RE: Market Based Rate Analysis

I agree with Christi's point. The problem is that those arguments - effectively that real competition will take away market power - are no longer effective at FERC. I think that Massey and Wood are ready to do something more potent. My primary question is how do we think that Appendix A would apply to Enron? Do we want Hirenymous (sp?) to undertake a proxy exam to see the real impact?

I am going to try and schedule a phone call for next Friday to outline our next steps. Should anyone else be in on the call? Who else could lead this analysis for us (given that we are all so busy)?

Jim

-----Original Message-----
From: Nicolay, Christi L.
Sent: Saturday, August 11, 2001 2:21 PM
To: Steffes, James D.; Novosel, Sarah
Subject: RE: Market Based Rate Analysis

After looking at the EPSA draft documents (Craig Roach etc.), here are some thoughts. Also, it seems that we should be able to work with EPSA (then hopefully it can be Enron's position, as well).

Ideas for Determining Market Power mitigation:
--How long can price be influenced? (for example, a generator in a load pocket vs. DSM, onsite generation, new transmission, new technologies, additional generator).
--Price spikes in times of shortage are normal -- This can signal the need for more generation, gas, etc. Prices should reflect costs that are incurred during drilling, etc./ keeping rigs available, etc.
--Market Power can be mitigated in a variety of ways by new entry through IPPs, merchant transmission, regular cost based transmission, access to interconnectiion and transmission on a non-discriminatory basis.
-- Need real time price and other RTO information (transparency) in order to effectively monitor and to send good price signals for the new entrants (who are putting their capital at risk, rather than the traditional cost -based, almost guaranteed recovery).

-----Original Message-----
From: Steffes, James D.
Sent: Mon 8/6/2001 6:39 PM
To: Nicolay, Christi L.; Novosel, Sarah
Cc:
Subject: FW: Market Based Rate Analysis

Christi & Sarah --

Any preference for how we proceed on developing an Enron position?

My preference is to establish stronger mechanisms but I don't know how to make them only apply to generators, not to marketers.

We need this pretty soon.

Jim

-----Original Message-----
From: "Erin Perrigo" <EPerrigo@epsa.org<@ENRON [ <mailto:IMCEANOTES-+22Erin+20Perrigo+22+20+3CEPerrigo+40epsa+2Eorg+3E+40ENRON@ENRON.com<]

Sent: Monday, August 06, 2001 2:21 PM
To: jsteffe@enron.com
Subject: Market Based Rate Analysis

Hello Jim-

Greetings from the sweltering city of Washington! Per our conversation, you know that we are hosting a one day meeting on market based rate analysis here in Washington in September to "roll up our sleeves" and develop an official EPSA position, if possible, as FERC moves forward on the issue. What I'd like to get out of this message is where Enron stands - what is your take on the hub and spoke, and what are your suggested alternatives? I'd like to get a heads up of our members' perspectives on the matter prior to the meeting so as to structure the agenda in the most effective and helpful manner.

As you know, Commissioner Massey has been very vocal about re-evaluating the hub and spoke, and we now have Commissioner Brownell voicing similar concerns. Whether or not we see a NOPR in the future is anyone's call, but I'd like EPSA to be an industry leader if and when the opportunity arises. Any help you can provide would be appreciated.

Regards-
-erin

Erin N. Perrigo
Manager of Policy
Electric Power Supply Association
1401 New York Ave., NW
11th Floor
Washington, DC 20005
p) 202.628.8200
f) 202.628.8260
eperrigo@epsa.org