|
|
Enron Mail |
Jeff -- thank you so much! Phew, for this minute! One never knows minute
by minute. Re: securitization, I don't think the exact form has been decided in terms of legislation, but its fair to say there are very active discussions at the highest level regarding the best way to do this (with good support, between us, it appears). All major parties will need to be supportive. -----Original Message----- From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com] Sent: Thursday, January 04, 2001 5:29 PM To: Kari.Dohn@GOV.CA.GOV Subject: PennFuture's E-cubed -- Price, Policy and Misperception Greetings, Kari. Today's installment includes: Background on Nord Pool Information on the status of de-regulation in Pennsylvania. The rumors regarding securitization of utilities' power purchase costs had a very positive effect on the utilities' stock today. Congratulations. There is conflicting information floating around, though. Some wires stories say that a state senator will sponsor a securitization bill. Others say that it will be the Governor's bill. Is securitization legislation something that the Governor intends to sponsor/support? Though there are clearly some challenges to securitization, we think it offers a promising option. Hope the information is useful. Best, Jeff (See attached file: Nord Pool.doc) ----- Forwarded by Jeff Dasovich/NA/Enron on 01/04/2001 07:16 PM ----- "PennFuture" <pennfuture@pennf To: <Undisclosed-Recipient: uture.org< @mailman.enron.com;< cc: 01/04/2001 11:12 Subject: PennFuture's E-cubed -- Price, AM Policy and Misperception Please respond to "PennFuture" PennFuture's E-cubed is a commentary biweekly email publication concerning the current themes and trends in the energy market. January 4, 2001Vol. 3, No. 1 Price, Policy and Misperception The ringing in of 2001 marks the completion of the fourth year since Pennsylvania's electricity competition law went into effect on January 1, 1997, and the second year since Pennsylvania's retail market was fully opened to customer choice on January 1, 1999. But nationwide, while reliability, environmental performance, and assistance for low-income customers are crucial factors, the price of power has alone become the main standard for judging the success or failure of competitive transition policies. Near hysteria about prices is yet another fallout of the California mess where rates are a daily nightmare for consumers. In an effort to broaden electricity policy discussion beyond the myopic focus on California, we note that competitive residential retail prices of electricity in Pennsylvania this New Year are considerably below what customers were paying for generation and transmission service or embedded generation on January 1, 1997. If you doubt it, compare columns B and D below. Just as interestingly, competitive prices for 100% renewable energy products are well less than what customers of Duquesne Light and PECO Energy paid for power generated from mainly coal and nuclear prior to competition (columns C and D). Comparison of Residential Unbundled Embedded Generation to Retail Power Prices (in cents/kWh)A. 2000 Shopping CreditB. Lowest Retail PriceC. 100% Green Power Prices?D. Embedded Generation & Transmission A.??????? B.????? C.??????? D.Duquesne?????? 4.80??? 4.60??? 6.49 8.75GPU/Met-Ed?? 4.53??? 4.60??? 7.09??? 5.70GPU/Penelec? 4.53??? 4.50 7.09??? 5.40PECO???????????? 5.65??? 4.65??? 6.37??? 8.65PPL 4.61??? 4.30??? 7.09??? 6.26Allegheny??????? 3.24??? 5.20??? 6.49 5.30Note: 2001 shopping credits will be moderately higher in some cases. In most parts of the Commonwealth, current competitive retail prices for residential customers are 0.90 to 3.15 cents per kilowatt-hour less than what customers were paying for the same generation and transmission service prior to competition. As a result of stranded cost charges that utilities are being allowed to collect, these substantial competitive savings are not fully passed on to consumers. In fact, were it not for stranded cost charges, Pennsylvania's residential customers would have had their total rates (including distribution and transition rates) decline by about 20% in 2000. Generation rates would have declined by as much as 40%. These huge price reductions are real but will not fully reach customers during the transition period when utilities are allowed to collect stranded costs. Competitive retail prices are also in most cases less than Pennsylvania's default rates or shopping credits. This is important and encouraging, because Pennsylvania's current residential default rates or shopping credits are in every case much less than what customers were paying for generation service at the start of the competitive transition. Indeed, current default rates are about one to three cents per kilowatt-hour less than residential customers were paying for the same service from their local utility prior to competition. The California fiasco has meant a lot of discussion about the price of electricity, but it has not meant a lot of understanding of sensible competitive policies' potential impact on retail prices. Instead, a great deal of reporting reflects understandable misconception of basic price benchmarks. For example, very few stories identify accurately or even at all what customers were paying for generation service prior to competition (the pre-competition embedded generation rate of the incumbent utility). This failing can be traced to the fact that states have not prominently made this data available. Worse yet, many press articles mistakenly assume the default rate or the shopping credit is equal to what customers were paying the local utility for generation service prior to competition, and report that competition will lead to price shock for customers if market prices exceed present default rates. But this dramatic warning is typically wrong. The press' misunderstanding hides an important fact: current default rates or shopping credits are nearly always much less than what customers were paying for generation service prior to competition. Total rates after the transition to competition will not be greater than they were prior to competition, unless competitive retail rates exceed the utility's pre-competition embedded generation rate. Consequently, if competitive prices are higher than current default rates but lower than a utility's pre-competition embedded generation rate, consumers will have lower total rates once stranded cost charges are removed and the transition period expires. That is, they will if a state creates a genuinely competitive retail market that pulls through competitive prices. E-cubed is available for reprint in newspapers and other publications. Authors are available for print or broadcast. Support E-cubed by becoming a member of PennFuture ? visit our secure online membership page at www.pennfuture.org by clicking on "Support Our Work."?PennFuture, with offices in Harrisburg, Philadelphia and Pittsburgh, is a statewide public interest membership organization, which advances policies to protect and improve the state's environment and economy. PennFuture's activities include litigating cases before regulatory bodies and in local, state and federal courts, advocating and advancing legislative action on a state and federal level, public education and assisting citizens in public advocacy. We hope you found this informative and interesting. However, if you would prefer not to receive future issues, please reply to this email and type "unsubscribe" in the subject line. (See attached file: Vol3No1_10301.doc)
|