On Friday, July 6th, we had an excellent first meeting with Com Ed. 

In attendence from Enron were Rogers Herndon, Marc Ulrich, Jeff Merola, Brad Snyder, Guy Sharfman and myself.  (Roy Boston and our attorney Chris Townsend attended our pre-meeting discussion but did not attend at ComEd to keep our numbers down).

In attendence from Com Ed were Pam Strobel President, Exelon Energy Delivery Company and Vice Chair, ComEd; Frank Clark, Ex. V.P. Customer Marketing and Energy Delivery Services, ComEd; Gerald Rhodes, President, Exelon Energy; Arlene Juracek, Vice President, Regulatory & Strategic Services, ComEd; John McCawley, Director, Electric and Gas Choice; and Michael Freeman, Long-Term Trader, Exelon Power Team.

During the course of the meeting, we delivered our message that we, like ComEd, wanted to see a competitive market emerge in Illinois, but that we had concern that lifting the PPO early without the presence of a competitive market could create a California-like situation - which is what they were striving to avoid - because their approach would leave buyers on the competitive market without having any sellers due to problems with physical delivery.  We indicated our concern for our existing customers and our ability to grow our business in Illinois.  We stressed the PJM model as a workable solution that creates a liquid market.  There was much enthusiasm on the part of ComEd for focusing ICC attention on creating that kind of a solution for Illinois.  Arlene Juracek encouraged us to work with them on this and to meet with Steve Nauman and Celia David.  Since Mike Roan and I will be in Illinois on this Tuesday and Wednesday, first to hear the Alliance's presentation to the ICC and then for Mike to make a presentation the following day, we are going to try and meet with them.

One of our objectives was to set up a team between Enron and ComEd to go through the requirements and nuts and bolts of physical delivery into Illinois.  This was accomplished and Jeff Merola and Mark Ulrich witll be meeting  with Ann McGlin at ComEd to get a better understanding of what we can and cannot do to achieve physical delivery.  Also, Michael Freeman indicated a willingness to sell us a structured retail product to help us achieve physical delivery (energy and/or load following services), and made it clear that whatever deal we do with the Exelon Power team would be independent and separate from any deal we might do with ComEd on the PPO front.  Once we have completed our discussions with Ann McGlin and with Michael Freeman, we will meet again with ComEd to negotiate what we need for physical delivery.  

We also discussed other aspects of the ComEd letter to the ICC and received the following clarifications.  Customers going off the PPO before 2004 would be offered rate 6L which is a bundled rate.  After 2004, ComEd plans to go to real time pricing on a day ahead or hourly basis.  As to whether the CTC could be reinstated after a customer was dropped from PPO, they indicated that they had not thought about it, but believed the law would allow this.  Arlene Juracek, however, commented that they could lock in a CTC agreement with a customer.  I interpret that to mean that as part of an agreement to support ComEd in its proposal, we may be able to guarantee that for our customers, the CTC will not reemerge if market prices go down or that we can negotiate a limited CTC, etc.  

We also pointed out that we had other concerns like ComEd's unwillingness to negotiate the Supplier Agreement.  Not much time was spent on that but my sense is that if this is an obstacle to getting our concurrence, we may be able to work through this as well.

Frank Clark asked us about our willingness to take on the role of supplier of last resort and we responded that we needed first to be sure that we could physically deliver to customers.  Once that hurdle is addressed, we would be willing to consider that possibility.

The ComEd negotiating team will meet in Houston on either the morning of July 16th or 17th when we believe the tasks with ComEd will be completed, in order to evaluate what we have learned and what our next steps should be.  I will then arrange a follow-up meeting with Pam Strobel and her team.  

Janine