Duke Energy proposes to manage SDG&E's entire electricity load for ,
 fyi...
---------------------- Forwarded by Karen Denne/Corp/Enron on 11/27/2000 
03:58 PM ---------------------------


tcwillia@duke-energy.com on 11/27/2000 02:23:42 PM
To: "Andy Brown (IEP)" <runwithmee@aol.com>, Bob Escalante at Constellation 
<Bob.escalante@powersrc.com>, Curtis Keebler at Reliant 
<curtis_l_kebler@reliantenergy.com>, Greg Blue <gtbl@dynegy.com>, "Jack 
Pigott @ Calpine" <jackp@calpine.com>, Jan Smutny-Jones <smutny@iepa.com>, 
"Joe Ronan @ Calpine" <joer@calpine.com>, John Stout for Reliant 
<john_h_stout@reliantenergy.com>, "Julie @ Edson" <jmball@ns.net>, "Karen 
Denne, Enron" <kdenne@enron.com>, Karen Edson <kedson@ns.net>, "Kassandra 
Gough @ Calpine" <kgough@calpine.com>, Katie at IEP <kaplan@iepa.com>, Lynn 
Lednicky at Dynegy <lale@dynegy.com>, Marty Wilson <mwilson@pstrategies.com>, 
Paula Hall-Collins <paula.hall-collins@williams.com>, "Richard Hyde, Duke" 
<rwhyde@duke-energy.com>, Rob Lamkin <rllamkin@seiworldwide.com>, Roger 
Pelote <roger.pelote@williams.com>, Stephanie Newell at Reliant 
<stephanie-newell@reliantenergy.com>, Steven Kelly <steven@iepa.com>
cc:  

Subject: Duke Energy proposes to manage SDG&E's entire electricity load for 
five years


The note below was sent to the 20 or so reporters that I have been working
with on the CA electricity crisis.

FYI.

Below is a press release we distributed today that details a proposal we
have made to San Diego Gas & Electric to manage their entire electricity
load (up to 3,300 megawatts) for five years at a fixed price of $60 a
megawatt hour.  The proposal was detailed in our comments to the Federal
Energy Regulatory Commission on their recent proposed solutions to
Caifornia.

As the release indicates, forward contracting for electricity is a very
effective way for the state's utilities to manage the volitility in the
state's electricity markets.  With natural gas prices more than doubling
since last year and last week being up to seven times higher than last year
on the spot market (up to $19 a million BTU vs. an average of about $2.50
in 1999), we feel that its imperative for utilities to take advantage of
these contracts so they can manage their own risk  exposure and their
customer's risk exposue to this volitility and the associated high prices.
(The price of natural gas represents about 90 percent of our plant's
operating costs).

We signed a forward power contract with PG&E Oct. 30 and Southern Cal
Edison Nov. 15 (announced for the first time in the this release).  The
Federal Energy Regulatory Commission strongly encourages these kind of
contracts -- and we hope that we, or other wholesale power marketers, can
do more of this kind of business with these utilities and SDG&E in the very
near future to bring stability to the state's wholesale electricity market.

Our proposal is detailed on pages eight and nine in the FERC filing, which
also includes our other positions on the California electricity crisis.
These are also detailed on our CA web site at
www.Duke-Energy.com/California.

For more information, call me at 805-595-4270 or page me at 877-364-5170.

(See attached file: Nov 27 release.doc)(See attached file: Duke Nov. 22
FERC filing.doc)
 - Nov 27 release.doc
 - Duke Nov. 22 FERC filing.doc
steven.kean@enron.com, richard.shapiro@enron.com, jeff.dasovich@enron.com, 