Jeff is correct that AB 1890 said NOTHING about direct access credits, said
nothing about whether such credits were to be market based, or whether
direct access customers were to be indifferent to their choice of power
providers.  All of the direct access credit rules were developed by the CPUC
in their approval of the direct access tariff rules (Rule 22) and in their
implementation of the utility cost recovery plans (the calculation of CTC).
Therefore, we cannot protest the PE advice letter on that basis.  We can
still argue for the DJ indexes as a more appropriate substitute for a PE
credit based just on Edison's cost of generation (retained generation plus
QFs plus DWR purchases) but we have to recognize that it the number is
higher than the PE credit, we will be effectively asking for a subsidy to
direct access providers from the utility's bundled customers.  I do not
expect us to succeed in obtaining that subsidy.  The bottom up tariff
structure is a much more likely result at this point.  Mike Day


-----Original Message-----
From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com]
Sent: Friday, April 20, 2001 2:26 PM
To: sstoness@enron.com
Cc: Harry.Kingerski@enron.com; JBennett; Leslie.Lawner@enron.com;
tjohnso8@enron.com; Susan.J.Mara@enron.com; MDay@GMSSR.com
Subject: Re: SCE Advice Filing on PX Credit -- Protest



Looks good, Scott.  One thing:  I admit I'm not a lawyer, so someone needs
to show me the precise language in AB 1890 that 1) requires the credit
(which, I believe was created by the PUC, not the legislature) to be based
on market and 2) requires DA customers to be indifferent to be from DA
suppliers.

Mike Day:  Do you concur with Scott's interpretation in AB 1890?

Like your arguments, Scott.  Just want to clarify that we're on solid legal
ground before putting the arguments foreward in a brief and/or protest.

Best,
Jeff




Scott

Stoness@EES          To:     JBennett
<JBennett@GMSSR.com> @ ENRON
cc:     Harry
Kingerski/NA/Enron@Enron, Tamara
04/20/2001           Johnson/HOU/EES@EES, Leslie
Lawner/HOU/EES@EES,
10:46 AM             Jeff Dasovich/NA/Enron@Enron

Subject:     Re: SCE Advice Filing
on PX Credit
-- Protest(Document link: Jeff
Dasovich)





We should protest this issue and argue that nothing should change but that
the Px credit should be based on DJ-NP15 and DJ-SP15 rather than the
defunct Px because AB1890 requires it to be based on market (not costs).
Changing to procured energy is inconsistent with the law AB1890 which
requires DA customers to be indifferent to buying from DA suppliers.
And since DA suppliers face costs close to DJ-NP15/SP15, that is the
only appropriate available method.

Further, the issue of how to calculate Px is interrelated to whether DA
customers should be charged the generation surcharges ($10 +$30).  DA
customers should be given market based Px credits (based on DJNP15/SP15)
because its the law.  There are 2 possible interpretations resulting from
the combination of AB1890 and the new law.
The DA customers should get a market based Px credit and not pay any
surcharge.
The DA customers should get a market based Px credit and pay the $30 +
$10 surcharges
Interpretation 1 results in DA customers getting lower rates than all other
customers.  It seems unlikely that the legislation would have this intent.
Interpretation 2 results in DA customers getting the same rate as all other
customers until the end of AB1890.  This seems like the likely
interpretation since otherwise the new legislation would have repealled
AB1890.  Thus given that the DA customers are being held indifferent to
frozen rates plus $40, they should get a Px market based credit plus pay
the surcharge until the rate freeze ends.

Once the Px credit ends (Mar 2002), the surcharge should end because the
law (AB1890) no longer requires them to be held at frozen rates and
because:
Any customer that is being served by a supplier other than DWR and the
utility is not causing any costs for DWR or the utility therefore they
should not be charged for them.

In the event that Px credit is not set based on market value (if the courts
interpret the law differently than Enron) then there should be no
generation surcharge for DA customers.

This is the same argument we should make in our brief on rate setting

Scott



JBennett <JBennett@GMSSR.com> on 04/20/2001 09:03:06 AM

To:   "Harry Kingerski (E-mail)" <Harry.Kingerski@enron.com>, "Robert
Neustaedter (E-mail)" <Robert.Neustaedter@enron.com>, "Scott Stoness
(E-mail)" <sstoness@enron.com>, "Tamara Johnson (Business Fax)"
<IMCEAFAX-Tamara+20Johnson+40+2B1+20+28713+29+20345-7374@GMSSR.com>
cc:   "Jeff Dasovich (E-mail)" <jdasovic@enron.com>, "Sue Mara (E-mail)"
<smara@enron.com>
Subject:  SCE Advice Filing on PX Credit -- Protest


As you are aware, SCE made an advice filing on April 5th to eradicate the
PX
Rate Schedule and Replace it with Schedule PE --Procured Energy.  As part
of
the filing, SCE proposes to set "on an interim basis" the cost of energy
procurement, for bundled service customers for billing purposes and in the
calculation of the energy credit for direct access customers equal to the
Generation rate component of the Customer's otherwise applicable tariff.

Two primary issues arise from SCE's statement. First what does "interim
basis" mean -- how long will this be in effect.  In starts on January 19th,
but it is unclear as to when it would end. Second, and most important. is
what is meant by the Generation rate component.  While there is not much
explanation in the April 5 advice letter, in a subsequent advice letter
filed on April 11 (1533-E), SCE set forth "Rate Schedule Specific
Generation
Related Rates" which range between five and nine cents.

I have forwarded both the referenced advice letters to you earlier.  We
need
to protest the change in the PX credit by Wednesday, April 25th.  All
thoughts on the matter are welcome.

Jeanne