This is an ENA issue.



	Robert C Williams@ENRON_DEVELOPMENT
	01/08/2001 08:31 AM
		 
		 To: Richard Sanders
		 cc: 
		 Subject: Re: FW: Strategy & End Game for FERC Proceeding

Richard?
---------------------- Forwarded by Robert C Williams/ENRON_DEVELOPMENT on 
01/08/2001 08:38 AM ---------------------------


Vicki Sharp@EES
01/07/2001 12:15 PM
To: Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: Re: FW: Strategy & End Game for FERC Proceeding  

Can you confirm with Richard Sanders that this is an ENA issue?



Robert C Williams@ENRON_DEVELOPMENT
01/05/2001 12:36 PM
To: Vicki Sharp@ENRON_DEVELOPMENT
cc:  
Subject: FW: Strategy & End Game for FERC Proceeding

fyi
---------------------- Forwarded by Robert C Williams/ENRON_DEVELOPMENT on 
01/05/2001 12:42 PM ---------------------------


"Fergus, Gary S." <GFergus@brobeck.com> on 01/05/2001 11:38:28 AM
To: "Andy Pickens (E-mail)" <apickens@gibbs-bruns.com>, "Conner, Randall" 
<RConner@brobeck.com>, "David J. Noonan (E-mail)" <djn@pkns.com>, "Jean 
Frizzell (E-mail)" <jfrizzell@gibbs-bruns.com>, "Meringolo, Peter" 
<PMeringolo@brobeck.com>, "Michael L. Kirby (E-mail)" <dcastro@pkns.com>, 
"Mike D. Smith (E-mail)" <msmith1@enron.com>, "Molland, Michael" 
<MMolland@brobeck.com>, "Richard B. Sanders Esq. (E-mail)" 
<richard.b.sanders@enron.com>, "Robert C. Williams (E-mail)" 
<Robert.C.Williams@enron.com>, "Susan Bisop (E-mail)" 
<sbishop@gibbs-bruns.com>
cc:  

Subject: FW: Strategy & End Game for FERC Proceeding


FYI
Thanks
Gary

-----Original Message-----
From: Jeffrey Watkiss [mailto:dwatkiss@bracepatt.com]
Sent: Friday, January 05, 2001 9:24 AM
To: gfergus@brobeck.com; rsander@enron.com; sbishop@gibbs-bruns.com
Cc: jsteffe@enron.com; rshapiro@enron.com; smara@enron.com
Subject: Strategy & End Game for FERC Proceeding


As you are aware, FERC's chief ALJ is presiding over administrative
proceedings, ordered by FERC, that ostensibly are intended to provide the
Cal. utilities with reasonable forward power supply contracts, but, in fact,
are being used equally to force sellers to the ISO and PX during the 3d and
4th Q 2000 to refund some of their profits from those sales.  The refund
will take the form of deeply discounted forward sales commitments to the
utilities.  The impetus for marketers or independent generators to play ball
is the threat that FERC may revoke their authorization to make power
wholesales at market-based as opposed to regulated cost-based rates or take
some other punitive step.

My concern is that this is a terribly one-sided negotiation.  Marketers and
generators are being asked to put their profits on the table - profits that
FERC's general counsel's office and FERC itself have concluded they have no
power to touch - and proceed to negotiate against themselves.

Enron has good people representing them in these FERC proceedings - Sue
Mara, Donna Fulton, Sarah Novosel and, when needed, my colleague Ron
Carroll.  What I am concerned about is that they do not have a concrete
strategy or end game to pursue.  Among other things, Enron 's strategy
should include requiring the utilities, FERC  and the CPUC to put some value
on the table together with the marketers' and generators' profits.  As these
values may implicate strategy in the California civil actions, I thought I
should run my thioughts by you.

Specifically, I think Enron (and its allies) should insist that as
precondition of even considering discounted forward sales:

1.  FERC and the CPUC must commit to file in the District Ct. action
pleadings in support of a motion ito dismiss the complaints on the ground of
exclusive FERC jurisdiciton.

2.  FERC agree to vacate on rehearing as unsupported by substantial evidence
its December 15 finding that rates had been unjust and unreasonable.

3.  The utilities and CPUC commit to auctioning off all or some large
percentage of the utilities' retail customer base.

There may be other quid pro quo considerations.  I think it is imperative
that Enron decide now what they should be.   Politically (and quite likely
commercially) it is not an option for Enron to pull out of the FERC
proceedings.  Therefore, we need to start changing what is at stake in the
FERC proceeding and directing it toward our end game.

Please let me know if you wish to discuss this further.


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