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Enron Mail |
Jay --
I wanted to talk with first thing on Friday about our decision to weigh in with testimony in this case. Forgetting the question Legal may or may not have (let's assume they don't have any concerns) about Scott testifying, it is still my opinion that we should not file testimony. First, I assume that you have already marked your book to the Lynch "thoughts" on rate design and revenue allocation included in the initial Order. I make this assumption, because the loss to EES has already occurred and our goal now is to try and bring back some of the value by (a) focusing on revenue sharing and (b) rate design. Scott indicates that the loss could be $100MM with bad outcomes on the 2 key issues. My purpose of EES' activity is to try and minimize that number. I feel that a quiet but forceful role in the case is the best vehicle given our recent troubles in CA and before the CPUC. Second, I am not sure that Govt Affairs is comfortable with Scott's model of rate design. While tiering of rates is on the table, the question of demand reduction payback under his framework could result in customers using 70% of their load and paying nothing. That hardly makes sense. Now maybe we just don't understand, but putting in testimony that is unclear or confusing isn't going to win the day before the CPUC. Third, most of our victory will come from aligning with the big users. If we are supporting / defending our own testimony (which they haven't seen), I think that our ability to work through a Settlement will be limited. Our goal is to "pick and choose" from the best solutions proposed while trying to highlight other options through cross-examination (granted, this may be very hard). Fourth, someone may try to get EES to weigh in on the allocation of these costs to DA customers. We have agreed not to take on that issue. Scott doesn't get to use the Fifth Amendment to not answer. Scott and his team is preparing testimony. Give me a call. If Scott and you are intent on moving forward, we'll do as you see fit within the other constraints. Jim ---------------------- Forwarded by James D Steffes/NA/Enron on 04/12/2001 11:12 PM --------------------------- From: Leslie Lawner on 04/12/2001 05:58 PM To: Richard Shapiro/NA/Enron@Enron, Mike D Smith/HOU/EES@EES cc: Scott Stoness/HOU/EES@EES, Harry Kingerski/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Tamara Johnson/HOU/EES@EES, Robert Neustaedter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff Dasovich/NA/Enron@Enron, Susan J Mara/NA/Enron@ENRON Subject: pros and cons Here is the list of pros and cons for Scott Stoness filing testimony in the CPUC rate design case (testimony due tomorrow, hearing set to begin next Monday). We have a call into Mike Smith to get legal's view. Pros of filing testimony: Getting out on the table a demand reduction program and a market-based pricing mechanism Favorable "strawman" proposal can move direction of CPUC decision in our favor Insurance policy in case no one files a proposal we like Can be withdrawn before hearing if we have other proposals we can support Could give us leverage to participate in settlement negotiations Easier to make case through direct testimony than on cross exam. Cons of filing testimony: We get in a position of having to defend our position and loose ability to throw support behind other positive proposals (alone or in combination) We open ourselves to cross examlination and discovery (Scott Stoness will be supporting witness and could have information we would not want revealed). Enron is not very popular these days and filing/testimony could fuel more negative press Additional Enron resources will be used (Scott's time, Tamara's time) Market dysfunction may help ENA's position Scott Stoness estimates that there is a $50 million risk if dollars are not apportioned properly to each rate class, but this is an issue that a number of parties will likely be addressing in their testimony. He estimates that there is an additional $50 million at risk if CPUC's seasonal rate design is adopted as opposed to his two-part real time pricing proposal. $100 million potential loss if Lynch proposal does not solve the problem for the winter of 2001-2002 and anothe rate increase is needed in November.
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