Tom Hoatson, et al -

What would PJM say in response?  What is their current thinking?  Also, given 
that the FTR process may leave some FTRs "unfunded", this would seem to move 
people away from cash flow devices?  How would PJM need to change so this 
doesn't happen?

Jim





	Steve Walton@ECT
	02/09/2001 09:30 AM
		
		 To: James D Steffes/NA/Enron@ENRON
		 cc: Tom Hoatson/NA/Enron@Enron;, Dan Staines/HOU/ECT@ECT
		 Subject: Re: PJM doesn't pay EPMI on FTRs

Jim,
 The PJM rules give monthly overcollection of congestion charges to those who 
pay the access fees (mostly the incumbent utilities) but simply short the FTR 
holder if there is an undercollection of congestion charges.  In addition all 
the auction revenues go to reduce access fees.  As a result, an FTR holder is 
at risk in any month when they congestion charge collections are smaller than 
payments due FTRs.  The accounting is done on an hourly basis with any excess 
credited at the end of the month.  I have attached the PJM FTR manual.  The 
details of the settlement procedure are covered in Section 5.

 This procedure benefits the incumbents, since their transmission cost is 
reduced by both auction revenues and monthly excess collections but never at 
risk for undercollection.  You have a gate that lets in benefits but keeps 
out risk.  In New York, for all its other flaws, the under/over collection 
reconciliation works in both directions.  This is fairer, but there could 
still be an annual shortfall.  Contrary to advertisement, the simultaneous 
feasibility test used in the FTR auction does not guarantee the ability to 
fund the FTRs issued.

 To address this potential annual shortfall, we proposed for the e-trans 
tariff, that the auction revenues be held in escrow between auctions.  If 
over the year, there was a net shortfall, it should be taken from the auction 
revenues before the credit is made to reduce the access fees.  This means 
that the buyers get what they paid for.  The payers of the access fees still 
get credit for the net gain (auction revenues + monthly collections - FTR 
payments), without shorting buyers of FTRs.  

Steve





	James D Steffes@ENRON
	02/09/2001 08:04 AM
		 
		 To: Tom Hoatson/NA/Enron@Enron, Steve Walton/HOU/ECT@ECT
		 cc: 
		 Subject: PJM doesn't pay EPMI on FTRs

Isn't the problem that PJM is only obligated to pay for these "negative" FTRs 
as much as there is congestion revenues?  What section of the PJM Manuals is 
involved.

Jim

----- Forwarded by James D Steffes/NA/Enron on 02/09/2001 08:07 AM -----

	Christi L Nicolay@ECT
	02/08/2001 04:07 PM
		 
		 To: Tom Hoatson/NA/Enron@Enron
		 cc: James D Steffes/NA/Enron@Enron
		 Subject: PJM doesn't pay EPMI on FTRs

EPMI bought some FTRs in PJM.  PJM did not pay EPMI appr. $105,000 in Sept 
and $194,000 in Oct.  PJM told Rebecca Grace at Enron that PJM is revenue 
deficient and, therefore, not required to pay.

In Dec., EPMI was negative $177,000 and they charged us $191,000.  
Apparently, PJM charged us all the negatives, but did not pay us some of our 
positives because of the revenue deficiency issue.

Tom--Do you know what the rules are about this?  It seems unfair that we can 
be charges all the negatives, but not get our money on the upside.  Let me 
know and you or I can call Andy Ott about this.  (Tom Dutta is the commercial 
trader on this for EPMI.)