Rick,

Here's what I mentioned.  Thanks for the v-mail, let me know what I can do.

Regards,
Ozzie

---------------------- Forwarded by Ozzie Pagan/HOU/EES on 05/30/2001 07:18 
PM ---------------------------

Elizabeth Howley

05/29/2001 12:45 PM
To: Ozzie Pagan/HOU/EES@EES
cc:  
Subject: Reliant Pushes for "Negawatt" Plan

Ozzie -
Here is an article talking about Reliant's effort to do what we were 
discussing last week, regarding negawatts - getting wholesalers to pay for 
them like they were actual generated power instead of the absence of.

---------------------- Forwarded by Elizabeth Howley/HOU/EES on 05/29/2001 
12:37 PM ---------------------------


STACEY BOLTON@ENRON
05/29/2001 12:14 PM
To: Jeff A. Brown/HOU/EES@EES
cc: Heather Mitchell/HOU/EES@EES, Elizabeth Howley/HOU/EES@EES, Mary 
Schoen/NA/Enron@Enron 
Subject: Reliant Pushes for "Negawatt" Plan

This is the Reliant program I mentioned in our meeting.

----- Forwarded by Stacey Bolton/NA/Enron on 05/29/2001 12:13 PM -----

	Lynnette Barnes
	05/29/2001 11:58 AM
		 
		 To: Tom Chapman/HOU/ECT@ECT, Marchris Robinson/NA/Enron@Enron, Bill 
Moore/NA/Enron@Enron, Howard Fromer/NA/Enron@Enron, Frank 
Rishe/NA/Enron@Enron, Steve Montovano/NA/Enron@Enron, Daniel 
Allegretti/NA/Enron@Enron, Jeff Ader/HOU/EES@EES, Mark Bernstein/HOU/EES@EES, 
Pearce W Hammond/HOU/EES@EES, Brad J Snyder/HOU/EES@EES, Gloria 
Ogenyi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Robert Frank/NA/Enron@Enron, Mary 
Schoen/NA/Enron@Enron, Ron McNamara/NA/Enron@Enron, Harry 
Kingerski/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Stacey 
Bolton/NA/Enron@Enron, Patrick Keene/NA/Enron@Enron, Leslie 
Lawner/NA/Enron@Enron, Stella Chan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Robert Neustaedter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Kevin 
Kuykendall/Enron@EnronXGate, Roy Boston/HOU/EES@EES, Barbara A 
Hueter/NA/Enron@Enron, Becky Merola/HOU/NewPower@NewPower, Susan M 
Landwehr/NA/Enron@Enron, Janine Migden/NA/Enron@Enron, Kerry 
Stroup/NA/Enron@Enron, Donald Lassere/NA/Enron@Enron, bmerola@newpower.com, 
Geoff Duda/HOU/NewPower@NewPower, kathleen.magruder@newpower.com, 
pbray@newpower.com, sbertin@newpower.com, scovino@newpower.com, 
treichel@newpower.com, cynthia.sandherr@newpower.com, Kathleen 
Sullivan/NA/Enron@ENRON
		 cc: 
		 Subject: Reliant Pushes for "Negawatt" Plan


FT Energy Article


By Rick Stouffer
rstouffer@ftenergy.com
The electricity supply-demand equation is simple: Match supply to demand and 
things are dandy. Demand overwhelms supply: build more supply.

Throughout the country, but particularly in California, there is no question 
more supply is mandated*NIMBY (not in my backyard) be hanged. But what about 
the demand side of the issue? What about getting customers involved in the 
solution by allowing them to sell their excess power back into the system? 

'Negawatts' nothing new
Granted, the concept of negawatts is nothing new; it was coined roughly a 
quarter-century ago by the founder of the Boulder-based consulting firm E 
Source: Amory Lovins. Many utilities today use customer curtailment to get 
them through wattage rough spots from time to time. 

All the existing independent system operators have actively considered 
demand-side bids at one time or another, according to Richard Rudden, 
president of the consulting firm R.J. Rudden Associates in Hauppauge, N.Y. 

But what about a negawatt program serving the entire Western Interconnection? 
Rather than a supply exchange, aka an independent system operator, put in 
place a "demand exchange" where customers could make a choice: Do I produce 
widgets, run my milling machines, build product or take the power I would 
have used, bid it out and see what happens? 

Just such a demand exchange within the Western Interconnection is being 
championed by an unlikely proponent: Reliant Energy Inc. 

The Houston-based energy giant already has testified in Washington, D.C., 
concerning the proposal, has had meetings with key Western state government 
leadership and pitched its idea to trade associations and environmental 
groups. 

The scorecard: Thus far, no one has laughed, no one has walked away from the 
conversations*no one has said "no," according to Reliant's John H. Stout, 
senior vice president of asset commercialization. 

"You're taking forced, rotating outages and prioritizing the interruption, 
with the customer (that) can take the outage doing so," said Stout. 

Much of what Reliant proposes is included in Texas Republican Congressman Joe 
Barton's Electricity Emergency Assistance bill, but no big generator is 
pushing from the industry side like Reliant. 

A demand exchange
Like generators, including Reliant, bidding load into the independent system 
operator pool, a demand exchange allows retail customers to determine what 
they could spare and bid in a specific load and acceptable price. 

The negawatt dispatch clearinghouse would develop a bid stack and make it 
available throughout the Western Systems Coordinating Council (WSCC). If a 
particular system needed more power, it would contact the clearinghouse, 
which would match the least cost set of bids that could be shipped, keeping 
in mind additional transmission charges. 

Once the bids were identified, the clearinghouse would contact the customer 
and its local control area. The customer would interrupt and the host utility 
would move the curtailed megawatts onto an export schedule. 

One key to the program's success is that no one loses money. The customer 
that gave up its designated electrons would continue to pay its retail 
supplier for what it didn't actually use, and the customer would receive its 
bid price, times the megawatts curtailed, minus its regular retail charges, 
plus any payment to the transmission provider. 

"The key is it gets the incentives right at the margin," said William Hogan, 
a professor at Harvard University's John F. Kennedy School of Government. 

Another key to the Reliant-championed negawatt program is that it is not 
seasonal; it doesn't lock a potential megawatt-shedder into a long-term 
contract. 

"You can bid into the market every day," said Stout. 

"It offers a tremendous advantage in that it allows distributive decisions to 
be made, how much a customer is willing to take for an energy entitlement," 
said Richard Tabors, president of the Cambridge, Mass.-based energy 
consulting firm Tabors, Carmanis & Associates. 
As Tabors points out, customers who sell back into the market obviously are 
doing so to play the margin, to make money. But their efforts also will have 
a serious impact on the spot market price. 

"Every megawatt not consumed is a megawatt which doesn't have to be 
produced," Tabors reasoned. "That lowers the marginal cost, the spot market 
cost. It really comes down to what (specific megawatts) are worth to someone 
and not worth to me." 

Heavy users thrilled
Heavy industrial users already are thrilled with the regional negawatt 
proposal. "We think it is a well thought-out program. We feel customers have 
the right to buy power, they should have the right to sell power and ought to 
be compensated like the generators," said John Anderson, executive director 
of ELCON, the Electricity Consumers Resource Council, which represents large 
industrial users from nearly every manufacturing sector. 

Anderson favors this particular plan because it gives the customer choice*
sound familiar?*allowing it to determine when it shuts down or gives up its 
power. 

"This is voluntary. You know when you will be shut down and thus you won't 
incur any damages," said Anderson. "Many proposals tell the customer to cut 
usage, but it costs money for industrial users to just shut down. Command and 
control proposals treat everyone alike*and they're not." 

Stout said at least two vendors have expressed interest in taking part in the 
Reliant proposal, with discussions already taking place with Automated Power 
Exchange Inc. (APX). 

"We have had discussions with Reliant; we're in the business of working with 
generators," said John Melby, vice president for North American marketing for 
Santa Clara, Calif.-based APX. 

According to Melby, APX represents more than half the demand response in the 
California ISO. He said the company could utilize key computer programs and 
systems previously developed to get the region-wide negawatt program up and 
running. 

The down side
There could be a number of problems in moving forward with such a large plan. 
Consultant Tabors, for example, pointed to the White House and the Bush 
administration's seeming preoccupation with supply. 

Harvard's Hogan said having the power available when needed was key, while 
Reliant's Stout said the biggest hurdle was that many states prohibit retail 
customers from selling load back into the wholesale market. An obvious 
solution to that would be passage of the Barton bill; however, nothing is 
certain in such a divided Congress. 

Thus, Stout continues to travel the West pushing the negawatt program. 
California Gov. Gray Davis was briefed on the plan some two weeks ago when he 
called a meeting of all California's generators. 

"We thought he (Davis) generally liked the idea," Stout said. 

Next up on Reliant's hit list is S. David Freeman, former head of the Los 
Angeles Department of Water and Power and now Davis' California energy 
conservation "czar." 

"We've already raised the issue with him (Freeman), but we're looking to plug 
him in," Stout said.