Thanks.  By the way, it is only a "suggestion".  

I know that I can push pretty hard at times but it's only because I believe that both of you can handle it.  You're both doing fabulous jobs.  Of everything going on, I never worry about the NE and SE RTO mediations because I know that you guys are going to get everything possible for Enron.  Keep up the great job!!!!

Thanks for everything,

Jim

-----Original Message-----
From: Nicolay, Christi L. 
Sent: Thursday, August 23, 2001 4:25 PM
To: Steffes, James D.; Novosel, Sarah
Subject: FW: Future FERC Involvement and Proposed Schedule for
SoutheastRTO


CONFIDENTIAL

EPSA letter to ALJ.  Please note the timetables proposed are consistent with Jim's "suggestion" this morning.

-----Original Message-----
From: Jack Cashin [mailto:JCashin@epsa.org]
Sent: Thursday, August 23, 2001 4:18 PM
To: bobbie.mccartney@ferc.fed.us; herbert.tate@ferc.fed.us;
jonathan.siems@ferc.fed.us; laura.sheppeard@ferc.fed.us
Cc: john.a.cohen@bakernet.com; jlphillips@calpine.com;
jregnery@calpine.com; tkaslow@calpine.com;
douglas.keegan@constellation.com; dtaylor@constellation.com;
eisenstatl@dsmo.com; Lebarrett@duke-energy.com;
mfgildea@duke-energy.com; dan.king@dynegy.com; Mary.Doyle@dynegy.com;
vann.prater@dynegy.com; Nicolay, Christi L.; Fulton, Donna; Connor, Joe;
Maurer, Luiz; jphill8@entergy.com; mward3@entergy.com;
PSCHAUB@entergy.com; Erin Perrigo; Illane lewis; Jack Cashin; Jackie
Gallagher; Julie Simon; Mark Bennett; Michael Reddy;
charles_askey@fpl.com; cpmccart@llgm.com; hsgruner@llgm.com;
george.cannon@LW.com; beth.bradley@mirant.com; GOOlaniran@moheck.com;
glawrence@mwe.com; ndaggs@mwe.com; harry.singh@neg.pge.com;
jack.hawks@neg.pge.com; steve.mcdonald@neg.pge.com;
frank.rapley@nrgenergy.com; lisa.decker@powersrc.com;
dennis.sobieski@pseg.com; pauline.foley@pseg.com;
john_r_orr@reliantenergy.com; trent_carlson@reliantenergy.com;
dacrabtree@tecoenergy.com; chip.estes@williams.com;
excetral.caldwell@williams.com; james.bruggeman@williams.com;
jane.mudgett@williams.com; Mark.Becker@williams.com;
wayman.smith@williams.com
Subject: Future FERC Involvement and Proposed Schedule for SoutheastRTO


UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

Regional Transmission Organizations	)	Docket No. RT01-100-000

To: Honorable Bobbie J. McCartney:

The Electric Power Supply Association (EPSA) has welcomed the opportunity to give you input during the Southeast mediation proceeding.  EPSA and its members would like to thank you and your team for taking time from the proceeding, to share your insights, hear our views, and answer our questions.  We now want to provide you with additional input from generators and marketers in the form of proposed milestones and deadlines regarding continued FERC involvement after the mediation.  We recognize your schedule and hope these brief points will be appropriate prior to your receipt of responses to the strawmen. 

FERC's Continued Involvement
EPSA strongly supports FERC's continued involvement in the development of one Regional Transmission Organization (RTO) for the Southeast.  EPSA believes such continued involvement is critical to achieving RTO market operations in the Southeast as soon as possible.  We cannot overestimate the damage to market efficiency and consumer benefits that result from continued delays to full competition, a problem that plagues the entire country. It was very encouraging to hear of your support for this involvement and desire to get input from market participants regarding how this can be done after the 45-day settlement period has ended.  EPSA would like to make procedural suggestions for the post-mediation period that would include continued Commission involvement that is deemed critical to the formation of a single Southeast RTO.  We hope that the following suggestions are helpful when you are developing your report to the Commission on the mediation results.

The Southeast Power Grid model will be an evolutionary process following the end of the mediation.  Several issue areas are still likely to be the focus of significant debate and will require a collaborative process that the stakeholders will remain responsible for establishing.  Resolving these issues and more importantly, their associated details, will be critical to the enduring success of the eventual Southeast Power Grid.

The Commission's continued involvement is critical to the formation of a seamless power grid.  Additionally, regional market participants can benefit from first-hand FERC input on previous rulings from other regions.  This can help prevent any future Southeast Power Grid filings from attempting to establish rules, protocols, and plans that are contrary to Commission precedent.  Moreover it prevents disagreements between stakeholders on specific points from stalling the process, and potentially resulting in a deficient filing.  Potentially FERC will incur added costs of travel and staff time; however, filings that follow FERC's current thinking will more than offset these costs.

The Commission's presence in the process going forward will prevent any future delay by providing ongoing dialogue between regulators and market participants.  This will shortcut the time-consuming sequence of: (1) internal negotiations; (2) filing; (3) filing response and, hopefully, obviate the need for going through the sequence repeatedly.  FERC presence will also help prevent parties from becoming polarized in their views during negotiations without feeling a need to compromise. 

Future stakeholder meetings in the Southeast Power Grid process will work best by involving two FERC staff representatives and to avoid ex-parte concerns, EPSA recognizes that any meeting attended by Commission staff must be publicly noticed. These Commission staff representatives need to be knowledgeable of the Southeast process and can serve as back-ups to one another.  Consequently if a situation arises where one staffer cannot participate in a meeting, the alternate should be able to stand in as a proxy for the other Commission representative.

The mediation process will have its value increased if the Commission's staff representatives are empowered to correct procedural problems that emerge in the process as it moves forward.  For example, if the Commission's staff finds that meeting minutes do not reflect stakeholder decisions or consensus on a given issue or they are not being disseminated to process participants in a systematic manner, they can ensure that problems are rectified.  Making expedient changes as the subsequent process unfolds after the 45-day mediation period is over will confirm that the successes of the mediation continue and that parties continue to work collaboratively.  

Staff involvement will give the Commission the ability to monitor the process during the post-mediation period.  If questions arise during post-mediation period, staff can supply on-the-spot answers or coordinate with senior staff to get answers to the parties quickly.  The efficiency of this established feedback channel ensures that negotiations between parties do not bog down and hinder the completion of the overall process over a single issue.  Moreover, the presence of Commission staff assists in maintaining a cooperative approach between the parties, as is evidenced in our mediation process.

Having Commission representatives in the field for the Southeast Power Grid process can prove valuable as a way for FERC to continue to engage state public utility commissions and remain responsive to their concerns as details about the Grid organization get refined.  The involvement of state commissions is integral to the success of more competitive wholesale markets in the Southeast.  A FERC presence going forward will allow federal and state regulators to confer on the benefits to consumers of successful competitive wholesale and, ultimately, retail power markets.  State regulators' comfort level could be increased if the process continues with an ongoing FERC presence.  

Proposed Milestones and Deadlines
The following schedule still assumes some form of convergence between the existing structures.  EPSA continues to believe that a single Southeast RTO can be formed in a timely manner, that will provide certainty to the market, steadily reduce business risks for those who have and will invest in the Southeast, and provide consumers with the quickest path to a cost-effective market structure * all while maintaining the reliability of the existing system.

		Sept.6, 2001	Begin post mediation process and resume RTO development

Sept. 30, 2001	Section 205 Filing consistent with mediation settlement reached

Oct.1, 2001	Start stakeholder input process: identification or Advisory Committee establishment

Nov.1, 2001- Dec. 31, 2001	Start and complete selection of Board, immediately followed by selection of Market/System Administrator

Dec. 15, 2001	Filing with Commission on completed consensus
(Order 2000 op. date)	documents and status report

Feb.1, 2002	File with Commission any outstanding organic documents

Mar.1, 2002	Market Monitor Selection process completed

Apr. 2002	Commission Response 	 

Mar.- Jun. 2002	Asset Transfers, Staff established

Jun. 2002	RTO becomes operational, with Day 1 market system

Dec. 15, 2002	Day 2 market system implemented
(Order 2000 Requirement)

We appreciate your taking the time to hear our suggestions.  We have great confidence in your command over these proceedings and that they will lead to a single competitive market for power in the Southeast.