Meeting with US Consular Staff

FYI - Though Mitch has the gov't's 4 guiding principles wrong. They are:
protecting consumers, creating a stable business climate, protecting the
environment, and promoting new ways of doing business and alternative
sources of energy.
----- Forwarded by Aleck Dadson/TOR/ECT on 05/07/2001 09:03 AM -----

"Optican, Mitchell E." <OpticanM@state.gov<
05/04/2001 01:21 PM

To: "'Aleck.Dadson@enron.com'" <Aleck.Dadson@enron.com<
cc: "Santillo, Patrick" <patrick.santillo@mail.doc.gov<, "Dykeman, Peter"
<peter.dykeman@mail.doc.gov<
Subject: Today's Meeting

Aleck,

First, thanks for spending time with us this morning. I think it was a very
worthwhile meeting.

In your thinking about a scheme to satisfy Harris government political
concerns, please consider that the Premier said on May 1 that he is
insisting that before deregulation four conditions will have to be met over
the next 12 months. These are: a guarantee that consumers will be spared
from sharp rate hikes; a reliable supply of power; adequate environmental
safeguards; and continued support for alternative power sources.

I think we need, therefore, to consider how to freeing up the wholesale
market would not cross these four conditions. For example, deregulating the
wholesale market would not appear to have any negative impact on
environmental safeguards or continued support for alternative power sources.
It may be that such a deregulation would have a positive impact (I noted in
today's WSJ that ENRON and 4 other companies are calling for CO2 caps). How
could deregulating the wholesale market "guarantee the consumers will be
spared from sharp rate hikes" and "provide a reliable supply of power"?

I think that any plan for reducing market risk that ENRON could suggest (as
you mentioned, Ontario could contract for future deliveries at a set price)
would seem to meet that requirement. What needs to be clear is the
mechanism whereby this would be done.

If an alternative plan is then contrasted with the consequences of ENRON
pulling out of the Ontario market and the reciprocity repercussions for OPG
in NY, perhaps the Harris government would have the political cover as well
as the incentive to qualify its May 1 statement to include a November 2001
opening for the wholesale market.

best, Mitch