FYI
---------------------- Forwarded by Richard Shapiro/NA/Enron on 12/01/2000 
12:11 PM ---------------------------


"Biel, Eric" <EBiel@Fontheiminternational.com> on 12/01/2000 11:13:39 AM
To: "'Richard.Shapiro@enron.com'" <Richard.Shapiro@enron.com>
cc: "Painter, Sally" <SPainter@fontheiminternational.com> 

Subject: RE: Options the Governor's Considering

Rick--many thanks for forwarding the messages and attachment to me.  Even
having been at the meeting, reading Steve's assessment of it was very
useful.  I certainly concur on the idea of pulling a short document
together; could you forward whatever is developed to Sally and me, so we'll
be in the loop on that?  Thanks.
Spoke with Kari Dohn last night.  She actually had to drop out of going with
Gray Davis to the Vicente Fox inauguration in Mexico City to stay behind and
work on electricity issues--that's how consumed they are by the whole thing.
Lots obviously happening every day out there--and on the FERC front.  Jeff
D. obviously is an extremely capable person to be following that closely.  
I think Jeff and Kari will have a very productive meeting next Wed.--not to
say she is in a position to overrule others with different perspectives and
agendas, but she is smart, a good listener, and was very impressed with
Steve and Jeff last Monday, so really does want to hear more on what Enron
thinks should and can be done to address all of the issues.  And she also
understands this is not just sophisticated technical advice; it also has a
political sophistication to it.
Anyway, thanks again, and look forward to being in touch regularly on this
and other matters.
Best, Eric

-----Original Message-----
From: Richard.Shapiro@enron.com [mailto:Richard.Shapiro@enron.com]
Sent: Thursday, November 30, 2000 1:56 PM
To: Jeff.Dasovich@enron.com
Cc: ebiel@fontheiminternational.com
Subject: Re: Options the Governor's Considering




thanks



From: Jeff Dasovich on 11/30/2000 11:19 AM

Sent by:  Jeff Dasovich


To:   Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Paul
      Kaufman/PDX/ECT@ECT, Sandra McCubbin/NA/Enron@Enron, Susan J
      Mara/NA/Enron@ENRON, James D Steffes/NA/Enron@Enron, Karen
      Denne/Corp/Enron@ENRON
cc:

Subject:  Re: Options the Governor's Considering  (Document link: Richard
      Shapiro)

FYI:  Set up a meeting with Kari Dohn for next Wednesday.


 

                    Steven J Kean

                                         To:     Jeff
Dasovich/NA/Enron@Enron                                      
                    11/27/2000           cc:     Alan Comnes/PDX/ECT@ECT,
Jeff Dasovich/NA/Enron@Enron, Joe        
                    09:22 PM             Hartsoe/Corp/Enron@Enron, Karen
Denne/Corp/Enron@Enron, Mary              
                                         Hain/HOU/ECT@ECT, Mona L
Petrochko/NA/Enron@Enron, mpalmer@enron.com,     
                                         Paul Kaufman/PDX/ECT@ECT, Richard
Shapiro/NA/Enron@Enron, Sandra          
                                         McCubbin/NA/Enron@Enron, Sarah
Novosel/Corp/Enron@Enron, skean@enron.com, 
                                         Susan J Mara/NA/Enron@Enron, Tim
Belden/HOU/ECT@ECT, David                
                                         Parquet/SF/ECT@ECT

                                         Subject:     Re: Options the
Governor's Considering(Document link: Jeff   
                                         Dasovich)

 




Jeff Dasovich and I, along with several IEP members, met with Gov Davis'
staff today, including his Chief of Staff, his Staff Director and two
policy advisors on energy issues.  They made the following points:

     The Governor is personally spending a great deal of time on
     electricity issues (and is forcing them to spend their time on it as
     well).
     The Governor recognizes that part of the problem is a supply shortage,
     but they put special emphasis on the view that in addition to supply
     shortfalls, a big part of the problem is a "dysfunctional market" -- a
     thinly veiled reference to price manipulation by people sitting in the
     room.
     The Governor's view is that all participants (regulators, utilities,
     customers and generators) must "behave responsibly".
     Everyone must "share the pain".
     The legislative battles are likely to start as soon as the legislature
     returns next week, and the Governor will be putting forth several
     legislative proposals in the next couple of weeks.
     While staff went out of its way to say that the list of proposals (in
     the attached e-mail) were unofficial and for discussion purposes only,
     it was fairly clear that they defined much of what the governor plans
     to propose.

The meeting was not very encouraging nor did it provide much in the way of
new information.  The IEP group was on message, making the usual arguments
about the need for forward contracting, expedited generation and
transmission siting, a real retail market to promote demand side responses,
etc.  The staff is clearly focussed on forward contracting as part of the
solution but remains committed to the idea that generators have to cough up
some money and remain subject to rate caps, possible restrictions on sales
outside the state (at least at peak times), etc.  One approach they appear
to be toying with is a "share the pain" proposal which would have utilities
absorbing some of the deferred costs and consumers absorbing some of the
deferred costs in the form of higher rates.  That leaves generators ... who
they might want to either agree to some refunds or provide power at lower
going-forward prices.

The staff says that they remain open to proposed solutions, but the Davis
administration appears unwilling to spend any political capital to fix the
problem.

I think we are in for a lengthy legislative and PUC fight.  We should, as
always, provide consistent and reasonable solutions.  I think we should
prepare a document for distribution to staff, legislators (and anyone else)
that takes the factual background and proposed solutions we have put
forward (eg in Belden's presentation and the Seabron Adamson whitepaper)
and wraps them in a more political context.  In other words, we have
already articulated the right answers; we now need to put a political
rationale around our proposals -- a set of arguments which responds
directly to the political opposition those answers are likely to encounter.
Jeff will follow up with one of the staff members in particular (Kari Dohn)
and I would suggest that Jeff and Sandi work together on putting the
necessary political rhetoric around the solutions we have proposed.



 

                    Jeff Dasovich

                    Sent by: Jeff        To:     skean@enron.com, Richard
Shapiro/NA/Enron@Enron, Paul             
                    Dasovich             Kaufman/PDX/ECT@ECT, Sandra
McCubbin/NA/Enron@Enron, Mona L               
                                         Petrochko/NA/Enron@Enron, Susan J
Mara/NA/Enron@ENRON, Joe                
                                         Hartsoe/Corp/Enron@ENRON, Mary
Hain/HOU/ECT@ECT, Sarah                    
                    11/22/2000           Novosel/Corp/Enron@ENRON,
mpalmer@enron.com, Karen                        
                    04:00 PM             Denne/Corp/Enron@ENRON, Alan
Comnes/PDX/ECT@ECT                           
                                         cc:

                                         Subject:     Options the Governor's
Considering                           
 




Steve:  FYI.  Don't worry about the conference call, but thought it might
be useful to review the proposals prior to Monday's meeting.

See you Monday.

Happy Thanksgiving to all.

Best,
Jeff

****************************************************************************
****************************************

Several  IEP  companies  have been invited to a meeting with the Governor's
staff next Monday, November 27th.


The following are some options, which the Governor's office is considering.
IEP  is doing some preliminary research on some of these topics.  IEP would
like  to arrange a teleconference call around noon on Monday, November 27th
to  discuss  the  Governor's  meeting.  Please advise us as to whether your
have been invited, and who you are sending.


California's  electricity supply situation has two inter-related problems ?
(1) high wholesale electricity costs, and (2) marginally adequate supply of
generation  ?  both  have  combined  to  create  a  dysfunctional wholesale
electricity market.  The goals should be:


     To  assure reliable electricity to California consumers for the lowest
reasonable cost.


o    Consider requiring that all in-state generation be sold in state.
o    Consider re-asserting state authority over the operation, maintenance
and safety practices of all in-state generating facilities' for public
health and safety purposes.
o    Consider developing a state power authority to build generation and
own/operate transmission.
o    Consider requiring utilities both to retain existing and to build new
generation.
o    Consider providing utilities with authority to stabilize retail prices
to be paid by consumers through development of an energy portfolio that
reduces exposure to spot markets, including contracting forward for much
more of their unmet power needs.
o    Consider extending consumer rate freeze.
o    Consider centralizing power plant dispatch like the other ISOs in the
rest of the country.
o    Consider eliminating the ISO and assigning its functions to either a
state or private entity that can acquire the transmission facilities, and
control the electricity transmission grid (MUNIs have proposed this).
o    Consider sponsoring/supporting legislation to change the ISO and PX
boards to increase accountability.
o    Expand energy conservation programs focused both on immediate peak
demand reduction and on longer term, broader-based programs.
o    Aggressively work to site new generation and transmission facilities,
to streamline permitting, and to develop renewable resources.
o    Call for/sponsor federal FERC reform legislation that would:
o    Impose a regional price cap that varies by time of day and year;
o    Set requirements for FERC to use its retroactive refund authority;
o    Improve FERC enforcement over price gouging practices;
o    Affirm the role of states to protect their customers from unjust
prices.
o    Pressure the FERC to do its job to (1) bring about responsible seller
behavior in wholesale electric markets through price controls and other
market interventions as necessary, and (2) provide refunds to affected
consumers.
----- Forwarded by Jeff Dasovich/NA/Enron on 11/22/2000 03:44 PM -----
 

                    Susan J Mara

                                         To:     "CHUDSON" <carol@iepa.com>

                    11/22/2000           cc:     "Andy Brown \(E-mail\)"
<abb@eslawfirm.com>, chudson@iepa.com,    
                    03:05 PM             "Curtis Kebler \(E-mail\)"
<curtis_l_kebler@reliantenergy.com>, "Delaney  
                                         Hunter \(E-mail\)"
<dhunter@smithandkempton.com>, "Greg Blue \(E-mail\)"  
                                         <gtbl@dynegy.com>, "Jack Pigott
\(E-mail\)" <jackp@calpine.com>, "Jeff    
                                         Dasovich \(E-mail\)"
<jdasovic@enron.com>, "Joe Ronan \(E-mail\)"         
                                         <joer@calpine.com>, "John Stout
\(E-mail\)"                               
                                         <John_H_Stout@reliantenergy.com>,
jparker@HMOT.com, "Katie Kaplan         
                                         \(E-mail\)" <kaplan@iepa.com>,
kelly@hnks.com, "Kelly Norton \(E-mail\)"  
                                         <knorton@mcnallytemple.com>, "Lynn
Lednicky \(E-mail\)"                   
                                         <lale@dynegy.com>,
marie_moretti@msn.com, mrmonagan@aol.com, "Bob         
                                         Weisenmiller \(E-mail\)"
<rbw@mrwassoc.com>, "Bob Escalante \(E-mail\)"   
                                         <rescalante@riobravo-gm.com>, "Rob
Lamkin \(E-mail\)"                     
                                         <rllamkin@seiworldwide.com>, "Jan
Smutny-Jones \(E-mail\)"                
                                         <smutny@iepa.com>, "Steven Kelly
\(E-mail\)" <steven@iepa.com>, "Susan J  
                                         Mara \(E-mail\)"
<Susan_J_Mara@enron.com>, "McNally Temple Assn. Inc.     
                                         \(Business Fax\)"@mail.cwo.com

                                         Subject:     Re: (Document link:
Jeff Dasovich)                           
 




Jeff Dasovich and Steve Kean are attending.  Someone can be on a call -- me
if no one else -- if Jeff and Steve are travelling at the time. Hey, does
the Governor have to fly coach?


 

                    "CHUDSON"

                    <carol@iepa.c        To:     "Katie Kaplan \(E-mail\)"
<kaplan@iepa.com>, "Jeff Dasovich       
                    om>                  \(E-mail\)" <jdasovic@enron.com>,
"Kelly Norton \(E-mail\)"               
                                         <knorton@mcnallytemple.com>, "John
Stout \(E-mail\)"                      
                    11/22/2000           <John_H_Stout@reliantenergy.com>,
"Curtis Kebler \(E-mail\)"              
                    12:47 PM
<curtis_l_kebler@reliantenergy.com>, "Rob Lamkin \(E-mail\)"              
                                         <rllamkin@seiworldwide.com>, "Bob
Weisenmiller \(E-mail\)"                
                                         <rbw@mrwassoc.com>, "Susan J Mara
\(E-mail\)" <Susan_J_Mara@enron.com>,   
                                         "Andy Brown \(E-mail\)"
<abb@eslawfirm.com>, "Bob Escalante \(E-mail\)"   
                                         <rescalante@riobravo-gm.com>, "Greg
Blue \(E-mail\)" <gtbl@dynegy.com>,   
                                         "Jack Pigott \(E-mail\)"
<jackp@calpine.com>, "Jan Smutny-Jones           
                                         \(E-mail\)" <smutny@iepa.com>, "Joe
Ronan \(E-mail\)" <joer@calpine.com>, 
                                         "Lynn Lednicky \(E-mail\)"
<lale@dynegy.com>, "McNally Temple Assn. Inc.  
                                         \(Business Fax\)"@mail.cwo.com,
"Steven Kelly \(E-mail\)"                 
                                         <steven@iepa.com>, "Susan J Mara
\(E-mail\)" <Susan_J_Mara@enron.com>,    
                                         <mrmonagan@aol.com>,
<marie_moretti@msn.com>, "Delaney Hunter \(E-mail\)" 
                                         <dhunter@smithandkempton.com>,
<kelly@hnks.com>, <jparker@HMOT.com>,      
                                         <chudson@iepa.com>

                                         cc:

                                         Subject:

 









Jan Smutny-Jones, Exec Dir
Independent Energy Producers Assn.
1112 I Street, Suite 380
Sacramento, CA 95814
PH: 916-448-9499
FX: 916-448-0182
iepa@iepa.com

(See attached file: Govs meeting Conf Call.doc)