From: richard.shapiro@enron.com
To: j..kean@enron.com
Date: 2001-09-24 14:37:28+00:00
Subject: FW: FW: ERCOT Residential/Industrial Service Mix Requirements


FYI
 -----Original Message-----
From: 	Kingerski, Harry  
Sent:	Monday, September 24, 2001 9:18 AM
To:	Shapiro, Richard
Cc:	Keene, Patrick
Subject:	FW: FW: ERCOT Residential/Industrial Service Mix Requirements


... some recent history.  I had left the message with Rogers Herndon.
 -----Original Message-----
From: 	Keller, James  
Sent:	Thursday, August 23, 2001 11:12 AM
To:	Castano, Marianne
Cc:	Kingerski, Harry; Ogenyi, Gloria
Subject:	Re: FW: ERCOT Residential/Industrial Service Mix Requirements

You are correct!  This is not a new issue, but it seems to resurface on a regular basis.  The issue has been pointed out regularly (the first time in connection with the license and regularly thereafter) and each time the business has said not to worry, if they can't cut a deal with New Power they will just pay the $1/MW.  EES has assumed it will pay the $1/MW since day one!

	Jim





 
Marianne Castano
08/23/2001 08:33 AM
To:	Harry Kingerski/ENRON@enronXgate @ ENRON, Gloria Ogenyi/Enron@EnronXGate
cc:	James E Keller/HOU/EES@EES 
Subject:	Re: FW: ERCOT Residential/Industrial Service Mix Requirements   

Harry and Gloria:

Jim Keller and I have indeed dealt with this issue in the past (it actually came up at the time we were applying for our TX marketer license). 

 It is my understanding, and Jim, please comment if my information is "stale", that we were going to choose the option set forth in Sec. 39.352(g)(3), which allows us to make a payment into the System Benefit Fund.  This approach was discussed with Dennis Benevides, and then, I believe, with Don Black, and they were OK with our pursuing this course, in lieu of having TNPC provide service to residentials on our behalf. 

 Please call me if you have any questions:  814-835-0793.  

Marianne




From:	Harry Kingerski/ENRON@enronXgate on 08/22/2001 04:06 PM
To:	Marianne Castano/HOU/EES@EES
cc:	 
Subject:	FW: ERCOT Residential/Industrial Service Mix Requirements

Marianne - per my voicemail.

 -----Original Message-----
From: 	Ogenyi, Gloria  
Sent:	Wednesday, August 22, 2001 12:06 PM
To:	Hamb, Edward
Cc:	Blachman, Jeremy; Gahn, Scott; Letke, Eric; Wood, James; Presto, Kevin M.; Curry, Mike; Wagner, Joseph; Misra, Narsimha; Dietrich, Janet; Collins, Patricia; Keene, Patrick; Kingerski, Harry; Steffes, James D.; Ryall, Jean; Shapiro, Richard; Herndon, Rogers; Nicolay, Christi L.
Subject:	ERCOT Residential/Industrial Service Mix Requirements


Ed,

Residential Obligation
Section 39.352(g) of Senate Bill 7 provides that for any REP serving an aggregate load in excess of 300 MW, 5% of the load must consist of residential customers. A REP can fulfil this requirement by:
1. Demonstrating that it directly serves residential load amounting to 5% of its total load
2. That another REP serves the residential load on its behalf, or
3. It pays 1 dollar per MWH of required 5% load into the System Benefit Fund.
 EES can fulfil its obligation by entering into an agreement with New Power to serve residential load on its behalf, or can pay the 1$ per MWH penalty.
There is an annual compliance reporting requirement and EES can demonstrate compliance if it has an agreement with New Power.

EES Contract,
For price to beat customers, the utilities have by Commission rule, the obligation to allow customers to come and go without restraint for the 5 year period conmmencing 1/2/02. The Commission concern may be that Enron will abuse this provision by gaming the system. The Enron contracts as currently written are within the rules as approved by the Commission. Until the utilities move to amend the relevant rules, the Commission can only exercise its displeasure by appropriate oversight and enforcement to determine what conduct amounts to abuse and gaming. I think it will ultimately be a question of degree and pattern of switching. The onus will be on the affiliated REPs to prove abuse and gaming. Fundamentally, it is in the best interest of the market to allow customers to come and go. Customer mobility is the best customer protection in a competitive market. Besides, a restraint on customer mobility could have a chilling effect on competition as it will increase customer inertia. The Commission will carefully weigh any course of action to insure that they achieve a reasonable balance. For larger than 1MW customers, they can agree to long term contracts and a restriction on their ability to come and go.

Please call with any questions,
Gloria
 -----Original Message-----
From: 	Hamb, Edward  
Sent:	Wednesday, August 22, 2001 10:32 AM
To:	Ogenyi, Gloria
Subject:	Re: Update: Enron Direct Telesales Initiative in NY, NJ and TX

To:	ehamb@enron.com
cc:	 
Subject:	ERCOT Residential/Industrial Service Mix Requirements

get on this.  we need to discuss
---------------------- Forwarded by James M Wood/HOU/EES on 08/22/2001 10:20 AM ---------------------------
From:	Rogers Herndon/ENRON@enronXgate on 08/22/2001 09:27 AM
To:	Jeremy Blachman/HOU/EES@EES, Scott Gahn/HOU/EES@EES, Eric Letke/HOU/EES@EES, James M Wood/HOU/EES@EES
cc:	Kevin M Presto/ENRON@enronXgate, Mike Curry/ENRON@enronXgate, Joseph Wagner/ENRON@enronXgate, Narsimha Misra/ENRON@enronXgate, Janet R Dietrich/HOU/EES@EES 
Subject:	ERCOT Residential/Industrial Service Mix Requirements



Everyone -  

I was just informed by EPMI that there may be a requirement for Retail Energy Providers in ERCOT to serve a certain mix of residential rate class/industrial rate class customers once a certain industrial threshold is crossed (300 Mw of industrial rate class load).  

EWS has not set it itself up to monitor such requirements.  Therefore, I cannot comment on the accuracy or details of this requirement.  However, it is something we definitely need to look into.  In addition, we (EPMI/EWS) are getting feedback from the TX PUC that they are not pleased with how they see the pilot and the market structure unfolding.  Specifically, they are not pleased with retail energy providers' contracts that contemplate the right to switch between direct access and tariff (and visa-versa).  We will monitor and need to get more clarity on how the PUC intends to address their displeasure.

On the residential requirement front, someone needs to address this.  Specifically, is this true.  If so, what rate classes are considered industrial vs. commercial?  Is there a similar requirement for commercial load?  Is TI considered industrial?  Do we already have industrial customers in our portfolio?  Who in EES tracks and monitors issues like these as we enter markets?

Mike Curry is in the process of tracking this info down from an EPMI perspective as they are focusing on more of the pure, large industrial customers.  We will share any information Mike receives with the EES group. 

RH









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