Jeff,

As best I can tell, this is the paper summarized in the article you 
forwarded.  It is not new but perhaps was attached to a parties filing 
(SDG&E?).

Alan

---------------------- Forwarded by Alan Comnes/PDX/ECT on 11/28/2000 03:20 
PM ---------------------------


"Sabine Schnittger" <Sabine.Schnittger@frontier-economics.com> on 11/28/2000 
12:15:08 PM
To: <Alan.Comnes@enron.com>
cc:  

Subject: RE: Kahn & Joskow piece



You probably have this already, but I am attaching the Harvey/Hogan piece
that I was referring to. I haven't seen Dynegy's response, can you tell me
where I can find that?

Cheers, Sabine.

-----Original Message-----
From: Alan.Comnes@enron.com [mailto:Alan.Comnes@enron.com]
Sent: Tuesday, 28 November 2000 2:54 PM
To: Sabine.Schnittger@frontier-economics.com
Subject: Re: Kahn & Joskow piece



Sabine,

Thanks.  Did Harvey Hogan update their study or are you refering to the
paper we referred to in our comments.  If the former, could you send it to
me or point to whose comments they were attached to?

Thanks,

Alan

PS For fun and if you have it, see Dynegy's response to Hoeker's Q3.





"Sabine Schnittger" <Sabine.Schnittger@frontier-economics.com> on
11/27/2000 10:07:33 AM

To:   <Alan.Comnes@enron.com>
cc:   "Seabron Adamson" <seabron.adamson@frontier-economics.com>

Subject:  Kahn & Joskow piece



Alan,

Refer to the recent Harvey & Hogan piece for a thorough critique of recent
market power studies in the California market. Joskow & Kahn make all the
same mistakes that HH have already highlighted in the BBW work and probably
more, since a) JK were forced to use more aggregate data and b) JK had to
estimate some of their data that BBW have access to. Key criticisms include
ignoring the effects of various market efficiencies, one-part bidding,
opportunity costs in other markets and a host of data problems.

As far as the withholding modeling goes - the discussion is so vague that
it
is hard to know what data was used/approach taken. Again, forgone
opportunities in other market and as a result of water/emissions RTCs
shortages are not discussed and can explain what looks like 'withholding'.

Sabine.



-----Original Message-----
From: Alan.Comnes@enron.com [mailto:Alan.Comnes@enron.com]
Sent: Thursday, 23 November 2000 8:55 PM
To: James.D.Steffes@enron.com
Cc: Mary.Hain@enron.com; Joe.Hartsoe@enron.com; smara@enron.com;
Jeff.Dasovich@enron.com; Paul.Kaufman@enron.com;
Sarah.Novosel@enron.com; rcarroll@bracepatt.com;
tim.heizenrader@enron.com; tim.belden@enron.com; bob.badeer@enron.com;
Seabron.Adamson@frontier-economics.com;
Sabine.Schnittger@frontier-economics.com
Subject: Emprical Study on High Prices



Attached is a paper that was filed at the FERC by Paul Joskow and Ed Kahn.
I assume it was attached to SCE's comments in the FERC price caps
proceeding.

This study appears to be the most definite analysis so far of the question:
did market fundamentals or generator market power cause the price run-ups
this summer?  Joskow/Kahn conclude that although much of the run up was due
to gas prices and NOx costs, that the market was unworkably competitive;
i.e., the cost run ups do not fully explain the price run ups.  Further,
they provide what they claim is evidence that individual generators
withheld this summer.

Joskow/Kahn state: "Moreover, there is considerable empirical
evidence to support a presumption that the high prices experienced in the
summer of
2000 were the product of deliberate actions on the part of generators or
marketers
controlling the dispatch of generating capacity to withhold supply and
increase market
prices."  Biggest withholders in their analysis are: AES/Williams, Reliant,
and Dynegy

Marketer/traders are largely but not completely spared criticism in their
analysis.  Joskow/Kahn recommend that FERC staff undertake a study of the
entire WSCC data to "Determine the role of marketers in the production and
bidding behavior of the California generators." and to find out more why CA
imports fell.

It will be interesting to see how the CA generators react to this study.

My initial read is that this is will be received as an important,
influential work.  It will fuel the fire for more information release,
especially by the UDCs and CA regulators--at least release of physical
operational data.

I would be interested in your reaction to the study.  In terms of potential
criticisms: I noticed that their gas prices might be low (used monthly
average data rather than daily).  They also did not account for generator
marginal profit or margin recovery to account for possible outages and
noncontiguous schedules.   Finally, they do not examine the benefits that
would have accrued had additional capacity come on line.

Alan Comnes

(See attached file: Joskow Kahn Paper 11_21.pdf)




 - Market power issues in California (Oct 2000).pdf