Please see the summary below.  Of note is Chairman Scriber's comment that he 
is going to raise the shopping credit for the southern utilities - I think 
this increases are leverage going in to meetings with AEP.  I would also 
recommend that we move on Cinergy and strike while the iron is hot.  On the 
other hand, if we hold off, we could get higher shopping credits.  However, 
the utilities will argue to recover the amount of the increase through the 
Regulatory Asset Charge.  Although the stipulations in the cases, to the best 
of my recollection, do not provide for this, my sense is that they would 
recover the cost.  

Schriber's comments on POLR are also interesting in light of the statute that 
requires competitive bidding at the end of the Market Development Period.  I 
think this summer would be a good time to meet with Schriber to discuss our 
views on the POLR issue and would welcome feedback from any of you as to what 
we want to say.  My inclination for starters is to require separate bids by 
utility by customer class so that we do not have to mix residential with 
commercial.  Also I would argue that that the winning bidder automatically 
become the POLR and that the utility not be in a position to usurp this role 
by matching the winning bidder's price.  Other thoughts on how the POLR rate 
should be structured, i.e. is it based on a market index plus or a fixed 
price, need to be discussed in terms of how you compare bids.

Also please note the comments on transmission.

Janine
----- Forwarded by Janine Migden/NA/Enron on 05/25/2001 10:01 AM -----

	Kerry Stroup
	05/25/2001 08:23 AM
		 
		 To: Janine Migden/NA/Enron@Enron
		 cc: Barbara A Hueter/NA/Enron@Enron
		 Subject: Schriber 5/23 testiimony

Chairman Schriber testified to the House Public Utilities Committee on May 
23.  After a very brief overview of his history with SB 3, he focused on the 
fact "not much progress had been made" in the southern half of Ohio, where 
customer switching rates were low.  He stated that inducing shopping will be 
a major effort of the Commission this coming year (although he acknowledged 
that the effort was like"pushing on a string"), and he expressly stated that 
the Commission will order higher shopping credits next year.  Several staff 
members I spoke to in the afternoon were surprised he had spoken definitively 
on that issue.  He also highlighted the MSG controversy before the 
Commission, stating that it was a "no win situation for the PUCO".  

Predictably, he commented on the differences between California and Ohio, 
pointing out there had been no divestiture in Ohio, contrasting bilateral 
contracts with the Cal PX, noting that California limited purchasing to the 
day ahead and spot markets, and claiming that our transmission system was 
more robust.  Despite these assurances, he expressed a concern over the 
potential situation at the end of the transition period(s), when wholesale 
prices could still be higher than the current capped rate.  The PUCO, he 
claimed, is thinking hard over who will be the provider of last resort, and 
at what price; and stated that there will be a need for the POLR to manage 
their risk by entering into long term arrangements for procuring power.  

Schriber stated that the potential for problems when the market development 
period ends may be mitigated by the size of the market and the state of the 
transmission system, and asserted the need to push FERC on these issues.  He 
expressed comfort about the new generating capacity coming on line in Ohio -- 
2200 MW having been added since 1999.   At the same time he was cautious 
about the fact that this was gas fired generation.

On the subject of natural gas, Schriber noted that forward prices for gas had 
fallen to the $4.50/$5.00 for next winter.  He stated that the PUO is 
contemplating a limited pilot program for next year that would provide 
opportunities for utilities to hedge their purchases.

Several legislators asked questions at the end of the presentation.  The 
concerns reflected were:

1. Commission management of the POLR's market price after the end of the 
market development.  Alan had no specific answer, other than the fact the 
PUCO was thinking about this issue.

2. Federal plan to utilize eminent domain to bolster the electric 
transmission system.  Alan responded by noting Ohio's strong transmission 
siting authority, which he believed was preferable to federal exercise of 
authority.  On the other hand he noted that some states like Indiana don't 
have a strong state siting law, and in those cases federal exercise of 
jurisdiction may be necessary.  He said that if the federal government 
exercises authority in the manner that Ohio does, that would be appropriate.

3.  Representative Sites was concerned about the sapping of "our" power 
supplies by other states, and asked what we could do to prevent it.  Alan 
responded that we cannot embargo "our" generating facilities.

4.  Representative Driehaus asked whether the reluctance of CG&E customers to 
switch was a result of what happened in the gas market in Cincinnati.  
Schriber responded by saying that, unlike the gas situation, competitive 
electricity providers were required to be certified by the PUCO.