We may want to add other issues and there may be some overlap between the PX 
filing and the EOB filing.  Sorry this is so rough.

Protest of PX filing

? FERC should reject the PX,s price caps because
? Energy Markets are competitive in the West ) 20 loads and 40 sellers.  
? Say what we and EPSA said in San Diego case and say that high prices are 
not due to exercise of market power, they are the product of scarcity and the 
failure of the IOUs to hedge in the forward market and their underscheduling 
in the PX day ahead market.
? FERC had to administer the price caps for the gas industry and they caused 
terrible problems ) list a few of FERC,s nightmares FERC as reminders.
? The Cal PX shouldn,t be able to do this on a whim and indefinitly. 
? Cal PX should have to substantiate the request, which they haven,t.  ISO 
and PX haven,t had the same prices as the ISO for years and they didn,t have 
the problems described in the filing.  PX proposed this for political reasons.
? If two parties want to agree ) why shouldn,t PX match ) they have to be 
willing buyers, have the ability to go to the ISO real time market.  Parties 
should be able to buy outside of the PX ) we don,t want to create a monopoly 
for the bilateral market.
? Recognize that the FERC may allow price caps, if they do 
? FERC should have same cap they allow for New York, PJM.  Inconsistent with 
other markets, including Canadian markets over which Commission has no 
jurisdiction.
? $250 Price cap in California is not enough to incent generation to be built 
because it does not allow a return on an investment in generation
? FERC should consider allowing a cap based on the price at which 
interruptible load is willing to be cut - $1,500.
? Could we make the argument that capping the price in the PX will drive up 
the price by making participants bid up to the cap?  Isn,t this what happened 
in California?  Ask for Seabron to help?

Protest of the EOB filing

? FERC should reject it
? Cross reference anything we said with respect to the PX filing that 
applies  
? Analysis ) provided by Seabron Adamson of why we can,t exercise market 
power the way the EOB says we have.
? The EOB,s filing confuses bid and price caps. After all, who would buy in 
the bilateral market if they can go to the ISO and the PX get power for 
less?  
? Attach the joint resolution telling the ISO to show cause why it should not 
lower the price caps to $100/MW.  Attach the EOB vote not to reaffirm 
directors. Of ISO and PX.  If in response to the EOB,s show cause order, the 
ISO lowers prices to $100/MW and the PX follows suit - as they have indicated 
they will in their filing and as the EOB vote on their directors would force 
them - California generators will stop producing because if they generate 
they will not be able to recover their variable costs.  Generators outside of 
California will not sell into California markets because they would not 
recover their variable costs and they could sell their power elsewhere and 
recover their variable costs.  Therefore, the liquidity of the California 
market will dry up and reliability problems will occur.
? We &told you so8 FERC
?  the EOB thinks they have much more power than you allowed them to have as 
illustrated by their issuing orders to show cause to the ISO to lower the 
price cap and 
? the EOB is now making the ISO and PX unindependent by not reaffirming Board 
members because they won,t vote for lower price  caps.  This is ultra vires 
in that the EOB,s power is supposed to relate to retail jurisdiction, not 
setting wholesale price caps (not just bid caps) for the entire California 
market. 




Susan J Mara@EES
09/08/2000 08:16 AM
To: Elsa Piekielniak/Corp/Enron@Enron, Scott Vonderheide/Corp/Enron@ENRON, 
Dennis Benevides/HOU/EES@EES, Jeff Richter/HOU/ECT@ECT, Chris 
Stokley/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Sarah 
Novosel/Corp/Enron@ENRON, Mona L Petrochko/SFO/EES@EES, Susan J 
Mara/SFO/EES@EES, Joe Hartsoe/Corp/Enron@ENRON, Mary Hain/HOU/ECT@ECT, 
Christi L Nicolay/HOU/ECT@ECT, James D Steffes/HOU/EES@EES, Richard 
Shapiro/HOU/EES@EES, David Parquet/SF/ECT@ECT, Sandra McCubbin/SFO/EES@EES, 
Jeff Dasovich/SFO/EES@EES, Tim Belden/HOU/ECT@ECT, Dennis 
Benevides/HOU/EES@EES, Roger Yang/SFO/EES@EES, Harry Kingerski/HOU/EES@EES, 
Chris H Foster/HOU/ECT@ECT, Stewart Rosman/HOU/ECT@ECT, Mike 
Swerzbin/HOU/ECT@ECT, Greg Wolfe/HOU/ECT@ECT, Kathryn 
Corbally/Corp/Enron@ENRON, Douglas Condon/SFO/EES@EES
cc: rcarroll@bracepatt.com 
Subject: [Fwd: FW: You should look at this -- Reuters on $100/MWh price caps 
for ISO and PX]

Price cap aand Oversight Board frivolities
---------------------- Forwarded by Susan J Mara/SFO/EES on 09/08/2000 08:09 
AM ---------------------------


Carl Imparato <cfi1@tca-us.com> on 09/07/2000 11:07:54 PM
Please respond to cfi1@tca-us.com
To: smara@enron.com
cc:  
Subject: [Fwd: FW: You should look at this -- Reuters on $100/MWh price caps 
for ISO and PX]


More bad stuff on the way...

Carl

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Reply-To: <fpickel@tca-us.com>
From: "Fred Pickel" <fpickel@tca-us.com>
To: "Richard Tabors \(E-mail\)" <tabors@tca-us.com>,        "Scott Englander 
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<nrao@tca-us.com>,        "Judith Cardell \(E-mail\)",        "Ellen 
[Banaghan] Wolfe \(E-mail\)" <ellen@tca-us.com>,        "Carl Imparato 
\(E-mail\)" <cfi1@tca-us.com>
Subject: FW: You should look at this -- Reuters on $100/MWh price caps for 
ISO and PX
Date: Thu, 7 Sep 2000 23:45:44 -0400
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Oh  boy!? What a mess.
?

?Frederick H. Pickel,  Ph.D
?Vice President
?Tabors Caramanis &  Associates
?Los Angeles, California
?& Cambridge,  Massachusetts
?email: fpickel@tca-us.com
?alternate email:  fred.pickel@ALUM.mit.edu
?tel +1 (323) 937-7920
?
-----Original Message-----
From: Sam Van Vactor  [mailto:svv@econ.com]
Sent: Thursday, September 07, 2000 7:44  PM
To: Lisa_G_Urick@calpx.com
Cc: Dona K.  Lehr
Subject: You should look at this


?  

By Nigel Hunt

?? LOS  ANGELES, Sept 7 (Reuters) - The cap on wholesale power prices in 
California  could be cut for the third time this year, this time to $100 per 
megawatt hour  after starting the year at $750 per MWh.

?? The  state's Electricity Oversight Board (EOB) is to make a request to the 
California  Independent System Operator (ISO) within the next few days on the 
issue  following a resolution by the state's lawmakers last week.

?? "We will  make a formal request within the next few days," EOB Executive 
Director Gary  Heath said.

?? An  assembly joint resolution approved last week called on the EOB to 
direct the ISO  to "show cause why the price caps in the ancillary services 
and real-time energy  markets should not be lowered to $100 per megawatt-hour 
immediately and continue  until at least March 31, 2001."

?? The cap  currently stands at $250 per MWh after previous cuts from $750 to 
$500 and $500  to $250 amid growing consumer unrest about skyrocketing 
electricity bills and  allegations of possible price gouging by generators.

?? The  assembly resolution says the EOB should report back to the 
legislature by  December 1, 2000.

?? There was  heavy criticism of the ISO, which controls most of the state's 
power grid, by  lawmakers this year at its governing board twice rejected 
resolution to cut the  cap to $250 from $500 before finally agreeing to such 
a move.

?? Heath  noted the EOB at a meeting last week decided not to approve the 
appointment or  reappointment of 13 members of the ISO board and 12 members 
of the California  Power Exchange's governing board.

?? "We are  trying to place people who are a bit more mindful of the 
implications of board  decisions on Californian consumers," Heath said.

?? Existing  board members will remain in office until replacements can be 
appointed.

?? Heath  said that some individuals who were rejected may eventually be 
approved and the  EOB was rather making a statement about the performance of 
the two boards.

?? "The  board was making a very clear statement that we are not satisfied 
with the the  efforts of the ISO or PX governing boards to proect Californian 
consumers,"  Heath said.

?? Wholesale  power prices in California soared to record levels during a 
heatwave in June and  many customers in San Diego faced a tripling in their 
electricity bills.

? Supporters of  cutting the cap believe the power market is not "workably 
competitive" and  prices rose to excessive levels during the heatwave, 
putting an unfair burden on  both ratepayers and shareholders of investor 
owned utilities.

?? Opponents  have been led by independent power producers who have argued a 
lower cap could  make it more difficult for the state to import power at 
times of shortage.

?? Emergency  legislation signed into law by Calif. Gov. Gray Davis on 
Wednesday imposed a  price cap on how much San Diego residents should pay 
which was less than a third  of the current "free market" rate.

? Customers of  San Diego Gas and Electric, a unit of Sempra Energy <SRE.N>, 
had been  exposed to market based prices under the terms of California's 
power  deregulation.

?? Rates for  customers of California's other two investor owned utilities, 
Edison  International's <EIX.N> Southern California Edison and PG&E Corp.'s  
<PCG.N> Pacific Gas and Electric, are frozen.

?? A  spokesman for the California ISO was not immediately available for 
comment.

?? ((--Los  Angeles bureau + 1 213 955 6752))