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Enron Mail |
An update from the meeting we had with SCE on August 9: SCE said that it h=
as TEMPORARILY stopped charging CTC because it doesn't know what to charge = for DWR. Meanwhile, it continues to keep track of the dollar flows through = the TCBA and the new account set up for DWR. Once the CPUC decides on the = DWR's revenue requirement, SCE expects that it will charge generation-relat= ed CTC again. There is also continuing CTC related to QF contracts that wi= ll return (and goes beyond 3/31/02) once QF contracts are above the "market= ". SCE is also considering filing a petition with the CPUC to get guidance= on all these matters. Once the CPUC rules on SCE"s advice letter approache= s, SCE plans to go back and re-bill begining with Jan 18 (it used some diff= erent PX credit approaches early on and switched to this approach for bills= going out June 4). I didn't ask the question about calculating CTC back to= Jan 18. I guess if the DWR rev req is retroactive and leaves room for CTC= , they will bill it. The other twist I had forgotten about is that they ha= ve a one-half cent charge added to the embedded gen rate of 10.27 cents (ma= king it about 10.77 cents) that collects the $400 million that was uncollec= ted while the CPUC played around with a rate design for the three cent surc= harge. The half cent addition is for 12 months. -----Original Message----- From: =09Curry, Wanda =20 Sent:=09Friday, August 10, 2001 8:51 AM To:=09Swain, Steve; Mellencamp, Lisa; Steffes, James D.; Ruffer, Mary Lynne= ; Tribolet, Michael; Huddleson, Diann; Mara, Susan Cc:=09Gorny, Vladimir; Bradford, William S. Subject:=09Summary or PX Credit Proposals I wanted to summarize the conclusions from our meeting on Wednesday, August= 8th. Please let me know if I have misrepresented anything. =20 Below is a description of four proposals which may help resolve issues asso= ciated with PX credits or mitigate Enron's exposure to PX credits. Steve S= wain has the responsibility for evaluating each proposal, and his goal is t= o have recommendations for EWS/EES management on August 14th. =20 Current Issues: 1) The methodology for calculating PX credits after January 18 is undeterm= ined (SCE and PG&E have implemented different methodologies) 2) Applicability of the 1 cent surcharge to direct access customers (PG&E = is passing thru to DA customers, SCE is not) 3) Impact to Enron if FERC implements retroactive changes to the CAL PX = clearing prices from Oct 2, 2000 thru January 18th which result in revised = PX credits=20 4) Recoupment of outstanding PX credits against future payments for T&D 5) Uncertainty surrounding future tariffs (CTC or other pass through charg= es), making it difficult to hedge price risk in forward positions 6) Large uncollected receivables from both PG&E and SCE The four proposals are as follows: SCE Recommended Approach=20 =09This approach assumes no PX (or PE) credit effective from January 18, 20= 01 forward. Mary Lynne and Diann will work with Steve to quantify the =09g= ross PX receivable (as billed by each utility) which would be reversed. = This approach will ensure that only charges for T&D (no =09generation/comm= odity costs, CTC charges, or surcharges for CDWR, including the 1 cent) wi= ll be applicable to Direct Access customers. =20 =09Enron would request the following: =091) Assurances that no surcharges for CDWR will be passed through to EES = or EEMC =092) SCE will support our historical PX credit receivable as an "allowabl= e claim" at a minimum and would provide additional credit support if possib= le. =20 =093) PG&E will support Enron's recoupment argument=20 =094) Both utilities will immediately reinstate the Cumulative Credit Balan= ces on utility bills and agree to a netting arrangement at the utility pare= nt =09level.=20 =095) Both utilities agree to not adjust the historical PX credits, if/when= an adjustment of historical PX clearing prices is mandated by FERC=20 =09Other consideration: =09Ability to hedge price risk in the retail portfolio, without concern re = CTC or other surcharge amounts. =20 PG&E Recommended Approach =09This approach assumes the PX calculation methodology effective January 1= 8, 2001 would include an "avoided cost" component. This avoided cost =20 =09component would include, owned generation, QF purchases, actual CDWR pur= chases for the utility, bilateral purchase contracts, and ISO purchases. = =09This resulting "avoided cost" would be used in lieu of the PX clearing p= rice in the old PX formula through March, 2002. If the actual CDWR purch= ase =09costs are not included, then the surcharge (along with the embedded = gen costs) should be included in the calculation. =20 =09 =09Enron would request the following: =09Same as above =09Other Consideration: =09Enron would continue to be exposed to "price" risk attributable to the = actions of the utility at a minimum through March, 2002. This would hamper= =09Enron's ability =09to hedge the positions in the retail portfolio.=20 Hybrid Approach =09This approach assumes that the PG&E approach is applicable from January = 18, 2001 through September 1, 2001 and that the SCE approach is =09applicab= le from September 1st forward. This approach might be necessary as a comp= romise for both utilities to provide their support of the proposal.=20 =09Enron would request the following: =09Same as SCE and PG&E approach =09Other considerations: =09Ability to hedge price risk in the retail portfolio, without concern re = CTC or other surcharge amounts. =20 Enron Model=20 =09This approach assumes we continue to support a market based (NP15 and SP= 15) calculation methodology for the PX credit. =20 =09Enron would request the following: =09It is unlikely we would receive any level of cooperation from either PG&= E and SCE. The consensus from legal, regulatory, and EWS commercial is = =09the probability of getting this approach approved is low. However, und= erstanding this amount, at a minimum, can be used to help defend the "value= "=09Enron is foregoing in order to reach agreement with the utilities and C= PUC. =09Other considerations: =09This approach would give Enron the ability to hedge "price" risk, but th= is is somewhat offset with incremental credit exposure associated with the= =09actual collection of the PX credit. Again, please let me know if this does not clearly represent what we conclu= ded in Wednesday's meeting. Thanks, Wanda Curry
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