Dow Jones Article re EEI Contract ,
 Article as per my voice mail.
Thanks 
Elizabeth
36349
---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 11/29/99 09:47 
AM ---------------------------
From: Christi L Nicolay on 11/24/99 04:50 PM
To: "Betsy Carr" <bcarr@bracepatt.com> @ ENRON
cc: Elizabeth Sager/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT 
Subject: Re: Christi, this is generating a lot of interest!  

Elizabeth Sager has been working on the EEI contract for Enron.



"Betsy Carr" <bcarr@bracepatt.com> on 11/24/99 03:48:07 PM
To: Christi L Nicolay/HOU/ECT@ECT
cc:  
Subject: Christi, this is generating a lot of interest!



Christi, this is generating a lot of interest!

>  By Mark Golden
>
>  A Dow Jones Newswires Column
>
>  NEW YORK (Dow Jones)--"Et tu, Sonnet?"
>
>  The Edison Electric Institute unveiled Wednesday a standardized master
> agreement for trading power, but there's already a standard contract
>  - the one written by the Western Systems Power Pool.
>
>  There are several ways to characterize this battle: East versus West;
> power
> marketers versus utilities; and, even, Southern Co. versus
>  Southern Co. A power struggle has begun, despite the fact that most
> traders, preschedulers and trading managers aren't even aware of the
>  new contract.
>
>  Southern Co. (SO) Vice President Bobby Campo has been a leader in WSPP
> since the organization's inception and has been chairman of its
>  contract committee for four years. Yet Southern Co. Energy Marketing's
> chief counsel, Sonnet Edmonds, is a leader in the rival-contract
>  faction.
>
>  Will EEI, along with its comrade, the National Energy Marketers
> Association, manage to dethrone the WSPP contract or crash? WSPP's
>  raison d'etre is to manage and promote use of its contract, which is
> traded
> extensively in the West and has gained proponents in the East.
>
>  "I'm not real excited about it right now," Campo said of the new
> contract.
> "The EEI contract is being done by contract people and lawyers.
>  We - operators and power marketers - worked on our contract for years
> before we brought in the lawyers. It (the new contract) may die from a
>  lack of interest from participants, but EEI has the ability to keep it
> alive."
>
>  It isn't clear if the big power marketing companies will get the ball
> rolling by asking counterparties to switch to the EEI contract. Edmonds
>  hopes that Southern Co. will do so.
>
>  "Management hasn't given the official word yet, but we participated in
> its
> development, so I imagine we'll use it at some point," she said.
>
>  Enron Corp.'s (ENE) general counsel also worked on the EEI contract, but
> the company hasn't made a decision to actually use it.
>
>  Entergy Corp.'s (ETR) general counsel, Christopher Bernard, led the
> effort
> to develop the new contract as head of NEM's standardized
>  contract committee. But Entergy's Jim Kenney is chairman of WSPP's
> executive committee. Entergy's power trading managers, meanwhile,
>  haven't even read the new contract yet.
>
>  Duke Power Co. (DUK), an NEM member, is looking at it, a spokesman said.
> Enron and Southern Co. aren't NEM members, though they
>  serve on its contract committee.
>
>  Several sources said American Electric Power (AEP) has agreed to be the
> guinea pig, and plans to switch to the EEI contract with
>  counterparties on eastern U.S. trades. A spokesman for the utility
> couldn't
> confirm or deny that rumor because Paul Addis, president of AEP
>  Energy Services, has imposed a vow of silence on AEP's traders.
>
>  There are elements of the EEI contract that power marketers may like. One
> innovation is a new product called "Firm (No Force Majeure),"
>  which requires the payment of liquidated damages for failure to deliver -
> no excuses, no force majeure, just send a check.
>
>  The new contract also has two other firm products. "Firm (Liquidated
> Damages)" is closest to the WSPP firm product, but it defines force
>  majeure more strictly than WSPP. "Firm (LD-System Reliability)"
> explicitly
> allows a selling utility to curtail deliveries without paying liquidated
>  damages if necessary to maintain native load. Of particular interest to
> traders of eastern U.S. electricity is the fact that the EEI contract
>  defines what an "into" product is.
>
>  WSPP has debated the introduction of such products, but in the end has
> tried to come up with a single, agreed-upon product for trading.
>
>  "EEI has created a lot of different types of firm products, but that can
> create problems. Many people have said 'no, we want one firm
>  product'," said WSPP's counsel, Michael Small, of Washington, D.C., law
> firm Wright and Talisman.
>
>  So why didn't the EEI group just work with WSPP to get changes made to
> the
> existing standard? Too much bureaucracy, according to
>  Southern's Edmonds.
>
>  "Changes to the WSPP contract require approval from 90% of the members,
> after working through the operations committee and the
>  executive committee. Then the changes have to be filed at Federal Energy
> Regulatory Commission," Edmonds said.
>
>  Coincidentally, WSPP's executive committee is meeting Friday in San Diego
> to discuss what changes are needed in the definition of its firm
>  product. Western utilities are pushing hard for "firm" to mean backed up
> by
> reserves of generating assets or previously purchased power. In
>  other words, some utilities want to eliminate short positions from power
> markets.
>
>  At least one power marketing company, which didn't want to be named, will
> switch to the EEI contract if that change gets made to WSPP.
>
>  For the EEI contract to fly, not only will the lawyers at the big trading
> companies need to make it their companies' standard, but traders will
>  have to convince utilities to abandon most, if not all, force majeure
> claims. Many municipal utilities and rural electric cooperatives are
>  forbidden to do so by state regulations.
>
>  For traders, though, the biggest adjustment to make if the EEI contract
> does take off will be more social than professional. The semi-annual
>  meeting of the WSPP's operations committee is as much fun as any blatant
> boondoggle should be. The serious work of a handful of
>  committee members is a small hook on which hangs the revelry of hundreds
> of
> power marketers, brokers and utility staffers. As it stands,
>  non-committee members must have a hard time convincing bosses that their
> presence is necessary at the meeting.
>
>  How on earth will traders justify going if the WSPP contract is no longer
> used? Can EEI throw a good party? And how will the Gucci-loafered
>  EEI executives from Washington handle $1,000 dares to go naked in a bar?
>
>  Such are the questions now vexing America's electric utilities.
>
>  -By Mark Golden; Dow Jones Newswires; 201-938-4604;
> mark.golden@dowjones.com
>
>  Copyright (c) 1999, Dow Jones & Company Inc
mark.haedicke@enron.com, jeffrey.hodge@enron.com