FYI re your meeting with Ristori next Wednesday. Obviously Bruno can give 
more background. And I have met the UM people with Philip previously. 

---------------------- Forwarded by Peter Styles/LON/ECT on 06/01/2001 05:25 
PM ---------------------------
From: Philip Davies/Enron@EUEnronXGate on 06/01/2001 02:36 PM GDT
To: Paul Mead/LON/ECT@ECT, Ross 
Sankey@/O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=BFC3C3AD-85CCEF7-8625653F-
620E04@EX@EUEnronXGate
cc: Bruno Gaillard/Enron@EUEnronXGate, Raphael Brun/LON/ECT@ECT, Peter 
Styles/LON/ECT@ECT, Jonathan Pietila/Enron@EUEnronXGate, Simon 
Brod/LON/ECT@ECT 

Subject: RE: EFET Meeting with the CREG/Union Miniere feedback

 Ross, Paul

We had good feedback from Union Miniere on the Belgian situation yesterday.  
Apparently the Febeliec press release on the competitive situation in Belgium 
went down very badly in the government.  Febeliec got a letter back saying 
that the govt was "disappointed and unhappy" with the letter, noting that the 
govt priorities were the Belgian presidency of the EU, the finances of the 
communes (whose finances are of course completely wrapped up with 
Electrabel's extraction of revenues from captive customers) and something 
along the lines of "preserving the traditions of Belgian electricity 
supply".  Furthermore, there are suggestions of veiled threats (not from the 
government directly, but from those working closely with govt) of 
"retribution" ( taxes/environmental burdens) -presumably if Febeliec don't 
lay off.  Also confirmed Bruno's CREG feedback that border issues are not a 
priority.

UM however is going to persist.  Senior management (Marcel Goetstouwers, VP 
of Purchasing & Transportation) wants us to go back next week and present to 
him why exactly we can't commit to delivering firm on the Belgian grid next 
year and what it takes for us to be able to do so.  He intends to use this 
material in his upcoming meeting with the Minister.  We have of course been 
explaining all along the difficulties, but it has taken their recent Belgian 
tender (in response to which they received no offers apart from their 
Electrabel offer plus our OTM option) for him to take the issues seriously.  
UM is also talking again about complaints to the Commission, which they may 
actually do now (possibly).  

Our OTM option remains on the table and we can discuss it again after their 
visit to the Minister.

Against this background, the CREG refusal to meet with Enron is obviously 
symptomatic of the general attitude of the govt.  EFET Belgium needs to take 
this into account in moving forward. (Bruno - why not get some feedback 
directly, and independently, from Febeliec - and see if it confirms or not 
UM's report.)

On the test sale to Electrabel on the Belgian grid, I will take this forward 
with Jonathan on his return on Tuesday.  Following the recent 
pressure/letters from us on the issue to CPTE, they had indicated ARP trading 
on the grid would be in place by 1 July but this has since slipped to Sep or 
Oct, and of course, there is no CPTE commitment on paper anyway (a promised 
press release on the subject is probably being saved for the announcement of 
the nomination of the TS0, expected 21 July).  It will be interesting to see 
if Electrabel still give us a price, since there have been CPTE/Electrabel 
discussions on the matter since we raised it.

Philip
 -----Original Message-----
From:  Mead, Paul  
Sent: 30 May 2001 20:37
To: Sankey, Ross
Cc: Gaillard, Bruno; Davies, Philip; Brun, Raphael; Styles, Peter
Subject: Re: EFET Meeting with the CREG - Elect. and Gas

Just to clarify, we can buy from Electrabel in Belgium, but are told we can 
not SELL to them in Belgium.  Perhaps an even more crazy situation!

BTW, we intend to challenge this by doing a deal and just submitting a 
schedule.  Philip, what is the status of this?

PM





Ross Sankey@ECT
30/05/2001 18:45
To: Bruno Gaillard/Enron@EUEnronXGate @ ENRON
cc: Paul Mead/LON/ECT@ECT@ENRON, Philip Davies/Enron@EUEnronXGate@ENRON, 
Raphael Brun/LON/ECT@ECT@ENRON, Peter Styles/LON/ECT@ECT@ENRON 

Subject: Re: EFET Meeting with the CREG - Elect. and Gas   << OLE Object: 
StdOleLink >> 

Bruno,

As you say not unexpected!  

Were they quoting the govt in terms of their intentions to not open the 
market?  How does this approach play in terms of the Belgium presidency?

As a simple example, we face the ludicrous situation that CPTE allows us to 
wheel power through Belgium from Fr to NL (et vv) but refuses to allow us to 
buy from or sell to Electrabel - with significant implications for the Dutch 
as well as Belgium markets, given Electrabel's strong position in both 
markets.  In that this is a cross border issue the EU ie TREN and/or COMP 
should take more interest.......but probably only if prodded by the Dutch to 
conisder it more of a priority (and pigs might fly on that one?)?

Obviously position of TREN key on this - what hot buttons can we press 
(assuming Dutch do nothing)?  Is there action that could be taken or 
threatened against Electrabel (although this would obviously need to be 
justified by lengthy and difficult abuse investigation or such like).  Is the 
reported Electrabel/Distrigas "concert" another angle to raise with 
TREM/COMP?  Could CPTE be fined?

Regards,

Ross




From: Bruno Gaillard/Enron@EUEnronXGate on 30/05/2001 18:10
To: Ross Sankey/LON/ECT@ECT, Paul Mead/LON/ECT@ECT, Philip 
Davies/Enron@EUEnronXGate, Raphael Brun/LON/ECT@ECT
cc: Peter Styles/LON/ECT@ECT 

Subject: EFET Meeting with the CREG - Elect. and Gas

The meeting yesterday with the CREG was very disappointing although not 
surprising. We met Christine VANDERVEEREN - President and Department for 
dispute settlement, Thomas LEKANE - Director of the technical operation of 
the electricity market,  Jean-Paul PINON - Director of the technical 
operation of the gas market, and Fran?ois POSSEMIERS - Director of gas price 
control. The attitude of Ms VANDERVEEREN was one of resignation and apathy, 
Mr. LEKANE was very defensive (and did not seem to understand the issues i.e. 
did not understand the exchanging of energy blocks), M. PINON was the only 
one that seemed pro-active, open and wiling to listen to market participants, 
and Mr. POSSEMIERS did not say anything. 

Electricity

We presented the situation - no access to market/transit, quasi monopoly 
situation at the detriment to consumers,  no wholesale and retail market, no 
wholesale trading allowed. We insisted that in the short -term, capacity 
should be available on a UIOLI bases, block exchanges should be put in place 
ASAP. They indicated that only the strict minimum was going to be implemented 
in the short run. In particular, at the end of the meeting M. Vanderverren 
told me that the government had no intention of opening up the market for 
competition and that their only intention was to focus on internal market 
issues, and not border issues, to insure the transposition of the directive 
to fend off the Commission's latest  infringement action. 
  
The CREG is still operating under the "we have no power" mode. The tension 
between the CREG and the ministry is obvious and politically motivated. The 
CREG gives the impression that they are subject to the ministry's power, they 
are only acting as an administrator for the ministry in providing advice on 
proposed legislation.   The CREG continues to claim that they are not able to 
impose any rules or regulation on CPTE as CPTE is not the nominated TSO. They 
also seem to fend off any offer for us to consult on any issues other than 
draft decrees and certain "indicative plans" that are envisage (see below). 

Status of TSO designation:
The TSO should be nominated on 21/7. All important decrees will be passed by 
the 20/7. This includes the grid code, tariff related decrees (need 
precisions), and a new decree requiring licensing for intermediaries 
(including suppliers and traders).  Regarding this issue, the CREG is against 
additional licences but see this requirement unavoidable (due to political 
will), and asked that we provide them with comments once the proposed decree 
is available (with the condition that there will be very little time to 
provide for comments)        

Grid Code
According to a prior conversation I had with the secretary cabinet, the grid 
code should be issued by the end of June at the latest. They are still 
considering including a concentration process on specific issues. EFET will 
be scheduling a meeting with the cabinet shortly.   

Border capacity allocation:
It seems that the only change in allocation that they are considering is one 
that would implement auctions by 2002 (this what they consider to be the 
short term solution). In the long term Leanne explained that the preferred 
solution would be market splitting. They are not considering any type on 
UIOLI procedure in the immediate (despite our stressing that this should be 
easily implementable).

Trading Arrangements:
We also insisted on the need to implement ASAP block exchange procedures. It 
seemed that Lekane did not understand the issue and implied that his comments 
on  the grid code did not envisage that because of the limited time they had 
to offer comments to the ministry. (Again in previous conversation with the 
energy cabinet they are considering to include that notion and are possibly 
looking to ask for a formal consultation process)

Envisaged Consultation:
Electric: 
 Decree on licences,
 Projected demand for the next ten years - projected imports, exports and 
transits - need for production
Gas: 
 Projected demand for the next ten years - the need for flexibility, 
competition, ....
 New Grid Code: Changes to the existing proposed grid code to incorporate the 
new law.  

Next steps:
EFET decided to try meet with the Energy cabinet within two weeks. Is 
Envisaging meeting with Christopher Jones by the end of the month.
Enron is continuing to actively talk with the Energy Cabinet (next issue to 
discuss are UIOLI capacity allocation, trading arrangements). June 6 Meeting 
with DGTREN to expose barriers in BE market. (At the end of the CREG meeting 
I asked that they meet with Enron and the responded that they did not have 
the time)

Bruno