Seab/Sabine,

Sorry for the delay in getting back to you on this important issue.  The 
three rule changes or designs in other markets you describe look very good 
and are right on point.  I would like to add two more to your list, namely: 

1) Price caps in California

Attached is a one page memo from my colleague in California, Jeff Dasovich.  
Consistent with Jeff's first two points, Steve Kean has told me that in 
addition to chasing existing power supplies out of the state, price caps, and 
the uncertainty surrounding them, chase new generation away.  The turbine 
market is a worldwide market.  Firms will have difficulty committing their 
own capital (and borrowing from others) if they propose to put facilities in 
jurisdisctions where rates are capped or pricing is based on something other 
than the operation of the market.  Several generators, including Dynegy and 
Calpine, have said they will look for other homes for the turbines they have 
ordered.  I have a Nov 10, 2000 Megawatt Daily article that quotes Enron and 
Calpine as saying that price caps in California drove both companies to 
withdraw proposed plants.  

I recognize there is presently no price cap proposal in Alberta but I think 
we can draw the connection between interference through caps and interference 
through other forms of administrative intervention that are being considered 
in Alberta such as: 1) price discrimination on imports, or 2) the latest 
proposal I heard today from the Power Pool which is capping import offers 
into the Power Pool at Mid-C prices plus tranmission costs.



2) FERC Staff Report on Midwest that apparently states on pages 2-15 that 
some market participants believe that developers sited new generation in the 
Midwest because there were no price caps (see attached FERC Report).



As we discussed, I will be using this information in upcoming meetings (this 
Friday is the next one) with the Power Pool and the Alberta Gov't in support 
of Enron's arguments that policy makers in Alberta must "stay the course" 
through the higher priced periods, failing which they will make things much 
worse.

In view of the fact it is U.S. Thanksgiving could you please give me a sense 
of Sabine's timing on this.

Regards,

Rob





  





"Seabron Adamson" <seabron.adamson@frontier-economics.com> on 11/20/2000 
10:39:39 AM
To: <Robert.Hemstock@enron.com>
cc: "Sabine Schnittger" <sabine.schnittger@frontier-economics.com>, "Kevin. 
Wellenius" <kevin.wellenius@frontier-economics.com> 
Subject: Outline memo for paper on rules changes in other markets



Rob:

Please see attached. Can we discuss later today?


Seab


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Seabron Adamson
Frontier Economics Inc
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 - 00-11-20 SA Memo on paper with rule change example paper outline.doc