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Enron Mail |
haven't forgotten you...just doing leg battles. First, there wasn't any
press release from SVMG that we had that you didn't also have....remember you asked me to fax it to you? also, what thinkest thou about the FERC order? D Jeff.Dasovich@enron.com wrote: < Dorothy: < Thanks very much for the meeting yesterday. From my perspective it was < very useful. < < Per yesterday's conversation. More (much) to follow (soon). This is what < we gave the Govenor, Hertzberg, Burton, Brulte, etc., about 2 months ago < (i.e., prior to Davis' 20-20 announcement, etc.) < < You know how to get a hold of me. < < Best, < Jeff < ****************************************************************************** ***** < < Proposal to Alleviate California?s Electricity Shortage < Through Incentives to Reduce Demand < < Objective < ? Provide consumers with financial incentives to reduce demand in < anticipation of Summer 2001 electricity demand < < Proposal < ? The California PUC should require the utilities to immediately conduct < on-line auctions for demand reductions totaling at least 2,000 MWs < ? Alternatively, DWR could run the auction and implement the buy-down < program. However, if it is determined that DWR requires additional < authority to execute the auction, the State should avoid any further delays < and direct the CPUC to order the utilities to implement the buy-down < program immediately. < < The Auction Process (assuming the utilities implement the program) < ? Businesses and large consumers willing to commit to sustained < reductions through November 1, 2001 would submit bids indicating the price < they would be willing to receive for a given quantity of permanent < reduction < ? If the ?supply? of available reductions offered in the auction exceeds < 2,000 MWs, the utility should accept them, or explain to the Commission why < they chose not to accept them < ? Businesses should be permitted to include in their bids the continued < payment of wages to compensate employees for hours of employment foregone < due to demand reductions < < A Single Price Approach < ? A single price approach to a demand buy down program has two key < disadvantages: < ? First, customers who would be willing to reduce demand for a lesser < price will be overpaid, much in the same way the single price auction in < the PC overpaid lower cost generators. The state would overpay for reduced < demand under the single price approach. < ? Second, the single price may not attract sufficient demand reductions. < ? Further, the single price approach does not provide greater certainty < regarding the cost of demand reductions. By conducting an auction the < state will be able to observe all bids and pay on an as bid basis, starting < with the lowest bids necessary to provide the required demand reductions up < to the cost the state is willing to pay. < ? A single price approach, however, could work if targeted at customers < who would not participate in an auction, i.e. residential customers. A < well publicized program of rebates to residential customers who use less < than last year would further reduce demand in the state. Thus the auction < and the single price could be structured in a complimentary fashion. < ? The costs of the incentive program should be paid for by all < consumers, since all consumers will benefit from the decreased risk of < service interruptions caused by the demand reductions < ? If DWR implements the program, DWR? would recover its costs through < rates, similar to the cost recovery mechanism used to recover power < purchase costs. < ? If the utilities implement the program, the California PUC would < include program costs in rates collected from customers < ? The auction should be conducted online which will increase < transparency and reduce the time required to complete the process < < Hazards to Avoid < ? Avoid allowing lengthy utility and/or PUC review to delay < implementation of the reductions < _ Any unnecessary delay increases the chance that California will fail < to achieve the reductions needed to help avoid severe shortages in Summer < 2001 < _ There are numerous firms offering moderately-priced on-line auction < services that can quickly provide auction services to the utility < _ The utility should immediately contract for on-line services and < present the contract to the California PUC for prompt approval < _ The utilities should also include in their submittal to the PUC a < simple, streamlined set of pre-qualification criteria that would apply to < bidders < _ The pre-qualification criteria should be designed with the goal of < making participation as easy and expansive as possible < _ Pre-qualification will encourage legitimate offers and reduce < transaction time < _ Once the PUC has approved the auction process, the PUC should not < apply any additional review to the auction results < _ Auction ?pre-approval? will ensure that the utilities are actively and < constructively engaged < < Actions < ? Governor?s office directs PUC to initiate auction and residential < program < ? CPUC directs utility to submit auction proposal within 30 days < _ Establish abbreviated schedule < _ Provide parties with abbreviated opportunity to comment < _ Finalize decision approving auction proposal within 15 days of utility < submission < ? CPUC rules in advance that results of auction are prudent, and < utilities conduct auction by May 1
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