Information on capacity release program (VPP) in France

Letter below to the consultants of EDF



Decision on Merger imposing capacity release




Trustee mandate that we proposed to the EU

 

Initial VPP proposal by EDF




 -----Original Message-----
From:  Sankey, Ross  
Sent: 01 June 2001 09:51
To: de Gaulle, Pierre
Cc: Gaillard, Bruno; Philip Davies/LON/ECT@ENRON; Brun, Raphael; Brod, Simon; 
Styles, Peter; Dindarova, Nailia; Shaw, Eric; Elliott, Mark
Subject: RE: EdF capacity auctions

All,

I would suggest we need to do the following :- 

? Register for the auction and receipt of the IM asap.  Bruno could you 
please discuss with Mark and put together our registration document.  I 
assume that ECTRL meets the criteria of a trader "registered" in an EU member 
state?  Does not appear to be any need to deal with credit support or other 
regulatory "qualifiers" such as balancing agreements as yet.  Mark - agree?  
Bruno - could you please take care of sending this registration letter (agree 
with Pierre who should act as principal contact).
? Establish once and for all the role of Trustee and CRE in the process of 
approving capacity release phasing, auction process for each phase and 
product specifications AND understand how the "consultation" process will 
work once we have the IM.  Hence need to discuss with MTF, then Trustee and 
CRE asap ie in June if possible.  Preferably before we meet again with 
PWC/Roth....

In addition to Pierre's comments, the PIM also states that strike prices at 
least are subject to Trustee review but a number of areas need to be 
questioned.

? Capacity Release Phasing.  PIM confirms the 5 year period of the remdey but 
also says a review can be requested after 3 years.  Bruno - you need to 
review the remedy doc, but I do not see how a 2 year phasing of capacity 
release complies with the remedy (at least in spirit).  We would suggest 
there is no impediment to offering the FULL remedy in a single phase.  If 
theere is insufficient demand they can always have a fall back position to 
release unsold capacity on a 6 monthly or annual basis through the 5 year 
period.  The current proposal is no more than EdF trying to minimise capacity 
release and/or extract max value (can't blame them for trying but it is not 
what we want or what remedy requires).  EdF's only real argument is that 
phasing will allow more new suppliers to enter at a later date as eligiblity 
threshold drops in France.  However, since eligible demand already exceeds 
total capacity release this would limit development of competition to 
existing eligibles.  As a minimum the release programme for all capacity 
should be clearly defined up front; not at the whim of EdF.  Peter - thoughts 
on this and how, in context of remedy, we can argue for accelerated single 
phase auction (with possible reauctioning of unsold capacity over 5 years)?
? Auction Process : qualifying criteria likely to be more defined in IM; but 
no obvious problems here.  I am less sure about nature of auction process.  
We obviously need to think it through more, but why not just have a simple 
process based on single sealed bids (or an electronic bid process).  The use 
of price "clock" controlled by the auctioneer may allow a reserve price to be 
set which is clearly not the intent of the remedy - this should be set at 
zero for all product groups not subjectively "to ensure excess demand" but 
only for certain groups!
? Product Specs : need to understand what if anything can be changed here.  
Strikes seem to be subject to Trustee approval, but we need to understand 
what else can be influenced eg within day flex.  Since we have already 
covered this in previous submissions to MTF, EdF etc this should be easy to 
identify as we go forward.

Any comments?

Ross



 -----Original Message-----
From:  de Gaulle, Pierre  
Sent: 01 June 2001 09:00
To: Sankey, Ross
Cc: Gaillard, Bruno; Philip Davies/LON/ECT@ENRON; Brun, Raphael; Brod, Simon; 
Styles, Peter; Dindarova, Nailia
Subject: RE: EdF capacity auctions & other EU news

Point 1.5: This info is of a preliminary nature and is subject to change. In 
addition, it is mentioned in point 6 that registered companies for the 
auction will have the opportunity to ask questions and raise issues during 
conferences, which will be then considered by EdF.

Specifications of the auction will be finalised by end August. This seems to 
leave some room for a complete feedback from registered companies. Let's 
discuss the content of the PIM.

I suggest to arrange anothe meeting with PWC/Rothschild in the next few weeks 
(week 11-16 June). 

What about a potential meeting with the Trustee about the PIM?

Pierre
  


From: Ross Sankey/Enron@EUEnronXGate on 31/05/2001 19:31
To: Bruno Gaillard/Enron@EUEnronXGate, Philip Davies/LON/ECT@ENRON, Pierre de 
Gaulle/LON/ECT@ECT, Raphael Brun/LON/ECT@ECT, Simon Brod/LON/ECT@ECT
cc: Peter Styles/LON/ECT@ECT, Nailia Dindarova/LON/ECT@ECT 

Subject: RE: EdF capacity auctions & other EU news

Bruno,

Quel surprise.  Should make your follow up with the MTF interesting as to the 
role of the Trustee.

One point to note for both MTF and Albers at COMP - the lack of within day 
flexibility is hardly in keeping with the intention of supporting development 
of retail supply to end users with fluctuating demand.  Suppliers will thus 
be at the mercy of EdF in the balancing market.

In addition, how on earth can they be allowed to take 2 years to complete the 
process?  How does that fit with merger remedy?

Somewhat ironic that they have the document in English!

Lets discuss what if anyhting we can do after you have spoken with MTF.

Regards,

Ross



 -----Original Message-----
From:  Gaillard, Bruno  
Sent: 31 May 2001 19:03
To: Philip Davies/LON/ECT@ENRON; Sankey, Ross; de Gaulle, Pierre; Brun, 
Raphael; Brod, Simon
Cc: Styles, Peter; Dindarova, Nailia
Subject: RE: EdF capacity auctions & other EU news

Obviously a done deal - interestingly the Trustee is not mentioned. EDF has 
the capacity offering on its web page 
http://www.edf.fr/htm/en/enchere/enchere and has a detailed document in 
English but not in French yet. They also has EFET under industry links as 
well as the CRE, DIGEC. 

Attached is EDF's presentation of the product. After a quick look, it seems 
that flexibility is not a option (nomination at noon, and price has not 
changed)

 << File: VPP MIP.pdf >> 
Bruno


31/05/01 UK: EDF ISSUES DETAILS OF ITS FIRST CAPACITY AUCTION.
LONDON, May 31 (Reuters) - French utility Electricite de France (EdF) 
announced on Thursday details of its first auction to sell electricity 
production capacity to competitors. EdF was required by the EU Commission in 
February to give access to some of its generation capacity as a condition for 
EU approval of its purchase of a 25 percent stake in German utility EnBW.
In the next two years, EdF will auction a total of 6,000 megawatts which 
include 1,000 MW of peak capacity sold at a price of 26 euros per megawatt 
hour (MWh) and 4,000 MW of baseload at a price of eight euros/MWh.
In addition, 1,000 MW of cogeneration production capacity will be made 
available. Production from cogeneration plants is bought by EdF from smaller 
producers under long-term contracts.
"With such contracts, electricity suppliers and traders will be able to have 
electricity without the technical and operational risks of running a power 
plant," said EdF in a statement.
The price for cogeneration capacity will be made public a few weeks before 
the auction as it depends on gas price movements, EdF said.
The auction will take place in several tranches, the first one starting in 
September, when 200 MW of peak capacity will be auctioned, 800 MW of baseload 
and 190 MW of cogeneration.
The whole 6,000 MW should be sold by October 2003.
EdF, which has a 94 percent share of the French generation market, has a 
total installed capacity of 103,500 MW.

 -----Original Message-----
From:  Dindarova, Nailia  
Sent: 31 May 2001 17:20
To: Gaillard, Bruno; Philip Davies/LON/ECT@ENRON
Subject: EdF capacity auctions & other EU news

FYI see attached
---------------------- Forwarded by Nailia Dindarova/LON/ECT on 31/05/2001 
17:07 ---------------------------

 << OLE Object: Picture (Device Independent Bitmap) >> 
"Sandra James" <Sandra_James@electricity.org.uk> on 31/05/2001 17:11:51
To: <david.love@british-energy.com>, <rob.plaskitt@british-energy.com>, 
<shercock@compuserve.com>, <jgreen3@edisonmission.com>, "Gwyn Dolben" 
<Gwyn_Dolben@electricity.org.uk>, <KHanks@enron.com>, 
<Nailia.Dindarova@enron.com>, <Peter.Styles@enron.com>, 
<mwedg90@entergy.com>, <alison.cole@innogy.com>, <DAVID.TOLLEY@innogy.com>, 
<peter.heffer@magnox.co.uk>, <ALAN.CLARK@natpower.com>, 
<David.Burnett@nie.co.uk>, <Gordon.Dunlop@nie.co.uk>, <Chris.Price@pgen.com>, 
<david.densley@scottish-southern.co.uk>, <shamblyn@seeboard.com>, 
<Brian.Samuel@txu-europe.com>, <Phil.Hardy@txu-europe.com>, 
<andy.papageorgi@uk.ngrid.com>, <christine.brown@uk.ngrid.com>, 
<judith.ward@uk.ngrid.com>, <louise.petchell@uk.ngrid.com>, 
<michael.metcalfe@uk.ngrid.com>, <James.Sheward@uuplc.co.uk>, 
<Arthur.Probert@yeg.co.uk>, <gail.antrobus@yeg.co.uk>, 
<Gail.Silcock@yeg.co.uk>, <joanne.bridge@yeg.co.uk>
cc:  

Subject: EdF capacity auctions & other EU news


Dear All

Please see attached news items from this afternoon, including details of 
EdF's sale of capacity.

Regards

Sandra



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 - eunews 31may pm.doc << File: eunews 31may pm.doc >>