John:

I thought it might be helpful to expound on several important principles that we have learned through experience regarding RPS/disclosure.   I've been working on these issues for about 2 years, and they have a long and often complex history.  After you've had a chance to digest the below, I'm glad to help out in our response.
1. RPS and disclosure requirements need to be developed together.  Further, since environmental disclosure is a requirement in 14 states and RPS in 7 states, it's important that we don't have overlapping, redundant requirements on a national level.  This can ultimately add to the customer's bill because of the administrative cost to comply with these requirements.
2.  For disclosure, the label calculation (how you derive the fuel mix) is the most crucial. Suppliers need the following: 
	a. the ability to project what they will deliver to customers over a specified "settlement period" (we greatly prefer annually) if they are differentiating their products (either with bilateral contracts or claims about the environmental benefits of the product). Otherwise, suppliers would submit a label with the default mix for spot market purchases.  (As Kevin pointed out below, this allows flexibility in determining how the products will be sourced -- either through bilaterals, spot and/or renewable energy certificate (REC) purchases).
	b. For suppliers purchasing from the spot market, there needs to be default fuel mix data provided to suppliers.
	c. After a calendar year, suppliers would provide customers with an annual label based on actual fuel purchases  ("historic label") for differentiated products (including REC purchases and bilaterals). For system mix products, the projections and historical would be the same. The latter has worked well for EES.
	d. There needs to be a lag in-between the timing of label distribution for projections and historic label for the product claim. This will allow any necessary true up between unanticipated customer usage and the amount of power purchased for the customer. 
3. For RPS and disclosure:  It is extremely important that any national RPS/disclosure requirement be developed with a certificate trading program.  A certificate is usually defined as one MWh of renewable energy that has been generated, and represents the attributes or environmental benefits of the generation separate from the underlying power.  This should be a tradable instrument separate from the power.  Renewable energy certificates "RECs" can be bought sold, traded separately from power, and allows vital flexibility to get renewables to regions of the country where the supply might be constrained or where renewables such as wind and solar are not conducive to being sited.  RECs also provide verification for the purchase of power attributes for RPS and disclosure. As Christi was stating below, it is impossible with our sophisticated wholesale markets to track all electrons from generation to end use consumption.  The beauty of certificate trading programs is that they create a secondary market by which the attributes of power can be tracked through various trades. Certificates trading programs are not always limited to renewable energy.  In New England, they are developing a full certificates based system by which all generation would be issued certificates.  This helps support the disclosure requirements in the East.
Regards,
Stacey Bolton
Environmental Strategies
Enron Corp
713-853-9916 direct 
713-303-2632 cell 
sbolton@enron.com <mailto:sbolton@enron.com>
 

 -----Original Message-----
From: 	Guerrero, Janel  
Sent:	Monday, September 17, 2001 7:41 AM
To:	Bolton, Stacey; Mainzer, Elliot; Keeler, Jeff
Cc:	Nicolay, Christi L.; Lindberg, Susan
Subject:	Kevin Presto comments on the summary of Bingaman bill


Stacey et al,

I thought you should see Presto's comments on the Bingaman energy legislation as it relates to environmental disclosure and renewable issues. If you have additional questions, you might want to follow up with Christi Nicolay or Susan Lindberg.

 -----Original Message-----
From: 	Nicolay, Christi L.  
Sent:	Thursday, September 13, 2001 8:45 AM
To:	Shelk, John
Cc:	Yeung, Charles; Rodriquez, Andy; Steffes, James D.; Robertson, Linda; Shapiro, Richard; Herndon, Rogers; Black, Don; Novosel, Sarah; Shortridge, Pat; Guerrero, Janel
Subject:	Kevin Presto comments on the summary of Bingaman bill

John -- Kevin Presto, head of East Power Trading, had these comments:

Under Title IV Electric Reliability Standards -- Kevin says, "NERC should be eliminated."

Under Title V Subtitle B Environmental Disclosure: -- Kevin says that the "uniform reporting to consumers, in monthly electric bills, of the known energy sources" is not good because it supports day-ahead source requirements for retail suppliers.  Enron advocates the ability of customers to choose how to source their portfolio, whether from bilateral contracts done on an ahead basis or purchases in the spot market.  

John, the renewable portfolio standard provisions later in the draft bill may alleviate this concern, but I don't know enough about how that works.  Several years ago credits were discussed as credits that accrued to the clean energy generator and it can trade those credits.  Therefore, the seller of clean energy to endusers would need to have a certain amount of clean credits in order to claim it sold clean energy (meaning that the clean generator was supported by the marketplace since sellers needed a certain amount of credits).  That program recognized that you can't specifically source a clean generator to a load because electricity doesn't flow that way.  Thus, portfolio sourcing could continue and clean energy is supported.  But I don't know how this bill's provisions would work.  You probably have the Enron experts on this (used to be Janel G.)  Thanks.