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Enron Mail |
Elizabeth,
As punishment for ignoring its pleas for price controls, last week the CPUC issued an order requiring the California IOUs to develop market-based rate tariffs for their Federal customers, e.g., military installations, federal agencies. The CPUC thinks that by exposing the Federal government to current market prices it will cause Bush/Cheney to rethink price caps. In any case, while I think this proposal is unconstitutional under the principles of the McCulloch v. Maryland case (states can't tax the federal gov.), I also think there might be a business opportunity here for EPMI in helping Federal enclaves lock in a fixed price for electricity. In other words, offer these Federal entities a fixed-for-floating deal. Stewart Rosman suggested that the best way to handle this would be to offer the Federal entities a purely financial deal. The Federal entities would continue to receive physical delivery from their utility but could lock in a fixed rate through a financial swap. Before we get too far down the road on this, what are your thoughts? Can the Federal gov., besides the U.S. Treasury, enter into derivatives contracts? While financial deals would appear to be superior because they involve less ongoing work (no physical scheduling or real time support), are there benefits to a physical transaction? Any other ideas? Steve
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