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< -----Original Message----- < From: MDay < Sent: Friday, May 11, 2001 3:27 PM < To: 'Kristen Bird'; 'awu@quinnemanuel.com'; 'Richard.Sanders, Enron'; < 'Robert.C.Williams@ENRON.com' < Cc: JBennett < Subject: Direct Access Legislation and the impact on Settlement < Discussions with UC/CSU < < Richard Sanders and Bob Williams asked that I provide the following brief < memo in order to summarize wherer the legislative efforts are at this time < and how they might impact settlement discussions. < < With the close of the first extraordinary session today, a second < extraordinary session will open on Monday and all the existing but < unpassed bills will be reintroduced--so we are told. That means there < will continue to be at least 2 bills which would substantially protect the < rights of customers to choose direct access, although both contemplate < that under varying circumstances the customer could be required to pay an < exit fee. < < What is relatively likely is this: < < A direct access bill will pass this session. It will likely create the < following situation: < < Any customer who has not been on direct access continuously since before < January 17, 2001 will have used some power purchased by DWR while being < charged bundled utility rates far lower than the actual cost. If these < customers (like UC) eventually elect to return to direct access they WILL < be required to pay the shortfall that has accrued while they were on < bundled service. < < Other stranded costs which may be incurred by DWR after the customer < leaves bundled service for direct access may also be passed on in an exit < fee. This would include stranded contract costs if DWR has contracted for < more long term power than it has customers, as well as any costs related < to the bond financing intended to pay for the long term power contracts. < We HOPE that the legislation will have a provision excusing the customers < from such an exit fee if DWR has not purchased all the net short power by < long term contracts and DWR can match its supply to the new lower demand < simply by reducing daily spot purchases. < < UC would potentially face the first type of exit fee in any event, it may < face the second, although there is a possibility of a short "open < enrollement" period following passage of the bill, which would allow < customers to switch to DA immediately without paying the second type of < exit fee. < < There may be other exceptions to the exit fees for customers who install < self generation or distributed generation. This might affect a few UC < campuses, but not all. < < At least one of the bills might give the CPUC enough discretion to permit < it to impose onerous conditions on direct access and thereby prohibit it. < However, this provision is strongly opposed by many customer groups and we < believe it can be defeated. < < We do not know when the direct access legislation will be adopted. We < hope within the next month. We will keep you advised, and please feel < free to call for an update at any time. < < Mike Day
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