----- Forwarded by Jeff Dasovich/NA/Enron on 11/28/2000 01:13 PM -----

	"Ronald Carroll" <rcarroll@bracepatt.com>
	11/28/2000 12:43 PM
		 
		 To: <gfergus@brobeck.com>, <acomnes@enron.com>, <jdasovic@enron.com>, 
<jhartso@enron.com>, <jsteffe@enron.com>, <mary.hain@enron.com>, 
<smara@enron.com>, <seabron.adamson@frontier-economics.com>, <mday@gmssr.com>
		 cc: 
		 Subject: Fwd: DJ FERC To Lower Price Cap In Calif PwrOrder-Commissioners

The attached article (based upon another FERC leak) states that FERC will 
lower the cap to $100 but will not (cannot) order refunds. 

----- Message from Carol Opatrny <ccopat@e-z.net> on Tue, 28 Nov 2000 
08:29:53 -0800 -----
To:	tbradley@bracepatt.com, pfox@bracepatt.com, doug.little@powerex.com, 
mike.macdougall@powerex.com
Subject:	Fwd: DJ FERC To Lower Price Cap In Calif Pwr Order-Commissioners
Greetings:
According to this article, the price cap in California will fall (to
$100/MWh) and, refunds will not (cannot) be ordered.
Carol

>23:05 GMT November 27, 2000 =DJ FERC To Lower Price Cap In Calif Pwr
>Order-Commissioners 
> 
>   By JASON LEOPOLD 
>   Of DOW JONES NEWSWIRES 
> 
>LOS ANGELES (Dow Jones)--The Federal Energy Regulatory Commission will
>likely lower its proposed $150 per megawatt-hour "soft cap" on California's
>wholesale power prices to $100/MWh in its final order to repair the state's
>troubled electricity market, commissioners said Monday. 
>But the commissioners told Dow Jones Newswires they won't order generators
>to refund billions of dollars in windfall profits earned last summer as a
>result of spiking power prices in the state, despite pleas from state
>lawmakers and Gov. Gray Davis, because they lack the authority to do so. 
>"We still believe we cannot order refunds," one FERC commissioner said. "If
>there was an inch in the (Federal Power Act) that gave us the authority, we
>would take it. But that would destroy the future of deregulation." 
>FERC released a report earlier this month that largely pinned California's
>ongoing power crisis on the structure of the state's wholesale electricity
>markets. The commission also issued a proposed order requiring changes
>needed to make the market workably competitive. 
>The order found that electricity prices in the state rose to "unjust and
>unreasonable" levels last summer. But FERC fell short of ordering refunds,
>saying it lacked the legal authority to do so. 
>Instead, FERC proposed changes to the governing boards of the state's two
>wholesale-market operators - the Independent System Operator and Power
>Exchange - said the state's three investor-owned utilities should no longer
>be required to buy a majority of their power from the CalPX, and proposed
>penalties for utilities that put off buying the power they need until the
>last minute. 
>FERC also proposed capping the price paid to all bidders in California's
>power auctions at $150/MWh. Individual bidders could still get higher
>prices, but would have to justify their claims to FERC. 
>FERC may issue its final order as early as Dec. 13, and commissioners said
>California shouldn't expect it to differ from the proposed changes
>recommended by FERC earlier this month. 
>The comment period for FERC's draft order closed Nov. 22. 
>(MORE) Dow Jones Newswires 27-11-00 
>2305GMT 
>Final Order Won't Order Refunds 
>Davis warned FERC commissioners at a public hearing in San Diego two weeks
>ago that a failure to order refunds would produce a "ratepayer revolt." 
>"Your proposed solution to our energy crisis does nothing to lower prices
>for California consumers," the Democratic governor told FERC on Nov. 13 at a
>meeting in San Diego. "Quite to the contrary, it is designed to bring our
>economy and our consumers to their knees." 
>California's power regulators and utilities also pressed for refunds. 
>The state's Public Utilities Commission said it has evidence of market abuse
>by generators and that consumers were overcharged $4 billion last summer for
>electricity. 
>Edison International unit (EIX) Southern California Edison, in its response
>to the FERC order, attached a study by a Massachusetts Institute of
>Technology economist, who found "considerable evidence" generators and power
>marketers deliberately withheld supply from California from June through
>September - when power usage is at its peak - to drive up wholesale prices. 
>But despite the allegations, FERC commissioners said they will not order
>refunds, though they said the state could legally return to cost-based
>rates. 
>One commissioner also warned a lower "soft cap" of $100/MWh would likely
>deter generators from building new power plants in the state, even as it
>limited price spikes. 
>"The truth of the matter is there is no painless or easy way for California
>to change its electricity market," the FERC commissioner said. 
> 
>   Consumer Groups Push Ballot Measure To Re-regulate 
> 
>Davis will file the changes the state wants made to the proposed order with
>FERC on Friday, but FERC commissioners said they don't expect to be swayed
>by the governor's filing. 
>Meanwhile, Californians are steaming ahead with their own solutions. 
>On Tuesday, the Foundation for Taxpayer and Consumer Rights, a Southern
>California consumer advocacy group, will hold a news conference announcing
>its own sweeping changes to the state's power market, which it will try to
>implement through a proposed ballot measure, the details of which have not
>been disclosed. 
>Furthermore, state lawmakers plan on rewriting parts of AB1890, California's
>landmark restructuring law when the state Legislature convenes next year. 
>There is already heated debate within the Legislature to reauthorize
>utilities to build power plants and to create a public utility system like
>Nebraska's, where there are no investor-owned utilities, in an effort to
>control power prices. 
>"California lawmakers want to be re-elected in 2002," one key lawmaker close
>to the electricity issue said. 
>And Davis is in meetings to replace the Cal-ISO and CalPX with a new entity
>to manage the power grid and the state's two wholesale power markets, said
>Steve Maviglio, Davis' press secretary. 
>-By Jason Leopold, Dow Jones Newswires; 323-658-3874;
>jason.leopold@dowjones.com 
>-0- 
>Last week, FERC received hundreds of pages of comments to its proposed order
>for California's power market. 
>(MORE) Dow Jones Newswires 27-11-00 
>G_nther A. Pergher
>Senior Analyst
>Dow Jones & Company Inc.
>Tel.  609.520.7067
>Fax. 609.452.3531
>
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>
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Carol Close Opatrny
Opatrny Consulting, Inc.
18509 N. E. Cedar Drive
Battle Ground, Washington 98604
360.666.8509 (fax)
360.666.8510 (phone)
e-mail: ccopat@e-z.net