Re: PGE's '02 and beyond

FYI
---------------------- Forwarded by David W Delainey/HOU/ECT on 02/06/2001
07:32 PM ---------------------------

Mitchell Taylor@ENRON
02/03/2001 10:22 AM
To: David W Delainey@ECT, Cliff Baxter@ECT, mmetts@enron.com
cc:
Subject: Re: PGE's '02 and beyond

Dave,

Here is PGE's response to the question you raised about how its plans to
cover its short position in '02 and beyond. Part of Pamela's response does
not make sense to me and I will follow up with her for additional details.

Let me know if you have additional questions.

Mitch
---------------------- Forwarded by Mitchell Taylor/Corp/Enron on 02/03/2001
10:17 AM ---------------------------
From: Pamela Lesh/ENRON@enronxgate on 02/02/2001 02:00 PM
To: Jim Piro/ENRON@enronxgate
cc: Mitchell Taylor/Corp/Enron@ENRON

Subject: Re: PGE's '02 and beyond

Hi, Mitch! As of today, Oregon is sill moving forward with our version of
open access. As you may recall, this is a fairly consevative approach. Only
non-residential customers are eligible for direct access. Utilities need not
sell any generating resources. We will use a technique called "ongoing
valuation" to allow non-residentials to elect other suppliers while still
receiving the benefits/paying the costs of our current supplies. We are
planning to be in balance (or long) for 2002 on a full load basis. Thus,
while non-residential customers may elect new suppliers, they are essentially
fully hedged with our portfolio of long- and short-term supplies. We have
also begun to raise the question for discussion whether we should fill a full
load position for years beyond 2002. Those discussions will probably continue
the next couple of months. One possible outcome is that we would fill all of
our load except perhaps customers over 1-5 MWs. They would have the right to
"opt-out" by giving us notice 1/1/02 not to plan for them beginning 1/1/03.
Then, the Commission might phase in this option for consecutively smaller load
customers on a set schedule. This would allow us some certainty and ability
to make longer-term commitments and also give the market some certainty about
what load might be available when. Everyone is well-aware of our short
position and the implications of that. We are seeking an amendment to
Oregon's restructuring law that would eliminate any date restriction on our
ability to treat resource commitments as eligible for transition treatment. I
think this is a critical piece to ensuring that Oregon doesn't set up a cliff
like California did or Nevada appears to be doing. All this being said,
whether Oregon's restructuring moves forward is ultimately an
emotional/political issue. Bad news, even if unrelated to direct access,
could spook the Legislature enough to give momentum to the several bills
already introduced to delay/reverse it. We will keep you informed.
Meanwhile, our power supply folks are proceeding as if we will need to plan
for almost everyone indefinitely.

<<< Jim Piro 01/26/01 02:26PM <<<
I think based upon your discussions with staff and the commissioners you are
the best one to respond to this question. Thanks

<<< <Mitchell.Taylor@enron.com< 1/26/01 8:49:09 AM <<<
Jim,

In the resource plan that you sent me earlier this week, you indicated that
PGE was short anywhere from 400 to 700 MW, going out to 2006. What
sentiment are you hearing in Oregon about open accesss? (In Nevada, where
I have been focused of late, the drums are beating louder for longer
delays). If open access (customer choice) is deferred beyond this year,
how do you plan to cover this short position, especially in '02? Does the
OPUC appreciate that you are short in anticipation of open access?

Thanks,

Mitch