Here is a follow-up proposal from Professor Littlechild, after his San 
Francisco/Tokyo trips.  He is inquiring as to whether we would want to retain 
him to  do some rebuttal to Ruff/Hogan/et al on retail markets importance.  I 
am not championing him, and both Nick and Jeff have had a chance to gain the 
measure of the felow.  He has come to his views a bit belatedly, for a 
regulator who was in the chair for 9 years, but over here he is a highly 
respected academic, and I might still think about using him in Europe for 
just this purpose.  His low-key style will go dwon well, and his views will 
be respected.  Any use for this type of work in your markets, let's discuss.  
Otherwise, I might let him know that he is free to consult for a Japanese 
firm, which does not trouble me, as I think he holds views that would find 
their way into Japanese thinking in a way that would be a net benefit for us, 
rather than losing an ally.  Look forward to hearing from you.   thanks   mcs
---------------------- Forwarded by Mark Schroeder/LON/ECT on 06/12/2000 
17:00 ---------------------------


"Stephen Littlechild" <littlechild@tanworth.mercianet.co.uk> on 04/12/2000 
16:49:17
To: "Mark Schroeder" <mark.schroeder@enron.com>
cc: "Bridget Paveley" <bpaveley@legendjsm.net> 

Subject: SF and Tokyo



Dear Mark
?
Just back from Japan and sorting out  affairs.?I had a good meeting with your 
colleagues in the Tokyo office on  Friday.? They are very well informed about 
developments there, and provided  an excellent analysis of the situation.? I 
suspect your colleagues in San  Francisco are equally well informed, though I 
was not yet able to meet them  individually as you know.? In meetings with 
regulators and companies I was  also able to?put the case for full retail 
competition in both markets, and  for creating the situations in which this 
would be possible.? As far as I  can gather, this would be consistent with 
the arguments that Enron has been  putting. 
?
It strikes me that the regulatory authorities in  both areas are looking for 
guidance.? No doubt your colleagues are  submitting advice in various 
appropriate ways.? I'm not sure how much of  this is written down or 
published.? I have seen papers and testimonies  submitted to regulatory 
commissions, and published in journals such as the  Electricity Journal in 
the US, by people such as Larry Ruff and Bill  Hogan.? They are in favour of 
competition in principle, but it seems to be  a rather regulated form of 
competition, preferably in?a tightly regulated  Pool, and one which regards 
retail competition and trading as rather  marginal.??I have not seen much 
published in the way of counter  arguement.
?
If you are looking for an area that we might  develop together, the 
possibility of a public counter argument to these  commentators might be a 
useful one. That might also extend to rebutting the  arguements for hard 
price caps on generation, as adversely affecting the  prospects for trading 
as well as for new entry into generation. And it might  extend to rebutting 
the arguments of these same people against bilateral trading  instead of a 
compulsory Pool, eg concerning the devleopments of NETA in E&W.  I note that 
FERC's recomendations in California move in this direction, but  Hogan has 
mostly rubbished this and argued for something else. Finally, there  are the 
issues surrounding nodal pricing and flowgates, which I do not pretend  to be 
an expert on, but where I suspect that Hogan et al give too little weight  to 
the implications for trading. I'm sure that your people are well up on these  
issues, and able to put the case themselves.? What I could bring would be  
partly the experience and authority of a previous regulator.? But also the  
rethinking about economics, and relating this to modern developments in  
economics (both Austrian ideas and transactions cost economics), that I think 
is  necessary to shift the ground on which the others are fighting.
?
Let me know if you would like to take this  forward.? I should say that I was 
asked if I would join in a bid to provide  advice to one or more of the large 
incumbent electricity companies in  Japan.? We agreed that this would 
probably be incompatible with advising  Enron, so I said that I would defer 
any decision until I had spoken to  you.
?
In the meantime, many thanks for helping to fund  both trips, and indeed 
making them possible.? You kindly agreed to cover  one day's fee in each 
country plus the balance of unrecovered?air fare to  Berkeley.? I am asking 
my secretary Bridget to invoice you  accordingly.
?
I look forward to hearing from you in due  course.
?
Best wishes
Stephen
?
?