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Enron Mail |
The CPUC is very aware that the utilities have gone to the legislature when
the UDCs face elimination of some of the advantages that they have in the retail market. We now have a fully-constituted commission (5 members) with two new democratic appointees with close ties to the governor. This may empower the CPUC to take control of issues within their purvue, which ratemaking and the PX credit, clearly are. Some members of the legislature are loathe to get into the CPUC's backyard and "micro-manage". That being said, we still face significant risk within the legislature. We have Steve Peace, who thinks a wholesale pass-through is adequate for competition, and Rod Wright, the chair of the Assembly Utilities and Commerce Committee, who sponsored a similar bill last year and who doesn't believe in retail competition either. We have our work cut out for us. Last year we fought essentially the same battle and defeated the utilities at attempts to include similar provisions into law for electricity. We were able to do so because we had a broad coalition of supporters, including the environmental community. Essentially, everyone opposed the utilities' proposals. This year we have a different scenario. SCE is attempting to peel off environmental groups by rolling in extension of the public purpose funding. They are also talking to the large consumers, who may perceive that they are able to get a better deal from the utilities by avoiding the mark-up. However, it doesn't appear as though the utilities are united in supporting SCE's language. We are actively attempting to revive the coalition that was so effective last year. We are talking to the environmental groups to try and keep them in the fold. This can be done by keeping the two issues of public purpose funding and competition as separate as possible. We have been encouraged to settle the PX credit case by the judge. We are engaged in the beginning stages of settlement on the PX credit issue with SDG&E. We are a long way from settling, however, if we are successful, the settlement would likely be precedential for both SCE and PG&E. There is significant room between the utility proposals for the "retail" portion of the PX credit and what we are supporting. We also appear to have the support of the ratepayer advocates. We are attempting to get the customer groups to agree on an outcome, leaving the utilities isolated. Adoption of our proposal for the full retail adder is a long-shot. From a timing perspective, it is possible that we will resolve this issue at the PUC, before any legislation would become effective. However, that would not prevent the legislation from estopping the CPUC decision. We could use the help of the business units in providing documented information about the UDCs activities, if its available. Customer accounts are very credible, however most customers are unwilling to do that. We may also need some assistance from the business units in presenting testimony when these issues go to hearing before the appropriate committees. We are working on this issue and will report on any developments. Thanks. Jim Badum 03/01/2000 06:22 AM To: Roger Yang/SFO/EES@EES cc: Kelly Cook/SFO/EES@EES, Bruno Gaillard/SFO/EES@EES, Thomas S Reichelderfer/DUB/EES@EES, Janel Guerrero/HOU/EES@EES, Lisa Mackey/SF/ECT@ECT, Jeff Brown/HOU/EES@EES, Douglas Condon/SFO/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, Phyllis Anzalone/SFO/EES@EES, Harry Kingerski/HOU/EES@EES, Susan J Mara/SFO/EES@EES, Jeff Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Sandra McCubbin/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Subject: Re: Re2: SCE Legislative Language So, what do we do to stop this...? Roger Yang 02/29/2000 04:52 PM To: Kelly Cook/SFO/EES@EES cc: Bruno Gaillard/SFO/EES@EES, Thomas S Reichelderfer/DUB/EES@EES, Jim Badum/HOU/EES@EES, Janel Guerrero/HOU/EES@EES, Lisa Mackey/SF/ECT@ECT, Jeff Brown/HOU/EES@EES, Douglas Condon/SFO/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, Phyllis Anzalone/SFO/EES@EES, Harry Kingerski/HOU/EES@EES, Susan J Mara/SFO/EES@EES, Jeff Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Sandra McCubbin/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Subject: Re: Re2: SCE Legislative Language This is a blatant example of marketing on behalf of SCE. Of course SCE does this stuff under the guise of Customer Education. Do we have anything in writing provided by SCE that Enron Govt Affairs can provide to the CPUC as examples of marketing activities, whereby the costs of these types of activities should be unbundled from the distribution rate. Of course there is no mark--up what so ever, because the cost of providing retail commodity is recovered in distribution rates. Enron Govt Affairs is currently participating in a proceeding as part of a coalition to determine what this commodity cost adder should be. Additionally, the reason there is no premium mark-up for risk management is because these costs are all pass throughs so there is no price certainty for the customer. In fact, there will be price volatility from month-to-month, if not hour-to-hour. We do not want to push this last point to much, to the extent that the customers rally at the CPUC to eliminate the volatility along with the price signals in favor of interclass and intertemporal subsidies. Roger Kelly Cook 02/29/2000 02:02 PM To: Bruno Gaillard/SFO/EES@EES cc: Thomas S Reichelderfer/DUB/EES@EES, Jim Badum/HOU/EES@EES, Janel Guerrero/HOU/EES@EES, Lisa Mackey/SF/ECT@ECT, Jeff Brown/HOU/EES@EES, Douglas Condon/SFO/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, Phyllis Anzalone/SFO/EES@EES, Roger Yang/SFO/EES@EES, Harry Kingerski/HOU/EES@EES, Susan J Mara/SFO/EES@EES, Jeff Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Sandra McCubbin/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Subject: Re2: SCE Legislative Language As you would expect, SCE is out telling customers that the proposed legislative language regarding default electric service is a done deal. The relevant text in Bruno's message below is as follows: "SCE believes that the UDC should be the default provider and offer commodity at a pass through PX price with no adders." Apparently, SCE is going one step further than a straight pass through of PX day ahead prices with no adders when in front of industry trade groups. A potential EES customer has told me that since 1/1/00, John Fiedler, Sr. VP of Regulatory Policy and Affairs for SCE, has spoken at both CMA and CLECA meetings and presented with great assurance that in the post transition period, SCE will purchase both long term and short term energy and pass through a blended wholesale energy cost with no mark-up to large, end-use customers. My interpretation is that such an offering by SCE would put them in direct competition with ESPs. Kelly Bruno Gaillard 02/16/2000 11:56 AM To: Thomas S Reichelderfer/DUB/EES@EES, Jim Badum/HOU/EES@EES, Janel Guerrero/HOU/EES@EES, Lisa Mackey/SF/ECT@ECT, Jeff Brown/HOU/EES@EES, Douglas Condon/SFO/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, Phyllis Anzalone/SFO/EES@EES, Kelly Cook/SFO/EES@EES, Roger Yang/SFO/EES@EES, Harry Kingerski/HOU/EES@EES cc: Susan J Mara/SFO/EES@EES, Jeff Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Sandra McCubbin/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Subject: Re: SCE Legeslative Language SCE has submitted proposed legislative language at the California Legislation that will define the role of the utility. This language has not yet found a bill. However, in order to be prepared, Sandi McCubbin has asked me to forward the proposed language for analysis. Bellow is a preliminary analysis of the bill and of our position. Please expand, edit and complete for legislative action. Please foward to appropreate people for comments. Summary: SCE is defining the basic electric service to include, Distribution, Metering, Billing, and Customer Service SCE believes that the UDC should be the default provider and offer commodity at a pass through PX price with no adders. Every customer will be charged a non-bypassable charge for basic electric service (customer charge) and a non-bypassable public goods charge (Energy efficiency, low income, R&D, and renewable charge). Renewable charge includes funding for production credits for renewable not under contract with utility, mandatory state purchase of renewable energy, minimum utility content of renewable energy, PX green product, Customer credit for Renewables not under contract with the utility. DA customers can choose billing and metering services from their ESP and will receive an avoided cost credit from the UDC for these services. Analysis: SCE is trying to preempt through the legislation the role of the utility to be a Wires and Revenue Cycle Services (RCS) company. Furthermore they see themselves as being a default provider and offer electric commodity at the wholesale price, undermining any kind of competition from ESPs. Their definition of what is included in the renewable credit again undermines any competition for ESPs in offering these products. Furthermore, although SCE allows ESPs to offer metering and billing services, the credit ESPs can receive is based on an avoided cost. The CPUC is currently presiding over a proceeding, in which it is trying to unbundle RCS. At a minimum the credits for billing and metering services should be based on Long Run Marginal Costs. Position: Actively Oppose The UDC should be a wires only company. For a UDC, Basic Electric Service should only include the distribution of the electric power and should be renamed as Basic Electric Distribution Service. Revenue Cycle Services (metering, billing,..) should be unbundled from the distribution function. Costs allocated to these functions should be based, at a minimum, on a Long Run Marginal Costs or Embedded Costs. The Avoided Costs allocation does not represent all the costs associated with these services. The default provider function should be competitively bid out to ESPs and non-regulated affiliates. The UDCs should be out of the energy service business including all electric retail functions. The commodity charge for default customers should include the PX price, all procurement related costs, and retail marketing related costs. Currently, the green market is the only viable market in CA for small consumers. This proposal would eliminate the competitive market and ensure market-share dominance for UDC and PX. SCE's proposal would limit, or seriously restrict, the development of the market to only UDC-provided green products of PX-provided green products. This structure creates a subsidy for both the UDCs and the PX for green products, which would disadvantage competitive offerings for the amount under contract, providing the UDC with a guaranteed base-load of green-product demand. The market available to competitors for green would be only the demand in excess of the base, for which customers (not ESPs) would receive a credit from the UDC for the incremental green demand. Again, because the UDC would be in the position of doling out credits for green, they would still control that market. Attached is a copy of SCE's draft language.
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