I agree that someone should file. Curious if we can send in our message 
through EPSA or WPTF?

Mary's last point about the non-ISO and PX markets is a key point.  We need 
to keep any FERC action contained to those markets.

Mary - pls submit an RCR.

Jim




	Mary Hain@ECT
	03/20/2001 07:44 PM
		 
		 To: Susan J Mara/NA/Enron@Enron,  Alan Comnes, Joe Hartsoe@Enron, James D 
Steffes/NA/Enron@Enron, Ray Alvarez/NA/Enron@ENRON, Sarah 
Novosel/Corp/Enron@ENRON, Donna Fulton, Richard Sanders, 
sbishop@gibbs-bruns.com, Christian Yoder/HOU/ECT@ECT, steve.c.hall@enron.com, 
gfergus@brobeck.com
		 cc: carrrn@bracepatt.com
		 Subject: Emergency Motion of City of San Diego

Due to the risk of wholesale market participants becoming bankrupt and 
therefore unable to flow refunds through to customers, the City of San Diego 
has asked FERC to direct sellers of wholesale power in the "California" 
markets to sequester any amounts collected from sales that are in excess of 
costs and to maintain those amounts, with interest, adequate to pay potential 
refund obligations.  It also asks FERC to clarify that these amounts are 
being retained by the sellers in trust to fulfill refund obligations.

I think we should make the following arguments at FERC:

In the In re Columbia Gas Systems Inc. case relied on by San Diego, FERC had 
ordered, and Columbia had received, refunds from upstream pipelines, but had 
not specified that Columbia was to hold those refunds in trust for its 
customers.  To my knowledge, none of the refunds FERC has recently required 
would be paid to EPMI, nor has FERC required EPMI to make any refunds, it has 
merely conditioned its rates "subject to refund."  Accordingly, it is 
inappropriate for EPMI to be required to sequester any of its profits.
San Diego seeks to apply this requirement to every participant in the market, 
although it has not proven that refunds would put EPMI on the verge of 
insolvency.  It has simply said that "there is no assurance that the actual 
wholesale sellers , , , are capable of paying the refunds that potentially 
may be ordered."
San Diego also alleges that the potential refund obligation is immense.  This 
allegation is based on San Diego's allegation that the refund liability 
calculated by FERC's March 9 order (of $69 million) is vastly understated.  
This is suppostion, on supposition, not to mention a collateral attack on the 
Commission March 9 order. 
The pleading is in essence a request for cost-of service based rates given 
that market participants would be deprived of any benefit of participating in 
the market for years - "pending a final nonappealable order in these 
proceedings."  Therefore, it is a collateral attack on FERC's December 15 
order finding that it would not order cost based rates.
This pleading also seeks refunds beyond what could be required pursuant to 
FERC's December 15 order in that its would apply sequestering to sellers of 
wholesale power "in the California markets" not just for sales in the ISO and 
PX markets.