FYI
-- -------------------- Forwarded by Andrea Bertone/ENRON_DEVELOPMENT on 
07/14/99 05:39 PM ---------------------------


Luiz Maurer
07/02/99 08:56 AM
To: Andrea Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Lindolfo Ernesto Paixao/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Your participation in the Wholesale Market Implementation (MAE)

Andrea

Voc pode conversar hoje . tarde???Antecipando, segue um resumo do assunto. Estamos vislumbrando sua ?participa??o principalmente no Grupo Legal??LM?---------------------- Forwarded by Luiz Maurer/ENRON_DEVELOPMENT on 07/02/99 ?09:03 AM ---------------------------???Luiz Maurer?06/24/99 04:51 PM?To: Lindolfo Ernesto Paixao/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT?cc:  ??Subject: Your participation in the Wholesale Market Implementation (MAE)??REVISADO?---------------------- Forwarded by Luiz Maurer/ENRON_DEVELOPMENT on 06/24/99 ?05:24 PM ---------------------------???Luiz Maurer?06/24/99 02:46 PM?To: Lindolfo Ernesto Paixao/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, ?sassad@elektro.com.br, joaoalb@elektro.com.br@ENRON_DEVELOPMENT?cc:  ??Subject: Your participation in the Wholesale Market Implementation (MAE)??MAE detailed implementation is gaining momentum. Given the breadth and scope ?of the required efforts, several Task Forces have been created or are about ?to be created. ??The Task Forces are in general responsible for further detailing  the market ?rules and/or project management of specific implementation efforts. Some of ?those task forces are joint ONS-MAE efforts.?? Regulatory Affairs from both Enron and Elektro has participated in some of ?the Task Forces, but many of them are not being covered. We think Enron ?should have a broader coverage in more ot the workstreams. However, ?Regulatory Affairs does not have sufficient resources to participate more ?actively in all the required workstreams.??Broader participation is important for three reasons:??a) It is easier to influence and change directions at the early stages of the ?process?b) The Technical Commitee does not have a good coordination mechanisms across ?all Task Forces. Unless one participates   directly, we lose touch with the ?subjects being discussed?c) It is an opportunity to get in close contact with ONS - Enron does not ?have a seat at the ONS Board??Therefore, we are requesting your support to help Enron participate more ?actively, by assigning specific professionals from your departent to the Task ?Forces more related to your current or future responsibilities. We assume ?that the average workload is about 1 day a week for each Task Force.??The Project Charters and responsibilities are described as follows. As an ?initial thought, we think the most relevant groups are: ??1) Trading - "b", "l"?2) Legal - "d", "m"?3) Integrated Projects - "a", "f", "n"?4) Elektro - "b", "f", "g"??Once we have a few suggested names, Regulatory Affairs will be in charge of ?making sure the participants "hit the ground running" and for coordinating ?the efforts across teams. ??a) Optimization and Pricing Models (led by Sheilly Contente - Coelba) - It is ?a joint task force (MAE-ONS), examining in detail all existing and future ?optimization models (most of them "black boxes" produced by CEPEL). Those ?models will also be key to set the MAE spot price on a half-hourly basis. ?Jos, Lucio Reis is participating. ??b) AMPs (Authorized Market Procedures) - (led by Alexandre Magno - Cachoeira ?Dourada) - it is a Task Force working with PriceCoopers to detail all future ?procedures to be used by the MAE. Those procedures include Contract Register, ?Data Submission, Energy Accounting, and many others. This group is also ?examining the interim procedures to be adopted as soon as the MAE starts to ?develop the settlement and accounting functions (formerly developed by GCOI). ?this Task Force is responsible for updating the GCOI rules, taking into ?acount the breakdown of the supply contracts into T and G components (Initial ?Contracts) and some other recommendations on settlement being made by ANEEL. ?Enron has had an ad hoc participation in some meetings. This is an area ?particularly important to the Trading activities.??c) Implementation  - (led by Jean Thebault - Light) - This Task Force is ?examining the overall work plan to implement the MAE, to make sure all the ?pieces fit together. MAE implementation requires a good orchestration between ?MAE Rules, ONS System Development, Metering and Metering Protocols, ?Accounting and Settlment Systems and many others. There is a general feeling ?that many of those pieces are dangling. Dates and responsibilities are also ?very fragmented. No one from Enron is participating.??d) Legal (led by Rosane Magalh?es - CERJ) - this task forces examines all ?legal  and tax aspects on the MAE implementation. It also supports other task ?forces, when legal issues are involved. Currently, no one from Enron ?participating. We think that having a lawyer from Enron or Elektro engaged in ?this Task Force is essential.??e) Capacity Fee (led by Luiz Maurer - Enron) - this Task Force is further ?detailing the implementation of this subject, already approved by COEX. Work ?involves the setting of a capacity fee for peaking plants, as well as the ?establishment of criteria on who should pay, who and how should receive. ?CEPEL and PSRI have been hired to support the quantitative analysis. Fred ?Sampaio (Elektro) has also participated  ??f) MAE Algebraic Rules (led by Sureck - Gerasul) - this Task Force has ?examined in detail the MAE algebraic rules proposed by Price Coopers and ?proposed some modifications. This task force is now also involved in ?proposing how the Initial Contracts energy should be profiled on a ?half-hourly basis. Luiz Maurer has participated in the initial phased, in ?charge of examining the proposed the rules for International ?Interconnections. Fred Sampaio is now the Enron representative.??g) Allocation of Transmission Surplus - (led by Paulo Born - Metropolitana) - ?this Task Force need to quantify the US$ volumes involved in the surplus and ?propose ways to distribute it. Some general guidelines have already been ?proposed while the Initial Contracts are effective. No guidelines exist ?afterwards. Initial analysis revealed that a lot of money may be at stake, ?and generators are eager to use those funds to limit their contract risk ?exposure. No one from Enron is participating.??h) MRE (Energy Reallocation Mechanism) - (led by Sylvia Celestino - Furnas) - ?The purpose of this Task Force is to work on the details of the MRE. For ?example, how the assured energy and the secondary energy will be profiled ?over time and compared to the Initial Contracts. Subject is important for ?hydro generators (or to assess the value of hydro generation). No one from ?Enron is participating  in this Task Force.??i) Demand Side Bidding - (led by Ana Pimenta - Light) - the purpose of this ?Task Force is to evaluate and expand the proposals made by Price Coopers ?regarding the participation of large users  in the MAE price setting process. ?The Task Force has also considered the possibility of creating additional ?market rules to foster the demand side management. No one from Enron is ?participating.??j) Cost of Capital - (led by Danilo Dias - BNDES) - this Task Force is ?reviewing the traditional 10% discount rate used by the electric sector, and ?developing sensitivity analysis on the impact of higher rates on the ?optimization decisions. Kleinworth Benson and CEPEL have been hired to ?support the effort. Luiz Maurer is participating.??k) Cost of Rationing - (led by Wellington - ANEEL) - this Task Force is ?reviewing the traditional cost of energy deficit used by electric sector, ?which is currently US$ 540/MWh. Studies are being developed to define the ?energy deficit as a step function, whose cost of deficit will depend on the ?magnitude of the energy rationing. CEPEL has been hired to support the ?quantitative analysis. The group will also tangencially revisit the Value of ?Lost Load (VLL) which is a key parameter to calculate the capacity fee. No ?one from Enron is currently in this task force.??l) Financial Settlement - (led by Gilberto Pimenta - CEMIG) - this Task Force ?has to make interim and definitive recommendation on how the financial ?settlement should occur. The possibility to use financial institutions as ?clearing agents has been examined and in principle the idea looks attractive. ?Special efforts are being assigned to the interim period - as of Oct 01, all ?the accounting and settlement has to be developed by ANEEL. This Task Force ?is related to Task Forces "b" and "c". Therefore, it may be relevant to ?Trading as well??m) Chain of Accountability - (led by Fred Sampaio - Elektro) - this joint ?Task Force, involving ABRADE, MAE, ONS, ABRAGE and others has the ?responsibility to better define accountability issues in case of failure. It ?has provided inputs to the Initial Contracts and to the Transmission ?Contracts as well.??n) Optimization and Pricing Procedures (led by Miranda - Chesf) - this Task ?Force has the objective of analyzing and double checking the assumptions used ?to run the optimization and pricing models. Discount Rate, expansion plan, ?plant comissioning dates and expected delays are being revised. This group ?has a strong interface with Task Force "a" ???In additon to those Task Forces (I hope I did not miss any), there are also ?some ad-hoc efforts, such as MAE Budget, a Task Force to hire consultants to ?develop MAE processes and systems, and a few others. Those are important ones ?as well, but they have basically being discussed at the Technical Commiitte ?level - (Where both Enron and Elektro have participated)????LM???????