|
|
Enron Mail |
Gerald,
I intended to send you a copy of the attached. Bill -----Original Message----- From: Bill Bryant Sent: Monday, November 05, 2001 4:30 PM To: Marchris G. Robinson (E-mail) Subject: Gulf Rate Docket - Weather Derivatives MR, With information about Harry's testimony in Georgia and about the existing Gulf revenue sharing program, I've changed my opinion about whether Enron should intervene in the Gulf docket. Enron may benefit from intervening in the Gulf rate docket both by selling the Florida Commission on its weather derivatives and by dissuading the Commission from raising the retail rates charged to ECS/EES. The Commission's order in the territorial dispute is due December 3. To avoid any adverse inferences in that docket as a result of intervening in the Gulf rate docket, we should not file the intervention until after that time. There is a preliminary issue identification meeting in the Gulf rate docket on Nov. 7, but this may be moved because a meeting in the RTO docket has just been scheduled for the same time. We will attend both meetings. Enron likely has standing to intervene in this docket. Both the Florida Cable Telecommunications Association and the Florida Industrial Power Users Group (which has no significant member in Gulf's territory) have been granted standing to intervene on the simple grounds that they are retail customers of Gulf and electricity represents one of their largest variable costs. Gulf has not objected to the petitions of any persons seeking standing. The Federal Executive Agencies also have standing to represent four military bases in Gulf's territory. The existing and soon expiring revenue sharing mechanism makes this docket ripe for pitching weather derivatives. If we petition (after Dec. 3) and are granted standing to intervene, it will be necessary to prepare and file Harry's direct testimony and exhibits by December 21. The schedule of remaining activities in the Docket is: issue statements due: Jan. 2 second issue identification meeting: Jan. 14 Prehearing statements: Jan. 24 Prehearing conference: Feb. 8 Hearing: Feb. 25 - Mar. 1 Briefs: March 15 Natalie spoke to the Rates and Tariffs Division at the PSC about the usage characteristics of the military bases. As we discussed, I was curious about whether they were also designated PX (Large High Load Factor Power Service). Because a customer's designation is Gulf's proprietary (and very guarded) information, one cannot know for sure whether the military bases have the same designation as ECS. However, Dave Wheeler, asst. director of rates, said the military bases are probably designated LP (large power service) and not PX. PX designation applies for customers whose demand is 7.5 MW (7,500 kw), with an annual load factor of at least 75%, at any one meter. The military bases take delivery at multiple delivery points and probably have different rates at the different delivery points. They likely do not take more than 7.5 MW at any one point. The LP or LPT (large power time sensitive) designation is more likely because that applies to customers with a demand of 500 kw, which the military bases probably have at various delivery points. Still, it is very likely that the rate increase, as proposed, does not affect the federal executive agencies. Dave Wheeler also guaranteed that Gulf's current rate proposal (that leaves the PX rate unchanged) will not be approved by the Commission. He said that they will not permit a rate increase that affects only small customers. Bad politics. The level of effort required for this intervention will be greater than the RTO Docket. There we had only to endorse positions asserted by others. Although here we will merely be endorsing Gulf's rate methodology, we will also be introducing the weather derivatives concept as relevant to Gulf's rates. Gulf may be so excited by the potential of weather derivatives that they carry the burden by themselves. However, we can't count on that until we are sure that they understand and can sell the product to the Commission and staff. Therefore, the Enron budget for this intervention will have to assume that Enron carries the burden. We will be expected to advocate and participate fully. Based on these assumptions I think it likely that the KKH fee expense for full participation in this Docket will be about twice that in the RTO matter. In the RTO Docket we billed Enron $27,204 through October (after writing-off $4,207 at your request). Therefore, a planning number for this Docket (no guarantee that it will be limited to this amount) is $50,000. Let me know what you decide. Bill
|