|
|
Enron Mail |
Jim,
Here are my proposed changes to what you have said -- in color. Here is the language keeping DA alive -- the decision is attached (it's short) D01-03-009, page 6 , March 7, 2001 "Finally, due to pending legislation which would alter Section 80110, we shall stay action on implementation of the suspension of direct access under Water Code Section 80110 until further order." Jeff, Please fill in the discussion of the MOU below (bullet 5). ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ -------- The term "Surcharge" is only applicable until the end of the AB1890 rate freeze (which will end no later than March.31.02 and may end earlier if (a) federal court finds in PG&E/SCE favor or (b) California legislature mandates an earlier end-date or © the CPUC decides to actually complete its proceeding to value the retained assets and calculate an end to the rate freeze, which would take months. Surcharge is a "term of art" to get around the problems of the AB1890 rate freeze. At the end of the AB1890 rate freeze, it is my understanding that the CPUC will modify fully the rate structure and level to ensure full cost recovery on a going forward basis (therefore Utility Retained Generation, QF expense, CDWR current expenses (both energy purchase and financing costs will be included). Some members of the CPUC signaled in the May 5 decision (noted below) that they intended to investigate "bottoms up" rate making -- this is preferred by AReM and many others. Theoretically, it would clearly separate generation-procurement-retail sales functions from other charges, such as T and D. DA sustomers would only be charged for T & D etc. -- not the other. If done correctly, even charges included now in T & D, such as some ISO-related functions, would be moved out to make the T&D charges pure wires charges. This approach would be preferred. Any "bottoms up" proceeding would take months and unlikely to be concluded before the end of this year. Other outstanding costs will include (1) Utility Undercollection from May.00 until when no additional CA-ISO costs are applied or until rates cover costs and (2) CDWR costs beginning Jan.17.01 until the end of AB1890 rate freeze or the end of DWR's purchasing activities. Understanding how all these costs will be recovered and by whom will most likely (80% probability) be decided by the Legislature with some decision-making by the CPUC. If theLegislature does not take this up, it will be decided by the bankruptcy court or federal court. Utility Undercollection Bypass - 25% So far, the Legislature has done nothing to address the utility undercollection (except for San Diego, which has a balancing account but no way to cfollect it yet). SCE's MOU does address this by (INSERT BY JEFF). The MOU has received bad reviews by the Legislature but Enron has been supporting it with some changes and a bi-partisan group of Legislators has been analyzing it and intends to propose amendments. Probablility that utility undercollection is dealt with by the Legislature -- 50% Various bills in the Legislature have been introduced to delete the language in AB1X 1that gave the CPUC the right to terminate DA. A diverse group of business interests called the Direct Access Coalition has been pushing for this and for a bill that takes care of DWR's potential stranded cost problem but provides flexibility for direct access. Our current assessment is as follows: Bypass allowed for payment of DWR costs Jan.17.01 thru rate freeze end - 80% probability for people who never were on Utility Service, 50% for people who used Utility Service post Jan.17.01 but build self-gen or incorporate energy efficiency/load management; also, 50% chance for 60-90 day amnesty period for people to select direct access and 50% chance for free direct access (without surcharge or exit fee) for those who switch while DWR has a "net short" position. CDWR Net Unavoidable Bypass - 10% for people who used Utility Service post Jan.17.01, 80% for others. LEGISLATION IMPACTING THIS DECISION There are three key direct access bills being considered (the Bowen bill - SB2x27, the Kelley bill - AB2x42, and the Battin bill - SB2x??). The Bowen bill would remove the DA suspension authority granted in AB1x1 and replace it with the following (1) if a customer has not bought from an electric utility on or after Jan.17.01 there are no charges [except there may be an entrance fee to use the electric utility going forward] and (2) if a customer wants to switch from an electric utility to an ESP they must pay "to the department any uncollected amounts equivalent to the department's net unavoidable cost of power procurement, including any financing costs, attributable to that customer" to ensure the satisfaction of any power purchase obligation or bond obligation to serve "that customer". The recovery period shall be coincident with the terms of bonds issued to finance the purchases. The CPUC has 90 days from the effective date to notify customers of their obligations. The Kelley bill would remove the DA suspension authority granted in AB1x1 and replace it with the following (1) if a customer has not bought from an electric utility on or after Jan.17.01 there are no charges, (2) every customer is allowed to buy from an ESP a % of their load equal to the amount served by Utility Retained Generation (not CDWR purchases) with no charges, (3) after the effective date, any customer that buys from the electric utility and wants to switch must pay "to ensure satisfaction of any power purchase obligation or bond obligation incurred by the department" with the following constraints - (a) for res and small commercial customers, if DA load is less than load growth or (b) to self gen customers, if the customer has given 180 days prior notification or © if the customer has given DWR 12 months' advance written notice (then only a fee equal to 12 months unavoidable costs). The CPUC has 30 days from the effective date to notify customers of their obligations. The Battin bill would ... still reviewing Keep in mind that all of these bills are in flux. As described above, the DA Coaltion is pushing hard for a "good" direct access bill that provides some flexibility and has its own language that it is floating. Even with exit fees, the Coalition's proposed language would require DWR to base the fee on a calculation of its actual costs from losing the load. Enron is also pushing to make direct access part of any compromise settlement and the Republicans have taken the same approach. CPUC DECISIONS IMPACTING THIS March 7 Decision Implementing ABX 1 -- decided not begin the process to terminate direct access May 5 Order - DA doesn't pay DWR expenses going forward and the 3 cent surcharge does not apply to DA customers.Good for bypass of these costs. We expect the utilities to file Petitions to Modify the decision to argue that they cannot implement it -- they will likely seek to have the charge appply to DA Customers and then put the same amount in the credit. Given the problems we all have with the negative credit and the utilities' notion of a zero bill, there will be much opposition to the utilities' proposal. The utilities chance of success on this is less than 50%. Proposed action -- Alliance for Retail Energy Markets (AReM) will begin pushing to stop charging the current 1 cent surcharge to DA customers (to be consistent with the May 5 decision). Chance of success is 60%. . Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854
|