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Enron Mail |
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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Dasovich, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JDASOVIC< X-To: Tribolet, Michael </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mtribole<, Mellencamp, Lisa </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Lmellen<, Mara, Susan </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Smara<, Shapiro, Richard </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Rshapiro<, Steffes, James D. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jsteffe<, Curry, Wanda </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Wcurry<, Huddleson, Diann </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=42fc33c8-1b17856e-86256583-4c4c89< X-cc: X-bcc: X-Folder: \JSTEFFE (Non-Privileged)\Steffes, James D.\California Issues X-Origin: Steffes-J X-FileName: JSTEFFE (Non-Privileged).pst Edison has dripped out information over the last 48 hours that reveals what the team had anticipated for some time: Edison will pay ESPs what they are owed w.r.t. the negative CTC when they pay everyone else ("sometime in Q1'02"). However, Edison has told us and will tell ESPs today that they intend to very aggressively push the PUC to charge DA customers for "their fair share of the PX credit," since in their view DA customers (through the negative CTC) "contributed to the undercollection no more and no less than bundled customers did." They claim they are "on the side of the angels" because it is an "equity" issue, and that allowing DA not to pay would be a massive "jailbreak." Their calculation is simple: If DA represents 10% of the load, then DA is responsible for paying down 10% of the undercollection. Edison wants the undercollection recovered over the period of its settlement (they claim that, based on their calculations, they can recover it over 2 years). In short, Edison is zero-ing out payables tied to negative CTC by forcing ESPs/DA customers to pay it back through rates over the next two years. In a conversation yesterday, Edison said that it is not attempting to link the two. That is, they are not making payment of PX-credit-related debt on agreement by ESPs to pay a portion of Edison's undercollection through rates over the next two years. Presumably, in this way, Edison can say, "We said that we would pay our creditors, and we did. It was the PUC who sets the rates and decided to claw back by charging ESPs/DA customers as part of the normal course of fulfilling its regulatory responsibilities." Implications Clearly negative from the perspective of expeditiously recognizing earnings for amounts Edison says it will pay us when it pays everyone else in Q1. Equally important, it may increase significantly the risk of recognizing earnings for what PG&E will pay us. If the PUC addresses whether ESPs/DA customers should contribute to pay down Edison's undercollection, it will likely also want to address the issue for PG&E. We need to discuss the extent to which the PUC can meddle with PG&E in this regard given that PG&E is pursuing its work out through bankruptcy. Impact on tomorrow's meeting: I still think it is constructive to meet face-to-face with Edison tomorrow, but wanted to give folks the option of doing it by conference call: We still have to determine whether we have agreement on what they owe us. This includes calculations up to Jan. 17; the period from Jan. 17 to when we put our customers back on bundled service; and the period since they've been returned to DA status. Since Edison claims they will pay everyone at the same time--sometime in Q1'02--there seems to be some value in determining what that number is, and getting the agreement in writing. Second, it would be useful to explore with Edison why they have chosen to take an extreme, hardball stance on the issue (given that the PX Credit issues represents about $243MM/~$6B = 4-5% of the total debt). In addition, it would be useful to let Edison know that they are in for a very long, protracted litigation struggle if, once they've paid us, they attempt to take it back through ratemaking shenanigans at the PUC. In yesterday's conversation with Fielder, I told him that Edison is ensuring World War 3 and that they'd better prepare for it if they intend to pursue this unreasonable approach. However, I tried to keep things as cordial as possible in an effort not to close down communications altogether. Other ESPs and DA customers are likely to oppose Edison's proposal. Sue's informing the ARM coalition of what Edison's up to.
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