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Enron Mail |
FYI.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 04/04/2001 01:20 PM --------------------------- Tom Chapman 04/04/2001 01:15 PM To: Christi L Nicolay/HOU/ECT@ECT cc: Subject: Re: PA wholesale vs. retail prices The short answer is yes. Both Duquesne and GPU have divested their generation assets, and both have already suffered problems with their POLR service. The implicit reason for the GPU-First Energy merger is that GPU has lost hundreds of millions over the last two years (and promises to do so indefinitely without help) providing POLR service. First Energy can offer both hedging help, but generation in off-peak times (only off-peak because of system congestion in PJM). Enron has an opportunity here to do some good things. However, from a credit perspective, we should be aware that GPU is in a risky position. Duquesne divested of their generation selling their assets to Orion/Constellation. In turn, Duquesne contracted with Orion to provide energy to meet their load. As part of this contract, Duquesne did two things that are questionable from a business perspective. When turning over their assets to Orion, they also transferred the FTRs to Orion. Thus, Duquesne's load no longer holds the FTRs making it difficult to hedge transmission risk. Second, Duquesne did not contract for capacity. For this reason, they are having problems joing an RTO because they have no capacity resources, and Orion is holding them hostage over this issue--expecting a large capcity payment. Without some rectification, Duquesne is in conflict with both PJM's rules and PJM West's proposed rules. For this reason, there is an opportunity in this effort. Tom Chapman
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