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Enron Mail |
---------------------- Forwarded by Steven J Kean/HOU/EES on 08/18/2000 02:22
PM --------------------------- Steven J Kean 08/14/2000 05:42 PM Sent by: Maureen McVicker To: Executive Committee cc: Gavin Dillingham/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joseph P Hirl/AP/ENRON@ENRON, Jeannie Mandelker/HOU/ECT@ECT, Nicholas O'Day/AP/Enron@Enron, Mark Schroeder/LON/ECT@ECT, Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES Subject: Talking Points re "reregulation" in California As I promised this morning at the executive committee meeting, below are some talking points for your use. Overall message: the market is working, regulation is not. In California, peak demand rose by 10% over the last 4 years while new capacity grew by only 2%. But, as you would expect, the market responded by proposing 8,000MW of new generation - - more than enough to offset the peak demand growth. The regulatory process, at both the state and local level, has failed to site this new generation. The problem is regulation, not deregulation. When San Diego customers began experiencing the effects of higher prices, Enron responded with a fixed price which would have shielded San Diego customers from price volatility and provided prices below their current summer levels (Enron's price was about $55/MWH). After publication of Enron's offer, nine other companies made offers. Again, the market responded where regulation failed. San Diego has not accepted any of these offers because of regulatory/legislative restrictions on its ability to buy outside of the PX (i.e. the spot market). In markets where siting is easier, suppliers have moved to build additional generation. Enron built 3 plants in response to the 1998 price spikes. Those plants were planned, sited and built in less that 12 months - - in time for the summer of 1999. Where regulatory hurdles are lower, the market responds. The solution to current pricing and reliability issues is more competition not reregulation. Policy makers should: Open the transmission grid so that power can get from where it is to where it is needed. Expedite interconnection of new generation. Expedite siting of new facilities. Give customers a choice, so that they have better access to demand side solutions. Also attached is a more detailed discussion of California, prepared by Jeff Dasovich of our San Francisco office.
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