FYI 
---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 11/29/99 11:43 
AM ---------------------------


"Andy Katz" <AKatz@eei.org> on 11/29/99 10:21:32 AM
To: Elizabeth Sager/HOU/ECT@ECT
cc:  
Subject: Fwd: FW: Dow article from this morning



This is the article I mentioned.

Andrew S. Katz, Senior Attorney
Edison Electric Institute
701 Pennsylvania Avenue, N.W.
Washington, D.C.  20004
Voice:  202-508-5616
Fax:     202-508-5673
e-mail:  akatz@eei.org

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From: "Edmonds, Sonnet" <sonnet.edmonds@SouthernEnergy.Com>
To: "'Andy Katz'" <AKatz@eei.org>
Subject: FW: Dow article from this morning
Date: Mon, 22 Nov 1999 16:33:47 -0500
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Have you seen this?  Obviously, I ended up speaking to that Dow Jones
reporter late last week, at the request of our media relations dept.  I was
horribly misrepresented.  Virtually all of the reporter's questions were
about the factual differences between the EEI and WSPP contracts and this is
what the article ended up looking like.

> -----Original Message-----
> From: Brown, Steve
> Sent: Monday, November 22, 1999 11:51 AM
> To: Edmonds, Sonnet
> Subject: FW: Dow article from this morning
>
> You are mentioned in this Dow Article.
>
> -----Original Message-----
> From: Markham, Robert F.
> Sent: Monday, November 22, 1999 11:28 AM
> To: Brown, Steve; Soto, Oscar
> Subject: FW: Dow article from this morning
>
>
>
> =DJ Power Points: EEI Contract - Will This Dog Hunt
> Nov 19 15:20 - CM - Dow Jones Capital Markets Report
>
>
>   By Mark Golden
>   A Dow Jones Newswires Column
>
>   NEW YORK (Dow Jones)--"Et tu, Sonnet?"
>   The Edison Electric Institute unveiled Wednesday a standardized master
> agreement for trading power, but there's already a standard contract - the
> one written by the Western Systems Power Pool.
>   There are several ways to characterize this battle: East versus West;
> power marketers versus utilities; and, even, Southern Co. versus Southern
> Co. A power struggle has begun, despite the fact that most traders,
> preschedulers and trading managers aren't even aware of the new contract.
>   Southern Co. (SO) Vice President Bobby Campo has been a leader in WSPP
> since the organization's inception and has been chairman of its contract
> committee for four years. Yet Southern Co. Energy Marketing's chief
> counsel, Sonnet Edmonds, is a leader in the rival-contract faction.
>   Will EEI, along with its comrade, the National Energy Marketers
> Association, manage to dethrone the WSPP contract or crash? WSPP's raison
> d'etre is to manage and promote use of its contract, which is traded
> extensively in the West and has gained proponents in the East.
>   "I'm not real excited about it right now," Campo said of the new
> contract. "The EEI contract is being done by contract people and lawyers.
> We - operators and power marketers - worked on our contract for years
> before we brought in the lawyers. It (the new contract) may die from a
> lack
> of interest from participants, but EEI has the ability to keep it alive."
>   It isn't clear if the big power marketing companies will get the ball
> rolling by asking counterparties to switch to the EEI contract. Edmonds
> hopes that Southern Co. will do so.
>   "Management hasn't given the official word yet, but we participated in
> its development, so I imagine we'll use it at some point," she said.
>   Enron Corp.'s (ENE) general counsel also worked on the EEI contract, but
> the company hasn't made a decision to actually use it.
>   Entergy Corp.'s (ETR) general counsel, Christopher Bernard, led the
> effort to develop the new contract as head of NEM's standardized contract
> committee. But Entergy's Jim Kenney is chairman of WSPP's executive
> committee. Entergy's power trading managers, meanwhile, haven't even read
> the new contract yet.
>   Duke Power Co. (DUK), an NEM member, is looking at it, a spokesman said.
> Enron and Southern Co. aren't NEM members, though they serve on its
> contract committee.
>   Several sources said American Electric Power (AEP) has agreed to be the
> guinea pig, and plans to switch to the EEI contract with counterparties on
> eastern U.S. trades. A spokesman for the utility couldn't confirm or deny
> that rumor because Paul Addis, president of AEP Energy Services, has
> imposed a vow of silence on AEP's traders.
>   There are elements of the EEI contract that power marketers may like.
> One
> innovation is a new product called "Firm (No Force Majeure)," which
> requires the payment of liquidated damages for failure to deliver - no
> excuses, no force majeure, just send a check.
>   The new contract also has two other firm products. "Firm (Liquidated
> Damages)" is closest to the WSPP firm product, but it defines force
> majeure
> more strictly than WSPP. "Firm (LD-System Reliability)" explicitly allows
> a
> selling utility to curtail deliveries without paying liquidated damages if
> necessary to maintain native load. Of particular interest to traders of
> eastern U.S. electricity is the fact that the EEI contract defines what an
> "into" product is.
>   WSPP has debated the introduction of such products, but in the end has
> tried to come up with a single, agreed-upon product for trading.
>   "EEI has created a lot of different types of firm products, but that can
> create problems. Many people have said 'no, we want one firm product',"
> said WSPP's counsel, Michael Small, of Washington, D.C., law firm Wright
> and Talisman.
>   So why didn't the EEI group just work with WSPP to get changes made to
> the existing standard? Too much bureaucracy, according to Southern's
> Edmonds.
>   "Changes to the WSPP contract require approval from 90% of the members,
> after working through the operations committee and the executive
> committee.
> Then the changes have to be filed at Federal Energy Regulatory
> Commission,"
> Edmonds said.
>   Coincidentally, WSPP's executive committee is meeting Friday in San
> Diego
> to discuss what changes are needed in the definition of its firm product.
> Western utilities are pushing hard for "firm" to mean backed up by
> reserves
> of generating assets or previously purchased power. In other words, some
> utilities want to eliminate short positions from power markets.
>   At least one power marketing company, which didn't want to be named,
> will
> switch to the EEI contract if that change gets made to WSPP.
>   For the EEI contract to fly, not only will the lawyers at the big
> trading
> companies need to make it their companies' standard, but traders will have
> to convince utilities to abandon most, if not all, force majeure claims.
> Many municipal utilities and rural electric cooperatives are forbidden to
> do so by state regulations.
>   For traders, though, the biggest adjustment to make if the EEI contract
> does take off will be more social than professional. The semi-annual
> meeting of the WSPP's operations committee is as much fun as any blatant
> boondoggle should be. The serious work of a handful of committee members
> is
> a small hook on which hangs the revelry of hundreds of power marketers,
> brokers and utility staffers. As it stands, non-committee members must
> have
> a hard time convincing bosses that their presence is necessary at the
> meeting.
>   How on earth will traders justify going if the WSPP contract is no
> longer
> used? Can EEI throw a good party? And how will the Gucci-loafered EEI
> executives from Washington handle $1,000 dares to go naked in a bar?
>   Such are the questions now vexing America's electric utilities.
>   -By Mark Golden; Dow Jones Newswires; 201-938-4604;
> mark.golden@dowjones.com
>
>   (END) Dow Jones Newswires  11-19-99
>   1520EST