I agree.

I think a specific thing we could ask for re QF's re your point 2 below is to 
require the CPUC to move the SRAC formula back to a hedgeable basis.  
Specifically, get them off of WACOG and back to a border index.  That would 
allow the least expensive hedges.  5000 MW at SRAC if hedged by the IOUs 
would save them alot of money in the near term.



	Frank W Vickers
	12/29/2000 11:38 AM
		 
		 To: Dave Parquet
		 cc: 
		 Subject: Response

Dave, I think that we need to insert some QF based thoughts into the 
discussion.  See comments to Jeff below.

Frank
---------------------- Forwarded by Frank W Vickers/HOU/ECT on 12/29/2000 
11:04 AM ---------------------------


Frank W Vickers
12/29/2000 10:46 AM
To: Jeff Dasovich/NA/Enron@Enron
cc: Terry Donovan 
Subject: Response

Jeff, we need to add some discussion focused on QF issues in California and 
how resolution to certain items would enhance QF ownership and provide the 
utilities with optimal performance of the QF's and perhaps encourage new 
capacity development at existing QF locations.


The utilities should be motivated to enter into buyout, buydown, blend and 
extend, negotiate fixed energy prices and other restructuring transactions 
with the QF's.
The utilites have the ability to hedge the floating price currently being 
paid to the QF's.  They should be motivated to look into these structures.
Utilities should provide some clarification to the energy prices under QF 
PPA's.  There is alot of risks around SRAC and PX that affect both the 
utilities and the QF owners.  It seems like resolution to that risk is 
beneficial to both the utility as well as the QF.
QF's should have the ability to move excess capacity and energy into either 
the market and/or to the utility.  That  would create additional economic 
incentives for the QF's to run and perhaps increase their capacity.


Frank