The west desk also supports these comments.


To: Bob Carter/HOU/ECT@ECT, Steve Walton/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, 
Alan Comnes/PDX/ECT@ECT
cc: James D Steffes/NA/Enron@Enron 
Subject: Re: APS Answer/Interconnection Filing

FYI re: a Duke/Enron answer to APS' reply to our protest.  I will forward 
Arizona PS's reply to Steve, and Mary.  Alan and Bob, let me know if you 
would like to see it.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 01/09/2001 
10:39 AM ---------------------------


Christi L Nicolay
01/09/2001 10:40 AM
To: teresabrown@duke-energy.com @ ENRON
cc: lebarrett@duke-energy.com@ENRON, schottg@dsmo.com@ENRON 

Subject: Re: APS Answer/Interconnection Filing  

See comments below.  Sorry this is so delayed.  Thanks.



teresabrown@duke-energy.com on 01/02/2001 01:22:39 PM
To: cnicola@ect.enron.com
cc: lebarrett@duke-energy.com, schottg@dsmo.com 

Subject: APS Answer/Interconnection Filing


Christi,

Attached are comments Gretchen generated regarding APS' answer to our joint
protest of APS' interconnection procedures.  We are considering filing a
reply, and I wanted to get your input.  Generally, DENA does not like to
file answers to answers as it is in FERC's discretion whether to accept
such responses, but we may want to consider clarifying our position
regarding the monthly direct assignment charges under Article 12 of the IA.
Please let me know your take.

Best Regards,

Teresa Brown
(713) 627-6592

We've taken a look at the answer Arizona Public Service Company filed on
12/22/00 in response to our protest.  There are a number of issues to which
DENA should consider responding.  Responses must be filed by Monday,
January
8, 2001.

*    Study assumptions (APS Answer, at 8-9):  APS argues that there is no
benefit from disclosing assumptions and that this would give a generator an
unfair market advantage over other market participants.  While APS does not
indicate to whom there is no benefit, presumably it means APS.  We should
consider challenging this since there is a benefit to disclosure of the
study assumptions -- how else is a generator to determine whether it is
being asked to goldplate APS' system?  APS' answer to this is to say that
the IA's Willful Action provisions prevent APS from conducting activities
or
making decisions based on motive to serve financial benefit.  We are at a
loss, however, as to how the provisions accomplish that since what they
really do is shield APS from liability.I agree -- and agree that APS' response
doesn't make sense.  I believe that the Commission has
required Entergy to provide more study data to a generator in one of last 
year's
complaints against Entergy (either Dynegy or NRG?).

**What about a response on the "must -run" issue (p. 27-28).  I think APS is 
trying to 
back door the Arizona proposed requirements (that are still being fought and 
are
not accepted?)  This is a big issue and APS' response does not address our 
arguments other
than stating that Must Run should be required in the IA.  I do not
know of any other interconnection agreements that have must-run provisions.
*    Transmission credits (APS Answer, at 30-31):  APS claims that
transmission credits are appropriate only for firm service, a proposition
the Commission just rejected in the ComEd order issued on 12/8/00.Absolutely 
agree that it
should be for firm and non-firm.
*    Monthly Direct Assignment Charges (APS Answer, at 32-33):  We should
consider clarifying our position on this issue, which APS appears to
misunderstand. APS argues that, in our protest, we addressed the cost of
modifications, not the cost of operation and maintenance, and thus were
comparing apples to oranges.  This is not true.  Rather, what we argued is
that we should not be responsible for the cost of operating and maintaining
any facilities for which we were not responsible for the initial
installation cost.  APS apparently missed the point.I agree.
*    Willful Action (APS Answer, at 33-37):  APS essentially argues that
the strict liability provisions in the IA are appropriate because it cannot
make a profit by entering into an IA.  Unlike with respect to transmission
service, it recovers only its actual costs.  APS  ignores the fact that, by
interconnecting a generator, APS will ultimately generate transmission
revenue.  APS also ignores the benefits that new generation bring to the
table.   APS has not justified why the liability provisions are "consistent
with, or superior to" the pro forma tariff and why a generator should be
required to bear the consequences of APS' negligence and, in many
instances,
intentional misconduct, particularly where APS is not provided any
incentive
to act prudently, simply because APS receives no profit.I agree.  APS' 
proposed restrictions
are wholly unwarranted and are outrageous.  There are no other 
interconnection agreements
(that I know of) containing anything remotely similar.

Please let us know how you'd like to proceed.  If you have any questions,
let us know.  Thanks.

Gretchen