We need to communicate with Massey before he gets completely carried away 
blaming the interstate pipeline business for gas price spikes.  We need to 
get him the information regarding Cal LDCs failure to fill storage and their 
opposition to additional pipeline construction in the state.  Shelley -- 
could you forward copies of the LDC filings to the group.  Should Joe or I 
(or both) try to see massey when I am in town next week?
---------------------- Forwarded by Steven J Kean/NA/Enron on 04/26/2001 
02:07 PM ---------------------------
From: Jeff Dasovich on 04/24/2001 06:57 PM
Sent by: Jeff Dasovich
To: Richard Shapiro/NA/Enron@Enron, skean@enron.com, James D 
Steffes/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Leslie 
Lawner/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, Rob 
Bradley/Corp/Enron@ENRON, Janel Guerrero/Corp/Enron@Enron, Karen 
Denne/Corp/Enron@ENRON, Alan Comnes/PDX/ECT@ECT, Sandra 
McCubbin/NA/Enro@Enron, Susan J Mara/NA/Enron@ENRON
cc:  

Subject: Some Background on California Gas Price Spikes--The Other Side of 
the Story

Last week, I distributed a presentation that the Brattle Group gave before 
the California Inquisition (i.e., legislative gas oversight committee looking 
into the gas price spikes at the Cal border).  

The Brattle Group is a consulting firm that Edison has long used to beat up 
on SoCalGas (recall that Edison used to be a big gas customer when it owned 
power plants).  Edison "arranged" for the Brattle Group to be the star 
witness at the Cal Leg gas hearing.  Their job was to set up El Paso and 
Dynegy for the hit at hearings that took place the following day.  Their 
message was simple (and simplistic):

El Paso and Dynegy have market power.
They have used the market power to drive up basis and thus the price of gas 
at the border (to "obscene" levels).
That, in turn, has driven up electricity prices.

Ken Lay is giving a gas talk tomorrow, and Rob Bradley asked that I provide 
the alternative view to the Edison/Brattle rant, in the event that he gets 
any questions on the topic.  It's attached.  Apologies, it's quick and dirty, 
but it provides the basics.

Obviously no need for us to defend El Paso or Dynegy, but might be useful to 
offer a more rationale explanation than the one that the California 
Legislature is peddling.

Finally, we were also fingered somewhat as culprits at the hearing (the 
California PUC FERC lawyer claimed that ENA and TW colluded to drive up basis 
when ENA controlled a portion of  the capacity), but the overriding goal of 
the hearing was to go after EP and Dynegy.

Best,
Jeff