-----Original Message-----
From: 	Alonso, Tom  
Sent:	Friday, May 18, 2001 12:57 PM
To:	Fischer, Mark
Subject:	FW: Mercury News  -- Nominees for panel don't favor price	caps



 -----Original Message-----
From: 	Comnes, Alan  
Sent:	Friday, May 18, 2001 8:31 AM
To:	Alonso, Tom; Alvarez, Ray; Badeer, Robert; Belden, Tim; Crandall, Sean; Driscoll, Michael M.; Fisher, Mark; Guzman, Mark; Heizenrader, Timothy; Mallory, Chris; Mara, Susan; Motley, Matt; Platter, Phillip; Richter, Jeff; Scholtes, Diana; Swain, Steve; Swerzbin, Mike; Williams III, Bill
Subject:	FW: Mercury News  -- Nominees for panel don't favor price	caps

Info on yesterday's FERC confirmation hearings for Wood and Brownwell. Their statements are more pro-market than pro-interventionist.

Alan C.

 -----Original Message-----
From: 	"Ronald Carroll" <rcarroll@bracepatt.com>@ENRON [mailto:IMCEANOTES-+22Ronald+20Carroll+22+20+3Crcarroll+40bracepatt+2Ecom+3E+40ENRON@ENRON.com] 
Sent:	Friday, May 18, 2001 7:15 AM
To:	mmilner@coral-energy.com; rreilley@coral-energy.com; ray.alvarez@ei.enron.com; acomnes@enron.com; dfulton@enron.com; jsteffe@enron.com; smara@enron.com; snovose@enron.com; seabron.adamson@frontier-economics.com; gackerman@wptf.org
Subject:	Fwd: Mercury News  -- Nominees for panel don't favor price	caps

Content-Transfer-Encoding: quoted-printable
Date: Fri, 18 May 2001 08:39:37 -0500
From: "Tracey Bradley" <tbradley@bracepatt.com>
To: "Deanna King" <dking@bracepatt.com>,	"Justin Long" <jlong@bracepatt.com>,	"Paul Fox" <pfox@bracepatt.com>,	"Ronald Carroll" <rcarroll@bracepatt.com>
Subject: Mercury News  -- Nominees for panel don't favor price caps
Mime-Version: 1.0
Content-Type: text/plain; charset=ISO-8859-1
Content-Disposition: inline

FYI

Published Thursday, May 17, 2001, in the San Jose Mercury News

Nominees for panel don't favor price caps
Pair could sway vote

on wholesale energy
BY JIM PUZZANGHERA
Mercury News Washington Bureau

WASHINGTON -- Two Republican nominees who could tip the regulatory balance in favor of wholesale electricity price caps for California said Wednesday that they would be cautious about enacting such limits.

The statements by Nora Mead Brownell and Patrick Henry Wood III during their Senate confirmation hearing echoed public statements made by two other members of the Federal Energy Regulatory Commission, or FERC, regarding the price limits California officials have desperately sought to try curb soaring electricity costs. Both are expected to be confirmed to fill two vacancies on the five-member commission, which regulates interstate energy sales.

Brownell is a member of the Pennsylvania Utility Commission. Wood is chair of the Texas Public Utility Commission and was appointed by President Bush when he was governor. Bush has opposed price caps, saying they discourage companies from building new power plants and would make the California situation worse.

Two of the panel's current members -- the chair, Curt H?bert, a Republican, and Linda Breathitt, a Democrat -- oppose wholesale price caps. The third, Robert Massey, a Democrat, has supported the cost-of-service price caps California has sought, which would pay electricity providers the cost of producing the power plus a profit in the range of 11 to 15 percent.

Looser limits

With the backing of H?bert and Breathitt, the commission voted 2-1 last month to set a plan for looser limits on electricity prices in California during Stage 2 and Stage 3 emergencies. The state is considering whether to accept the plan, which some experts say could actually make the situation worse this summer.

If Brownell and Wood supported the type of price caps California wants, they could join Massey to push it through the commission. But both told members of the Senate Energy and Natural Resources Committee that they strongly support the free-market system for electricity instead of regulation such as price caps. And they said the complicated process of setting a specific cost-of-service price cap for each company could be a lengthy, bureaucratic process.


A fair rate

``Honestly, in the amount of time it would take to establish a fair rate, we might have enough power plants to negate the problem,'' Wood said.

Brownell and Wood expressed concern about California's crisis and vowed to work quickly to help resolve the problems in prices for electricity and natural gas. They also said they would aggressively pursue inquiries into allegations of price gouging by electricity providers.

``We need to end the uncertainty and the tragedy that is occurring for all the constituents of California and the West,'' Brownell said.

Sen. Dianne Feinstein, D-Calif., told Brownell and Wood that they were the two most important nominees to the Bush administration for California.

``You can make the difference between life and death,'' she said. ``California effectively stands at a precipice.''


No explanation

Feinstein questioned the two about the huge price increases in electricity and natural gas in California, but Brownell and Wood said that without detailed information they could not explain the increases. But they admitted that the large increases raise concerns.

``The math doesn't add up,'' Wood said when questioned as to why natural gas in California has cost more than three times what it costs across the state's border.

Despite their hesitancy on setting price caps, Feinstein said she was optimistic that they might be helpful to her press for the limits. She met with both for about an hour privately last month. Although Senate rules prevent asking questions about specific policy positions, Feinstein said Brownell and Wood showed flexibility and an understanding of the complicated California situation.