to deliver to Davis.
In addition, the legislation to create a dedicated rate component to service the bonds to repay the state budget for power purchased by DWR (and de-link the bonds from the DWR contracts) may be on a slower track than folks thought initially.
Will have more information tomorrow on where Burton and the bond legislation stand.
Best,
| Weekend efforts to translate core/noncore proposal into legislative language |
The Bond Legislation The Democrats in the Assembly and Sentate have agreed to language to create a Dedicated Rate Component to repay the budget and de-link the bonds from the DWR contracts.
But the Republicans have still not agreed to go along.
The bill would require a 2/3's vote to keep the bond issuance on schedule, so Republican votes are necessary.
The Republicans are trying to meet tonite or tomorrow to determine whether to go along.
The Conference Committee Senator Burton does not like the idea of a conference committee and at this point prefers to use the existing committee structure to hear the core/noncore proposal.
Using the existing committee structure could take longer to produce a bill than using the conference committee structure, but how much longer is uncertain.
No sense yet of when hearings on the core/noncore proposal---in conference
| California Update 07.09.01 |
Please see the following articles: Sac Bee, Tues, 5/10: No deal in energy refund talks Sac Bee, Tues, 5/10: Third power plant opens: But the Los Medanos=20 facility isn't pouring out electricity yet Sac Bee, Tues, 5/10: State reveals high-priced power deals Sac Bee, Tues, 5/10: Government finds ways to conserve: The Santa Rita=20 Jail goes solar as agencies get creative to cut costs SD Union, Tues, 5/10: Energy talks reach no settlement; state threatens sui= t SD Union, Tues, 5/10: Refunds in jeopardy as talks fail SD Union, Tues, 5/10: State's massive outlays detailed SD Union, Tues, 5/10: State releases early spot market energy purchases LA Times, Mon, 5/9: FERC Judge Says State Owed No More Than $1 Billion LA Times, Tues, 5/10: Electricity Cost Data Spread the Blame LA Times, Tues, 5/10: Duke Energy Asked to Allow Release of Data LA Times, Mon, 5/9: Concern Over Price of Long-Term Power Pacts Grows SF Chron, Tues, 5/10: State's refund demand rejected=20 Judge ends rebate talks, rebukes $9 billion claim=20 SF Chron, Tues, 5/10: Davis opens another new power plant=20 Pittsburg facility will generate 555 megawatts SF Chron, Tues, 5/10: California rejects B.C.
Hydro $125 million settlement SF Chron, Tues, 5/10: Davis' criticism of Texas misdirected, report finds SF Chron, Tues, 5/10: Developments in California's energy crisis SF Chron, Tues, 5/10: Energy talks reach no settlement; state threatens sui= t SF Chron, Tues, 5/10: Toxic fumes not linked to blackouts=20 Backup power OK in facilities, report says Mercury News, Tues, 5/10: Power suppliers, state fail to agree on refund to= tal Mercury News, Tues, 5/10: Power purchase bills exceed $7.5 billion Biggest suppliers are not from Texas OC Register, Tues, 5/10: Refund outlook dims OC Register, Tues, 5/10: State reveals details of power purchases OC Register, Tues, 5/10: Ghost of Bob Citron roaming halls of capital Gray Davis is following footsteps of former O.C.
treasurer into fiscal=20 chaos (Commentary) Individual.com (PRnewswire), Tues, 5/10: Calpine's Los Medanos Energy Cente= r=20 Adds Needed Generation to California Second New Major Base Load Generator for=20 California=20 NY Times, Tues, 5/10: California and Generators Still Split After 2-Week Ta= lks Wash. Post, Tues, 5/10: Energy Refund Talks Fail In Calif.; Federal Agency'= s=20 Judge To Propose Settlement WSJ, Tues, 5/10: California and Energy Companies Miss Deadline
| Energy Issues |
FYI.
In bizarre times, help can sometimes come from bizarre places.
Granted, we're likely to disagree strongly with Hogan's continued obsession with Poolco, but the discussion in his paper regarding market power may be helpful---I've read the Joskow paper, but haven't yet had a chance to review
| From Today's Electricity Daily |
Folks.
I'm working on it, but it's going to require quite a bit of work.
Please chk your emails later this evening for the next draft.
I'll page folks--those with pagers, that is--to notify when I've emailed it.
Scott,
| Dunne Letter |
Greetings; I've tried to accommodate everyone's comments, but there's still a hole or two.
In addition, seems that the letter would benefit from a bit more editing to make it shorter.
Richard, note that I've left a place holder in the opening paragraph to fill in a summary of our arguments and the conditions under which we'd be willing to produce certain documents.
Best,
| Next Draft of Letter to Dunn |
need watkiss' phone #.
peace's letters to FERC urging FERC to approve CA's (dumb) market structure should be on file there.
I'm checking w/smutney.
best,jeff
| Peace Letters to FERC |
Please note Maviglio's comments in response to Sec of State Bill Jones' claim that Davis' consultants have violated ethics laws by not filing conflict of interest reports with the state while working for Davis.
Maviglio sez: Jones is "on a witch hunt on something outside his jurisdiction."
Mark, quit feeding PR lines to Davis' people.
Best,
| Davis Accuses Jones of "Witchhunt" |
Talked to Dave.
In a nut shell, here are the problem areas in the bill as he sees it.
It was a very brief conversation, but I think I've captured the key points: Based on an expectation that the "expedited siting" bill would help site plants, Dave's group had six plants on the drawing board.
The 5 ppm requirement kills 4 of the 6, i.e., the 4 can't meet the 5 ppm requirement.
The requirement that the plants would either be 1) shut down after 3 years or 2) replaced with a combined-cycle plant kills the other 2 because a) shutting down the plants in 3 years kills the economics, and b) the sites for the two LM-6000s can't accomodate combined cylces (i.e., Dave couldn't get siting).
In addition,the generator would be required to sign an exclusive with the ISO (which the EOB would have to approve), which takes away the optionality of going to the market, thus killing the economics.
On the labor side, it's complicated, but in essence, by requiring that "...it be shown that the applicant has a contract with a general contractor and has contracted for an adequate supply of skilled labor to construct, operate, and maintain the plant," it forces Dave to negotiate a labor deal before he knows what the project is (i.e, before the project has been approved), and, it effectively prevents Enron from having the option to use internal resources (this issue is very specific to Enron; I can explain more if folks prefer).
In short, bullets 1-3 would seem to affect both Enron and the market, while the last bullet is, according to Dave, very Enron specific.
Point 2 in bullet 4, according to Dave is sensitive and should not be made public.
If any questions, let me know.
Bruno has emailed the price cap and the "general-funds-to-help-finance-the-cap" bills, and faxed the siting bill.
Best,
| Conversation with Dave Parquet re: siting bill |
Please forward to others who need this information.
As you know, Enron's been involved with a group of business customers, small customers, labor and enviros trying to hammer out a core/noncore proposal that would act as a key modification to Edison's MOU with the Governor.
Today, the Assembly leadership released a bill (AB 82XX) that modifies the MOU but does not follow the core/noncore proposal negotiated by the group.
The bill just came out, is about 80 pages long, and thorough analysis has not yet been completed.
The URL for the bill is attached.
Based on a meeting attended this morning in Sacramento,the key features of the bill( which is attached) are: Direct Access suspended until 1.1.2003 (suspension presumably effective on the effective date of the bill) Transmission sale at 2X book.
Approximately 90% (or greater) of Edison's undercollection absorbed by customers 20KW and above.
Create a Trust to address the money owed to the generators and offer the generators 70 cents on the dollar (but does not do away with the suits, investigations, etc.)
The bill is completely silent regarding who will pay for the DWR contracts and what the payment structure will look like.
Reaction and Timetable Very chaotic, with considerable uncertainty about where (if anywhere) the bill will go, leaving many to believe that bankruptcy remains a strong possibility.
Business customers (and of course Enron) are strongly opposed Republicans are strongly opposed Labor has big problems with the Tx sale unless they get assurances that TX labor jobs are guaranteed, which is not yet included in the bill We are working with business to remove the Direct Access suspension We are also working on the Senate side to attempt to get the Senate to include Direct Access in their version of the modified MOU, but the Senate has been more hostile than the Assembly to Direct Access.
Senate Democrats still intend to run a bill that delinks payment of the bonds to repay General Fund for power already purchased from the DWR contracts.
AB82XX does not address this issue.
Senate Democrats also intend to craft their own version of a "modified MOU."
Word is that the Senate will release their bond language and their "modified" MOU this weekend or early next week.
The Assembly will hold an "informational" hearing on the bill tomorrow (Saturday) to get members up to speed The Assembly will have a committee hearing and vote on the bill on Monday, with the intent of sending the bill to the full Assembly for a vote on Tuesday.
The Legsilature is supposed to have a month-long recess beginning Friday, July 20th, which requires that both the budget and the energy issue get resolved by then, or suspend the recess and continue working
| California Assembly Releases "Modified MOU" for Edison |
Barry, et al: FYI.
Some initial info I got from our outside council regarding utility authority to engage in financial risk management tools.
More info to follow as we get it.
If you have quesitons, comments, or suggestions for additional research needed, just holler.
Please forward to others who might need it.
Best,
| Utility authority to engage in derivative transactions |
Here's the latest that we have on the legislation ("82XX") released on Friday.
The Assembly Energy Committee will hold an "informational" hearing on 82XX at 1:30 PM PDT today.
"Informational" means that there won't be a vote today.
Attended a meeting this morning with the business groups with Assemblyman Dutra (self-proclaimed pro-biz Democrat, who's an "author" of 82XX), Hertzberg's chief staffer, and Hertzberg's outside legal consultant.
The DWR contracts continue to be the roadblock to a rational solution.
Dutra is unhappy with the process thus far----claimed he wasn't familiar with
| Update on California Legislation---Afternoon of 07.16.01 |
Drew/Steve/Tony: I've talked to Dan and he's available to represent Steve during his testimony on Wednesday.
Few things: Dan's an excellent regulatory lawyer.
Dan worked for many years at SoCalGas before going into private practice.
Drew, I'll leave to you and Dan to work out the details of any contract for Dan's services.
Dan will need immediately: A copy of Steve's testimony.
A copy of the PUC Rulemaking, etc.
calling for testimony.
Any information on the list of parties who have indicated that they will cross Steve and for how long, and any testimony filed by those parties.
In addition, I would recommend strongly that Dan and Steve (at a minimum) get on the phone and discuss Steve's testimony tomorrow, and plan to meet prior to the hearing on Wednesday.
If you'd like me to participate in a call tomorrow, just let me know.
If there's anything else I can do, just let me know.
Best,
| Legal Representation for Steve Harris |
man, do i OWE you a phone call.
please don't hold it against me.
sort of well, you know, a little nuts right now.
but i will reconnect.
i promise.
| SCE SOx Auction |
What people know: Hertzberg (et al's) bill (82XX)was heard in an "informational" hearing today and still sits in the Assembly Energy Committee.
It will be heard again tomorrow (perhaps beginning at 10 AM) , at which time parties will have a chance to support/oppose and ask for amendments.
Most, including us, oppose unless significantly amended.
The Wright (D) -Richman (R) bill (83XX)was heard in an "informational"
| California Update--0717.01 |
The wierdness continues.....
In the Senate: After Burton's "proclamation" yesterday afternoon that Senate bill 78XX was "all Edison was getting, period," the bill was voted down in committee and never made it to the full Senate for a vote.
The bill will be "reconsidered" (i.e., voted on again) today in the same committee.
In the Assembly: Hertzberg's bill (82XX) got voted down initially, until Rod Wright switched his vote and let it get out.
82 XX then went to the appropriations committee, where it was voted out, and now it's scheduled for a floor vote this morning.
83XX, the bipartisan bill led by Wright (D) and Richman (R), was also voted out of committee and will go to appropriations today.
Will report back later this AM with any additional information.
Best,
| Update to California Update 07.18.01 |
Anything can happen, but Hedy just talked to the Executive Offficer of the Senate Rules committee who told her that it is very unlikely that the full Senate would vote on any contempt report before the Senate leaves for recess; that is, they likely wouldn't vote on anything until they return in August.
Other info from the conversation: With respect to fines, sanctions, etc., he said that "they're making it up as they go."
Any vote on fines, etc.
would only a require a simple majority to pass.
| Dunn |
John: Here are two alternatives to the language in AB1X.
The language does two things: 1) ensures that DA customers' costs are shifted to utility customers.
2) ensures that DA customers' don't unfairly escape any costs (e.g., bond payments, etc.)
We're assuming that you'll shop these with Lenny and we'll work the Reps on SB 18?
Lemme know.
Best,
| DA Language |
The Republicans are currently on the Senate floor arguing (noisily, repeatedly and passionately) that California (and the Senate in particular) is being hypocritical and intellectually dishonest in attacking and investigating private companies and ignoring munis.
One Senator specifically identified prices charged by LADWP and SMUD and compared those prices to Enron's (1/3 to 1/2 less than LADWP and SMUD charged).
Best,
| Senate Debating Unfairness of Singling Out Private-sector Sellers for Investigation |
FYI.
Fairly accurate account of the activities in California.
Assembly released new version of Hertzberg's bill late last night.
Another update to follow shortly.
Best,
| State Senate OKs bailing out Edison from bankruptcy |
Summary of the activities since Friday: Overall, it's 50-50 or better that the Legislature will finish up the budget and recess until August 20th, without having passed some form of an "Edison MOU."
Will have a better view of the chances of getting an MOU agreed to and passed through both houses by COB Monday.
In the Senate: The "Edison MOU": As previously reported, on Friday, SB 78---the Senate's version of the Edison
| California Update 07.22.01 |
You didn't tell me that you were going to France to have a secret rendez-vous with Evie Kahl.
Gotchya!
Welcome back.
It's been a fucking zoo.
Best,
| vitally urgent--please read |
FYI.
This was a significant event while you were gone.
I got tasked with putting together a letter to Dunn's committee from Steve.
Here's the final.
You should look it over so you know what's out there.
Would be interesting to contrast with our recent FERC filing.
Best,
| FINAL |
Dan Walters: Blame game over California's energy crisis will continue for years (Published July 24, 2001) The wrestling match between politicians and Enron Corp. moved into a more intense arena over the weekend when a state Senate investigating committee sought contempt penalties because the huge energy company has refused to turn over internal documents.
Although Houston-based Enron owns no major power plants in California, it has adopted the toughest stance of all energy companies against the multiple investigations of why wholesale energy prices spiked so high.
And it has become, in turn, a whipping boy for California politicians.
At one point last spring, state Attorney General Bill Lockyer said he wanted criminal charges against Enron and its chairman, Kenneth Lay.
"I would love to personally escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey,' " Lockyer said.
With less colorful language, Gov.
Gray Davis has often castigated Texas-based companies as price gougers -- even though Texas firms have been fairly minor
| Dan Walters: Blame game over California's energy crisis will continue for years |
Bizarre as it sounds, we've now heard that they are calling the Assembly members back.
So it appears that the Assembly leadership will at least make a run at this.
We are getting more information and mobilizing industry.
Some key considerations: The Governor is putting immense pressure on the Legislature to get something done.
The Legislature is fearful of getting blamed by the Governor for having "done nothing."
Becauase the Assembly has thus far "done nothing," the only thing it has in front of it is 78.
The Assembly could not agree to the Speaker's bill because it felt the bill was too far to the left; but 78 is even more one-sided.
So there's a reasonable likelihood that 78 would have to be amended considerably in order to get the support necessary to get voted out.
Once voted out of the Assembly, it would have to go back to the Senate, where the Senate would have to approve it.
Again, the Senate has adjourned, so Burton would have to round them up and call them back for a vote, and there's no indication at this time that Burton's inclined to come back.
In addition, Burton has said that he's not interested in making any changes to 78, that "it's 78 or nothing."
Consequently, for the Sentate (i.e., Burton) to vote it out, it would first have to agree to the Assembly's amendments.
Thus far, the Assembly and the Senate have not seen eye to eye on the issues.
All that said, this Legislature is far from rational, and nothing can be counted out.
We're therefore operating under the assumption that 78 could move.
Will report back as information becomes available.
Best,
| Rumor That The Legislature May Reconvene |
Adding to Kristin's update, here's the summary of a meeting that just occured with Assembly leadership staff and industry on the Assembly's latest version of an "Edison MOU": The Speaker's staffer said that if he had to bet at this time, he would bet that the Assembly would not convene on Friday.
He also said that, if it doesn't happen on Friday, nothing will happen until they get back from recess on the 20th of August.
The Assembly will let folks know by tonight or first thing tomorrow whether they intend to move forward with a vote on Friday or recess.
From the most recent proposal released today by the Assembly leadership, it appears that the centrist Democrats are prevailing.
The proposal: Retains Direct Access (though they said that they are continuing to be pressured by the Treasurer, who wants DA suspended due to the bond issuance) Places 80% of Edison's past debt with large customers (leaving 20% with small customers, which business customers or strenuously opposing).
Eliminates all references to any purchase, or option to purchase, Edison's transmission.
(They said there simply ain't the votes to buy, or consider buying, Edison's transmission in the Assembly) Maintains the Senate provision, which would pay the banks, pay the QFs, but place with Edison the risk of figuring out how to pay the $1billion owed to suppliers.
(Even the munis are begining to complain about those provisions.)
Creates a tradeable, renewable portfolio standard (conceptually similar to the one created in Texas).
The new bill is created by 1) amending SB78 and 2) gutting a different bill passed from the Senate to the Assembly, SB39, and replacing it with the new version of 82XX.
The two would go together to create the Assembly's newest proposal.
If this bill gets voted out of the Assembly, it will likely have a difficult time getting the votes necessary to pass in the Senate, since the Senate has considered and rejected several provisions currently included in the Assembly version.
Will report back on whether the Assembly's going forward or adjourning for recess as soon as we hear.
Best,
| California Update 7/25/01----Meeting w/Assembly on Its Latest Version of Edison MOU |
Just got a call from Hertzberg.
He pulled the plug last night on trying to get an Edison MOU finished by this weekend.
Too complicated; too rushed; he couldn't pull it off, but intends to continue working with folks.
He said that likelihood now is that the Assembly will recess, come back on the 20th, and try again.
Since the Legislature has adjourned without resolving the Edison/energy issue, the focus will now be at the CPUC, which is scheduled to rule on a rate agreement between DWR and the CPUC, Direct Access suspension, etc.
at its August 23rd meeting.
Best,
| California Update 07.26.01--Assembly Pulls Plug on Bailout |
Folks, since many law firms have failed to exit the dark ages, they continue to use wordperfect.
To open this, don't launch.
Instead, "detach."
Then open the file that you've "detached" and it should convert from WP to word and you should be able to open it.
Best,
| First Amended Complaint |
FYI.
This is THE story out here today.
Given the repugnant things that Maviglio has said about Enron over the past several months, it will be very interesting to see whether he'll be able to withstand the fact that all the time that he was saying those things, he owned our stock.
Gee, couldn't happen to a nicer guy.
Best,
| Davis spokesman under fire for stock |
Gouger Gray Davis California's petulant governor ignores reality as he overpays for electricity LANCE T. IZUMI Mr. Izumi is a senior fellow in California Studies at the San Francisco- based Pacific Research Institute.
On the surface, things seem to be going pretty good for Gov.
Gray Davis with regard to California's electricity crisis.
The governor has scored some nice publicity by switching on some new power plants.
The weather has been unseasonably cool.
His poll numbers are edging back up.
Yet beneath this optimistic picture lie troubling problems.
For example, Davis's argument that out-of-state power generators are responsible for the electricity crisis has been falling apart.
For months, Davis has been claiming that private generators have overcharged California by $8.9 billion and demanded that this amount be refunded to the state.
However, after a two-week mediation between state officials and the generators, Curtis Wagner, the federal government's chief energy regulatory judge, rebuked Davis's claim saying that such a huge overcharge "has not and cannot be substantiated."
Further, while the generators may be liable to refund a much smaller amount to the state, perhaps $1 billion, Wagner said that generators are owed more money by the state than they owe the state in refunds: "Can a cash refund be required where a much larger amount is due the seller?
The chief judge thinks not."
Davis reacted to the judge's ruling by calling it a "raw deal" and by urging the Federal Energy Regulatory Commission to ignore the lack of evidence and the judge's conclusions and to "step up and provide the refunds we've asked for."
Davis's position, as usual, is motivated purely by politics.
Indeed, Dan Walters of the Sacramento Bee says that Davis is operating in a "melodramatic virtual world" de-linked from reality.
Davis's blame-the-generators argument took another body blow when newly released documents showed that, on average, major out-of-state power companies such as Enron, Duke, Dynergy and Mirant charged less than the average prices paid by the state during the first three months of the year.
California government utilities, on the other hand, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District (SMUD), charged the state much more for electricity than the out-of-state generators.
For example, while Texas-based Enron, a favorite Davis whipping boy, charged an average $181 per megawatt hour, SMUD charged an average $330 per megawatt hour.
Davis responded to this revelation in typical political fashion.
A Davis spokesman said that the governor had expressed his anger at "the generators who wear cowboy hats" and that "just because there are other entities that are charging us more doesn't change the fact that we are getting ripped off by companies from Houston, Tulsa, Atlanta or Charlotte."
Yet, for all Davis' feigned indignation about consumers being ripped off, it turns out that he and his regulators are poised to ensure that business consumers are ripped off by state government.
Davis has signed $43 billion in ill-advised long-term purchase contracts at rates above-market-price.
The state must, therefore, ensure that enough business customers remain in the current state-controlled distribution system to pay for high-priced state power purchases.
This is especially important to Davis since the high prices are borne disproportionately by business.
Thus, Davis' regulators are set to eliminate "direct access," which allows businesses to shop for cheaper power.
Who's the real gouger?
No matter how much Davis points the finger, Californians are paying dearly for his political opportunism and bad policies.
| Gouger Gray Davis : |
Hi Mike: Parquet found me to talk about the QF ideas that you guys are bouncing around.
I'll be in Portland tomorrow.
You have some time to sit and discuss a bit?
Best,
| QF Ideas |
Bear with me.
I want to work on it through the evening.
Will make sure that it's out tonite, well in advance of tomorrow's 1 PM PDT conference call.
Best,
| Letter to Senators |
I've just been informed that I'm being switched to Outlook tonite, which means, I've been told, that I may not have access to my email later this evening.
If that holds, I'll email the draft to everyone first thing in the morning (hopefully by 8 AM Houston) time.
Otherwise, it'll land in your email later tonite.
My apologies for all the machinations.
Best,
| Letters to Senators--What Next? |
Greetings: We are getting considerable traction with the idea of using a "benchmark" to judge utility purchases, similar in concept to what's in place on the gas side.
To oversimplify it: 1) set the benchmark 2) the utility buys for consumers and tries to beat the benchmark 3) if (at the end of the year) the utility has beat the benchmark, it shares the profits with consumers; if the benchmark wins, the utility shares the losses with consumers 4) the PUC performs no "after-the-fact" reasonableness; no "second-guessing" California likes the idea and is now looking to Enron to come up with what the benchmark ought to be.
I talked to Calger a bit about it today and he suggested that I get together with you guys.
As always, time's short.
Are you available on Monday?
Thanks,
| Getting the PUC off the Utilities Back for Purchases |
Got your message re: reverse auction all of the utility's demand.
Getting (interestingly complicated), though.
Now, the utilities want to create a "core/noncore" split in electricity, like in gas (where large gas customers can't take commodity from the utility).
With a core/noncore split, Edison claims that QF contracts, nukes and other existing generation that it still holds is sufficient to meet "core" needs and it therefore may not need "contracts."
As you can imagine, large customers ain't clamoring to get thrown into the market as "noncore" customers right about now.
But they may find themselves without a choice.
I talked to Calger on Friday about reverse auction versus benchmark and I'll be talking to the traders about it this afternoon, and we'll be discussing further when Rick, Steffes et al are here tomorrow.
Will let you know where it goes.
Best,
| Reverse Auction |
Hi Michelle: Guess who?
Just went into Ehronline and noticed that under vacation it sez that I'm entitled to 75 hours of vacation, and that I've used 48 hours, leaving 27.
I think that I'm actually entitled to more than 75 hours.
Please tell me that I am.
Thanks very much.
Signed, Desperately in need of vacation Also, I clicked on deferral enrollment, and by-golly if I couldn't find the election form to download.
Am I just clueless, or is there another place that I need to look for it?
Thanks a million.
| Vacation, Sweet Vacation |
Please keep this confidential at this point.
It's the agenda for the California "subcommittee" meeting on Tuesday that I mentioned in an earlier note.
They were unable to reschedule the meeting, which starts at 10 AM tomorrow, but we're on the subcommitte and will have very good access to the final product, so I'm not too concerned about missing the "kickoff" meeting.
Folks in California are really looking to us to help figure out item #2 "forward contracting."
It would be very useful to discuss this outline tomorrow while we're all together.
Best,
| Agenda for December 5 Meeting |
Here's an attempt at being frank about the legislation without jeopardizing our relationships or commercial prospects.
Overall, we respect the effort, but California failed to get the ball over the goal line: On Siting Intentionally or not, California has designed power plant siting laws that make it excruciatingly difficult to construct power plants in the state.
Folks seem to have lost sight of the need to balance growth and environmental quality in California.
That's why nothing's been built in the state for a decade and developers are going outside the state to build power plants.
Tinkering around the edges won't help; and (with all due respect) the legislation passed yesterday tinkers.
Real reform is required if California hopes to build the supply necessary to keep pace with Silicon Valley and a high tech culture and tame the price spikes.
If developers continue to have to navigate through a maze of a half a dozen--or more--state and local agencies, California's supply problems will
| Possible Messages on Legislation in California |
Distributed Power: The Next Big Investment?
With today's electricity demand expanding beyond the reach of available supply, and nationwide electric deregulation efforts providing inconsistent results, distributed power just may be the next big thing, according to Bear Stearns analyst Robert Winters.
With technology-laden, electricity-hungry companies popping up every time you turn around, and blackouts and brownouts occurring more frequently as large power grids are becoming less reliable, the analyst points towards distributed energy services as a possible solution, and maybe the "next big investment opportunity for the coming decade."
In Winters' 250 page report, "Distributed Energy Services-The World's Power and Transportation Industries: Set for a Revolution-Part 2," he examines technologies and companies within the distributed energy services sector that might be able to take advantage of the current situation.
"Thanks to major technological advances and energy deregulation, a wave of new investment in the power industry has just begun.
We believe that this coming era in the power industry could resemble the wave of investments which flooded into the telecommunications industry following the breakup of AT&T in the early 1980's," said Winters.
"Companies and municipalities need to find ways to ensure the availability of high quality, reliable power," added Winters.
According to his research, microturbines are the best positioned of the "new" technologies that would be able to have an immediate impact on electric generation.
He based his recommendation on the fact that microturbines are small, quiet, efficient and very versatile.
"They can be used as a main power source, a back-up power source or as an alternative when there is a spike in traditional energy prices," the analyst said.
"Microturbines can also be used in remote locations, including developing countries, that do not have access to electricity."
Another attractive feature of microturbines is their fuel requirements.
The units often use natural gas, but can also use several other fuels as well.
In the study, the analyst also examined fuel cells, flywheel technology, and existing reciprocating engines technologies such as diesel engines and Stirling engines, which he noted are enjoying a comeback.
In addition to the report, Winters initiated coverage on two distributed energy companies.
He labeled Active Power, a company that is pioneering flywheel technology, as a "buy" and Capstone Turbine Corp., a leading manufacturer of microturbines, as "attractive."
The companies are in addition to two fuel cell companies he currently follows.
Ballard Power is currently a buy, and Plug Power is rated neutral.
| Distributed Power: The Next Big Investment? |
Folks: As you recall from out meeting on Tuesday, we decided that I'd pull together a brief description of our key priorities and the actions underway to achieve them.
The status report will be updated weekly.
We'll use the weekly update as an important internal communication tool to keep folks abreast of activities and developments in CA.
It will also serve as a a tool to help identify the need to modify our priorities and/or actions in light of ever-changing circumstances.
We were going to try to get the first report out this week, but with the meeting in Houston, Sue's doctor appt and Karen's meetings with Marathon, we'll get the first one out Monday.
My notes suggest that (today's) key priorities---understanding that
| First "Status Report" for California |
Rick, Jim, Harry: You will have the first status report for California by COB on Monday.
We will update that report weekly.
If there's anything you need between now and Monday, please let me know.
Have a good weekend.
Best,
| First Status Report for California |
Mike: Please forward the letter to Jeff.
Jeff, we'll be signing the letter.
Look like something TW can sign.
Give me a ring when you get a chance to look at it.
Best,
| Letter to Loretta |
Tim/Bob: Attached is the letter that we sent to Lynch explaining the info we thought ought to be made publicly available.
We're discussing how we can ensure that the market has access to any and all information that FERC might use in its "investigation" so that independent analyses might be undertaken.
Is there anything in addition to the information we included in the letter to Lynch (or that is already be publicly available) that FERC might use in its investigation and that we ought to target for public release?
Thanks alot.
Best,
| CA ISO / CAL PX Information Related to 2000 Market Activity |
Paul: Here's additional info for the "curtailment" data that we're pulling together.
Utility Pricing for Core Gas Customers Prior to the month in question, the utility forecasts gas prices based on NYMEX monthly prices.
So for example, based on November's forecast, the utility sets prices to be charged to core consumers in December.
When December's over, the utility compares forecast prices with actual prices.
If the forecast was too low, and there's an undercollection, the utility will increase January's price forecast by "just enough" to make up for the December undercollection.
If prices were too high and there's an overcollection, the utility will reduce January price forecast by just enough to refund the overcollection.
If the overcollection/undercollection is very large, the utilities have generally spread out the "true-up" over several months to avoid "rate shock" one way or the other.
However, under the current circumstances, the utilities may be less willing to spread it out, and may wish to recover the entire undercollection in the following month.
In short, there's at least a one-month lag in customer prices to account for differences in forecasts versus actual.
| Pricing for CA IOU's Core Gas Customers |
Professor Berk: Very interesting to hear the perspectives of a South African ex-pat last evening.
Today's been very hectic, but I'll get back to you on the possibility of having Enron sponsor internships for the financial engineering program.
Until we've had a chance to talk, could you wait before forwarding my name along to anyone else in the fin eng group?
Much appreciated.
Best,
| Sponsoring Internships |
Jennifer: I got a call from Chris Bailey (sp?)
needing a summary of California dereg for a presentation(s) that Harold's assembling.
Attached is summary that Mona pulled together for Harold a couple of months ago.
I don't have Chris' email address (I've left him a message).
Could you forward this along to him?
Thanks a bunch.
Best,
| California Deregulation Summary |
FYI.
As you know, we're attempting to find a solution to the "reasonable review" morrass that's impeding utility forward contracting.
For that effort, we've worked with the Portland desk to pull together some educational materials to use with a subset of California stakeholders that's trying to devise a solution to California's melt down.
The attached graphs show 3 scenarios for the state as a whole.
1) "do nothing" 2) for 60% of IOU short position, split the amount 50-50 and 1cover half the amount with 10-year fixed priced power and the other half with 5-year fixed priced power.
3) create a portfolio with a) 25% of short position covered by 10-year fixed priced power, b) 20% of short position covered by 5-year fixed price power, c) 15% covered by 1-year fixed price power, d) 20% covered by May-Sept fixed-price power, and e) 15% from the PX.
The term of each scenario is 5 years.
Because each is priced off our our curves, the average price is roughly equivalent for each of the three portfolios.
However, the graph shows (as one would expect) that exposure to price volatility is significantly higher under scenario 1 compared to 2 and 3.
The goal is to use the illustrative scenarios to persuade the industry that in the short run (i.e., immediately) the utilities should be permitted to buy a modest amount of power under 5 and 10 terms, and those purchases (if undertaken using a "DealBench-like" tool) ought to be "per se" reasonable.
| Illustrative Portfolios |
Could you please set up a conference call and send the information to the list below?
Please set it up for tomorrow, Wednesday, at 9 AM PDT, for one hour.
Thank you very much.
Jeff Dasovich/SFO/EES@EES, Steven J Kean/NA/Enron@Enron, James D Steffes/HOU/EES@EES, Rob Bradley/Corp/Enron@ENRON, mpalmer@enron.com, Karen Denne/Corp/Enron@ENRON, Mona L Petrochko/SFO/EES@EES, Susan J Mara/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Dave Parquet, Samuel Wehn/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT, Sandra McCubbin/SFO/EES@EES
| Conference Call |
Just met with the industry group trying to come up with a solution for California.
The group liked our portfolio approach.
In sum: A portfolio approach is the right long-term solution.
In the short run, our illustrative portfolios show that the utilities ought to immediately fill a modest portion of their requirements via fixed-price, long term contracts, and those contracts should be found reasonable, up front, so long as the utility uses a competitive auction.
To stimulate discussion we proposed that the utility fill 5% of its net short position with 5-year, fixed-price contracts and 5% from 10-year, fixed-price contracts.
Everyone on the call liked the proposal.
After some discussion about whether 5%-5% was the right one, Edison agreed to come to Friday's meeting with its proposal for price/term/quantity that it ought to contract for immediately.
(Edison may want the number to be higher, and the baskets to be different.)
Anything can happen between now and Friday, but thus far looks positive.
Thanks to everyone for the help in getting the proposal together, Steve Swain in particular.
(Steve: We may get asked to run a few more illustrative portfolios for the group.)
I'll report back on what happens at the meeting on Friday.
If there are any questions, etc., just let me know.
Best,
| Industry Group Likes Our Portfolio Approach |
As we discussed, attached is a brief description of ENA's and EES' key goals in California and the actions underway to achieve them.
We'll update the status report weekly.
We hope that the weekly update will serve as a useful internal communication tool to keep folks abreast of activities and developments in CA.
It can also serve as a tool to help identify the need to modify our goals and/or actions as circumstances change.
Comments on the form and/or substance of the document and how we can make it more useful are welcome.
Best,
| California Update--12.12.00 |
Professor Aceves: Attached are a word and an excel file.
Both are formatted for easy print out.
Note that the excel file has two work sheets: "balance sheet" and "income statement."
I'd be happy to provide you with a hard copy, too, if you would prefer a hard copy.
Just let me know.
Thanks for a great course.
All the best,
| Final Exam for E220 |
Here it is.
And I have JUST been informed that I have to be on a conference call tomorrow from 1-2.
Could we do our call at noon or 2 pm California time?
Sorry for the inconvenience.
Best,
| Please forward to the group |
Everyone, meet everyone else's email address.
Thanks to one and all for the taking the time to discuss the issues.
Seems that the conensus is that the meeting was useful.
Have a great weekend.
Best,
| Email Introductions |
Lara: I have rather hastily put this list together.
For that I apologize.
Hope it is helpful.
The things on the list are ones that you've likely already considered.
Nevertheless, some of the issues we face in California include: 1.
POWER PLANTS The utilities' subs are building power plants; competitors (like Enron) are also trying to develop plants to sell power into both wholesale and retail markets.
The utilities control the interconnection of plants to the grid.
The interconnection rules are currently so vague and ambiguous, that the utility could quite easily favor its generation sub over competitors.
This would have an effect on prices at both the wholesale and retail level (i.e., how do we know we've gotten the best generation deal if the utility can favor its subs plants via interconnection?).
2.
DISTRIBUTED GENERATION And the same goes for DG: in California many are pointing to DG as a viable solution to the price spikes.
If the utility loses sales because a customer has installed DG on her premises as a hedge against price spikes, the utility will have an incentive to thwart interconnection of the DG unit.
(Recall that in many places, recovery of distribution costs is derived from kwh sales; and if sales go down, so can recovery of the utilities' distribution-related costs).
In addition, if someone attempts to install DG at the grid level (as opposed to on-site DG) and sell the DG power in wholesale and retail markets, the utility has the ability to frustrate the DG project via interconnection.
This permits the utility to retain bundled service customers.
Utility control of DG Interconnection can also permit the utility to favor its DG subs.
3.
INTERCONNECTION/VOLTAGE BUY-UP And the same goes for the retail level---remember how SDG&E used
| Rick's Panel on Wholesale/Retail Market Power Issues |
Dear Ms Leisure: If you're still tanning, and still up for lunch, I'm game.
Besides, I owe you a beer.
Let me know.
Don't work too hard, Best,
| Still beached |
Please keep the following confidential.
Jessie Knight called.
Here's the latest.
Seems the Chamber of Commerce is going to launch a campaign with the following messages: 1) Deregulation must go forward, not back.
2) The transition will continue to be a bit bumpy.
3) The best option businesses and families have is to switch to an alternative service provider.
The Chamber has cut deals with ESPs (I didn't get all the details, but sounds like an exclusive) according to which the Chamber will aggregate customers and deliver them to the ESPs.
I believe that The New Power Company will be one of those ESPs.
Ray McNally's sister, who is one of our very satisfied rez customers in S.D., will appear at the press conference with the Chamber to announce the program.
They are attempting to launch the program and have the press conference this week.
The Chamber is also launching a program to educate S.D.
politicians and business leaders on the benefits of retail choice and how to benefit from it.
The Chamber is still looking for a business customer to appear with them at the press conference.
| Jessie Knight an Aggregator? |
Attached are the draft message points.
As always, all comments, suggestions, etc.
are encouraged and welcome.
I have five minutes.
Consequently, based on what other panelists say, and general tenor of the hearing, may end up emphasizing some points more and others less in opening, and use any Q & A to round things out.
Joe/Mary: any final word on format/participants?
Thanks.
Best,
| DRAFT message points for FERC hearing in San Diego |
John/Gia: You asked that we attempt to evaluate our activities.
Working with TW, I've valued this one.
The California Commission ruled that the "Hector Road" natural gas recent point in California ought to be made a primary receipt point.
This would have had the effect of TW losing access right to 200 MMcf/d of capacity at SoCalGas' Needles receipt point.
Best case scenario: Under SFV rates, loss to TW is commodity rates (wash) and the fuel margin.
TW calculates the fuel margin to be $5.8MM/yr.
Bad case: If shippers on TW try to make the case that TW is at fault for losing the primary access rights, then TW is at risk for the demand component of the contracts associated with the 200 MMcf/d.
TW calculates the demand charges loss to be $16.5 MM/yr.
Worse case: In addition to actual damages listed above, shippers face performance penalties and other contractual damages (from their customers) and they try to pass those costs on to TW.
I discussions with TW, we concluded that the most likely case fell between "best" and "bad," somewhere in the $12-15MM/yr range.
TW believes that without the assistance of CA Gov't Affairs in the case, the $12-15 MM/yr would have been lost.
Be happy to discuss with you further.
Best,
| Valuation of GA Activities |
I'd say, "What next?
", but I'm afraid to ask....
Regarding our California strategy, preventing the merger would seem to be right up there with "end the price caps" in our list of priorities.
At today's FERC hearing, a hair-brained consumer advocate called for merging the PX and the ISO.
During the panel I was on, I made the point that a merger would make California's problems worse than they are today.
The FERC Commissioners seemed somewhat responsive to my concerns.
P.S.
After the panel, Heber lobbied me hard to support transcos.
DJ Freeman Sees Cal/ISO, PX Merger, Lower Price Cap Copyright , 2000 Dow Jones & Company, Inc. By Jason Leopold Of DOW JONES NEWSWIRES SAN DIEGO (Dow Jones) -- David Freeman, seen a likely replacement for
| DJ Freeman Sees Cal/ISO, PX Merger, Lower Price Cap |
Forgive the length, but it was a long couple of days.
Apologies in advance, since I'm sure I've missed something.
Hopefully, it hits the highlights and gives a good flavor.
Please foreward to anyone I've inadvertently missed.
Don't hesitate to contact me if you have any questions.
Best,
| Summary of Congressional/FERC Hearings in San Diego |
Hi Kari: I know that you and I are both swamped, so I'm writing very briefly to give you a brief update.
But first, thank you very much again for meeting last week.
Greatly appreciated, and look forward to working together to help in any way I can to find solution that is acceptable to all.
Here's the update: Our "subcommitte" is meeting tomorrow to try to close the deal on a proposed solution.
It focuses on 3 key areas: Using the utilities retained assets to moderate prices.
Designing a framework for forward contracting that strikes a much more appropriate balance in CA between state oversight and the need for utility flexibility.
Rate stabilization/Undercollections (utility solvency) I will update you tomorrow on the group's progress.
If thing's go according to plan, we may be in a position to submit something to you a early as Monday.
If there's a deadline from your end that I ought to be aware of, let me know and I'll incorporate it into the subcommittee's work plan.
In the meantime, if there is anything at all that I can do to help, please don't hesitiate to contact me.
Thanks again and all the best,
| Quick Update |
Here are some suggestions for the op-ed piece.
One general comment: It may be a bit lengthy at this point.
Also, have we decided whether it would be our op-ed piece?
And one key point that is very commercially sensitive: The term "end the rate freeze" has very ominous implications for EES's book, depending on the timing of any such "end" in California.
Thus my heavy-handed edits on that portion.
Nice job, Jeannie.
Best,
| edits to the op-ed |
FYI.
Please keep this internal and confidential.
Here's where the group I mentioned left off last Friday.
It will be useful for our discussion this afternoon.
You'll note from the comments that it's anything but a done deal.
I'll forward the SF press mentioned in the note.
Best,
| Revised CESG Outline |
Just got off the call with the California stakeholders.
The group's trying to come up with a solution and today's call was a challenge.
Edison threw new demands on the table that effectively ended any chance for a deal today.
Appears that at this point that anything more than a 10% rate increase is out of the question politically for the Governor, and the utilities are very unhappy about it.
Consumer groups are already balking publicly at the 10% increase reported in the press.
The meeting effectively ended when Edison announced that, in response to New West turning back their customers, Edison plans to file a proposal with the Commission this week that would require all returning customers to pay the spot price for energy.
The large customer groups blew their tops and that pretty much ended the call.
The group agreed to meet again on Friday, after the PUC business meeting on Thursday.
Best,
| Notes from Meeting with California Stakeholders |
Heres' the file.
Again, we used it, in the end, to justify having the utilities go out, now, and fill 10-15% of their net short position with 5 and 10 years deals.
The group agreed, though there's still discussions about the percentage (higher?)
and the mix (5 and 10 year deals?
; 3, 5, 10 year deals?)
--you get the picture.
| Portfolios |
Mark: Here's the info Size = 500 MW Purchase price = $42 MM (sold to Calpine) Permit status at time of sale = all permits had been obtained One note: while we had gas and electric interconnection agreements ready to execute, Calpine told us not to and they arranged those for themselves.
If there's anything else that you need don't hesitate.
Happy holidays.
Best,
| Pittsburg Deal |
Paul Kaufman phoned with the following brief report from the Western Governor's Association "Energy Summit" that took place today.
Paul will follow up with more detail when he gets back to a computer.
The governors issued the following recommendations: California should immediately implement FERC's order issued last Friday and aggressively pursue all available DSM and conservation opportunties.
The Western region should likewise be much more aggressive in identifying and implementing DSM and efficiency opportunities.
Increase supply as soon as possible.
FERC should do an investigation into the potentially negative effects that price caps can cause in the industry.
FERC should add to its investigations an investigation into what caused the price spikes in the first week of December.
Work with the Bush transition team to make sure that someone from the new administration is focused on the issue.
Hoecker said that he is not inclined to impose a region-wide cap until California takes the actions it needs to take to help alleviate the situation (e.g., reforming regs governing utility forward contracts).
Jeff
| Summary of Western Gov's Energy Summit |
Attached is the URL to get to what should be a real audio broadcast of tomorrow's PUC business meeting.
The meeting starts at 10 AM PST.
Many who have tried to use the link in the past have been unable to connect, but the PUC may have since worked the kinks out.
I will be at the meeting and will report back via email.
Best,
| Possible dial-in to PUC meeting |
We will set up a call-in number to relay to folks any actions the Commission takes tomorrow.
The Commission meeting starts at 10 AM PST, but it's unclear when they will take up our issue.
Since the press will likely have the place surrounded, they may decide to do that item first.
We'll send out a notice with a call-in # and time as soon as we have the information.
Best,
| Call to Discuss California PUC Action |
These folks will need to be added to the distribution list.
Lysa/Joseph: it's going to be a bit wacky, because, as the note indicates, I'm not sure what time the call will be.
Anywhere from about 11 AM to 2 PM PST.
We'll need to keep the number of ports as unlimited as possible, because I have a feeling that the note indicating that there be a meeting will get around, perhaps globally.
As soon as I know what time I'll want to have the call, I will notify Joseph, who will need to set up the call and distribute the info to the original list I sent around plus the names below.
If you two have suggestions on how you'd like to handle, like Ross Perot, I'm all ears.
Thanks so much for your help.
Also, please make sure to add Vicki Sharpe and Michael Smith of EES on the list, too.
Jeff
| Call to Discuss California PUC Action |
Mike (Smith): Since things will move pretty quickly from this point forward, we want to have a quick meeting to explore our legal options and how best to preserve them.
We'd like to have a kickoff call after the daily 10 AM (CST ) call that Wanda Curry handles.
Are you available after Wanda's call?
Say 11 AM CST?
Thanks.
Best,
| Meeting to Discuss Legal Issues |
We're in the process of developing a strategy to take us through the next few months.
But while the (otherwise perishable) thoughts are still fresh in my mind from the hearings on Monday and Tuesday, I wanted to throw out some observations for discussion in the days/weeks ahead.
OBSERVATION--The pressure to finger somebody for "price gouging" is
| Observations on the Hearings this Week |
Today's hearing was dominated by : 1) many lawyers arguing over whether the Commission must declare that the "rate freeze" is over before raising rates, or whether the Commission can rely on its general constitutional and statutory authority to raise rates on an interim basis, without addressing the issue of the rate freeze, and, 1) an appearance by Ralph Nader.
The Legal Issue In general, our proposal seems to have gotten some traction.
Whether it sticks remains to be seen, however.
We proposed that: The Commission has the authority to raise rates without addressing the rate freeze issue.
The Commission will not have the facts it needs, and it won't have provided the due process necessary by Jan 4th, to address all the complex issues tied to the rate freeze.
And if it tries, it's likely to face a flurry of law suits, which is in no one's best interest.
For it's Jan 4th decision, the Commission should confine itself to determining whether, and if so by how much, to raise rates to maintain the utilities' access to capital markets.
(We've taken no position on whether there's a need to raise rates.)
setting a hearing schedule to examine the "rate freeze" and all related issues thoroughly and methodically.
The utilities argued that the Commission must declare an end to the rate freeze; otherwise any Commission decision to raise rates would be easy to attack in the courts.
(In reality, the utilities want the Commission to end the rate freeze in order to assure lenders that the Commission will permit the utilities to recover going-forward procurement costs.
Under the rate freeze, the utility is at risk for procurement costs that exceed the rate freeze.)
In his presentation, our outside counsel offered numerous citations to past Commission decision and court cases supporting the Commission's ability to raise rates if it found it necessary to do so.
Many other parties agreed with our position.
A few parties said that the issue was too murky to make a call.
During questioning, both the President of the Commission (Loretta Lynch) and the presiding judge seemed to indicate that they believe the Commission has ample authority to raise rates without having to address the rate freeze issues.
The Ralph Factor Apparently, having lost the Presidential election, Ralph Nader's still looking for work.
He showed up at the hearings today and held a very lengthy news conference.
From what I could hear, he targeted all of his criticism at the utilities for being greedy, and at the Governor for being too ready and willing to bail the utilities out.
Even when thrown some soft balls about "out of state generators," Nader stuck to bashing the Governor and the utilities.
But I couldn't hear the entire press conference, so he may have said things that I missed.
The Next Steps The hearings that were scheduled to end today will now go into next week.
Tomorrow, the utilities are scheduled to make their case for financial hardship.
Customers intend to question the utilities very aggressively (as does the PUC).
The utilities will also have the chance to question the consumer representatives who filed their own proposals and analysis with the Commission.
On Tuesday, the Commission is likely to take up the issue of how big any rate increase needs to be and how much of the increase each customer group should shoulder.
More tomorrow on the call.
Best,
| Update--Day 2 of California PUC Hearings |
All: Please see attached materials from Steve Kean.
Ken Lay and Steve Kean met yesterday with the Governor of California and his policy director to discuss solutions to California's energy problems.
The meeting was very constructive.
Ken Lay and Steve offered some of Enron's proposed solutions and the Governor discussed the options he's considering.
We've been asked to provide--by Tuesday--feedback on his proposals.
The turn-around time is
| Meeting with Governor Davis, need for additional comments/suggestions |
Well, I was clearly too ambitious in setting out the schedule.
My apologies.
I managed to trudge through the reading and the document last night, but didn't not get to answering the question.
I appears that this will be a busy weekend.
I've a feeling that I won't get my proposed answer to folks until Saturday afternoon for your review.
If that poses a problem for anyone, please let me know.
I still intend to be the compiler of wisdom, so folks should feel free to distribute when they've got something drafted.
Best,
| Even the best laid plans... |
Steve: I'm going to give you a call.
Few things: Got your message.
As you'll see from the document, I likely spent too much time over the weekend on the "what's in it for consumers" messages.
Since it was one of the the "to do" items, I figured that it should get some emphasis, but sounds like that may not be the case.
I've proposed a template for how to provide feedback on the Gov's specific proposals, using direct investment in power plants by the state as the illustrative example.
Let me know if you think it works.
I have ideas on each, but thought it better to await feedback from the commercial folks before filling out our comments in each area.
I'm finishing up a bit more detailed proposal for how the Gov might use "energy gurus" to help on the portfolio/procurment issues, and am also offering additional detail on the need for a "rate summit."
Got messages in to Schroeder re: Nordpool--expect to hear back from him today
| Status on Feedback to Governor |
Greetings: Attached is the draft.
I've attempted to capture everyone's comments.
The only piece that is not likely to go this evening is the piece providing comments on the Governor's specific proposals.
That will likely go first thing tomorrow morning.
You'll note that only one of the Governor's proposals currently has any comments attached to it.
Comments on the Governor's proposals are appreciated.
The remainder of the materials will go to the Governor's staff later this evening; so any and all comments on those portions are welcomed and appreciated.
Thanks to all for the assistance, particularly in light of the holiday.
Best,
| DRAFT of materials for Governor |
Greetings Kari: Attached is follow-up information from the meeting that the Governor and you had with Ken Lay and Steve Kean last Thursday.
Tomorrow morning I will email three additional pieces of information: Our specific comments on the proposals that the Governor raised at the meeting.
More details on the "demand buy-down" concept.
Information on Norway's version of the ISO, "Nord Pool."
If there's anything you need, don't hesitate to contact me at 415.782.7822.
Happy New Year.
Best,
| Follow up materials |
This is material that I received re: Nord Pool from Davies (one of Schroeder's guys).
If you want to take a wack at putting together a few bullets on what Nord Pool is, how it differs from Cal model and why it's preferable, that would help me immensely and free me up to focus on 1) comments to Gov's proposal and 2) more detail on demand buy-down.
That possible?
Let me know.
Greatly appreciated.
Best,
| Nord Pool |
Copy of order to follow.
Here's a quick summary.
Does not look great for the utilities.
More to follow.
one cent/kwh charge for all customers--equals 9% for rez, 7% for small biz,
| PUC DRAFT Decision |
Greetings Kari: Forgive the delay.
Much going on today, PUC draft decision in particular.
The draft does not look promising for the utilities' financial position.
Attached are our comments on the Governor's Proposals and some more detail on the demand-reduction proposal.
We continue to work on the Nord Pool research for you and will turn that around as quickly as we can.
| Additional Materials |
I forwarded this to you so that you could have a chance to take a peek at it before forwarding along to the rest of the group.
If you'd like me to forward it along to the larger group, just let me know.
Jeff
| ICA memo |
Late afternoon 1/3/01 news: USA: Calif utility ratings may fall too far on 7-15 pct hike.
By Jonathan Stempel 01/03/2001 Reuters English News Service (C) Reuters Limited 2001.
NEW YORK, Jan 3 (Reuters) - Bankruptcy may loom and the credit ratings of the two largest California electric utilities will likely fall too far if that state's Public Utilities Commission awards them an interim rate hike of 7 to 15 percent, analysts said Wednesday.
In a draft decision on Wednesday, the CPUC proposed an immediate hike of 9 percent for residential customers of Pacific Gas & Electric Co. and Southern California Edison, and hikes of seven to 15 percent for various business customers.
The CPUC commission is expected to issue a final decision on Thursday.
"It forces the utilities and their creditors to be limbo dancers, and skilled limbo dancers at that," said Shawn Burke, head of U.S. investment-grade research at Barclays Capital.
PG&E and SCE had requested respective rate increases of 26 percent and 30 percent, a hike that would help them avoid imminent bankruptcy.
The utilities have also asked the regulators to remove a freeze on retail rates imposed under California's 1996 law that deregulated the state's electricity market.
On a day when most stocks roared ahead after the Federal Reserve announced surprise interest rate cuts, investors beat down the stocks of Pacific G&E's parent, San Francisco-based PG&E Corp. , and SoCal Edison's parent, Edison International .
PG&E shares closed Wednesday on the New York Stock Exchange at $17, down $2-9/16, or 13.1 percent, while Edison International shares closed at $12-1/4, down $2-3/4, or 18.3 percent, on the Big Board.
Bond quotations were not immediately available for the utilities' bonds, which in recent weeks have traded like junk.
Pacific G&E and SoCal Edison were banking on a big rate hike to allow them to pass on some of their soaring wholesale power costs to consumers.
The utilities, which operate under a rate freeze, have accumulated more than $8 billion in unrecovered costs since wholesale power prices started skyrocketing last summer amid a worsening electricity shortage in the state.
They claim they are running out of money due to the price freeze, and have billions of dollars of bills coming due in the next six weeks.
Central to their concerns is whether credit rating agencies Moody's Investors Service and Standard & Poor's will cut their medium investment grades to junk status.
"No one knows for sure, but if we consider the average rate hike is only about 10 percent, it will be difficult for the companies to maintain investment-grade ratings," said Dorothea Matthews, a fixed-income electric utilities analyst for Deutsche Banc Alex.
Brown.
The utilities have already been unable to tap short-term capital markets because of their precarious financial state.
Downgrades to junk, which the agencies have already threatened, would cement the door shut to these markets, and cause the utilities to default on some of their loans.
Late Wednesday, PG&E Chief Executive Gordon Smith said the commission's proposed hikes could jeopardize his utility's future loans.
Even a downgrade to the lowest investment grades - "Baa3" for long-term debt and "Prime-3" for short-term debt from Moody's, and "BBB-minus" and "A3" from S&P - would make the going very difficult for the utilities.
The reason: short-term debt markets are often closed to companies with those ratings.
"Unless this process allows the rating agencies to keep 'A2/P2' ratings on the short-term debt of both companies, then this process has largely been a waste of everyone's time," said Burke.
Still, he said, "there is a reasonable chance, despite today's weak recommendation, that the situation can be salvaged with mid-'triple-B' ratings, which would allow a lifeline to conventional sources of liquidity."
Moody's and S&P were not available for comment.
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
| Late Press on PUC Decision |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.