From: robert.hemstock@enron.com
To: rob.milnthorp@enron.com, john.lavorato@enron.com, derek.davies@enron.com, tim.belden@enron.com, john.zufferli@enron.com, steven.kean@enron.com, aleck.dadson@enron.com, richard.shapiro@enron.com, peter.keohane@enron.com, eric.thode@enron.com, mark.palmer@enron.com, tmclaren@gpc.ca, seabron.adamson@frontier-economics.com, tburns@gpc.ca, aleck.trawick@blakes.com, dpef@blakes.com
Date: 2000-11-15 17:28:00+00:00
Subject: Update - Alberta Power Pool Rule Changes

Dale McMaster called this afternoon to advise that the Power Pool Council 
agreed to delay any decision on the recently proposed rule changes (importers 
excluded from setting pool price and dispatch risk) for a period of two 
weeks.  During this two week period Dale has been asked to obtain stakeholder 
input into ways to address concerns about whether the spot price in the 
Alberta Power Pool is a product of interaction among competitiors in a 
efficient market.   

In our discussions with the Power Pool and ADRD today and yesterday Enron 
expressed its willingness to work with the Power Pool to provide feedback on 
suggested rule changes but has also made it clear that we do not agree with 
the premise that there is a "problem" that requires "emergency" amendments to 
the Pool rules.  Our position has been that Alberta is short supply, and 
significant changes to the rules and/or market design will only discourage 
new generation development. 

Dale McMaster had just left the Power Pool Council meeting when he called and 
had not yet put much thought into how to define the issue he has to address 
and what the process will be.   We discussed the process and it appears he 
will likely receive comments from stakeholders at large and also assemble a 
small committee of 4-5 stakeholders (which would include Enron) to work with 
the Power Pool to consider possible changes to the Pool rules.  Dale said he 
would try to pull together a "terms of reference" document that would define 
the mandate of the small committee by tomorrow.

After my call with Dale McMaster, Peter Keohane and I spoke to Aleck Trawick 
and we have asked Blakes to assist us in three areas:

1) Once the terms of reference of this small committee are released (and 
assuming Enron is asked to participate on the committee) Blakes will assist 
us with preparing a letter that states that Enron's participation does not 
represent acknowledgement or agreement that the Power Pool Rules must be 
amended to address the concerns of some stakeholders about real time pricing 
in Alberta and that Enron's participation on the committee is on a without 
prejudice basis;

2) Enron needs to obtain the final memo from Frontier Economics in which 
Frontier provides its opinion on how the proposed rule changes: i) would 
introduce price discrimination into the Alberta electricity market, ii) would 
be contrary to the development of an efficient, fair and openly competitive 
market for electricity, iii) would compromise the independence of the Power 
Pool, and iv) would have the expected effect of artificially depressing the 
real time price of electricity in Alberta.  Once Blakes receives a copy of 
the Frontier Economics memo, they will prepare a memo for Enron advising: i) 
whether the two week process of consultation by the Power Pool is in 
accordance with the standards required of the PPC as an administrative 
tribunal operating in Alberta; and ii) whether such rule changes offend the 
provisions of the EUA;

3) Blakes will advise Enron of the possible avenues of recourse (i.e. appeal 
to the AEUB, and/or legal action in the Court of Queen's Bench) in the event 
the proposed rule changes (or similar changes) are approved by the PPC at the 
end of this two week period.   GPC and Eric Thode will also be consulted on 
this issue and obviously input from all those within Enron working on this 
project will be sought prior to any decision being made to pursue any 
possible legal remedies.  

Please advise if you have any comments.

Regards,

Rob