PUC Changes Decision to End Direct Access as of July 1

FYI. Please see note chain. Legislative effort differs considerably from this. Note on that bill and today's Leg events to follow.

Best,
Jeff

-----Original Message-----
From: Huhman, Steve [mailto:steve.huhman@mirant.com]
Sent: Monday, August 27, 2001 7:00 PM
To: 'Dan Douglass'; ARM; Vicki Sandler; Tamara Johnson; Mara, Susan;
Huhman, Steve; Roger Pelote; Rob Nichol; Randy Hickok; Nam Nguyen; Jim
Crossen; Dasovich, Jeff; Janie Mollon; Jack Pigott; Greg Blue; George
Vaughn; Gary Ackerman; Ed Cazalet; Denice Cazalet Purdum; Curtis Kebler;
Curt Hatton; Corby Gardiner; Charles Miessner; Carolyn Baker; Bill Ross;
Karen Shea; Max Bulk
Subject: RE: CRITICAL!! IMMEDIATE REVIEW NEEDED

If Legal analysis indicates that we can make a strong case for either
hearings, or a change of date, Mirant would be a supporter. Due to time
constraints, we may not be available to contribute to strategy discussions
in the next day or two, however. If the group comes up with an action that
it believes makes good sense, Mirant will participate. - - Steve

-----Original Message-----
From: Dan Douglass [mailto:douglass@energyattorney.com]
Sent: Monday, August 27, 2001 7:23 PM
To: ARM; Vicki Sandler; Tamara Johnson; Sue Mara; Steve Huhman; Roger
Pelote; Rob Nichol; Randy Hickok; Nam Nguyen; Jim Crossen; Jeff Dasovich;
Janie Mollon; Jack Pigott; Greg Blue; George Vaughn; Gary Ackerman; Ed
Cazalet; Denice Cazalet Purdum; Curtis Kebler; Curt Hatton; Corby Gardiner;
Charles Miessner; Carolyn Baker; Bill Ross; Karen Shea; Max Bulk
Subject: CRITICAL!! IMMEDIATE REVIEW NEEDED

THE COMMISSION HAS ISSUED A REVISED DRAFT OF THE BARNETT DECISION TODAY
WHICH RETROACTIVELY SUSPENDS DIRECT ACCESS TO JULY 1.

The cover letter states as follows:

"This version differs from the draft mailed on August 15, 2001 in several
ways. First, the effective date of the suspension has been changed from
September 1, 2001 to July 1, 2001 (as proposed in the draft mailed June 15,
2001). Second, the draft decision clarifies that customers who have executed
direct access contracts prior to July 1, 2001 may continue to receive power
from electric service providers for the initial term of the contracts.
Several other editorial and explanatory changes have also been made.

Assembly Bill No. 1 from the First Extraordinary Session (AB1X) requires
that direct access be suspended until the Department of Water Resources no
longer supplies power to the customers of the three largest regulated
electricity companies. It directs that the Commission determine the
effective date of the suspension. In order to reduce the possibility of harm
to customers and to resolve potential conflict, parties should comment on:
(1) whether AB1X suspends the entire direct access program, including all
transactions under that program, (2) how the Commission can comply with AB1X
if it exempts written contracts for direct access executed before July 1,
2001 from the suspension, and (3) whether July 1, 2001 is an appropriate
date for the suspension......Comments on the draft decision are permitted.
Those comments are to be electronically served on the service list (for
those who have electronic addresses) no later than 10:00 a.m. on September
4, 2001, and shall be filed with the Commission by 5:00 p.m. on that date."

The specific wording in the Decision is:

"The Legislature has directed this Commission to suspend direct access until
DWR no longer procures power for the retail end-users, and we find it should
be suspended effective July 1, 2001. The Legislative direction is clear;
and the suspension should apply to SCE, Pacific Gas and Electric Company
(PG&E), and San Diego Gas & Electric Company (SDG&E). In the interest of
providing cost stability for current direct access customers, written
contracts for direct access signed before July 1, 2001 are exempt from the
suspension for the initial term of the contracts."

It also provides that:

"In comments on the draft decision, several parties questioned the need for
the Commission to implement the legislative suspension of direct access as
soon as July 1, 2001. By the draft decision mailed for comment to the
parties on June 15, 2001, market participants were provided notice that
direct access would be suspended as of July 1, 2001. The Commission
postponed its consideration of the draft decision. However, we do not
change the effective date of the suspension. The underlying legislation was
introduced on January 3, 2001, enrolled and sent to the Governor on February
1, 2001, and signed by the Governor the same day. Market participants have
now had eight months since then to prepare for this event. We do not wish
to reward customers who have switched to direct access since July 1, 2001 in
the hope that we would change the effective date of the suspension when this
switch could disadvantage customers who continue to receive bundled service
from the utility."

The decision also states that no parties have raised any factual issues
which would justify hearings, which presumably, although not explicitly,
disposes of the joint AReM/WPTF filing. I presume we will want to file in
strong opposition. Suggestions on strategy? It might be a good idea to
have a conference call on this and get started immediately with raising a
movement to counter this.

Dan

Law Offices of Daniel W. Douglass
5959 Topanga Canyon Blvd. Suite 244
Woodland Hills, CA 91367
Tel: (818) 596-2201
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