Let's discuss this in our Monday meeting.   In general, though, your approach seems reasonable to me.

 -----Original Message-----
From: 	Herndon, Rogers  
Sent:	Friday, July 13, 2001 11:55 AM
To:	Presto, Kevin M.; Will, Lloyd
Cc:	Misra, Narsimha
Subject:	Outsourcing of ERCOT Physical Delivery Services

Kevin -

Lloyd and I spoke yesterday about the idea of outsourcing all of EES' next 30-day physical obligations in ERCOT to the Wholesale Services Desk (Services Desk).   Essentially, we would provide Services Desk with a list of customers, meters, forecasts, and a net open position (load obligation - hedges).  Services Desk would fill any net open positions at some hourly index + service fee.  EWS-Retail would still hedge all forward risks.  How we handle load forecasting as it relates to changes in our position needs to be ironed out as far as whose forecasts we use - do we consolidate this function? .  My view is that 1) Wholesale Services Desk could benefit by getting an opportunity to serve retail load and learn in a low risk position and 2) Services Desk will ultimately perform a better service than I could begin to recreate.  I want this to be the model that I can build a case on to outsource all of our next 30 day physical delivery portfolio across the Eastern Grid.  Also, Lloyd will be able to best determine what metering capabilities we really need to most accurately deliver and work these requirements throough the Ozzie/PMC model we have been working on.  Doug is also interested and on board with this concept.

 Kevin, you and I can negotiate an overall macro service fee for this stuff once we get it ironed out.

What do you think?

Rogers