I read the proposal last night, and although it is not perfect, it is a big improvement over what we have today.   Therefore, I (and my team) support Enron's endorsement of the PJM Proposal (with your timeline condition).

Thanks for all your good work.

 -----Original Message-----
From: 	Novosel, Sarah  
Sent:	Wednesday, September 05, 2001 7:30 PM
To:	Presto, Kevin M.; Shapiro, Richard; Steffes, James D.; Robertson, Linda; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom
Subject:	RE: Support of PJM's Proposal to Implement Northeast RTO

Kevin:

I think the PJM proposal looks pretty good as a first step.  As we discussed in Houston, the proposal gives us a single day-ahead and real time energy market for the entire Northeast, but it does not get us everything at first.  For example, on Day One, PJM proposes to retain the 4 existing control areas and allow the individual control areas to redispatch in the real time market for local transmission constraints.  This could result in New York continuing to manipulate the market in an attempt to keep prices down, but as we discussed in Houston (and as Andy Ott has confirmed), it is highly unlikely that PJM will allow New York to continue this type of market interference once PJM is in charge and running the market.  Also, by leaving some of the existing systems in place, PJM has aptly responded to the New York argument that "local reliability" in New York must be maintained, so that New York's opposition is seen for what it is -- an attempt to delay indefinitely an RTO in the Northeast.

Enron's support of the PJM proposal would be very helpful in mediation since we are seen as a big player in the region and because the other two proposals on the table are sponsored by the New York TOs and the New York ISO and envision a new RTO system based on the PJM "Platform" changed by as-yet undefined "Best Practices" from the other two ISOs (and New York has indicated it thinks a lot of its market design is a "best practice"), and these other options will not begin operation for 3-5 years at best.

Nevertheless, even though we here in Washington think the PJM proposal looks good, it is important that you and your team are also comfortable with it.  If you all have not had an opportunity to review the proposal to ensure that you are satisfied with it, then I would propose that we not sign Enron's name onto the proposal.  We can talk about the proposal in more detail and even have Andy Ott available for a conference call or a trip to Houston to answer any questions you may have.  If you need more time, then I think we should follow this route instead, even if it means we cannot lend our support for PJM at this time.

Please let me know what you think.

Sarah

 -----Original Message-----
From: 	Presto, Kevin M.  
Sent:	Wednesday, September 05, 2001 7:41 PM
To:	Novosel, Sarah; Shapiro, Richard; Steffes, James D.; Robertson, Linda; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom
Subject:	RE: Support of PJM's Proposal to Implement Northeast RTO

Are we sure we can live with everything else in the PJM Single RTO proposal?

 -----Original Message-----
From: 	Novosel, Sarah  
Sent:	Wednesday, September 05, 2001 6:36 PM
To:	Shapiro, Richard; Steffes, James D.; Robertson, Linda; Presto, Kevin M.; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom
Subject:	Support of PJM's Proposal to Implement Northeast RTO

As I mentioned to each of you today, we plan to sign Enron's name as a member of the "One RTO Coalition" in support of PJM's proposal for developing a single Norhteast RTO with a single day-ahead and real-time energy market in the Northeast.  PJM's proposal is attached.  As you may recall, I gave you a copy of PJM's proposal and we discussed it when I was in Houston a couple of weeks ago.  The main concern with PJM's proposal is its timing -- their time line provides for an implementation date of November 2003.  We have talked extensively with PJM about the need to speed up the implementation process, and PJM agrees that they will move aggressively, but they are unwilling to change their target date in their proposal.

Because we disagree with the PJM date, we propose to have Enron Power Marketing, Inc.'s name included on the list of supporters of the proposal, with the following footnote:

	While all of the members of the One RTO Coalition support the substance of PJM's proposal to implement a single energy market as described herein, Enron 	Power Marketing, Inc. dissents from PJM's date of November 2003 for implementing the single RTO in the Northeast.  Enron believes that the PJM proposal 	can and must be implemented by December 2002 and that extension of the implementation date past December 2002 is unnecessary and contrary to the 	Commission's RTO policy established in Order No. 2000.

This footnote will preserve our right to argue against PJM's timing in comments to the Commission after the Judge submits his report (due on September 17).  In those comments we can go into much greater detail about the need for quick implementation.

Please let me know if you have any suggested changes to the footnote or if you disagree with our proposed strategy.  We will address this issue on Thursday at mediation (I thought it was going to come up today, which is why I called each of you), so if you have any comments or concerns, please let me know as soon as possible. 

Thanks

Sarah

	 << File: PJM Market Design Proposal.pdf >>