|
|
Enron Mail |
As most of you know, in a last ditch attempt, we are trying to develop a
complete "solution" to the California problems that can be presented in the Sec of Treasury discussions. It would be very helpful if people would comment or provide analysis on the likelihood of the following settlement points: 1. Long-Term Contracting key need of CA is NEW POWER PLANTS - KEY MESSAGE - AND IT'S IN CALIFORNIA'S AUTHORITY TO DELIVER Live Auction conducted by DEALBENCH auction should be focused on "build" economics parties bid ($/Mwh) for the right to deliver 500+ MW (the right size needs to be determined) into Cal ISO control area for 5 years and the winning bidder obtains a pre-approved generation site in California (with all permits, siting obligations, and interconnection - BIG ISSUE) to build starting within 2 months focusing on just delivered energy without generation site is difficult to price (market too illiquid) keep the number of auctions to a minimum (probably 6 - 10) for each utility Counterparty is State of California (some agency) maybe structure the bids to be 50-50 baseload vs. peaking 2. Utility Retail Ratemaking per RELIANT ENERGY model, need $85/Mwh on average to work within retail framework (how much would rate increase does this create?) goal must be to have EBITDA positive utilities, although long-term utilities should be EBITDA = $0 for generation sales keep the current PX structure? Utilities may have to "eat" some of the current undercollection 3. Interim Credit Support pro rata credit from all creditors (including banks and energy suppliers) 60 day forbearance (to allow the auction to occur) 4. Liability PG&E, SDG&E, and SCE agree not to sue any suppliers State of California considers "taking" all civil cases and not pursuing State of California agrees not to pursue any criminal cases 5. Other Actions FERC agrees to immediate price cap lifting FERC and California agree to complete non-stakeholder board for ISO CPUC immediately finds that the result of the auction is "reasonable" The key point is to (1) stop the current bleeding by getting long-term deals in place soon and (2) manage the rate shock. We will be working three things (1) structure of the long-term auction, (2) rate model showing how high prices of long-term auction power can be, and (3) financial results for utilities under this outcome. What else needs to be included in a settlement? Jim
|