Italy

This is not very illustrative example. Utilities (ENEL distcos and 
municipalities) will not be allowed to sign long-term supply contracts with 
producers (ENEL gensets or divested ENEL gensets). Even, according to the 
last draft of market design recently published by the regulator, the single 
buyer will also need to procure power for non-eligibles through the 
forthcoming pool.

ENEL's divestiture has rather more to be with limiting market power and 
spurring competition than securing supplies.

Portugal

This could be more helpful. Here, the dominant SEP (public sector, ie, tied 
gencos and tied customers) security of supply is based on a rock-sodlid 
long-term power purchase agreements. The SEP is characterised by long-term 
contracts between REN (the TSO), public and private (vgr. Pego, owned by 
National Power, Endesa, EdF and EdP) gencos and the four EdP's distributors. 
Individual power purchase agreements are concluded for each plant, and cover 
the plant's entire economic lives and commit gencos to sell to REN 
exlcusively. 

New power plants to be dedicated to SEP will be open to tender, according to 
a central planning. REN buys power from these tied gencos at each plant's 
costs and sell to the distcos at a uniform rate, the bulk supply tariff (BST).

Unfortunately, the record of the tendering process open to private investors 
is not either long or very transparent, and we could not draw many good 
lessons from this. For example, EdP has been trying in the last two years to 
build additional capacity for SEP without a tendering procedure.

a.










Peter Styles
01/10/2000 17:31
To: Paul Dawson/Govt. Affairs/LON/ECT@ECT, Paul Hennemeyer/LON/ECT@ECT, 
Alfredo Huertas/LON/ECT@ECT
cc: Nailia Dindarova/LON/ECT@ECT, Bruno Gaillard/EU/Enron@Enron, Steven J 
Kean/NA/Enron@Enron, Mark Schroeder/LON/ECT@ECT 

Subject: RUSH RUSH: Examples of power supply auction processes [that worked]

See note from Steve Kean below. Examples might occur to the three of you, 
even from your NERA days. 

Alfredo: The statutory obligation for ENEL to sell off generating capacity to 
independent third parties is more or less the opposite of the process 
suggested to Governor Davis, but might be worth describing anyway. 

Paul D.: You are a direct recipient of the note. Also worth describing the 
previous longer term contracting practices of the E&W RECs?

Bruno: EFET has suggested to the Paris Bourse that the only way to kick start 
a traded power market in France would be for EdF to auction packages of 
generation output to new entrants; again this is really the opposite of the 
California situation, but may be of interest. Get details from Nailia (in 
London tomorrow.)

In view of tight deadline please e-mail or call Steve  (cc Mark , and let me 
know beforehand)  on Monday by  noon  Houston time (currently only 5 hours 
behind, thus 5pm London time) with any relevant descriptions. I am in London 
all day.

---------------------- Forwarded by Peter Styles/LON/ECT on 01/10/2000 17:15 
---------------------------
From: Steven J Kean@ENRON on 29/09/2000 15:47 CDT
Sent by: Steven J Kean@ENRON
To: Mark Schroeder/LON/ECT@ECT, Tom Briggs/NA/Enron@Enron, Robert 
Hemstock/CAL/ECT@ECT, Peter Styles/LON/ECT@ECT, Daniel 
Allegretti/HOU/EES@EES, Steve Montovano/DUB/EES@EES, Janine 
Migden/DUB/EES@EES, Aleck Dadson/TOR/ECT@ECT, Paul Dawson/Govt. 
Affairs/LON/ECT@ECT
cc:  

Subject: examples of auction processes that worked

Jeff Skilling proposed a solution to Gov Davis to solve the supply and 
pricing problems in the California market.  In summary, the proposal would 
have a neutral party conduct an auction wherein the utilities would seek bids 
for 5-10 year packages of power from suppliers.  The gov asked if anyone had 
successfully conducted such an auction in the industry already.

I need your help to identify and describe any such examples (European or 
North American) by mid day Monday. Jeff and I will have a follow up call with 
the governor on Monday.

Thanks