Regulatory Risks Tied to DA

Check this out. I want to get any comments you might have before I sent it around.

-----Original Message-----
From: Dasovich, Jeff
Sent: Thursday, September 27, 2001 8:06 PM
To: Dasovich, Jeff
Subject:

Here's a cut at the taxonomy of regulatory risks associated with Direct Access. Please let me know if there are others I missed, or if there are changes needed to the ones listed.

1. Retroactive Suspension of DA Contracts: The PUC rules in a subsequent decision that DA is suspended on some date between July 1 and September 20th.

2. Contract renewal forbidden: The PUC includes contract renewal under the suspension of DA.

3. No incremental "DASR'ing": The PUC includes incremental additions and subtractions of DA customer's load under the suspension of DA (e.g., fast food chains, University campus)

4. Cost allocation: the PUC adds new costs to DA accounts and/or disproportionately shifts existing costs to DA accounts. Costs with greatest risk of being shifted to DA customers include: IOU undercollection, bonds to repay the state general fund, and DWR contracts. The costs associated with these categories are substantial.

Additional suggestions from Mike Day:

5. DASR processing: Related to #1 above, in that, if the utilities attempt to implement the Commission-ordered suspension in an onerous way, it may put at risk contracts executed prior to 09.20.01 but not yet DASR'd.

6. Confidentiality of contract information: The utilities and/or the PUC may require ESPs to show contracts as proof that contracts were executed prior to 09.20.01.

Key risks associated with each category:
Adverse to P/L
Adverse to hedge (demand risk)