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Enron Mail |
Christi,
=09As I have been thinking about this problem, my opposition to a standard = model is declining, partly out of frustration with the slow progress being = made. I think, however, that we ought to think about the potential consequ= ences of recommending a standard model. If we simply endorse PJM, then we = may inadvertently get its warts as well -- no secondary transmission market= , ICAP market, etc. I think we are considering the same thing approach as = was reported by Charles Yeung's in his note on Tuesday's Inter-RTO Coordina= tion (Seams) Conference: "Harvey Reed, Constellation Power, suggested that FERC impose a standard ta= riff for all RTOs to work from that did not restrict RTOs from filing diffe= rent proposals, but would limit their ability to diverge from a single mark= et model." =09In addition to the standard model, there needs to be a deadline for eith= er filing the tariff or for filing the standard tariff. Without a "feet to= the fire" feature, nothing the grand stall will continue. In arguing for = a standard model, the PJM system could be the core of a proposal but we sho= uld specific modifications to address our concerns. On the transmission ri= ghts issue, for instance, a simple "don't allocate" solution won't work. T= he lack of the secondary market for NY TCCs or PJM FTRs goes both to the la= ck of information and to the way the rights are defined. If as Harvey Reed= suggests, RTOs can submit alternative approaches, at least there will be p= ressure to get moving. I have not discussed this idea with West Power. =20 =09It then occurred to me that FERC is unlikely to impose a standard tarif= f without a rulemaking proceeding. Whether they could act by fiat or not i= s a moot point, since I doubt that they would do so without creating a rec= ord. There are two possible down sides to a rule making. (1) The outcome= of a rulemaking is something of a crap shoot. The incumbents have a prett= y good record in the past, of coming out of rulemakings with plenty of good= ies such as the native load exemption in Order No. 888. There is a also a = distinct risk that PJM's ICAP or transmission right allocation process is g= iven blessed status, which will make revision of them later to be a huge up= hill battle. (2) The other consequence of a rulemaking its effect on curr= ent RTO discussions. The best outcome is that the uncertainty of the rule= making creates an urgency to get a proposal filed before a new FERC rule c= uts off options from a new the standard for review. The uncertainty prior = to the issuance of Order No. 888 in fact had that effect in the West. On t= he other hand it can mean that nothing happens until the new rule is issued= . This also happened prior to Order No. 888, with a number of companies si= tting on their hands, using the time delay to protect existing positions, w= hile whipping up State regulators' fears of jurisdictional shift as necessa= ry to boost their own position. =09These are only own views. I have not had a chance to speak with West Po= wer this week, but I will approach Tim when I am in Portland again next wee= k. Steve =09Christi L Nicolay 06/19/2001 04:21 PM =09 To: Steve Walton/HOU/ECT@ECT = cc: James D Steffes/NA/Enron@ENRON, Richard Shapiro/NA/Enron@Enron, Sarah = Novosel/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron Subject: Re: INTERI= M MODEL TALKING POINTS =09 Can we focus the PJM language as an interim fix toward the East (while mayb= e the threat of PJM in the West will make the West RTOs act quickly and ado= pt everything that Steve W. has been advocating). Also, I agree with the I= SO being required to provide much greater information on where the congesti= on occurs. While the allocation of FTRs is a problem and the idiosyncratic= nature is also a problem, it is because the traders do not have access to = all the information. They have told me that if they had access to all the = information about congestion from the past several years, they could essent= ially build a model for anticipated congestion that could trade "above" the= underlying FTRs as financial instruments. Steve Walton 06/18/2001 03:30 PM To:=09James D Steffes/NA/Enron@ENRON cc:=09Christi L Nicolay/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Sarah = Novosel/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron=20 Subject:=09Re: INTERIM MODEL TALKING POINTS =20 Jim, =09I have added my comments to your draft. My concern with the "Adopt PJM"= approach is that it will become a fiat accompli with regard to congestion = management. and the nature of future transmission rights. Once adopted as = the standard, nothing else will be accepted and any move to a decentralized= approach is highly unlikely. Unlike the British, we have a hard time chan= ging horses because of our multi-jurisdictional Federal system of governmen= t. =09The PJM's lack of a secondary FTR market is more that just an allocation= problem. If that were true, they New York would have a secondary market -= - none exists there either. The unpredictability of prices is probably the= biggest problem since no one knows how to value FTRs or TCCs. I think the= nature of instrument is also not particularly helpful. =09During our discussion of Seabron Adamson's last draft, I maintained that= a centralized unit commitment process didn't fit the Pacific Northwest (PN= W) with its pattern of trading to achieve coordination between hydroelectri= c and thermoelectric generation. You asked me to provide more detail hydro= -thermal operation. I am including a paper that covers the nature of PNW o= perations and contracting with observations about the nature of unit commit= ment. Given other work and travel, it has taken some time to complete the = paper and its examples. I hope this will help to explain why I am hesitant= to endorse a centralize unit commitment implementation. Steve =20 =09James D Steffes@ENRON 06/18/2001 01:48 PM =09 To: Steven J Kean/NA/Enr= on@Enron, Richard Shapiro/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT, Sa= rah Novosel/Corp/Enron@ENRON, Steve Walton/HOU/ECT cc: Subject: INTERIM = MODEL TALKING POINTS=09 Here is the draft of an Interim step for Enron to give to Lay. Please give= me your comments. This is CONFIDENTIAL and should not be shared outside t= he company. Jim =20 <Embedded StdOleLink< <Embedded StdOleLink<
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