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Enron Mail |
Jim. I like your suggestions and suggest the following enhancements:
We should integrate this solution into the CPUC process. ie Keep rate freez= e=20 in effect until the Mar 02. Make state agency take over as ESP to all=20 bundled customers at 110% of frozen rate. This solution keeps the current= =20 Rate Freeze in place and keeps us in the game to not lose our negative ctc.= =20 It also corresponds to your minimal changes goal. It also puts government= =20 agency in the same place as us in having exposure to negative ctc as us. I= t=20 also accomodates the problem of RFP's taking longer than expected. It also= =20 solves the liquidity problem immediately and avoids the need for=20 forbearance. And furthermore it keeps the utility exposed to bankruptcy=20 which minimizes their negotiating power. I don't understand how this proposal addreses what happens with the existin= g=20 assets of PG&E. The worry I have is that PG&E gets to keep 50% of the=20 benefits of nuclear sales and 10% of the benefits of hydro sales, post rate= =20 freeze. If we damage 1890, the utilities are now in the drivers seat. re "ESPs should be able to buy from UDCs at the current weighted average=20 generation rate from 1/1/01 =01) 12/31/02 to serve any competitive load in= =20 California" This suggest a replacement to AB 1890 which suggests significa= nt=20 changes. Would it not be better to say "After the rate freeze, the=20 government entity would take over the obligations of PG&E and continue them= =20 to the end of 2002. Such assumption and continuation, would be combined wi= th=20 the government entity recieving the benefits of the difference between=20 market prices and embedded costs of the SCE/PG&E existing generation assets= . Summary of Solution that incorporates these suggestions Government entity becomes an ESP taking over all customers not served by=20 another ESP. Government accepts any ESP's that come back within 3 weeks. Utilities stopped from selling any additional nuclear, hydro, thermal or QF= =20 generation. (requires change in legislation) Utilities provide surcharge/credit, for the lessor of 40 years or retiremen= t,=20 based on the difference between generation COS and market value to all ESPs= ,=20 after rate freeze ends (requires change in legislation and settlement). Government entity, as ESP, charges Frozen Rate plus 10% until the end of= =20 2002. Government entity, assures all ESP that they will their costs will not exce= ed=20 110% of frozen rate until the end of 2002. Rate freeze and surcharge continue until the end of March 2002. Any shortfall of agency would be recovered through a amortization over the= =20 next 15 years with securitization less positive proceeds from auctioning=20 default provider. (requires change in legislation) Government commit to building 10,000 MW of generation by summer of 2002 Government commit to allowing emmission constrainted generators to buy=20 emission credits Goverment change legislation to allow swift DSM activity From: James D Steffes@ENRON on 01/11/2001 10:42 PM To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Mark=20 Palmer/Corp/Enron@ENRON, Michael Tribolet/Corp/Enron@Enron, Harry=20 Kingerski/NA/Enron@Enron, Jeff Dasovich/NA/Enron@Enron, Susan J=20 Mara/NA/Enron@ENRON, Joe Hartsoe/Corp/Enron@ENRON, Sarah=20 Novosel/Corp/Enron@ENRON, Linda Robertson/NA/Enron@ENRON, Alan=20 Comnes/PDX/ECT@ECT, Mary Hain/HOU/ECT@ECT, Paul Kaufman/PDX/ECT@ECT, Sandra= =20 McCubbin/NA/Enron@Enron, Roger Yang/SFO/EES@EES, Scott Stoness/HOU/EES@EES,= =20 Robert Badeer/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT, Stephen Swain/PDX/ECT@EC= T,=20 Travis McCullough/HOU/ECT@ECT, Andre=20 Cangucu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Shelia Benke/Corp/Enron@Enron,= =20 Vicki Sharp/HOU/EES@EES, Wanda Curry/HOU/EES@EES, Don Black/HOU/EES@EES,=20 Gordon Savage/HOU/EES@EES, Donna Fulton/Corp/Enron@ENRON, William S=20 Bradford/HOU/ECT@ECT cc: =20 Subject: Financial Analysis of PG&E and Proposed Terms for Settlement Attached please find three documents that outlines the economics of LT=20 contracting necessary for PG&E and SCE. Also find some thoughts on element= s=20 of a workable settlement. Call me with any questions. Jim Scott Stoness 01/11/2001 05:09 PM To: James D Steffes/NA/Enron@ENRON cc: Don Black/HOU/EES@EES, Harry Kingerski/NA/Enron@Enron=20 Subject: Re: Treasury (keep PG&E) Solvent Strategy =20 Great idea. My strategy was solve the immediate problem of solvency quickl= y=20 by getting the government to step in while the rules of the RFP are defined= ,=20 then do the auction, but if you think we could go straight to an RFP for=20 standard offer without going bankrupt, I would be for it. I believe that we do not have time for an RFP (6 months) so that we should= =20 get the government entity to step in to give us the time. And auction by rate class would be good but noone would want the large=20 classes because their rate increase will be higher and they will be less=20 likely to stay. Scott From: James D Steffes@ENRON on 01/11/2001 03:25 PM To: Scott Stoness/HOU/EES@EES cc: Don Black/HOU/EES@EES, Harry Kingerski/NA/Enron@Enron=20 Subject: Re: Treasury (keep PG&E) Solvent Strategy =20 What about something different? If we asked for an Auction by rate class that would allow a different compa= ny=20 to market the default service. The competitive bids would be used to reduc= e=20 the overall undercollection. So in your ST point #1, replace Government=20 entity with a Competitive ESP that has paid the most to win that right. Jim =09Scott Stoness@EES =0901/11/2001 02:39 PM =09=09=20 =09=09 To: James D Steffes/NA/Enron@Enron =09=09 cc: Harry Kingerski/NA/Enron@Enron, Don Black =09=09 Subject: Treasury (keep PG&E) Solvent Strategy Solution Government entity becomes an ESP taking over all customers not served by=20 another ESP. Government accepts any ESP's that come back within 3 weeks Utilities stopped from selling any additional nuclear, hydro, thermal or QF= =20 generation. Utilities provide surcharge/credit, for the lessor of 40 years or retiremen= t,=20 based on the difference between generation COS and market value to all ESPs= ,=20 after rate freeze ends. Government entity, as ESP, charges Frozen Rate plus 10% until the end of= =20 2002. Government entity, assures all ESP that they will their costs will not exce= ed=20 110% of frozen rate until the end of 2002. Rate freeze and surcharge continue until the end of March 2002. Any shortfall of agency would be recovered through a amortization over the= =20 next 15 years with securitization less positive proceeds from auctioning=20 default provider. Other: Government commit to building 10,000 MW of generation by summer of 2002 Government commit to allowing emmission constrainted generators to buy=20 emission credits Goverment change legislation to allow swift DSM activity
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