Alberta Pool Rule Changes

----- Forwarded by Steven J Kean/NA/Enron on 11/29/2000 07:27 AM -----

Robert Hemstock@ECT
11/28/2000 08:00 PM

To: Aleck Dadson/TOR/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Steven J
Kean/NA/Enron@Enron
cc:
Subject: Alberta Pool Rule Changes

Unfortunately, today in an unprecedented move the Alberta Government
over-ruled the Power Pool on its decision yesterday not to amend the Power
Pool Rules and exclude importers from setting pool price. The Minister
signed a regulation under the Electric Utilities Act that excludes imports
from influencing the determination of the pool price. The Power Pool has
been tasked to work out the mechanics of implementing the regulation. Larry
Charach advised that this move was made by the politicians in the face of
advice not to do it from Larry. Apparently the Premier met with
representatives of Alberta farmers yesterday and also learned of what the
Government considers to be excessive pricing being offered by Enmax (the
City of Calgary owned retailer) that included: 1 Year (on-peak) $190/Mwh Cdn,
1 Year (all-hours) $137/Mwh Cdn.

Peter Keohane and I have a meeting tomorrow morning with lawyers from
Blakes. The present thinking is that we need to get legal advice on whether
we need to send a letter to the Government indicating that Enron believes
this action to be contrary to the provisions of the EUA prior to our
participating in the MAP Auction on Monday and Tuesday. The fear is that our
conduct of pursuing new commercial opportunities in this market may somehow
estop us from later arguing the new regulation is ultra vires the EUA.
Notwithstanding the advice we get on this point, there is agreement here
(Milnthorp and Keohane) that if we do send a letter it must not include a
paragraph threatening to sue the Alberta Government.

Regards,

Rob