Jeanne,

I have some more background on the PX Credit issue that leads me to believe 
that we should still comment on PG&E's Advice Letter.

The current PX credit calculation relies on the existence of a PX price
The PX price does not consistently reflect market prices.
Market prices are only reflected if:
buyers and seller are willing to take on credit risk by transacting in the 
market
the legalities of "who is liable for what" in case of default are unclear 
(according to a VP at EPMI), so the liquidity will not increase until there 
is certainty

From our perspective, the market value as posted on the PX is better for PX 
credit calculations than a constrained ISO price.  (There is no unconstrained 
ISO price available.)  Although -- it's a risk.

However, if the PX becomes so dysfunctional that prices, if any, do not 
reflect real market pricing at all, the CPUC cannot delay dealing with this 
issue because there will be no status quo for them to leave in place, there 
will be a void.

I suggest that we support the CPUC decision to delay hearing the advice 
letter with a big HOWEVER.  I think we should highlight the questionable 
viability of a PX price and bring forward the requirement that the CPUC must 
act if the PX becomes completely dysfunctional (we could ask Neil Bresnan for 
help in defining "dysfunctional").

/Tamara.





JMB <JBennett@GMSSR.com> on 01/25/2001 10:54:38 AM
To: "Tamara Johnson (E-mail)" <tjohnso8@enron.com>, "Harry Kingerski 
(E-mail)" <Harry.Kingerski@enron.com>, "Gordon Savage (E-mail)" 
<gsavage@enron.com>
cc:  
Subject: FW: Letter re: PG&E Advice letter 2073-E


Well, we do not have to worry about protesting PG&E's advice letter changing
the PX credit. The Energy Division nixed it and told PG&E to take up the
issue in the rate stabilization proceedings.

Jeanne
-----Original Message-----
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Cc: Shaw, Susan
Subject: Letter re: PG&E Advice letter 2073-E


Today the attached letter was received by PG&E from Paul Clanon, Director,
Energy Division, pertaining to Advice 2073-E, filed January 18, 2001. (cc:
Service List - A. 00-11-056)

 <<Letter_PGE_AL_2073-E.doc>>



Thank You,
Nel Avendano (nco1@pge.com)
Rates (415-973-3529)



 - Letter_PGE_AL_2073-E.doc