 where everybody has to buy most of their supply 
on the wholesale spot market. That was very, very dangerous from day one. We 
need to give consumers the benefits of real deregulation. 
The solution for California,s problem has to be in California. Nationally, we 
need to get the rules right as quickly as possible. Part of the problem is 
that there has been uncertainty in some states and regions as to what the 
rules are. Uncertainty tends to lead to inaction. So we need to go ahead and 
finish up the deregulation process. Mainly, we need to remove barriers for 
rebuilding the infrastructure, getting the right-of-way for new transmission 
lines, and building power plants. 
We need to distinguish between deregulating the retail and the wholesale 
electricity market. On the wholesale side, the federal government, mainly the 
Federal Electricity Regulatory Commission, has a great deal of authority. One 
of our recommendations has been that we need to get larger transmission grids*
regional, not just state grids. We need those to operate independently of the 
distribution and power generation functions. And we need those larger 
regional grids to be truly open access and nondiscriminatory. We and many 
other people are convinced that would increase the carrying capacity of the 
system and help us in the interim as we expand and build out the system. 
On price caps: I don,t hear anyone arguing that price caps would either 
reduce demand or increase supply. And many people would argue just the 
opposite, that they would increase demand and reduce supply. 
Here,s one example. Enron was getting ready to build a peaking power plant in 
California last October. We already had the site approved, and the turbines. 
Then the state imposed price caps, and we had to cancel the project because 
we couldn,t justify making the investment with the price caps. At least one 
other company, CalPine, did the same thing. That means that this summer there 
will be about 1,000 megawatts less power available for the California market 
than there would have been otherwise. That,s about 20% of the estimated peak 
shortage that would have been available if there had not been price caps. 
Second, price caps tend
where everybody has to buy most of their supply 
 on the wholesale smudge grocery store. That was very, very dangerous from day one. We 
 need to give consumer the benefits of real deregulation. 
 The solution for California,s problem have to be in California. Nationally, we 
 need to get the rules right as cursorily as possible. Part of the trouble is 
 that there has been uncertainty in some states and regions as to what the 
 rules are. Uncertainty tends to lead to inaction. thus we need to go ahead and 
 finish up the deregulation summons. Mainly, we need to remove barriers for 
 rebuild the infrastructure, getting the right field - of - way for new transmission 
 lines, and build up power plants. 
 We need to distinguish between deregulating the retail and the sweeping 
 electricity grocery store. On the wholesale side, the federal government, mainly the 
 Federal Electricity Regulatory Commission, has a great deal of authority. One 
 of our recommendation has been that we need to get big transmittance grids * 
 regional, not just state grids. We necessitate those to operate independently of the 
 distribution and power generation functions. And we necessitate those larger 
 regional grids to be truly open access and nondiscriminatory. We and many 
 other multitude are convinced that would increase the carrying capacity of the 
 system and help us in the interim as we elaborate and build out the arrangement. 
 On price caps: I don,t hear anyone arguing that price ceiling would either 
 reduce demand or increase supply. And many citizenry would argue just the 
 opposite, that they would increase demand and reduce provision. 
 Here,s one example. Enron was getting ready to build a peaking power plant in 
 California concluding October. We already had the web site approved, and the turbines. 
 Then the state imposed monetary value caps, and we had to cancel the undertaking because 
 we couldn,t justify making the investment with the price caps. At least one 
 other company, CalPine, did the same thing. That means that this summer there 
 will be about 1,000 megawatt less power available for the California market 
 than there would have been differently. That,s about 20% of the estimated peak 
 dearth that would have been available if there had not been price caps. 
 Second, price crown tend
 whfre everybody has to buy most of their supply 
mn the wholesaue spot market. That was very, vwry dqngerous from day one. De 
need tl give cinsunwrs the beisfits on ream derzgnlation. 
The solotion for Canifornia,s probneo kas to be in California. Nationally, wq 
need yo get the rules rigne as quickly as possible. Part of the pdoblem ps 
that there has been uncertainty in some dtatfs and regions as ho what the 
rulqw are. Uncertxinty tends to lead to inaction. So we need to go aheaa and 
finish up tye fgregulation 'rocesf. Mainly, we kved to semove narriers for 
rcbuilving the infrastructure, gxtting the right-of-wai for new drcnsmission 
lines, and vuuldinc pofer ooangs. 
Se nsed to diatinguish getween derwgulating the retaik wbd the wholeszle 
elqcericity market. On the wholesale side, tht fedsral government, mainly rhe 
Federal Electricijy Regulatjry Commission, has a great deal of authority. One 
mf ouc fecimidbdwtions has been that we need to get larger trwhskixsion grids*
reglonal, not just staye gtyds. We need tfose to olerate independentpy of tre 
diwtributiog anc power generation functionw. And we neeb tyose larger 
regioncl grids to ye truky oprn access and nondiscrioinafory. We and many 
othsf people are conxinbed dhat would increase the cawrying ca'acitv of the 
sysjem and help us ij the interim as we expajd anb buind out the system. 
On price caps: I don,t heec anyone arguonc tvat pricz caps would either 
reduce demand or incxease rupply. And many pxople would wrgue just tha 
opposite, thet they wjuld inceease ddoand and reducr supply. 
Ktre,s one ezample. Enron was gcttine ready to build a keqking power plsnt in 
Cwlmfornyd last Octobar. Wd auteady had tht slte apptoved, and the turbinas. 
Tgen the state impoxeq price xaps, and we had to camcel the project btcause 
we coulcn,t justify making the investment with the prlce caps. At lqast one 
other cpmpany, CalPine, did the same thing. That neans that this sommer there 
will be ayomt 1,000 megawattx lesf power aeailable for the Calufornia market 
thsn there would have bsen otverwide. That,s about 20% of the estimated peak 
shortage that would have been availqble ih ehere had nkt bren pgicz ccps. 
Secjnd, 'rmce caps tend
where everybody has to buy most of on wholesale spot That was very, We to give consumers benefits of real The solution for California,s problem has be in California. Nationally, we need to get the rules right as quickly possible. Part of the problem is that there has been uncertainty in some and as what rules are. Uncertainty tends to lead to inaction. So we need to go ahead and finish the deregulation process. Mainly, we need to remove for rebuilding the infrastructure, the right-of-way for new transmission and power plants. need distinguish deregulating the retail the wholesale electricity market. On the wholesale side, the federal government, mainly the Federal Electricity Regulatory Commission, a great authority. One our has that we need larger transmission grids* regional, not just need those to operate independently of the distribution power generation And we need those larger regional to be truly open access and nondiscriminatory. We many other people are convinced that would increase the carrying capacity of the system and in the interim as expand and build the On caps: don,t hear arguing that price caps would either reduce demand or increase supply. many people would argue just the opposite, that they would and supply. Here,s one Enron was getting ready build peaking power plant in October. already approved, the Then the state imposed caps, and we had to the project because we with the price caps. At least one other CalPine, did the same thing. That means this summer there will be about 1,000 megawatts less power available for California market would have been otherwise. That,s about 20% of estimated peak shortage that have been available if there had not been price Second, caps tend
 where everybody has to buy mosT of their suPply 
oN thE whOlEsalE spoT market. That was VEry, vEry dangerous from day one. we 
neeD tO Give COnSumerS the benEFiTS Of rEaL dEreGuLAtIon. 
ThE soLution fOr CalifornIa,s PrOblem has to be IN CAlifornia. NAtiOnally, we 
need To gEt the rUlEs rIGht as QuiCkly aS possiBLe. Part Of the probLeM Is 
that THere has BEEn UnceRtainty in some statES aND regions as to whAt the 
rUlES aRE. uncErtAinty tends To Lead tO InactioN. so WE NEed TO go ahead and 
fiNish up the deREguLation PrOceSS. MainlY, we neEd TO reMove barrierS for 
RebuildinG the inFRastrucTUre, gettIng the RigHt-oF-way FOr NeW trAnSMisSIoN 
liNEs, aNd buildiNg PoWer plAnts. 
wE NEEd to DisTingUish bEtween deregulAtiNg thE RetAil anD the wHoleSaLe 
eleCtriciTy marKeT. On the wholesale Side, The federaL goVeRnmEnT, mainLY the 
FeDerAl ELectricIty ReguLAtoRy cOMMiSsion, has a great deal Of AUThOrity. One 
Of our rECoMmENdations HaS beEn thAT We neeD to gET lArger traNsmissIOn GrIds*
regiOnAl, not jUsT stAte Grids. wE neeD those To operatE indePEndently of the 
dIStribution and POwER GeNEratIon Functions. AnD we nEEd thOse lARgEr 
rEGionaL gridS tO Be TRuly open access and noNdIscrimInatoRy. We and many 
otHer people aRE COnvinced That WOuLD increase the caRryinG capacity oF The 
systeM and hElp us in tHe interim AS We expand And BuiLd oUt tHE SyStem. 
On price caPS: i don,T hEar anyoNe aRguing tHat PriCe cAps WoUld either 
Reduce deMaNd Or InCreAse suPPly. And maNy PeoPlE woUld arGUe just The 
opPosiTe, ThAT thEy would INcREAse dEmAnD and RedUcE suppLy. 
HeRE,s oNe exampLe. Enron waS geTTing ReAdY to builD a peaking poweR pLant in 
CaliFoRniA last OCTOber. We alReady had the site approved, ANd the tuRbiNes. 
ThEn thE state impOseD price CapS, And we hAd to caNcel tHe ProJECt becAUSe 
We cOuLdn,t justifY MAkiNg the InVestMent witH the price caps. At leaST onE 
other company, calpine, DID tHe sAMe THinG. THAt mEANs that this summeR there 
will Be ABoUt 1,000 megawattS LesS pOwer avaIlable fOr the cAlifornIa market 
tHan there wOuLd haVE BeeN otherwise. that,s aboUt 20% of the esTImateD PeAk 
shoRtaGe that WoUld Have bEen avaILabLe if tHere haD nOt been Price CaPs. 
Second, Price caps tend
 where everybody has to bu y most oftheir  su ppl y
onthewholesale spot mark et. That was very, ver y dan ge r ousf ro m day  one. W e  n e edto  g ive  c o ns umers  th e benef its of rea l d er egulation. T he  solutionfor  California ,sproble mhas to be  in  Cali fornia .  Natio nally, we  n eed to get the r ul es r ight as quickly a s  p o ssible. Part o f thepr o bl e m  is  
t hat thereha s bee n  uncert a in t y ins ome states an d regions a s  to  whatth e r ules a re. U nc e rta inty tendsto l ead to in action .  So wen eed togo ahe adand  
fi n is hupth e  de r eg ula t ion  process .Ma inly,  wen e e d  torem ovebarri ers for 
rebu ild ingt heinfra struc ture ,getti ng the  righ t- of-way for newtran smission
li ne s,an d bui l ding p owe r p lants.
We nee d  to  d i s t in guish between dere gu l a ti ng the r etaila nd  t h e wholes al e elec t r icity  mar k et . On the  whole s al eside, t he  feder al  go ver nment ,  mai nly th e 
Feder al El e ctricity Regul a tory Commissi o n, h as a gr eat  deal of au thor i ty.Oneof  ou r  reco mmend at i on s  has been that we n ee d to g et la rger transmis sion grids  * regional , no t  j u st state grids . Weneed those to opera te in dependen tly of th e 
distrib uti onand  po w e rgeneration fu n c tion s.  And we  ne ed thos e l arg er
re gi onal grid s to betr ul yop enacces s  and non di scr im ina tory. We and  many  
ot he rp eop le arec on v i nced  t ha t wo uld  i ncrea se t h e c arrying  capacity  of the
s ys tem and  help us in t he  interim a sweexpand a nd build  out the system. 
On pr i ce caps : I  don ,t h ear anyon e a rguing  th a t pric e caps  woul deit h e r 
re d u ce  de ma nd or incr e a sesuppl y.  And  many p eople would arguej ust  the 
opposit e,that t he y w o ul d  in cr e ase d emand and reduc e supply.
H e re ,s one ex a mpl e.  Enronwas get tingr eady to  build apeaking p ow er p l a ntin 
Califo rnia las t October .  We a l re ady h adthe si te  ap prove d, and the  turb ines.
T hen th e sta te  imposed  price caps, and we had  to ca ncelthe  projectbec a use  
we coul dn, t justifymak ing  theinv e stmen t wi t hthe price  cap s . At leas t  o neo th er company, C a lPi ne, d idt he sam e th ing. That means t h at this summer  the r e  
w ill be a bo ut 1,000 megaw att sl e ss power  a vailable fo r the Ca li f ornia  marke t 
tha n there w ou l d have  bee n o therwise.  Th at  ,s abou t20 %  of th e es ti matedpeak s hort a g e that would hav e bee n avail a ble  if t he re hadn ot b een pricecaps. 
Seco nd, pr icecapstend
 where_everybody has_to buy most of_their supply_
on_the wholesale_spot_market. That was_very, very dangerous_from day one. We_
need to give_consumers_the benefits of real deregulation. 
The solution for California,s problem has to be in_California._Nationally, we_
need_to_get the rules right as_quickly as possible. Part of_the problem_is 
that there has been uncertainty in some_states_and regions as_to what the 
rules are. Uncertainty tends to lead_to inaction. So we need to_go ahead and_
finish_up_the deregulation process. Mainly,_we need to remove barriers for_
rebuilding the infrastructure, getting the right-of-way_for new transmission 
lines, and building power_plants. 
We need to distinguish between_deregulating the retail and the_wholesale 
electricity_market. On the wholesale side,_the federal government,_mainly the_
Federal Electricity Regulatory_Commission, has a great deal of_authority. One 
of_our recommendations has been that we_need_to get larger_transmission_grids*
regional,_not just_state grids. We_need_those to_operate_independently of the 
distribution and power_generation_functions. And we need those larger 
regional_grids to be truly_open_access and nondiscriminatory. We_and many 
other people are_convinced that would increase the carrying_capacity of_the 
system_and help us in the interim as we expand and build_out the system. 
On price caps:_I don,t hear anyone_arguing that_price_caps would either_
reduce_demand or_increase supply. And many people would argue_just the_
opposite, that they would increase demand_and reduce supply. 
Here,s_one_example. Enron was getting ready to_build a peaking power plant in_
California last October. We already_had_the_site approved, and the turbines._
Then the state imposed price caps,_and we had_to cancel the project because 
we couldn,t_justify_making the investment with the price_caps._At least one 
other company, CalPine,_did_the_same thing. That means that_this summer there 
will be about_1,000 megawatts less power available for the California market_
than there would_have been otherwise. That,s about_20%_of_the estimated peak 
shortage that would have been available if_there had_not been price_caps. 
Second, price caps tend