---------------------- Forwarded by John M Forney/HOU/ECT on 12/07/2000 12:48 
PM ---------------------------


Mary Hain
12/07/2000 12:18 PM
To: Tim Belden/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Jeff 
Richter/HOU/ECT@ECT, Greg Wolfe@ECT, Chris H Foster/HOU/ECT@ECT, John M 
Forney/HOU/ECT@ECT, Mike Swerzbin/HOU/ECT@ECT, Sean Crandall/PDX/ECT@ECT@ECT, 
Diana Scholtes/HOU/ECT@ECT, Tom Alonso/PDX/ECT@ECT, Matt Motley/PDX/ECT@ECT, 
Mark Fischer/PDX/ECT@ECT
cc:  
Subject: FERC Attorney Says California May Not Ban Power Exports

FYI
---------------------- Forwarded by Mary Hain/HOU/ECT on 12/07/2000 12:24 PM 
---------------------------
   
	Enron Capital & Trade Resources Corp.
	
	From:  "Ronald Carroll" <rcarroll@bracepatt.com>                           
12/07/2000 08:23 AM
	

To: <acomnes@enron.com>, <jdasovic@enron.com>, <jhartso@enron.com>, 
<jsteffe@enron.com>, <mary.hain@enron.com>, <smara@enron.com>, 
<snovose@enron.com>, <seabron.adamson@frontier-economics.com>, 
<ellen@tca-us.com>
cc:  
Subject: FERC Attorney Says California May Not Ban Power Exports


FYI - according to this article, a FERC commissioner informed Dow Jones that 
FERC does not plan to expand the price cap to the entire Western region.

DJ FERC: Davis Can't Force Generators To Sell Pwr In Calif
Copyright , 2000 Dow Jones & Company, Inc.

LOS ANGELES (Dow Jones)--A move by California Gov. Gray Davis which seeks to 
bar in-state generators from exporting their abundant power supply is a 
violation of interstate commerce rules - and therefore will never be 
implemented, an attorney with the Federal Energy Regulatory Commission told 
Dow Jones Newswires.

Last month, energy officials proposed to Davis the possibility of forcing 
in-state generators to sell all of their power into California, especially 
during statewide power emergencies.

     Davis said Tuesday night he may still seek legislation to force 
generators to sell their power supply here, which would help the state's grid 
operator avoid rolling blackouts.

     But according to federal law, the state cannot prohibit companies from 
doing business with other states, the attorney said, adding that it violates 
interstate commerce rules.

     Part of the reason energy companies export some of their power is that 
other states are willing to pay far above California's wholesale electricity 
price cap of $250 a megawatt-hour.

     Tuesday, with the state teetering on the brink of rolling blackouts, 
Northern California irrigation districts - government operated utilities that 
supply water and power to farmers - sold about 400 MW of excess power to the 
Northwest, reaping huge profits because customers there are not bound by a 
price cap.

     The ISO - forced to compete with companies willing to pay $1,000/MWh for 
electricity - narrowly avoided rolling blackouts Tuesday by paying about $1.1 
million for 1,000 MW of power, which is $1,100 a megawatt-hour.

     Still, Gov. Davis is pushing FERC to impose a $100/MWh regional price 
cap. But a FERC commissioner told Dow Jones Newswires that the commission 
will very likely impose a $100/MWh price in California only. FERC's final 
order on remedies California must undertake to repair its flawed market is 
due next week.

     But the FERC commissioner said it's the state's current price cap of 
$250/MWh that's destroying the wholesale market and resulting in generators 
exporting their power for a profit.

     "If they can make $275/MWh in Nevada they have an obligation to their 
shareholders," the FERC commissioner said.

     State lawmakers, meanwhile, want to force generators who conduct 
business in the state to report all wholesale electricity transactions to a 
state energy panel and register before selling power.

     -By Jason Leopold; Dow Jones Newswires; 323-658-3874; 
mailto:jason.leopold@dowjones.com
     (END) Dow Jones Newswires 06-12-00

     2308GMT