Re: Market Opening

FYI - Paul agreed with my suggestions.=20
----- Forwarded by Aleck Dadson/TOR/ECT on 06/22/2001 05:27 PM -----

=09Aleck Dadson 06/22/2001 05:03 PM =09 To: Rob Milnthorp/ENRON@enronXgate=
@ENRON cc: Garrett Tripp/TOR/ECT@ECT@ENRON, Paul Devries/TOR/ECT@ECT@ENRON=
Subject: Re: Market Opening =09

=09
With respect to point 1 in your memo, my sense is that the counterparty wo=
uld have to be either OPG or OEFC. In my view, the concept would not/could=
not go forward and be implemented unless it had the support of OPG. The =
question we should talk through is how do we best try to get that support =
from OPG. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09With respect to point=
2, I think we should be careful about being too encouraged by Wilson's /P=
urchase's comments to Lay/Lavorato on June 19 that if positive reports are=
delivered by the IMO and OEB in September, the gov't will be hard pressed=
not to move forward. My concern is that Wilson and Purchase may feel comf=
ortable saying this precisely because they are expecting a negative report =
from the OEB (or at least one that they can interpret as being negative). I=
agree with you that the likelihood of the IMO delivering a positive report=
is very good. The likelihood of a positive report from the OEB is far less=
certain. The key issues at the OEB/retail level are EBT, LDC access to th=
e data they need from HydroOne, completion of LDC CIS systems, the gov't's=
interest in an industry resolution of customer duplications prior to mark=
et opening in order to avoid mass confusion in the initial period of the ma=
rket, the state of customer education, and a contingency plan to accommoda=
te those who are not ready. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09- with respect to EBT, I think=
the best we can do is get onside quickly with our EBT hub of choice and =
work with them on perceived difficulties =09=09with LDCs, etc. Ellis, Marr=
yott and I are going to make a recommendation to Paul next week on our pref=
erred EBT hub. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09-with respect to the info from HydroOne, I have already rai=
sed this issue with the OEB and the IMO. The OEB and the IMO subsequently m=
et with =09=09HydroOne and the MEA in an effort to resolve this issue. My =
understanding, until yesterday's discussion with Conway, was that the issue=
was resolved =09and the information was now flowing to the LDCs. Paul, Gar=
rett and I are meeting senior HydroOne execs (including Rod Taylor) on Mon=
day re =09=09resource adequacy issues and we can press this with them a=
s well. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09- with respect to the CIS issue, there is not much =
we can do since most LDCs already have a CIS vendor; but my understanding =
is that at least =09=09one CIS vendor has backed out of its commitments to =
a number of LDCs recently (per David MacFadden) and perhaps we can get a ve=
ndor =09=09to move in quickly to fill that gap. I will raise this with Marr=
yott to see what may be feasible at this stage. =09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09- with respect to the cu=
stomer duplication issue, I have already met with the senior people at Dire=
ct (last week) to discuss this issue with them and to =09propose a resolut=
ion that would see the retailers involved retaining a third party (such as=
E&Y) to assess the degree of overlap and whether =09=09there was an accep=
table solution to any problem. Direct is convinced that the degree of dupli=
cation is not high. Direct is talking to Onsource =09=09and Toronto about =
this. =09I am checking with our staff in the UK about whether there was a s=
imilar issue when the UK market opened and, if so, how it was =09resolved. =
. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09-with respect to customer education,=
I and Dick Perdue (Direct's advisor) have contacted TransAlta, OPG, HydroO=
ne, Onsource, Enersource, =09=09and Toronto about funding a Province- wide=
consumer education initiative over the summer. We are meeting next week t=
o discuss this idea =09=09 further. This could require a financial commitm=
ent from Enron of up to $200,000. =09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09- with respect to the conti=
ngency plan to deal with those LDCs who are not ready, the OEB is already o=
n side in recognizing the need for a contingency =09plan - it will likely b=
e very simple: the IMO would send a bill to the LDC each month and the LDC=
would bill customers at some fixed rate, with a deferral =09account). The =
key issue will be how many LDCs (in terms of numbers and size) are not re=
ady and what is the minimum number of LDCs that =09=09the OEB/gov't is look=
ing for to be ready. This is an issue we will have to talk to the MEST abou=
t as well as the OEB=09, since ultimately the =09=09=09decision of whether =
enough LDCs are ready will be a political one.=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09These are the O=
EB/retail focussed things we are doing. On the larger political front, I =
have several ideas about some things I would like to do that I can discus=
s with you and Paul. =09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=09=
=09=09=09=09=09=09=09=09=09

=09Rob Milnthorp/ENRON@enronXgate 06/22/2001 11:13 AM =09 To: Paul Devrie=
s/TOR/ECT@ECT, Garrett Tripp/TOR/ECT@ECT cc: Aleck Dadson/TOR/ECT@ECT Sub=
ject: Market Opening=09

Garrett/Paul - Can you guys work with the North East desk to price out a 50=
0MW option at the New York/Ontario intertie as an insurance policy for the =
Ontario government re market opening. You will recall that this was somethi=
ng we had suggested a while back and didnt receive much support. However, f=
ollowing Lavorato's meeting with Harris, Lavo is adamant that we send a ter=
m sheet to Harris directly outlining both an call option structure and a sw=
ap structure.=20

Second, it is quite apparant to me that everything hinges on the September =
readiness report. If its favorable, I think there is a good chance of a fal=
l market opening. With that said however, we are in the hands of the IMO an=
d the OEB. I'm comfortable that we can continue to influence the IMO to pro=
duce a favorable announcement but I dont know what we can do to ensure that=
the OEB says its ready. Any suggestions, comments? I dont want to be in a =
position that one LDC could halt market opening.=20

Regards
Rob

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