RE: Rock Tenn CoGen Facility

Bob,

Per Section 25.345 © of the Electric rules, if the Cogen facility has a rated capacity of 10MW or less, it qualifies as "eligible generation" under Section 25.345©(B). In Section 25.345(i), an end-user whose actual load is lawfully served by eligible generation and who does not receive any electrical service that requires the delivery of power through the facilities of a T & D utility is not responsible for payment of any stranded cost charges.

Also a retail customer whose actual load is lawfully served by eligible generation who also receives electrical service that require the delivery of power through the facilities of a T & D utility, shall be responsible for payment of stranded costs charges based solely on the services that are actually provided by the T & D utility.

The short answers to your questions are:
1. Rock Tenn will not be required to pay CTC charges if its rated output is less than 10MW, and it does not take any T&D services from TXU.
2. If Rock Tenn uses T&D facilities occasionally, it will pay CTC only for the actual services it receives from the T& D utility.
3. If Rock Tenn completely disconnects from the utilities T&D services, it will be in the same position as in 1 above. It will not be required to pay the CTC.
4. At this time, TXU does not have a financing bond issued by the Commission. In an earlier order, the Commission approved $363 MM for TXU, but that order was appealed, and the Supreme Court remanded the case to the Commission for rehearing. With information that is available to it at this time, the Commission does not think that TXU has stranded costs. I believe TXU will disagree. It will be interesting to see how this plays out.

Please call with any questions,
Gloria
-----Original Message-----
From: Anderson, Bob
Sent: Friday, November 16, 2001 3:47 PM
To: Ogenyi, Gloria; Collins, Patricia
Cc: Rathvon, Richard; Sparling, Jay
Subject: RE: Rock Tenn CoGen Facility

Gloria,

Per the information you provided Trish (below) concerning CTC in TX, the cogen design is less than 10MW. Therefore, what are the "DG rules" and how do these rules impact Rock Tenn's requirement to pay CTC? What if they only use the utility's T&D facilities occasionally when the cogen is not running? What if they completely disconnect from the utility's T&D facilities, as if they are no longer in business? Is TXU expected to have significant stranded costs?

Thanks, Bob

-----Original Message-----
From: Sparling, Jay
Sent: Wednesday, November 07, 2001 12:49 PM
To: Anderson, Bob
Cc: Rathvon, Richard
Subject: Rock Tenn - Will pay CTC charges FW: CoGen Facility

---------------------- Forwarded by Jay Sparling/HOU/EES on 11/07/2001 12:47 PM ---------------------------
From: Patricia Collins/ENRON@enronxgate on 11/07/2001 10:34 AM
To: Jay Sparling/HOU/EES@EES
cc:
Subject: FW: CoGen Facility

Here is the information for Rock Tenn.

Thanks,

Trish

-----Original Message-----
From: Ogenyi, Gloria
Sent: Wednesday, November 07, 2001 10:09 AM
To: Collins, Patricia
Subject: FW: CoGen Facility

-----Original Message-----
From: Ogenyi, Gloria
Sent: Wednesday, November 07, 2001 8:43 AM
To: Collins, Patricia
Subject: FW: CoGen Facility

-----Original Message-----
From: Ogenyi, Gloria
Sent: Wednesday, November 07, 2001 8:38 AM
To: COLLINS, PATRICIA
Subject: FW: CoGen Facility

Trish, I sent this to you yesterday, but apparently, it went to the wrong address.

-----Original Message-----
From: Ogenyi, Gloria
Sent: Tuesday, November 06, 2001 5:16 PM
To: COLLINS, PATRICIA
Cc: Hamb, Edward; Kingerski, Harry; Ryall, Jean
Subject: CoGen Facility

Trish,

Per Chapter 39.252(b)(1) of the Texas Utilities Code, recovery of stranded costs by an electric utility shall be from all existing or future retail customers within the utility's certificated territory as it existed on May 1, 1999. A retail customer may not avoid CTC's by switching to a new on-site generation. New on-site generation is defined as an electric generator generating more than 10 MW, capable of being lawfully delivered to the site without use of the utility T & D facilities, and which was not fully operational prior to 12/31/99. (If the self-gen facility's output is 10 MW or less, it will be governed by the DG rules.)

If a customer commences taking energy from a new on-site generation (with output of more than10 MW ) which materially reduces or eliminates the customer's use of energy delivered through the utility's facilities, the customer shall pay an amount each month computed by multiplying the output of the on-site generation by the CTC which is in effect during the month.

Any CTC assessed on such a self -gen facility after it becomes fully operational, shall be included only in those tariffs or charges associated with services actually provided by the T & D utility to the customer after the facility has become fully operational. So if no services actually provided, there should be no payment.

Please call with any questions,
Gloria