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Enron Mail |
Cc: alan.comnes@enron.com, james.steffes@enron.com, janel.guerrero@enron.com,
jeff.dasovich@enron.com, joe.hartsoe@enron.com, karen.denne@enron.com, leslie.lawner@enron.com, paul.kaufman@enron.com, richard.shapiro@enron.com, sandra.mccubbin@enron.com, skean@enron.com, susan.mara@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: alan.comnes@enron.com, james.steffes@enron.com, janel.guerrero@enron.com, jeff.dasovich@enron.com, joe.hartsoe@enron.com, karen.denne@enron.com, leslie.lawner@enron.com, paul.kaufman@enron.com, richard.shapiro@enron.com, sandra.mccubbin@enron.com, skean@enron.com, susan.mara@enron.com X-From: Rob Bradley X-To: Jeff Dasovich X-cc: Alan Comnes, James D Steffes, Janel Guerrero, Jeff Dasovich, Joe Hartsoe, Karen Denne, Leslie Lawner, Paul Kaufman, Richard Shapiro, Sandra McCubbin, skean@enron.com, Susan J Mara X-bcc: X-Folder: \Jeff_Dasovich_June2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Here is the Q&A I will give to Ken on this topic, and I invite any improvements: Question: "What is your opinion about the study of the Brattle Group (Dr. Paul Carpenter) that market power exercised by El Paso and Dynegy exacerbated the natural gas price spike at the California border that contributed to the electricity price spike." Answer: "I always discount conspiracy theories when prices rise or fall and believe fundamental forces of supply and demand explain prices in this instance. I will say, however, that the transmission grid must be more open and transparent to improve everyone's confidence in the economics behind price formation. Long term contracting in the wholesale commodity market should also reduce speculation about price manipulation." - Rob Jeff Dasovich Sent by: Jeff Dasovich 04/24/2001 06:57 PM To: Richard Shapiro/NA/Enron@Enron, skean@enron.com, James D Steffes/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Leslie Lawner/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, Rob Bradley/Corp/Enron@ENRON, Janel Guerrero/Corp/Enron@Enron, Karen Denne/Corp/Enron@ENRON, Alan Comnes/PDX/ECT@ECT, Sandra McCubbin/NA/Enron@Enron, Susan J Mara/NA/Enron@ENRON cc: Subject: Some Background on California Gas Price Spikes--The Other Side of the Story Last week, I distributed a presentation that the Brattle Group gave before the California Inquisition (i.e., legislative gas oversight committee looking into the gas price spikes at the Cal border). The Brattle Group is a consulting firm that Edison has long used to beat up on SoCalGas (recall that Edison used to be a big gas customer when it owned power plants). Edison "arranged" for the Brattle Group to be the star witness at the Cal Leg gas hearing. Their job was to set up El Paso and Dynegy for the hit at hearings that took place the following day. Their message was simple (and simplistic): El Paso and Dynegy have market power. They have used the market power to drive up basis and thus the price of gas at the border (to "obscene" levels). That, in turn, has driven up electricity prices. Ken Lay is giving a gas talk tomorrow, and Rob Bradley asked that I provide the alternative view to the Edison/Brattle rant, in the event that he gets any questions on the topic. It's attached. Apologies, it's quick and dirty, but it provides the basics. Obviously no need for us to defend El Paso or Dynegy, but might be useful to offer a more rationale explanation than the one that the California Legislature is peddling. Finally, we were also fingered somewhat as culprits at the hearing (the California PUC FERC lawyer claimed that ENA and TW colluded to drive up basis when ENA controlled a portion of the capacity), but the overriding goal of the hearing was to go after EP and Dynegy. Best, Jeff
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