|
|
Enron Mail |
Jeff -- good wrap-up. May I forward to MKM and Drew?
Jeffery Fawcett 11/29/2000 10:58 AM To: Steven Harris/ET&S/Enron@ENRON, Kevin Hyatt/ET&S/Enron@Enron, TK=20 Lohman/ET&S/Enron@ENRON, Christine Stokes/ET&S/Enron@ENRON, Michelle=20 Lokay/ET&S/Enron@Enron, Lorraine Lindberg/ET&S/Enron@ENRON cc: Susan Scott/ET&S/Enron@ENRON=20 Subject: Proposed Decision The GD article today regarding the proposed decision is a pretty good Reade= rs=20 Digest version of the order. Susan and I spoke with Jeff Dasovich and Mark= =20 Baldwin yesterday, and the consensus of those conversations was that=20 Transwestern should remain involved in this proceeding only for purposes of= =20 implementation/documentation. Jeff offered that he might send a letter to= =20 Governor Gray's office expressing both dismay and indignation that the CPUC= =20 didn't complete their task and warning of the adverse outcome to California= =20 ratepayers if these more modest reforms are approved. He may ask the other= =20 Comprehensive Settlement parties to join in signing the letter. Susan, Mar= k=20 and I spoke about this idea later, and we've got some reservations about TW= 's=20 role in admonishing the CPUC. We should probably wait to see this letter= =20 first before committing to anything. Bilas draft cautious toward SoCal competition Mindful of the current chaos over energy markets in the state, California= =20 Public Utilities Commissioner Richard Bilas has recommended the adoption of a much more=20 moderate approach to promoting competition on Southern California Gas=01, (SoCal) sy= stem. In his draft decision, Bilas advised the commission to reject the unbundlin= g=20 of intrastate transmission and instead approve the first settlement filed in the case, th= e=20 less far-reaching Interim Settlement (IS), submitted in December 1999. SoCal, San Diego Gas a= nd=20 Electric and other parties filed two more settlements after the IS, reaching a=20 comprehensive agreement in April this year. But since then, gas and power prices skyrocketed in the state, prompting a= =20 consumer backlash and giving competition a bad name. The draft language notes that= =20 the first interim settlement was supported by more customer groups than the later agreements. Recent events =01&lead us to conclude that the centerpiece of this=20 investigation, the unbundling of intrastate transmission and the implementation of a system of firm,=20 tradable intrastate transmission rights, should be delayed,=018 according t= o the=20 draft order. =01&This unbundling is the basis of the [comprehensive settle= ment]=20 and we cannot approve it. We do not, however, wish to commit to paralysis= =20 until 2006, as the [post-interim settlement] would have us do. Accordingly,= =20 we believe Californians are better served at this juncture by the adoption,= =20 with modifications, of the IS.=018 The biggest change to the IS in the draft is the rejection of an automatic= =20 capacity expansion by SoCal at Wheeler Ridge, Calif., with rolled-in rates if certain criteria= =20 are met. El Paso Energy had objected to the provision in the IS that would have allowed SoCa= l=20 to automatically expand capacity at Wheeler Ridge by 100 million cfd if a certain number of= =20 curtailments oc-curred. =20 El Paso objected to forcing all shippers to pay for the expansion at Wheele= r=20 when only certain customers would benefit. =20 The draft says SoCal can file a separate application for the Wheeler Ridge= =20 expansion, but approval would be conditioned on a traditional hearing proce= ss. The draft decision would also: =01=07 End SoCal=01,s current =01&windowing=018 process, which limits shipp= ers=01, ability to=20 change nominations for deliveries between receipt points on the system. It is replaced with an= =20 announced daily calculation of capacity available at each receipt point; =01=07 Establish Hector Road as a formal receipt point for nominations; =01=07 Institute an operational flow order (OFO) procedure. Provides a foru= m for=20 more changes in OFO procedures if excessive OFOs are made; =01=07 Set up =01&pools=018 of gas on the SoCal transmission system that ar= e intended to=20 increase the liquidity of gas trading; =01=07 Make changes to balancing rules, while retaining the current 10% mon= thly=20 imbalance tolerance; =01=07 Make SoCal=01,s own gas acquisition unit subject to the same balanci= ng rules=20 and penalties as all other shippers; =01=07 Allow some limited imbalances trading, as well as the right to assig= n and=20 reassign unbundled storage contract in a secondary market, with a SoCal electronic bulletin=20 board set up for it; =01=07 Unbundle from core transportation rates the storage capacity cost ex= ceeding=20 that required for core minimum reliability; and =01=07 Provide for rate recovery of up to $3.5 million in implementation co= sts. In addition, the draft would unbundle core interstate transportation from= =20 rates, eliminate core contribution to noncore interstate transition cost surcharges, elimina= te=20 the core subscription option as well as the caps for core aggregation programs. The threshold fo= r=20 participating in core aggregation is reduced, and billing options are offered to core=20 aggregators. Bilas=01, draft also warned that the commission may come back in two years = to=20 open another investigation into gas competition, taking into account any changes in mark= et=20 conditions. Bilas gave a little more insight into his decision in the text of the draft= . =01&The cost of gas as a commodity has vastly increased at the border, show= ing a=20 differential between the basin and border prices that is more than the cost of transport= =20 and related services; we question whether there will be an opportunity for discounting by markete= rs=20 if more competition is allowed,=018=20 Bilas wrote in the draft decision. =01&With half the state already committ= ed to=20 a restructured competitive natural gas industry, it suddenly seems as if the= =20 benefits of such re- structuring to enhance competition are speculative, particularly at this=20 time. With one leg in the water, the current has switched direction and it will be difficult, if not= =20 foolhardy, to reach our goals by forging ahead. =01&We choose to take a cautious approach again,=018 the draft continues. = =01&Rather=20 than proceeding to unbundle transmission in Southern California now, we approve, with=20 modifications, the settle- ment suggesting smaller steps towards a competitive market. Additionally, w= e=20 unbundle core interstate transmission and once again urge the Legislature to pass consume= r=20 protection legisla- tion aimed at unregulated marketers while we facilitate growth in core=20 aggregation programs.=018 The CPUC would not rule out the unbundling of intrastate transmission and= =20 other restruc- turing in the future =01&but believe that at this point in time the certain= =20 benefits do not outweigh the costs to most ratepayers.=018 All drafts must be filed 30 days before the meetings at which they will be= =20 discussed. The draft decision is currently on the agenda for the CPUC=01,s Dec. 21 meeting= .=20
|