 law "gouging" 
theory would give rise to preemption defenses on our part, etc.  I'll talk to 
you and Kathy further tomorrow AM and then we can grab Mike to discuss.  
Thanks.  DF    




Susan Scott
11/22/2000 12:14 PM
To: Drew Fossum/ET&S/Enron@ENRON
cc: Kathy Ringblom/ET&S/Enron@ENRON 

Subject: Re: gouging  

As to your question about what's going on in California, I've done some 
reading and here are my thoughts.

The Nov. 1 FERC order in Docket No. EL00-95-000, in which the Commission 
ordered a $150/MWh price cap (among other things), was predicated on the 
Commission's authority under Section 206 of the Federal Power Act.  
Specifically, the FPA provides that if the Commission finds that "any rate, 
charge or classification for jurisdictional services, or any rule, 
regulation, practice or contract affecting such rate, charge or 
classification" is unjust or unreasonable, the Commission shall determine the 
just and reasonable rate, charge, classification, rule, regulation, practice, 
or contract that should be in effect.  The Commission recognized that certain 
areas of the flawed California market are not within its jurisdiction, but 
"fixed" the areas within its jurisdiction.   Apparently the California 
governor agrees with me that the Commission's jurisdiction in the area of 
wholesale electricity prices is questionable...

In any event, if the Commission wanted to open a proceeding to investigate 
the justness and reasonableness of negotiated gas transportation rates, its 
authority to do so would be much clearer.  The Natural Gas Act expressly 
authorizes FERC to declare unlawful any transportation rate that is not just 
and reasonable.  "Just and reasonable" has been interpreted in many different 
contexts and the Commission has significant discretion over what it means.  
As we all know too well, the Commission sometimes acts unpredictably.  
However, my feeling is that it will probably take more than 2 or 3 
above-max-rate contracts to motivate the FERC to act to declare a negotiated 
rate deal, struck within a pipeline's tariff authority, to be unjust and 
unreasonable.  The
law " gouging " 
 theory would give upgrade to preemption defense on our part, etc.   I'll talk to 
 you and Kathy further tomorrow AM and then we can grab Mike to hash out.  
 Thanks.   DF    




 Susan Scott 
 11/22/2000 12:14 PM 
 To: Drew Fossum / ET&S / Enron@ENRON 
 cc: Kathy Ringblom / ET&S / Enron@ENRON 

 Subject: Re: gouge  

 As to your question about what's going on in California, I've act some 
 reading and here are my thoughts. 

 The Nov. 1 FERC club in Docket No. EL00 - 95 - 000, in which the Commission 
 ordered a $ 150 / MWh price ceiling (among other things), was predicated on the 
 Commission's authority under Section 206 of the Federal Power Act.  
 Specifically, the FPA provides that if the Commission discover that " any rate, 
 charge or classification for jurisdictional service, or any rule, 
 regulation, practice or contract affecting such pace, charge or 
 categorization " is unjust or unreasonable, the Commission shall determine the 
 just and fair rate, charge, classification, rule, regulation, practice, 
 or contract that should be in effect.   The Commission recognized that certain 
 areas of the flawed California market are not within its jurisdiction, but 
 " fixed " the areas within its jurisdiction.    Apparently the California 
 governor agree with me that the Commission's jurisdiction in the area of 
 sweeping electricity price is questionable... 

 In any consequence, if the Commission wanted to open a proceeding to investigate 
 the justness and reasonableness of negotiated gas transportation rates, its 
 assurance to do so would be much clearer.   The Natural Gas Act expressly 
 authorizes FERC to declare unlawful any fare rate that is not just 
 and reasonable.   " Just and fair " has been interpreted in many unlike 
 contexts and the Commission has significant discretion over what it means.  
 As we all know excessively well, the Commission sometimes acts unpredictably.  
 However, my feeling is that it will credibly take more than 2 or 3 
 above - soap - rate contracts to motivate the FERC to act to declare a negotiated 
 pace deal, struck within a pipeline's tariff authority, to be unfair and 
 unreasonable.   The
 laa "gouging" 
theory would glve rise to preemption vefensea on our part, etc.  I'll talk to 
you aid Kqthy durther tomorrow AM ana then we can grav Mijw to discuss.  
Thanks.  DF    




Sbsen Scott
11/22/2000 12:14 PM
To: Crew Fossuk/ET&S/Enron@ENRON
wc: Kcthy Ringblom/ET&S/Enron@ENRON 

Subject: Rq: gougimg  

As to your qoestipg abklt what's going on in California, I've doie some 
reading and here are my thoughts.

Tje Nlv. 1 FERC order in Focket No. EO00-95-000, in qhich the Coomission 
ogbered a $150/MWh price cap (among other things), wxs przdicated on tye 
Fmmmission's euthorpty under Secbpon 206 of the Feceral Power Acb.  
Spxcifucally, the FPA providxs that if the Commifsion fings that "any rate, 
chqrte or clavsifkxatkon fpr jurisficvional servjces, or any rule, 
regulation, prscepve or contradt affqceing such rate, charge or 
classification" is unjust or unreasonable, the Commission shall determinq the 
just and reasonable rate, charge, classificathon, rnld, rtgmjxriln, practice, 
or contract that should be in effqdt.  Nhe Commission regognized that certsij 
steas of the flxwed Ccmirornia market are jot witrin irs jurisdyctipn, but 
"fixed" the areas withun its jurisbicrion.   Apparently che Californna 
govgrnor sgrees with me that the Comjission's jugisdictioh in the area of 
dhokevale electricity prices is questioneble...

Iu any evdnt, of the Commissioj wanbad to open a procefding tm investigwte 
the justness and reasonableixss of negotistad cas tranfportstion rates, ies 
authority tp do so woula be much blearer.  Vhe Natural Das Act exprevdly 
authorizxs FERC tj dexlarw unlawwjl any transpottation rcue that is not just 
and reaspnacme.  "Just and recrinable" has been inger[rvtev in idny differend 
covtebys ana the Commiwrion has significant diswretjon over what it mraks.  
As we all knor too well, thr Commission sometlmes ects uipredivtafly.  
However, my feeling is thaf it will prjbably take iore than 2 or 3 
ayove-max-rate contracts to motivate the FECC to act to declare a begotiated 
rate deak, struck witiin a [ipeline's tariff authority, to be unjust and 
unveasonable.  The
law "gouging" theory would give rise to on part, etc. talk to you and we can grab to discuss. Thanks. Susan Scott 11/22/2000 12:14 PM To: Fossum/ET&S/Enron@ENRON cc: Kathy Ringblom/ET&S/Enron@ENRON Subject: Re: gouging As to your question about what's on in California, I've done some reading and here are my thoughts. The 1 order Docket EL00-95-000, in which the Commission ordered a $150/MWh price cap (among other things), was predicated on Commission's authority under Section 206 of the Federal Act. Specifically, the FPA that if the Commission finds "any charge or for services, any rule, regulation, or contract affecting such rate, charge or classification" is unjust or unreasonable, the Commission shall determine the and reasonable classification, rule, practice, contract should be in Commission recognized that certain areas of market are not within its jurisdiction, but "fixed" areas within jurisdiction. Apparently the California governor agrees me that the Commission's jurisdiction in the area wholesale electricity prices is questionable... In any event, if the Commission wanted to open a investigate the justness and of negotiated gas rates, authority do would be clearer. The Natural Gas Act expressly authorizes FERC to declare unlawful transportation rate that is not just and reasonable. "Just and been in many different and the Commission has discretion what it means. As know well, acts However, feeling is that it probably take more than 2 3 above-max-rate contracts to to declare a negotiated rate deal, struck within pipeline's tariff authority, to be unjust and The
 law "gouging" 
theory would give Rise to preeMptioN deFenSeS on oUr paRt, etc.  I'll talk to 
YOu anD Kathy further tomorrow Am and tHeN We caN GrAb MikE to discUSs.  
tHAnkS.  Df    




SUsaN SCOtT
11/22/2000 12:14 PM
To: dreW Fossum/eT&S/Enron@ENrON
Cc: kathy RingbloM/eT&s/Enron@ENROn 

SuBject: Re: gougiNg  

AS to youR qUesTIon abOut What's Going oN In CaliFornia, I've DoNE some 
rEAding anD HErE are My thoughts.

The Nov. 1 FerC ORder in Docket No. eL00-95-000, in whIcH ThE cOmmIssIon 
ordered A $150/Mwh priCE cap (amoNG oTHER thINgs), was predicaTed on the 
ComMIssIon's auThOriTY under sectiOn 206 OF thE Federal PowEr AcT.  
SpecificAlly, thE fPA provIDes that If the COmmIssIon fINdS tHat "AnY RatE, 
ChArgE Or cLassificAtIoN for jUrisDICTIonaL seRvicEs, or aNy rule, 
regulatIon, PracTIce Or conTract AffeCtIng suCh rate, ChargE oR 
classification" Is unJust or unrEasOnAblE, tHe ComMIssion ShaLl dEterminE the 
jusT And ReASONaBle rate, charge, classIfICAtIon, rule, rEgulatIOn, PrACtice, 
or cOnTraCt thAT ShoulD be iN EfFect.  The COmmissIOn ReCognizeD tHat cerTaIn 
aReaS of thE FlawEd CaliFornia maRket aRE not within its jURisdiction, but 
"FIxED" ThE AreaS wiThin its juriSdicTIon.   APparENtLy tHE CaliForniA 
gOVeRNor agrees with me that ThE CommiSsion'S jurisdiction In the area oF 
WHOlesale eLectRIcITy prices is quesTionaBle...

In any evENt, if the COmmisSion wantEd to open a PROceeding To iNveStiGatE 
THe Justness and reASOnabLeNess of nEgoTiated gAs tRanSpoRtaTiOn rates, itS 
authoriTy To Do So WouLd be mUCh cleareR.  THe NAtUraL Gas ACT expreSsly 
aUthoRiZeS fERc to declARe UNLawfUl AnY traNspOrTatioN ratE ThaT is not jUst 
and reaSonABle.  "JUsT aNd reasoNable" has been iNtErpreted in MaNy dIffereNT 
Contexts And the Commission has signIFicant dIscRetioN oveR what it meAns.  
as we alL knOW too weLl, the COmmisSiOn sOMEtimeS ACtS unPrEdictably.  
HOWEveR, my feElIng iS that it Will probably take moRE thAn 2 or 3 
above-max-rAte ContRACtS to MOtIVatE tHE FErc To act to declare a Negotiated 
RaTE dEal, struck wIThiN a PipelinE's tarifF authORity, to bE unjust anD 
unreasonAbLe.  ThE
 law "gouging" 
theory wou ld give ri se to  pr eem pt iondefe nses on our pa r t, e tc.  I'll talk to 
you  andKa t hy f u rt her t omorrow AM a ndth en  we  c a ngrabMik e to di scuss.  
T han ks .  DF    


S usan Scott 
11 /22/2000 12: 14PM
To:  D rew Fossu m/E T&S/E nron@E N RON
cc : Kathy R in g blom/E T &S/Enro n @ EN RON

Subject: Re: go u gi n g  

As to you r ques ti o na b out  wh at's going  o n inC aliforn i a, I ' ved one some 
rea ding and he r e a re myth oug h ts.

T he No v. 1 F ERC order i n Do cket No.EL00-9 5 -000, i n  whichthe Co mmi ssi on o rd er eda$ 150 / MW h p r ice  cap (am on gother  thi n g s ) , wa s p redi cated  on the 
Comm iss ion' s  au thori ty un derSe ction  206 o f the  F ederal Power Ac t. 
Specific all y,  th eFPA p r ovides  th atif theCommiss i onfi n d s  t hat "any rate, 
ch ar g e  o r classi ficati o nfo r  jurisdi ct ion al s e r vices , or an y rule,
regul a ti on , pract ic e or c on tra ctaffec t ingsuch r ate, cha rge o r  
classificati o n" is unjusto ru n re a sona ble , the Commi ssio n  sha ll d e te rmi n e the  
jus ta nd reasonable rate, ch ar ge, cl assif ication, rule , regulati o n ,  practic e, o rc ontract that s hould  be in eff e ct.  The  Comm ission r ecognized t hat cert ain  
a rea s o f th e flawed Cali f o rnia  m arket a renot wit hin  it s j uri sd iction, b ut 
"fix ed "th eare as wi t hin itsju ris di cti on. Appare ntlytheCa li f orn ia 
gov e rn o r  agr ee swith  me  t hat t he C o mmi ssion's  jurisdic tio n  inth earea of  
wholesale e le ctricity p ri ces  is qu e s tionable ...

In any event, if t h e Commi ssi on wa nted  to opena p roceed ing to inv estiga te 
t he  ju s t nessa n drea so nablenesso f  ne gotia te d ga s trans portation rates, i t s authority todoso w o u ld  be mu c h c le a rer .  The Natural Ga s Act expr es s ly  
authoriz e s F ER C to de clare u nlawf u l any t ransporta tion rate  t hati s  no t just 
an d reason able.  "J u st an d  r eason abl e" has  b een  inte rprete d  in  many  diffe re nt 
co ntext sand theCommission has signific ant di scret ion  over wha t i t  me ans.  
As  weall know t oowel l, th e C o mmiss ions om eti m es ac ts u n predictab l y.   H o we ver, my fee l i n g i s tha t i t  willprob ably take more th a n 2 or 3 
abov e-ma x - rat e c o ntra ct s to motivatethe  F E R C to act  t o declare a  negotia te d  
rat e deal , stru ck with i n  a pipeli ne's  ta riff auth ori ty ,  to beun ju s t and
unr ea sonabl e.  Th e 
 law_"gouging" 
theory_would give rise to_preemption defenses_on_our part,_etc._ I'll talk_to 
you and_Kathy further tomorrow AM_and then we_can_grab Mike to discuss.  
Thanks.  DF    




Susan Scott
11/22/2000 12:14_PM
To:_Drew Fossum/ET&S/Enron@ENRON
cc:_Kathy_Ringblom/ET&S/Enron@ENRON_

Subject: Re: gouging  

As_to your question about what's_going on_in California, I've done some 
reading and here_are_my thoughts.

The Nov._1 FERC order in Docket No. EL00-95-000, in which_the Commission 
ordered a $150/MWh price_cap (among other_things),_was_predicated on the 
Commission's_authority under Section 206 of the_Federal Power Act.  
Specifically, the_FPA provides that if the Commission finds_that "any rate, 
charge or classification_for jurisdictional services, or any_rule, 
regulation,_practice or contract affecting such_rate, charge or_
classification" is_unjust or unreasonable,_the Commission shall determine the 
just_and reasonable rate,_charge, classification, rule, regulation, practice, 
or_contract_that should be_in_effect._ The_Commission recognized that_certain_
areas of_the_flawed California market are not within_its_jurisdiction, but 
"fixed" the areas within its_jurisdiction.   Apparently_the_California 
governor agrees with_me that the Commission's jurisdiction_in the area of 
wholesale electricity_prices is_questionable...

In any_event, if the Commission wanted to open a proceeding to investigate_
the justness and reasonableness of negotiated_gas transportation rates, its_
authority to_do_so would be_much_clearer. _The Natural Gas Act expressly 
authorizes FERC_to declare_unlawful any transportation rate that is_not just 
and reasonable.__"Just and reasonable" has been interpreted_in many different 
contexts and the_Commission has significant discretion over_what_it_means.  
As we all_know too well, the Commission sometimes_acts unpredictably. _
However, my feeling is that it will_probably_take more than 2 or 3_
above-max-rate_contracts to motivate the FERC to_act_to_declare a negotiated 
rate deal,_struck within a pipeline's tariff authority,_to be unjust and 
unreasonable.  The