I concur 100% with Doug on this issue.   We need to stop dancing around the 
issues.   The hybrid proposal does not satisfy the trading organization's 
needs for an efficient real time market with a supply and demand curve.

I am not confident that Tabor's will deliver a credible message that will get 
the changes we need in ERCOT.
---------------------- Forwarded by Kevin M Presto/HOU/ECT on 02/08/2001 
12:46 PM ---------------------------


Doug Gilbert-Smith@ENRON
02/08/2001 12:39 PM
To: James D Steffes/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron
cc: Jean Ryall/NA/Enron@ENRON, Ron McNamara/NA/Enron@Enron, Bruce 
Sukaly/Corp/Enron@Enron, Kevin M Presto/HOU/ECT@ECT 
Subject: Tabors visit to ERCOT

Jim,

I have just reviewed Tabors' proposal for a hybrid solution to RTOs and I do 
not feel that, at this point in time, this does the ERCOT desk any good 
whatsoever. It is simply a continuation of what the PUC has already seen from 
his counterpart, Dr Oren, and does not meet my expectations for a feasible 
market. I have not been impressed with Tabors understanding of our trading 
business and do not feel that this latest model forwards our efforts at all.

The purpose of the meeting on the 15th is to review the real-time congestion 
management mechanisms currently proposed and not a forward hybrid market. If 
we have two associates who are saying the same thing we do not achieve our 
goal of changing this situation. Furthermore, it simply means we end up 
signing on to a flawed market design which, I am sure, is not in anyone's 
best interest; commercially or politically! We have not been implicated in 
the failings of California's design because we did not sign up to the initial 
proposal there. It would be very foolish to sign up now to an equally flawed 
model.

I would like to have a quick meeting to discuss this so that we can forge 
ahead with the ERCOT gameplan. I will not accept a bastardised version of the 
current proposals as a solution for this market. It does not allow either EES 
or ENA to operate productively and will ultimately fail. I am confident we 
can get over any hesitations we have using other market experts to present 
the case and I know that there has been great interest in this. This should 
also fit in well with the efforts being led by Jeff Brown on the RTO side and 
is consistent with our discussions Tuesday.

I trust you will be able to accommodate us with a request to hammer this out. 
The business opportunities far outweigh the 'issues' we have with ditching 
Tabors' model in this market. We believe that having Hogan present at the PUC 
will undoubtedly forward our various causes in a much more effective manner. 
Furthermore, his cache with the utility crowd is an important consideration 
in getting them to understand our business and transact with us. 

I look forward to hearing from you and trust we can get this resolved today 
so we can get back to business.

Thanks,

Doug