---------------------- Forwarded by Phillip K Allen/HOU/ECT on 04/25/2001 01:51 PM ---------------------------


Ray Alvarez@ENRON
04/25/2001 11:48 AM
To:	Phillip K Allen/HOU/ECT@ECT
cc:	 
Subject:	Re: This morning's Commission meeting delayed   

Phil,  I suspect that discussions/negotiations are taking place behind closed doors "in smoke filled rooms", if not directly between Commissioners then among FERC staffers.  Never say never, but I think it is highly unlikely that the final order will contain a fixed price cap.  I base this belief in large part on what I heard at a luncheon I attended yesterday afternoon at which the keynote speaker was FERC Chairman Curt Hebert.  Although the Chairman began his presentation by expressly stating that he would not comment or answer questions on pending proceedings before the Commission, Hebert had some enlightening comments which relate to price caps:

Price caps are almost never the right answer
Price Caps will have the effect of prolonging shortages
Competitive choices for consumers is the right answer
Any solution, however short term, that does not increase supply or reduce demand, is not acceptable
Eight out of eleven western Governors oppose price caps, in that they would export California's problems to the West

This is the latest intelligence I have on the matter, and it's a pretty strong anti- price cap position.  Of course, Hebert is just one Commissioner out of 3 currently on the Commission, but he controls the meeting agenda and if the draft order is not to his liking, the item could be bumped off the agenda.  Hope this info helps.  Ray




Phillip K Allen@ECT
04/25/2001 02:28 PM
To:	Ray Alvarez/NA/Enron@ENRON
cc:	 

Subject:	Re: This morning's Commission meeting delayed   

Are there behind closed doors discussions being held prior to the meeting?  Is there the potential for a surprise announcement of some sort of fixed price gas or power cap once the open meeting finally happens?






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