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Enron Mail |
Angela -
The value proposition for a customer is related to which buckets of cost would be bypassed by switching to DA. If a customer goes DA after August 24, 2001 (based on the discussion about surcharges in the legislation that has only passed the Assembly Energy Committee last night - with still a very low probability of success of being signed by the Governor), the customer would pay for SCE undercollection (PG&E isn't being discussed on this piece), DWR bond costs, and DWR net unavoidable. The hardest piece to calculate - which Belden said on the last call he simply couldn't given the tremendous uncertainty - is the DWR net unavoidable. If the customer has been DA since July 1, the customer could avoid the DWR net unavoidable (but the legislation could change or not pass and the CPUC could do something else). Each customer needs to appreciate this latest information and make a determination about what these amounts will be - the key question I'd ask a customer is that they need to try and keep their options open. Of course, all of this assumes that the CPUC doesn't go back and suspend DA even earlier than July 1 or something else crazy happens - remember this is California. Jim -----Original Message----- From: Schwarz, Angela Sent: Wednesday, August 29, 2001 6:59 PM To: Steffes, James D. Subject: RE: Direct Access EOP has been under contract since July 1, does that make a difference? From: James D Steffes/ENRON@enronXgate on 08/29/2001 05:00 PM To: Angela Schwarz/HOU/EES@EES cc: Subject: RE: Direct Access Thanks for the info. While there may be some differences in presentation, there don't appear to be any basic differences in the analysis. All of the discussions of the legislation need to be aware that the passage is highly uncertain. I agree with the analysis that if you have never been DA and sign up today there is a very large possibility that you will pay a surcharge (assuming the legislation passes). Let me know if there is anything else. Jim -----Original Message----- From: Schwarz, Angela Sent: Wed 8/29/2001 2:02 PM To: Steffes, James D. Cc: Subject: Direct Access ---------------------- Forwarded by Angela Schwarz/HOU/EES on 08/29/2001 02:02 PM --------------------------- Gary Odland 08/29/2001 01:38 PM To: Angela Schwarz/HOU/EES@EES cc: Jeff Gale/HOU/EES@EES Subject: Direct Access Attached is a CA DA brief that Frank received from Les Spahn. Les has opinions that are different from what we have been advising Frank and EOP. I need your opinion on how to address these differences. Thanks. ---------------------- Forwarded by Gary Odland/HOU/EES on 08/29/2001 01:36 PM --------------------------- Frank_Frankini@equityoffice.com on 08/29/2001 11:55:15 AM To: godland@enron.com cc: Subject: Direct Access Gary, I need Enron's comments on this ASAP. ----- Forwarded by Frank Frankini/Engineering/Corporate/Equity_Office on 08/29/2001 11:54 AM ----- "Les Spahnn" <spahnn@hnks.c To: om< cc: Subject: Direct Access 08/27/2001 04:51 PM All: A lot of runors are swirling around. There is legislation pending right now as I write this e-mail. The outcome is uncertain. But here is what I know and what I have been working on for BOMA. First, the CPUC continues to threaten that it will suspend DA on September 6th, including any DA contract signed since last January. The PUC has threatened this several times and has deferred action several times pending action on the issue by the legislature. Even if the PUC were to act, the legislature could override their action with a statute. But I anticipate that they will not act as long as the legislature is actively considering the matter and does something before recessing for the year on September 14th. The real action is in the legislature. There is a comprehensive bill -- SB 78XX, the centerpiece of which is a bailout of Southern California Edison. For DA or anyhting else in the energy arena to happen, the Governor and the Assembly Democratic leadership insist on having a bailout of Edison. Here are the details of the bailout and DA which is linked to it: 1) The state would securitize $2.9 billion in bonds to help SCE pay its debts. Those bonds would be repaid by Edison customers who use 20kW or more in peak daily demand. That would translate to about 0.06 (as in 6/100ths) of a penny per kW. The original proposal was to place the bailout burden only on SCE customers who use 500kW peak demand, which would have been maybe 1.5 cents per kW (since the base would have been much smaller), but we beat that back to the current proposal of 20kW. 2) The Edison surcharge would be non-bypassable. That means that Edison customers are going to pay it whether you get your juice through Edison or from a DA contractor. If anyone is telling you that you can avoid the Edison bailout surchage by going DA they are lying! 3) The bill would permit DA going forward if there is demand (load) which exceeds supply as calculated as follows: DWR contracts + IOU retained generation + IOU long term contracts. If this delta, or headroom exists as of 1/1/03, then, per PUC regs,which are yet to be devloped, the Calif. Energy Commission would periodically permit DA contracts up to the amount of headroom, without the customer having to pay the state an exit fee. (An exit fee is a fee which would otherwise have to be paid to the state by a customer for the customer's proportional share of the state's stranded costs which accrue from power contracts bought by DWR, but for which there is no market.) If no headroom exists, a customer still could go DA, but pay the exit fee to do so. 4) A major issue is what DA would be permitted and what would be suspended. Right now the proposal is to permit all DA contracts that existed prior to 1/17/01 to continue without penalty. It looks like contracts signed between January and June would also be permitted to remain without penalty, but that date is not definite. Contracts signed between June and August 24th would also be permitted, but may have to pay some sort of retroactive exit fee, on a sliding scale, depending on the date they were signed. All DA contracts after August 24th would be subject to the 1/1/03 schedule described in #3 above. In addition to an Edison surcharge for Edison customers, and exit fees for DA customers when no headroom exists, there will be another surcharge for all non-municipal customers who have bought power through an IUO since January 17th. That surcharge would be to payoff $13 billiion in state revenue bonds which would be to repay the state General Fund for power DWR bought since January. Where does BOMA, and the rest of the business community stand on these issues? 1) BOMA has been O.K. with the bond surcharge because every IOU electric customer has been paying subsidized rates for electricity since Jan. 17, when the IOUs became uncreditworthy and DWR started buying spot market power. 2) While BOMA and others are not happy with the price and amount of DWR long term contracts, we understand the state is CURRENTLY on the hook for them, and wants to be held harmless for their costs. BOMA and other business groups are pushing to have as many of those contracts renegotiated or abandoned where possible to make more headroom available for DA without exit fees. 3) BOMA supports another provision of the bill which would rebate any surplus electricity revenues after the first $500 million to ratepayers based on each customers proportional share of consumption and electric rate payments. This provision is designed to soften the rate increases on customers who have experienced rate increases greater than 50% in the last few months. 4) Finally, BOMA is not happy with a ratepayer bailout of Edison. But the Governor seems to want it more than breath and he is strong arming everyone he can see, including all business groups, to help get it enacted. In that light, BOMA supported a position that all ratepayers, residential as well as business pay the debt. The legislature, however, did not want to pass this cost on to residential customers, so then it became a fight over where the consumer threshold would be. As stated above, we have suceeded in getting it as low as 20kW peak demand. (NOTE: There are those that feel it is worth bailing Edison out and getting them creditworthy in order to get the state out of the energy business. You can decide for yourselves.) 5) It should also be noted that the Edison, bond and DWR surcharges may all be covered in the existing rates you are now paying. That is to say that there may be no need to raise rates again to meet these obligations since the market price for power has come down substantially. But this remains to be seen. There is more to this package and moer to come i9n terms of changes. The committee is going back in at 6:30 this evening and we will see what happens. I hope tis helps you in understanding the situation. Les Spahnn * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The information contained in this communication may be confidential, is intended only for the use of the recipient named above, and may be legally privileged. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication, or any of its contents, is strictly prohibited. If you have received this communication in error, please re-send this communication to the sender and delete the original message and any copy of it from your computer system. Thank you. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
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