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Enron Mail |
I attended a luncheon this afternoon at which the keynote speaker was FERC
Chairman Curt Hebert. Although the Chairman began his presentation by expressly stating that he would not comment or answer questions on pending proceedings before the Commission, Hebert had some enlightening comments which relate to the referenced matter: Price caps are almost never the right answer Price Caps will have the effect of prolonging shortages Competitive choices for consumers is the right answer Any solution, however short term, that does not increase supply or reduce demand, is not acceptable Eight out of eleven western Governors oppose price caps, in that they would export California's problems to the West This is the latest intelligence we have been able to gather on the matter. We will be monitoring the Commission meeting tomorrow morning to determine the outcome. Ray Alvarez Alan Comnes@ECT 04/24/2001 11:47 AM To: Tim Belden/HOU/ECT@ECT, Mike Swerzbin/HOU/ECT@ECT, Michael M Driscoll/PDX/ECT@ECT, Matt Motley/PDX/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Diana Scholtes/HOU/ECT@ECT, Sean Crandall/PDX/ECT@ECT, Chris Mallory/PDX/ECT@ECT, Jeff Richter/HOU/ECT@ECT, Tom Alonso/PDX/ECT@ECT, Mark Fischer/PDX/ECT@ECT, Phillip Platter/HOU/ECT@ECT, Carla Hoffman/PDX/ECT@ECT, Christopher F Calger/PDX/ECT@ECT, Michael Etringer/HOU/ECT@ECT, Steve C Hall/PDX/ECT@ECT, Christian Yoder/HOU/ECT@ECT, Tim Heizenrader/PDX/ECT@ECT, Stephen Swain/PDX/ECT@ECT, Jeff Dasovich/NA/Enron@Enron, Susan J Mara/NA/Enron@ENRON, Joe Hartsoe/Corp/Enron@ENRON, Ray Alvarez/NA/Enron@ENRON, Elliot Mainzer/PDX/ECT@ECT, Bill Williams III/PDX/ECT@ECT cc: James D Steffes/NA/Enron@Enron Subject: FERC Price Mitigation (Cap) Update West Traders et al. FERC's meeting, which will include the issue of price mitigation for California, is on tomorrow's (Wed's) agenda. I will be patching in the meeting in a conference room here in Portland. The meeting begins 7 a.m. PDT. Based on yesterday's newspapers, staff's proposal appears to have a chance of adoption. However, what the FERC will do is very much up in the air. Any mitigation plan will replace the current approach set to expire 4/30/01 that requires (1) cost reporting of all accepted bids over $150/MWh, and (2) refunds (subject to appeal) of generators who bid and are accepted above a index based on a heat rate and monthly gas price. Staff's mitigation plan has been out since early March 2001. Here's a rundown: o Applies only in in-CA generators with agreements (PGAs) selling to ISO R/T. o Applies only in stage 3 (ALTHOUGH one of the easiest "tweaks" the FERC can do is make the staff proposal apply to Stage 2/3 or Stage 1/2/3) o ISO R/T prices within the state will be "mitigated" (capped) at a single price based on the marginal cost of the last PGA generator accepted. Staff proposal states: "PGA generators would be required to propose to the Commission, in advance, a dependable capacity for each unit as well as certain operating parameters necessary to calculate marginal costs, such as heat rate. The Commission staff could then use a published fuel cost such as that which is available in Gas Daily and emission credit data (where applicable) to determine the correct price that can be used for mitigation purposes. This would then be the basis upon which the ISO would use pre-determined standing prices to mitigate prices during times of reserve deficiency (e.g., Stage 3)." o It is not clear whether a daily or monthly index would be used. Currently refund orders use a monthly index. o By "single price", not that everyone will get the in-state clearing price based upon the marginal cost of the last PGA generator selected. o Imports: the staff proposal punts on imports. I read staff proposal imply that there will be no mitigation on imports per se but that imports are likely to be taken on an OOM basis more frequently when stage 3's are in effect. If you have any questions, please contact me. Alan Comnes.
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