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Enron Mail |
Been on two panels in the last two weeks with Florio--most recent yesterday.
Dan Richard of PG&E was also on yesterday's panel. Mike has now come so far as to push the "core/noncore" split a la the gas industy publicly (if you just wait long enough, people come around). Dan Richard did not object. I am pretty suspect about PG&E, though. Dan Richard said things like: I'm one of the people in my company who believes that, over time, the utility should exit the procurement function, but many policy makers want PG&E to act as a "quasi-governmental" body offering reliable, low cost service to small customers. I don't think anyone wants anyone's mother to be thrown to the competitive market willy nilly. People have to understand that the large customers are going to take all of the "good" power, leaving the "dregs" for small customers. While I'm skeptical of PG&E--Dan said what he knew people wanted to hear but there was little conviction behind the words--there is certainly an opening that we should try to exploit. In addition, Florio is now publicly agreeing pretty strongly that the gas model for utility procurement is one that merits a heck-of-a-lot of attention, i.e., set a benchmark, get the CPUC out of the way, and let the utility live or die by the benchmark. There's daylight among the stakeholders, but a very large amount of uncertaintly regarding whether the administration, its appointees, and/or the Legislature will get on board. Best, Jeff Mona.L.Petrochko@enron.com 11/13/2000 06:37 PM To: Susan.J.Mara@enron.com, jdasovic%.enron.com@enron.com, Sandra.McCubbin@enron.com, Joseph.Alamo@enron.com, Marcie.Milner@enron.com, Paul.Kaufman@enron.com, Lysa.Akin@enron.com, Mary.Hain@enron.com, Alan.Comnes@enron.com, Roger.Yang@enron.com, Harry.Kingerski@enron.com cc: Subject: ARM met w/ Mike Florio ARM had a good meeting with Mike Florio, TURN, on Friday on defining the utilities default role and more rationale to the forward contracting. My walk away was as follows: 1. TURN agrees with the big guys out first, and the utilities default role defined to residential and small commercial customers. Where you draw the line (20 kW, 50 kW or 100 kW) is probably debatable. TURN thinks SDG&E will be receptive, PG&E is thinking along similar lines and that SCE is most resistant, but could be coaxed. He thinks that CMTA/CLECA probably don't like it, but they will be in the minority. He met w/ John Stevenson, Governor's staff, who was receptive, as was Carl Wood. 2. He agreed that you need definition of the utilities default role to provide direction on forward contracting. Although, we all recognized that the rules around reasonable behavior were preventing utilities from entering into contracts. We discussed up-front reasonableness. Mike seemed to be warming to the virtues of a competitive bid process in determining a reasonable price. 3. The idea of competitive default provider may need some proving. He felt SDG&E was the best place to start. Michael Shames, UCAN, seems interested in the idea. 4. An important component of default service, at least initially, is certainty of price for small consumers. We discussed different ways of providing certainty. The utility could set a price, up front, and have to manage its costs to meet that price. No balancing account. Utilities at risk/reward. We also discussed ways to keep the utilities honest on the price. One way is competitive default provider. Another way is competitive bid for portions of its portfolio. 5. Discussed three components of utility procurement: existing generation, forward contracts and spot purchases. Existing generation would be valued. Question about whether market prices would establish price of output or some interim revenue requirement, as proposed by SCE on its hydro resources. Mike also seems to have softened over future divestitures so long as there is some kind of interim buy-back contract with the utility. Will be at AB 1890 Implementation Group Meeting Tuesday and Wednesday talking to other parties.
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