Elizabeth,
For various reasons, and from time to time,  these new RTO-type things come 
to legal because we presumably have some special "corporate law" expertise 
about board compostition and by-laws.  I'm not sure we do, but in any event,  
Steve and I have reviewed this three inch pile of paper and our conclusions 
are set forth below.  If you would like us to do anything further, please let 
us know. ----cgy
---------------------- Forwarded by Christian Yoder/HOU/ECT on 12/01/2000 
02:11 PM ---------------------------


Steve C Hall
11/30/2000 05:17 PM
To: Christian Yoder/HOU/ECT@ECT
cc:  
Subject: Western Connection Interface (WIO)

Christian,

Earlier this week you asked me to review a stack of documents (proposals and 
draft bylaws) relating to the proposed Western Interconnection Organization.  

Conclusion:  Based upon a quick review of the draft proposal, bylaws, and 
other materials, I see no major objections to Enron voting for the formation 
of the WIO.   The reason to vote for this organization would be to facilitate 
the development of uniform reliability standards and efficient electric 
markets in the Western Interconnection.  However, you should carefully 
consider the fact that the board of directors will be weighted towards 
transmission owners (who will have 8 of the 27 votes).  Power marketers, 
generators, and load-serving entities will only have 4 votes.  14 directors 
establish a quorum and the board only requires a majority vote of directors 
present, so it is conceivable that, for example, 15 directors show up, 8 of 
which are transmission owners, and the transmission owners are able to pass 
any resoultion they wish.  Related to this issue is the inability of one 
membership group, such as the power marketer's group, to be able to veto a 
proposal.  It will take three membership classes acting in unison, plus two 
other votes, to defeat a proposed action by the board.  Unfortunately, 
because I am not personally familiar with the internal dynamics of the WSCC 
membership, I am unable to offer any indication of the how much of a risk 
this presents.  

       Background and Overview
In General:  The Western Interconnection Organization ("WIO") will be formed 
by consolidating the Western Regional Transmission Association, the 
Southwestern Regional Transmission Association, the Northwestern Regional 
Transmission Association, and the Western States Coordinating Council (WRTA, 
SWRTA, NRTA, and WSCC, respectively) into one organization.  The WIO, a 
non-profit corporation, will assume and perform the functions of these 
organizations, and, eventually, those organizations will be disbanded.

The principal responsibilities of the WIO will be as follows:

 *The WIO will be the primary authority for promulgating regional 
reliability, operating, and procedural standards.
 *The WIO will work to resolve conflicting regional reliability standards, 
and work to develop compatible and efficient practices throughout the Western 
Interconnection.
 *The WIO will have no authority over commercial practices (but may work to 
promote compatible, efficient markets).
 *Provide a process for resolving disputes arising out of WIO functions and 
between WIO members.

Membership:

Any entity meeting the criteria for membership in one of the following 
membership classes may be Member of the WIO.  There are five classes of 
membership:  (1) Business entities owning more than 1000 miles of 
transmission lines, (2) Business entities owning less than 1000 miles of 
transmission lines; (3) Business entities that do not own, control, or 
operate transmission or distribution lines, e.g., power marketers, 
load-serving entities, independent power producers; (4) End users of 
electricity; and (5) Representatives of States and Provinces in the Western 
Interconnection.

 *Each class elects four (4) directors.
 *All of the classes select seven (7) non-affiliated directors, for a total 
of twenty-seven (27) directors.
 
Quorum:  A majority of all members, including a majority in at least three 
classes.  In the case of directors, there must be 14 directors.

Board Decisions:  A board decision requires a majority of the directors 
present.

Standing Committees:  There are three standing committees:  the Planning 
Coordination Committee, the Operating Committee, and the Market Interface 
Committee.  

Committee Voting:  For purposes of voting on recommendations to the board, 
committees are divided into three classes:  (1) transmission providers, (2) 
transmission customers, and (3) States and Provincial Members (which is Class 
5). In order to make a recommendation to the board, there must be a simple 
majority of votes from the transmission provider and transmission customer 
classes.

Termination:  The WIO can be terminated upon a vote of the majority of the 
members.