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Enron Mail |
some quantification on hedge and rate increase. (In Tamara's summary point #
2, I think she meant Oct 1 2001). ----- Forwarded by Harry Kingerski/NA/Enron on 03/02/2001 02:19 PM ----- Scott Stoness@EES 03/02/2001 09:58 AM To: Harry Kingerski/NA/Enron@Enron cc: Subject: CPUC Filing PG&E / SCE Harry. We want later surcharge, lower surcharge, less recovery of utility shortfall. I hope this helps in defining our strategy for evidence. ---------------------- Forwarded by Scott Stoness/HOU/EES on 03/02/2001 09:56 AM --------------------------- Scott Stoness 03/01/2001 07:04 PM To: Tamara Johnson/HOU/EES@EES cc: Subject: Comments???? Summary: Unwinding our hedge in 2002 and beyond results in a $326m gain. Assuming that our position is hedged beyond 2001. Reseting our PG&E / SCE curves to increase $15/MWh increase in October 1, 2002, in addition to the current $10/MWh surcharge, results in a $309m loss. Netting 1,2 setting our curve, with a $15/MWh increase in Oct, in addition to the current $10/MWh surcharge, results in a $17m gain. Sensitivity: Our position is heavily weighted toward today - (MWh short T&D) A later recovery of current year shortfall is to our advantage. An increase in surcharge from $10 to $25/MWh in Oct 1, 2001 results in a net $17m gain. (Base Case) An increase in surcharge from $10 to $25/MWh in March 30, 2001 results in a net $36m loss. An increase in surcharge from $10 to $25/MWh in Jan1, 2002 results in a net $44m gain. Keeping the surcharge flat at $10/MWh results in a net $170m gain. A longer recovery period is to our advantage: Oct 1, 2001 to end of 2011, requires a $23.2/MWh surcharge. Results in a $35m gain. Oct 1, 2001 to end of 2009, requires a $26.9/MWh surcharge. Results in a $2m loss. Oct 1, 2001 to end of 2006, requires a $27.9/MWh surcharge. Results in a $12m loss. The surcharge is heavily dependent on how much recovery of current utility shortfall is allowed. PG&E's surcharge would be reduced by $7/MWh if they were not allowed to recover their $6b current shortfall. Results in a $70m gain. Our customers, on average are paying $81/MWh, all inclusive today (including the $10/MWh surcharge). So 15/81 is a 19% increase. If I was forced to choose today, I would: Put the mid at Oct 1, 2001, $25/MWh surcharge. Taking a $17m gain. Readjust the rates by rate class. Put the Bid at Jan 1, 2001, $13/MWh surcharge. Put the Offer at Mar 30, 2001, at $15/MWh surcharge. Hedge 37% MWh declining to 10% by 2002. Hedge 24% mmntu declining to 10% by 2002. Hedge 5% tons coal from today until the end of 2011..
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