As I promised this morning at the executive committee meeting, below are some  talking points for your use.
Overall message:  the market is working, regulation is not.
In California, peak demand rose by 10% over the last 4 years while new  capacity grew by only 2%.
But, as you would expect, the market responded by  proposing 8,000MW of new generation - - more than enough to offset the peak  demand growth.
The regulatory process, at both the state and local level,  has failed to site this new generation.
The problem is regulation, not  deregulation.
When San Diego customers began experiencing the effects of higher prices,  Enron responded with a fixed price which would have shielded San Diego  customers from price volatility and provided prices below their current  summer levels (Enron's price was about $55/MWH).
After publication of  Enron's offer, nine other companies made offers.
Again, the market responded  where regulation failed.
San Diego has not accepted any of these offers  because of regulatory/legislative restrictions on its ability to buy outside  of the PX (i.e.
the spot market).
In markets where siting is easier, suppliers have moved to build additional  generation.
Enron built 3 plants in response to the 1998 price spikes.
Those plants were planned, sited and built in less that 12 months - - in time  for the summer of 1999.
Where regulatory hurdles are lower, the market  responds.
The solution to current pricing and reliability issues is more competition  not reregulation.
Policy makers should:  Open the transmission grid so that power can get from where it is to where it  is needed.
Expedite interconnection of new generation.
Expedite siting of new facilities.
Give customers a choice, so that they have better access to demand side  solutions.
Also attached is a more detailed discussion of California, prepared by Jeff  Dasovich of our San Francisco office.

Talking Points re "reregulation" in California
