----- Forwarded by Janine Migden/NA/Enron on 06/21/2001 10:16 AM -----


	Marc Ulrich@EES 06/20/2001 04:39 PM 	   To: Rogers Herndon/Enron@EnronXGate, James W Lewis/HOU/EES@EES, Jeff Rudolph/HOU/EES@EES, Scott Stoness/HOU/EES@EES, Gordon Savage/HOU/EES@EES  cc: Berney C Aucoin/Enron@EnronXGate, Guy Sharfman/HOU/EES@EES, Janine Migden/NA/Enron@Enron, Roy Boston/HOU/EES@EES, Harry Kingerski/NA/Enron@Enron, Jeff Merola@EES, J Ryan Frazier/HOU/EES@EES  Subject: ComEd Rate case - CONFIDENTIAL	



FYI - As you may have heard, ComEd has filed to raise T&D rates about 37% (about $5.5/MWh).  If they are granted the full increase in rates, our existing position will undoubtedly take a hit.  There are 3 potential but independent effects on our book...

Primary Effect - Assuming all customers have zero CTC, if T&D rates go up $5.5/MWh on average and we have 8.5million MWh so -$47m hit to the book.  However, we do have customers with positive CTCs that should offset some of this increase and true impact would likely be around -$12m. Remember this assumes ComEd get's the full $5.5/MWh increase they're asking for. 

Secondary Effect - Assume we still cannot deliver physically in IL.  With higher distribution rates customers are now more likely to get kicked off PPO (bc CTC=0) and we're returning them to bundled rates (Illinois State Univ. problem).  The impact would be about -$21m  [($71 - $76)/MWh * 4.2m MWh = -$21] if everyone's returned to BBR and we do not deliver.  The formula above is [(Avg price Customers are paying us - Avg BBR price)*(MWhs for 2005-2010)].

Tertiary Effect - We figure setup a desk to physically deliver and our delivery service rates are now higher.  We're back to the Primary effect.  However, if we can beat the generation prices embedded in PPO we're likely to offset that -$12m.

These are not additive effects and should not be summed.  They are worst-case scenarios under various states of the world.  Also they are rough estimates.  Finally, remember that no book impacts will be made until we understand which states of the will take place after the final order in April 2002.

I'm working closely with Janine Migden, Roy Boston, Guy Sharfman, and Harry Kingerski to identify which areas Enron will address in the rate case.  

Please do not share this information freely.  We are trying to negotiate with ComEd for wholesale energy and services and this information could tremendously hurt our negotiating position.

Please feel free to ask me questions on anything.  
Marc Ulrich