Jeff,

In general, I agree with you that absent market power price caps are bad
policy.  In this case, I believe we have crafted the settlement (and the
decision reinforces those sections, in fact, the reduction of market
concentration limits from 40% to 30% goes even further in this regard), so
that market power will not be a problem.  I have phoned Mike Day and
suggested that he craft his comments to include the caveat about market
power, and he indicated that would not be a problem.  With that change I
don't think we object to including the comments on price caps.  I am still
getting approval from the various powers that be, but hope to get that
soon.

Michael

--
Michael S. Alexander
Southern California Edison
Energy Supply and Management (ES&M)
626-302-2029
626-302-3254 (fax)


                                                                                              
                    "Dasovich,                                                                
                    Jeff"                  To:     "MDay" <MDay@GMSSR.com>, "Amirault, Paul"  
                    <Jeff.Dasovich@        <PaulAmirault@aec.ca>, "Jeff Dasovich  Enron SF"   
                    enron.com>             <jdasovic@enron.com>, "Michael Alexander, SCE"     
                                           <ALEXANMS@sce.com>, "Phil Davies, WGSI Calgary"    
                    10/18/2001             <PhilDavies@aec.ca>, "Porter, Douglas K"           
                    08:17 PM               <PORTERDK@sce.com>, "Hass, Glen"                   
                                           <Glen.Hass@enron.com>, "Steffes, James D."         
                                           <James.D.Steffes@enron.com>, "Mara, Susan"         
                                           <Susan.J.Mara@enron.com>                           
                                           cc:                                                
                                           Subject:     RE: I. 99-07-003  Draft Comments on   
                                           the Revised Proposed Decision                      
                                                                                              




Mike:  Comments looks good.  My only comment is that, in our view, the
price cap (which would cover ALL capacity in the secondary market) is
simply bad economic policy and won't address any problems--in fact it
will only create problems. (From a practical perspective, I'm not even
sure that the Commission can successfully "regulate" prices in the
secondary market.)

Will the commission change the price cap provisions of the decision
based comments advising against them?  Very unlikely.

But when the caps create problems (and they will), I want to have been
on record advising the Commission of why caps are bad economic policy
and pointing out the bad outcomes that caps will cause.  I think that
it's very important to point out the downside of caps and to be on
record against them.

That said, I don't want the comments to be so negative as to cloud
support for the decision; nor do I think the Commission will change the
cap based on our comments.  Other than that, EES and ENA can sign on.
Anyone have any objections to pointing out the fact that price caps are
ill-advised?

Best,
Jeff

           -----Original Message-----
           From: MDay
           Sent: Thu 10/18/2001 8:43 PM
           To: 'Amirault, Paul'; 'Jeff Dasovich Enron SF'; 'Michael
Alexander, SCE'; 'Phil Davies, WGSI Calgary'; 'Porter, Douglas K'
           Cc:
           Subject: I. 99-07-003 Draft Comments on the Revised Proposed
Decision



            <<X28621.DOC>>

           Enclosed for your review are the draft comments on the Revised
Proposed
           Decision in the Gas Restructuring Investigation.  WGSI and Enron
have
           indicated a desire to file supportive comments.  Edison has
indicated an
           interest in reviewing our draft for the purpose of considering
joining in
           our comments.  Please send edited electronic versions with
underline and
           strikeout to MBD at this address no later than noon tomorrow.
These comments
           must be filed tomorrow before 5 pm.  I am sorry for the lateness
of the
           draft, but these are not extensive comments.  Except for the
little
           bombshell about extending commission jurisdiction over gas
marketers, I see
           little in the RPD to warrant our opposition.  Even if the
Commission
           proceeds with the jurisdictional grab, I believe it can be
overturned by the
           Court of Appeals.

           I look forward to your comments.

           Mike Day




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