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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Richard Shapiro, skean@enron.com, James D Steffes, Paul Kaufman, Leslie Lawner, Joe Hartsoe, Rob Bradley, Janel Guerrero, Karen Denne, Alan Comnes, Sandra McCubbin, Susan J Mara X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf Last week, I distributed a presentation that the Brattle Group gave before the California Inquisition (i.e., legislative gas oversight committee looking into the gas price spikes at the Cal border). The Brattle Group is a consulting firm that Edison has long used to beat up on SoCalGas (recall that Edison used to be a big gas customer when it owned power plants). Edison "arranged" for the Brattle Group to be the star witness at the Cal Leg gas hearing. Their job was to set up El Paso and Dynegy for the hit at hearings that took place the following day. Their message was simple (and simplistic): El Paso and Dynegy have market power. They have used the market power to drive up basis and thus the price of gas at the border (to "obscene" levels). That, in turn, has driven up electricity prices. Ken Lay is giving a gas talk tomorrow, and Rob Bradley asked that I provide the alternative view to the Edison/Brattle rant, in the event that he gets any questions on the topic. It's attached. Apologies, it's quick and dirty, but it provides the basics. Obviously no need for us to defend El Paso or Dynegy, but might be useful to offer a more rationale explanation than the one that the California Legislature is peddling. Finally, we were also fingered somewhat as culprits at the hearing (the California PUC FERC lawyer claimed that ENA and TW colluded to drive up basis when ENA controlled a portion of the capacity), but the overriding goal of the hearing was to go after EP and Dynegy. Best, Jeff
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