---------------------- Forwarded by James D Steffes/NA/Enron on 04/30/2001 
04:56 PM ---------------------------


James D Steffes
04/26/2001 07:55 PM
To: Janel Guerrero/Corp/Enron@Enron
cc:  

Subject: FW: FERC Orders Cost-Based Price Caps for California

Janel --

Pls include this CERA study in Lay's California briefing book.  

Also, in the study CERA mentions another study we should include (pls ask 
Joan Stransky to get it from CERA) - Beyond California's Crisis:  Impact, 
Solutions, and Lessons.

Jim


---------------------- Forwarded by James D Steffes/NA/Enron on 04/26/2001 
07:52 PM ---------------------------
From: Chip Schneider/ENRON@enronXgate on 04/26/2001 05:06 PM
To: Christopher F Calger/PDX/ECT@ECT, Tim Belden/HOU/ECT@ECT, Greg 
Wolfe/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron
cc:  

Subject: FW: FERC Orders Cost-Based Price Caps for California

CERA report, followed by CSFB report.





 -----Original Message-----
From:  Paul Patterson <Paul_Patterson@xmr3.com>@ENRON 
[mailto:IMCEANOTES-Paul+20Patterson+20+3CPaul+5FPatterson+40xmr3+2Ecom+3E+40EN
RON@ENRON.com] 
Sent: Thursday, April 26, 2001 7:34 AM
To: Schneider, Chip
Subject: FERC Orders Cost-Based Price Caps for California

Credit Suisse First Boston
Paul Patterson
Good morning,
? Last night, FERC voted 2-to-1 to approve a California market mitigation 
order, which will impose cost-based wholesale price restrictions in 
California, during periods of Stage 1, 2, and 3 emergencies. The caps will be 
in effect from May 1, 2001 to May 1, 2002 and determined on a day-ahead basis 
by the California ISO, based on generators, marginal costs.
? Sellers with participating generator agreements will be required to offer 
all available power in the real time market. All generators, including those 
not regulated by FERC, will be required to sell into the ISO as a condition 
for using the ISO,s interstate transmission lines.
? The order only focuses on wholesale prices in California. It directs the 
ISO to file an RTO proposal by June 1 and the utilities to adopt demand 
reduction mechanisms. It also establishes an agency investigation into 
potentially unreasonable prices in the Northwest region.
? We view FERC,s order as a relatively mild one and would caution investors 
not to expect overly large reductions in California,s power prices, although 
some decline should occur.
? Although we believe most generators would still earn quite attractive 
returns, clearly the marginal cost approach of the least efficient plant will 
advantage lower-cost base load plants over higher-cost peakers.

Please call us with any questions.
Regards,
Paul Patterson, 212-325-5876
Neil Stein, 212-325-4217
Wen-Wen Chen, 212-538-0223

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 - ppp042601.pdf