IN: 3-day shipping upgrade for just $2! Have some last minute shopping to take care of? Now's the time. For an additional $2, we'll upgrade Ground shipping to 3-day Air--to guarantee your packages get under the tree before Christmas. But hurry, offer expires on December 19.

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OUT: "After Christmas Savings Before Christmas" - from Sierra Trading Post

IN: The Commission discussed its market based rate policy at today's meeting. They did not vote out an order today, but expect to take up this issue again next meeting. The staff memo recommended the following: For an interim period, FERC will deal with pending requests for market based rates and with triennial reviews of those rate authorizations, using a new test called the "Supply Margin Assessment" (also called a jazzed up version of the hub and spoke test) where a seller's capacity will be reviewed against the generation reserve margin in a market. The test takes into account constraints based on TTC. If the capacity of a seller is not necessary to meet peak demand,the seller does not have market power. This test is applicable to all markets that are not part of an existing RTO or ISO. For those selling into an RTO/ISO, the FERC will continue to allow market based rates subject to the market monitor and mitigation. Staff also recommends that FERC initiate a Section 206 investigation to require each seller with market based rate authority to change its tariff by adding a provision stating that if the seller acts in an anticompetitive manner, the FERC can require refunds. Through questioning by Commissioner Massey, it was revealed that, even if a seller did not engage in bad behavior, but sold into a disfunctional market, refunds could be required. In the staff memo, apparently staff had left vague the definition of anticompetitive behavior in order to be able to interpret it most broadly. However, Commissioners asked staff to better define the anticompetitive actions that could trigger refunds. This policy will be brought up again at the next Commission meeting on October 11. It will be issued as a proposed action, giving parties an opportunity to comment within 15 days and then also file reply comments, Final action is expected within 60-90 days. Last, for the long-term, FERC will hold outreach meetings looking for answers as to how to detect market power and what to do when it is detected. Since the interim measure is only a "snapshot" approach according to Commissioner Massey, he is willing to support it only along with the above described tariff provision. Commissioner Breathitt is very uncomfortable with an open refund requirement, stating that it adds to regulatory uncertainty at a time when the Commission is most interested in giving certainty to the industry in order to assure reliability.

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OUT: FERC Meeting: Market Based Rate Review

IN: Alan and Wayne: We received a letter from AEP Energy Services Inc. terminating all coal transactions with ENA as of 12/1. The letter states that they shall begin liquidating the contracts on 12/3. We have been instructed by Sally Beck's group to identify any terminated transactions that should be taken out of the book. Should these and if so, which transactions are these?

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OUT: Coal Termination

IN: Dear Michelle: I just finished my conference call with Liz Miller (counsel for Calpine), Christina Solomon, and Steve Schuler (Steve is co-counsel for Miller with Christina). Christina had passed along to Liz the various points I made at the meeting last week, so Liz was prepared to address our primary concerns. She made the following points: (1) She has talked with several different people at various levels of authority in Calpine's trading area, and insists that Calpine treats the power grids as "completely different" regions, strategies for which are not shared internally among those regions. (2) She asserts that "how we do it at Calpine is totally different from Enron," since Calpine is "trading around a portfolio of assets that we own." She asserted that Enron, not owning power generation assets, trades differently. When I replied that Enron does have power generation assets, she acknowledged the fact but insisted that Enron's trading style is vastly different due to the difference in emphasis vis a vis the power generation assets. (3) Liz claims that Miller works almost exclusively in "Urcot" (sp??) in Texas, with some participation in Entergy in Louisiana. According to Liz, Calpine's strategies concerning these specific regions is divorced from and not related in any way with any trading Calpine does in the East or West. (4) Liz is of the opinion that Miller "is not senior enough that we would be looking for what he knows." He has no role whatsoever in discussing or formulating strategy for trading. Miller, she insists, is on the receiving end only. He takes orders, dispatching and scheduling solely in response to orders he receives from others. (5) Liz acknowledges that, were Miller in a more senior, responsible position, she would have the same concerns we are expressing were the tables turned. Miller is "so slotted," however, that she believes that he is not in a position to use any Enron trade secret that he might possess (though she and Miller's attorneys expressed doubt that he could retain any critical information, that the most critical information changes on a day-to-day basis). We ended the conversation with the following understandings: (1) Liz will explore whether Calpine could put Miller in a non-trading function for a period of two months or so.

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OUT:
ENA v. Miller