Elizabeth/Christi

The following is an e-mail I recieved from Wabash with regard to them looking 
at risk associated with a "Into" product and their concern over the RTO 
forcing the designation of firm point resources.

I thought you would like to see this in conjunction with our last 
conversation.

thanks

Oscar




 -----Original Message-----
From:  Allen McKee <AllenM@WVPA.com>@ENRON  
Sent: Thursday, April 05, 2001 4:54 PM
To: Dalton III, Oscar
Cc: Rick Coons; Kari Wetter; Fred Kunkel
Subject: Network Resource Requirements

Mr. Dalton,

As we have discussed, the control area operators we coordinate with in the
NIPSCo, AEP, IPL, and Cinergy areas are increasingly concerned about the
reliability of transmission and its dependence on expected power flows from
source to sink.  Much of this concern comes from incremental reliability
requirements being developed by ECAR and NERC, along with potentially
substantial fines for failure to comply.  In order for Wabash Valley to
obtain Network Transmission service we must have firm resources that can be
qualified as designated network resources.

We received a document from a control-area operator that defines their
criteria for network resources.  These criteria are defined as follows:

* Network resources do not include any generation that is committed
for sale to another party on a firm basis.

* For a  power purchase to qualify as a network resource it must be
available to the purchaser on a non-interruptible basis.  Power purchases
that can be interrupted by the seller for reliability reasons qualify as
network resources.  This includes power sales that are provided with a
curtailment priority below that of the seller's native load.  Purchased
power that can be interrupted by the seller for economic reasons does not
qualify as a network resource, but purchases that can be interrupted for
extreme economic penalties other than more economic sale or purchase
opportunities qualify as network resources.

* For a power purchase to qualify as a network resource, the purchaser
must have an obligation to take the power.  The obligation to purchase does
not need to be in the form of a capacity payment.  However, if there is no
capacity payment, the contract should include a minimum take obligation.
The Commission does not require an around-the-clock purchase obligation; it
has approved as a network resource a power purchase with a minimum capacity
factor of 80% during on-peak hours and no minimum take in off-peak hours.
How much lower a capacity factor the Commission would permit is not clear.

* The requirement that a network resource be non-interruptible applies
to the transmission service as well as the power supply itself.  Therefore,
a network customer that designates an off-system resource as a network
resource must obtain firm transmission service for the generator to the
system of the network transmission provider.  If transmission from the
generator to the network transmission provider is non-firm transmission
service, the power purchase does not qualify as a network resource.
However, the requirement of firm transmission service does not apply to any
generator that was serving the load on July 9, 1996, because such generation
is grandfathered by Order No. 888.

It may be that your organization can meet these criteria with documentation
of resources and transmission path agreements, so as to not require any
additional "firmness" of the power supply you have already proposed to us.
Please take a look, and contact me with any further information you can
provide.

Let me know, also, if you need any else from me.

Allen McKee
System Planning Principal
Wabash Valley Power Association