Group,
Here is some input from Tony at EPE regarding running their system. I think the EPE system was run very well on October 18th, but aside from that, this email shows how closely they are watching our performance and what they expect. Let's do our best to continue to provide them with good service.

Thanks,
Bill


-----Original Message-----
From: tsoto/EPEC@epelectric.com [mailto:tsoto/EPEC@epelectric.com]
Sent: Friday, October 19, 2001 8:43 AM
To: Williams III, Bill
Cc: hpuente/EPEC@epelectric.com; PowerMarketingFolks@epelectric.com;
kpeterso@epelectric.com
Subject: DISPLACING GAS-FIRED GENERATION


 Bill,  thanks for the visit we enjoyed it.  It is always helpful to talk
face to face and have some frank discussion regarding   our current
business relationship.  Hopefully, we'll be able to reciprocate with a
visit in the near future.

On a different matter, I was going over some recent historical data and
have come across some instances where I believe we have room to displace
gas-fired generation with inexpensive purchased power.  In order to do
this, we need to tighten up our real-time operations.  By this, I mean to
start putting all our gas-fired generation down to their minimums and
replacing it with purchased power (this would apply to the early morning
hours only, since we have some take or pay gas we still have to burn some
base gas but this can be done during the day when prices are higher and our
loss will be less).

For example,  Thursday October 18, the unit commitment called for purchases
of around 330 MW during the early hours (see attached unit commitment for
amounts and times).  We only purchased 130 MW net during this time frame.
So we ended up generating around 200 mwh at around $44/mwh when purchase
power  was available for $19/mwh.  Furthermore, there was a sale for HE
06:00 to ENRON/CAISO for $22/mwh.  When we enter this sale into our costing
model, the sale will result in a loss of approximately $1,000 for EPE Power
Marketing since the model will use marginal cost (gas-fired generation) to
cost this sale.

Please look into this matter and  call me if you have any questions or wish
to discuss it further.


(See attached file: dispatch.xls)

Tony Soto
Power Marketing
543-4181