From: mikeb@baselice.com
To: klay@enron.com, skean@enron.com
Date: 2000-11-09 09:03:00+00:00
Subject: Arena and Electric Dereg.

1. Thank you for all your support on the Arena Proposition.
2. The following article reminded me to pass along a note about a PR/PA
firm in California who Baselice & Associates worked with this year in
passing Prop 35 (a contracting out initiative).  The firm is a full service
firm named Woodward & McDowell.  They have been active in California
legislative and initiative battles for some 20 years and I highly recommend
them if Enron is in search of support with the electric deregulation fight
out there.  Dick Woodward or Dave Fogarty can be reached at 650-340-0470.

If you have any questions, please call.

Mike



MICHAEL BASELICE
Baselice & Associates, Inc.
4131 Spicewood Springs Road
Suite O-2
Austin, TX  78759
Phone: (512) 345-9720
Fax: (512) 345-9740
email: mikeb@baselice.com




November 8, 2000
Calif Regulators,Grid Oper In Turf War Over Generation By JASON LEOPOLD Of
DOW JONES NEWSWIRES LOS ANGELES-California's electricity regulators and
power-grid operator are locked in a turf war over who has the authority to
order new power plant construction next summer to ensure the state has
enough juice on hand when demand soars.
The California Public Utilities Commission says it can bring emergency
power on line at a fraction of the cost that the Independent System
Operator is expected to pay independent power producers for the same
service.
Under it's plan, PG&E Corp. (PCG) unit Pacific Gas & Electric Co., Edison
International's (EIX) Southern California Edison unit and Sempra Energy's
(SRE) San Diego Gas & Electric Co. were ordered to submit documents by the
end of November stating whether they can build and operate "peaking" plants
by June 1.
The utilities weren't immediately available to comment.
On the other hand, the ISO - which is on the verge of signing contracts for
440 peaking units with between 20 and 91 megawatts of electricity - says
the commission's meddling could endanger any chance of additional resources
coming on line in time.
"Any further interference on the state level could destroy the plan
altogether," said an ISO source close to the issue. "There is no guarantee
the utilities will be able to pull this off by next summer. And if the
whole project is scrapped, you can expect there will be blackouts."
Interference by federal regulators has already cost the ISO two
participants and nearly 600 megawatts in its peaking program.
Calpine Corp. (CPN) and Enron (ENE) initially agreed to build peaking
plants for the ISO next summer, but withdrew their offers after the Federal
Energy Regulatory Commission proposed capping the clearing price for
California's wholesale electricity market at $150 a megawatt-hour.
The ISO, which operates one of the state's wholesale power markets and
manages most of the high-voltage transmission grid, has already solicited
and received bids from merchant generators for 1,800 megawatts of new
peaking power for next summer.
Burned by the summer's power crisis and facing an 8,000-MW shortfall next
summer, the ISO put out a request for bids in August. The ISO's board voted
Oct. 30 to enter into the contracts, which it estimated would cost about
$250 million a year for three years.
The state's Electricity Oversight Board, which oversees the performance of
the ISO, and the Public Utilities Commission protested the decision on the
grounds that the contracts were too expensive.
The commission is also questioning whether there is even a need for peaking
power next summer and, if there is, whether the ISO should handle the
solicitation.
"The question also arises as to whether the ISO - which is empowered only
to operate the state's transmission system and which does not represent the
state or its consumers - is the appropriate organization to plan, solicit
and pay for the construction of new power plants across the state," the
commission wrote in its Nov. 2 order.
Ind the end, the decision is up to state regulators. If utilities can come
up with a cheaper alternative and if the regulators determine that
additional generation is needed by next summer, then they will follow
through with the utilities proposal.