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Enron Mail |
Article as per my voice mail.
Thanks Elizabeth 36349 ---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 11/29/99 09:47 AM --------------------------- From: Christi L Nicolay on 11/24/99 04:50 PM To: "Betsy Carr" <bcarr@bracepatt.com< @ ENRON cc: Elizabeth Sager/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT Subject: Re: Christi, this is generating a lot of interest! Elizabeth Sager has been working on the EEI contract for Enron. "Betsy Carr" <bcarr@bracepatt.com< on 11/24/99 03:48:07 PM To: Christi L Nicolay/HOU/ECT@ECT cc: Subject: Christi, this is generating a lot of interest! Christi, this is generating a lot of interest! < By Mark Golden < < A Dow Jones Newswires Column < < NEW YORK (Dow Jones)--"Et tu, Sonnet?" < < The Edison Electric Institute unveiled Wednesday a standardized master < agreement for trading power, but there's already a standard contract < - the one written by the Western Systems Power Pool. < < There are several ways to characterize this battle: East versus West; < power < marketers versus utilities; and, even, Southern Co. versus < Southern Co. A power struggle has begun, despite the fact that most < traders, preschedulers and trading managers aren't even aware of the < new contract. < < Southern Co. (SO) Vice President Bobby Campo has been a leader in WSPP < since the organization's inception and has been chairman of its < contract committee for four years. Yet Southern Co. Energy Marketing's < chief counsel, Sonnet Edmonds, is a leader in the rival-contract < faction. < < Will EEI, along with its comrade, the National Energy Marketers < Association, manage to dethrone the WSPP contract or crash? WSPP's < raison d'etre is to manage and promote use of its contract, which is < traded < extensively in the West and has gained proponents in the East. < < "I'm not real excited about it right now," Campo said of the new < contract. < "The EEI contract is being done by contract people and lawyers. < We - operators and power marketers - worked on our contract for years < before we brought in the lawyers. It (the new contract) may die from a < lack of interest from participants, but EEI has the ability to keep it < alive." < < It isn't clear if the big power marketing companies will get the ball < rolling by asking counterparties to switch to the EEI contract. Edmonds < hopes that Southern Co. will do so. < < "Management hasn't given the official word yet, but we participated in < its < development, so I imagine we'll use it at some point," she said. < < Enron Corp.'s (ENE) general counsel also worked on the EEI contract, but < the company hasn't made a decision to actually use it. < < Entergy Corp.'s (ETR) general counsel, Christopher Bernard, led the < effort < to develop the new contract as head of NEM's standardized < contract committee. But Entergy's Jim Kenney is chairman of WSPP's < executive committee. Entergy's power trading managers, meanwhile, < haven't even read the new contract yet. < < Duke Power Co. (DUK), an NEM member, is looking at it, a spokesman said. < Enron and Southern Co. aren't NEM members, though they < serve on its contract committee. < < Several sources said American Electric Power (AEP) has agreed to be the < guinea pig, and plans to switch to the EEI contract with < counterparties on eastern U.S. trades. A spokesman for the utility < couldn't < confirm or deny that rumor because Paul Addis, president of AEP < Energy Services, has imposed a vow of silence on AEP's traders. < < There are elements of the EEI contract that power marketers may like. One < innovation is a new product called "Firm (No Force Majeure)," < which requires the payment of liquidated damages for failure to deliver - < no excuses, no force majeure, just send a check. < < The new contract also has two other firm products. "Firm (Liquidated < Damages)" is closest to the WSPP firm product, but it defines force < majeure more strictly than WSPP. "Firm (LD-System Reliability)" < explicitly < allows a selling utility to curtail deliveries without paying liquidated < damages if necessary to maintain native load. Of particular interest to < traders of eastern U.S. electricity is the fact that the EEI contract < defines what an "into" product is. < < WSPP has debated the introduction of such products, but in the end has < tried to come up with a single, agreed-upon product for trading. < < "EEI has created a lot of different types of firm products, but that can < create problems. Many people have said 'no, we want one firm < product'," said WSPP's counsel, Michael Small, of Washington, D.C., law < firm Wright and Talisman. < < So why didn't the EEI group just work with WSPP to get changes made to < the < existing standard? Too much bureaucracy, according to < Southern's Edmonds. < < "Changes to the WSPP contract require approval from 90% of the members, < after working through the operations committee and the < executive committee. Then the changes have to be filed at Federal Energy < Regulatory Commission," Edmonds said. < < Coincidentally, WSPP's executive committee is meeting Friday in San Diego < to discuss what changes are needed in the definition of its firm < product. Western utilities are pushing hard for "firm" to mean backed up < by < reserves of generating assets or previously purchased power. In < other words, some utilities want to eliminate short positions from power < markets. < < At least one power marketing company, which didn't want to be named, will < switch to the EEI contract if that change gets made to WSPP. < < For the EEI contract to fly, not only will the lawyers at the big trading < companies need to make it their companies' standard, but traders will < have to convince utilities to abandon most, if not all, force majeure < claims. Many municipal utilities and rural electric cooperatives are < forbidden to do so by state regulations. < < For traders, though, the biggest adjustment to make if the EEI contract < does take off will be more social than professional. The semi-annual < meeting of the WSPP's operations committee is as much fun as any blatant < boondoggle should be. The serious work of a handful of < committee members is a small hook on which hangs the revelry of hundreds < of < power marketers, brokers and utility staffers. As it stands, < non-committee members must have a hard time convincing bosses that their < presence is necessary at the meeting. < < How on earth will traders justify going if the WSPP contract is no longer < used? Can EEI throw a good party? And how will the Gucci-loafered < EEI executives from Washington handle $1,000 dares to go naked in a bar? < < Such are the questions now vexing America's electric utilities. < < -By Mark Golden; Dow Jones Newswires; 201-938-4604; < mark.golden@dowjones.com < < Copyright © 1999, Dow Jones & Company Inc
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