On October 2, I, Aaron Klem and our outside attorney, Jeanne Bennett, met with other ESPs, the utilities, and the Energy Division staff of the CPUC to hammer out an agreement on implementing the CPUC's order suspending direct access (DA) and handling continued submission of DASRs.

It was news to the utilities that ESPs have many contracts --  most several years old -- that allow for addition and subtraction of facilities throughout the contract term.  The utilities had thought that cutting off DASRs would be the best way to enforce the CPUC's order without having to review contracts (which they don't want to do). After much discussion and debate, the participants agreed to make a joint filing at the CPUC seeking quick action.

Most agreed on the following plan (with the CPUC staff to check on the appropriate procedural vehicle):
We will endeavor to reach agreement on a joint filing at the CPUC to modify Rule 22 (the rule that governs CPUC/ESP interactions) (a Petition to Modify was also discussed as a vehicle) - a small working group of attorneys has been set up to draft this.  The group includes Jeanne Bennett and Dian Grueneich, who represents UC/CSU.
The new Rule 22 will add a section that acknowledges the CPUC action and sets forth therein (or in an Appendix) a verification procedure.
Each ESP will submit a list of customers by this Friday, October 5, for ALL contracts -- existing and new -- to each utility. It will be diificult and perhaps impossible to add customers later, so be complete.
Each ESP will submit to each utility the account level information for each customer on the list by November 1. All customer accounts should be on this list including facilities that have not yet been switched to DA, but may be switched sometime in the future.  Also, to the extent customers have plans for new facilities, put them on the list -- even if we do not yet have account information. Anyone who has the right to add DA later needs to be on the list.
Any DASR submitted for an account on the November 1 list will be accepted by the utilities -- no matter when it is submitted.
Additional accounts not on the November 1 list can be added through a verification process, such as an affidavit submitted by the ESP or by both the ESP and the customer.  This process is being worked out by the attorney working group.
The CPUC will be asked to approve this approach quickly.  

There is risk that the CPUC will NOT approve the approach and will cutoff DASRs on some date certain, in which case legal action would be required to allow for futher submission of DASRs. Steve Roskow of CPUC Energy Division said the CPUC has two factions -- one wants to cut off DA and the other wants it to continue.  He could not guarantee how the CPUC will respond to the joint approach.  He also mentioned that there are many lawyers at the CPUC looking at the retoactivity issue and the Commission's ability to affect existing contracts. Several participants, including Enron, UC/CSU and APSES, made strong statements about the legal problems the CPUC would face if they go down that road.

The utilities will be making a filing at the CPUC tomorrow that describes the steps they have taken to enforce the order.  PG&E and SDG&E will discuss the meeting and the joint plan -- PG&E may also say it will stick with some DASR cutoff date unless it hears otherwise from the CPUC.  SCE did not attend the meeting in person and at the end made clear that they had not agreed with the joint plan.  SCE is sticking with its original plan -- a customer and account list by September 24 and a DASR cutoff of October 20, no DASR accepted unless the name is on the customer list. The Energy Division staff is trying to move SCE off this position but I believe it comes from "on high."  We'll take our own run at it through a higher level at SCE. For now, we should continue to submit DASRs and follow the proposed joint plan and just keep records of our interactions with SCE (and the other utilities as well). If the situation does not improve in the next few days, we will reassess.

There is also the risk that the CPUC will not act on the joint approach quickly, leaving these issues in limbo and the utilities assuming "risk" that they have done the wrong thing and will be "punished." Not surprisingly, the utilities seem to favor a drop dead date for DASR submission, as a way to minimize this risk.  During the course of the meeting, the utilities mentioned a "compromise" of January 1, 2002 for a DASR cutff date.  They thought this would give the CPUC time to act on the joint plan, but allow them to minimize their risk in the event the CPUC decides that the utilities should have cutoff DASRs from the beginning.  This notion may appear in the filings to be made tomorrow.  I told them that any drop-dead date for DASR submission would be unacceptable to Enron. UC/CSU said the same.  A few ESPs seemed ready to accept the 1/1/02 cutoff but most do not.

Call with any questions.

Sue Mara
(415) 782-7802