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Enron Mail |
I think there is only one point of view. We should defend Annex V. We want =
to=20 preserve US$ 60 million in EBITDA for Elektro in 2001 Luiz Travesso (AES) was quite aggressive last Saturday in trying to convinc= e=20 me otherwise. Needless to say, he did not.=20 My view was to defend contract sanctity, which for him is a [minor] detail.= =20 He screamed loudly and swore to God he was not going to pay if Tiete gets= =20 short. I said he would better discuss this issue in court, as opposed to=20 killing the messenger. Demostenes (AES) defended the idea that ANNEX V is a risk sharing mechanism= =20 between Gs and Ds and because of this those should sit down again and agree= =20 on a new risk allocation mechanism. This is wrong. I helped design Annex V= .=20 The only reason why ANNEX V is there is to mitigate the isk for generators,= =20 not distributors. (statistically, a generator will not able to deliver its= =20 assured energy in 5 out of 100 years) Any amendment to Annex V will push=20 risks/costs back to Elektro. The argument that rules are being changed is weak. No rules are being=20 changed. Annex V was part of the initial contracts and prices accordingly.= =20 When Luiz Travesso replied that he overvalued Tiet during its privatization= ?because he did not take Annex V into account I expressed my sympathy. I = told ?him to hire more competent investment banks next time. ??We should no= t fall into the trap of killing Annex V because all generating ?companies w= ill be bankrupt, as Luiz claims. ??LM?????Orlando Gonzalez?05/19/2001 09:32= AM?To: sergio.assad@enron.com?cc: Luiz Maurer/SA/Enron@Enron, Fred Sampaio= /SA/Enron@Enron, Joao Carlos ?Albuquerque/SA/Enron@Enron, Joe Kishkill/SA/E= nron@Enron, Jose ?Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT ??Subject: Re= : Generators want to kill Annex V ??After today's round of meetings please= schedule a call tomorrow to review ?Enron's position on all these point= s. Sergio Please coordinate and ask ?Cristina to set up. I suggest mid mo= rning on Sunday so we have time to ?adjust. I do not want to defend two or= three points of view on the same ?subject as Enron.????Luiz Maurer?18/05/2= 001 22:21?To: Debora Klinger/SA/Enron@Enron?cc: Sergio Assad/SA/Enron@Enron= , Fred Sampaio/SA/Enron@Enron, Joao Carlos ?Albuquerque/SA/Enron@Enron, Orl= ando Gonzalez/SA/Enron@Enron, Joe ?Kishkill/SA/Enron@Enron, Jose Bestard/EN= RON_DEVELOPMENT@ENRON_DEVELOPMENT ??Subject: Re: Generators want to kill An= nex V ??Debora??Good points.??Economic Equilibrium. You are right. We can = claim it. However, it may be ?virtually impossible to claim the opportunity= cost of a foregone long ?position. I would not take this risk.??Your state= ment that ANEEL has no power to change Annex V makes me feel more ?conforta= ble. It makes me believe that the right way of approaching the issue ?is to= prepare a position paper on Monday and to deliver/explain it directly ?to = Minister Pedro Parente. No need to spend time on consensus building on ?iss= ues which are "zero sum game" by nature (two years of COEX have taught me ?= this lesson). Let's preempt the issue by being faster and smarter. ??LM??= ??=09Debora Klinger?=0905/18/2001 09:46 PM?=09?To: Luiz Maurer/SA/Enron@Enr= on?cc: Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlo= s ?Albuquerque/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron, Joe ?Kishki= ll/SA/Enron@Enron, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT ??Subje= ct: Re: Generators want to kill Annex V ??Maurer,??This is a very importan= t issue. Although in case of loss to Elektro, we would ?always be eligible = to claim for the reestablishment of the economic-financial ?balancing of th= e concession agreements, we would be, with no doubt, in a ?better position = in case we can maintain the Annex V.??Regarding the ANNEL sympathy towards = generator=01,s pressure, I don't believe ?ANEEL has the authority to interf= ere in a duly executed agreement, as it is a ?perfect legal act ("ato jur?d= ico perfeito"). Only the Union is competent to ?intervene in such acts, bas= ed on the public interest and the social well ?being.??I will work hard on = the analysis of the matter and come back with further ?comments.??Thanks,?D= ,bora?????Luiz Maurer?05/18/2001 09:02 PM?To: Sergio Assad/SA/Enron@Enron, = Fred Sampaio/SA/Enron@Enron, Joao Carlos ?Albuquerque/SA/Enron@Enron?cc: Or= lando Gonzalez/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Jose ?Bestard/E= NRON_DEVELOPMENT@ENRON_DEVELOPMENT, Debora Klinger/SA/Enron@Enron ??Subject= : Generators want to kill Annex V??The rumor mill says that generators want= to revoke Annex V. No surprise. The ?bad news is that it seems that Aneel = likes the idea.??This may represent a US$ 60 million loss to Elektro, only = in 2001. ??Distribution companies are [aparently] against this measure. How= ever, D/Cs is ?short position will [likely] applaud the idea (to avoid cost= ly exposures in ?the MAE)??An Abradee group was created to think about the = issue. Joao and Fred will ?participate tomorrow.??A few supporting argument= s.??1) Contract sanctity. Why changing the rules in the middle of the game = if ?Annex V was designed specifically to deal with rationing conditions? ??= 2) More subtle argument. The risk of being exposed is the only economic ?i= ncentive for a D/C to reduce its load. Otherwise, we will have a classical= ?"free ride" problem: D/Cs will not put any effort to reduce their ?loads/= revenues and will advocate for an ex-post adjustment on ICs based on ?verif= ied load reduction. We can build a case that in the absence of this ?exposu= re, D/Cs will have no incentives to work hand in hand with their ?clients t= o foster load reduction and the whole program will fail.??Debora is working= on the legal aspects of Annex V, taking into account the ?new MP. Sergio h= as talked to a few lawyers to get their views/written ?opinions.??What abou= t writing a letter to Pedro Parente as Enron, exploring those issues ?and e= xplaining why Annex V is so important to the success of the whole ?program?= (the free ride issue)??LM???????????
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