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To: Philip H. Lee who wrote (2914)	1/3/1998 12:33:00 AM
From: Dan Packer	Respond to of 78526

Philip, thanks for the response. My understanding is that there is to be separation among the power generation function, the transmission function, and the actual power itself. I understand generally how it is supposed to work in CA with the PX and oversight group. I guess that there will be hourly dutch auctions. I'm not quite sure how the power is sold into, and bought out of this market structure. Do you know? Does it make a difference? Your likening the situation to the telcos is compelling in its simplicity. My concern is that power consumption is not necessarily rising the way communication traffic is. I would think that there will be some winners AND some losers. The early losers I would choose generically would be the municipal electric utilities. However they won't know that they are losers for some time. You suggest some that are winners - I cannot argue since I don't know how to rate management. (One that puzzles me could be Cinergy. How can branding by putting your name on Riverfront Stadium in Cincinnati help? Is this modern name recognition or is it evidence of management extravagance like the old CG&E used to display with their stadium boxes?) Without the help of the Public Utility Commissions there to guarantee profits, will it make a difference. For a significant time many will continue with their old utility, so maybe owning the transmission lines may insure business. In CA stranded costs will be amortized over the next two or three years, I think? Does this hobble the locals? Maybe I'm looking at the trees and missing the forest. Do you have some putative rules of thumb? Dan

To: Philip H. Lee who wrote (2914)	1/3/1998 10:38:00 AM
From: Terry Maynard	Respond to of 78526

I agree with your speculation; however, picking the winners may be difficult so early in the game. There are some outsiders - like Enron - jumping into the fray that have to evaluated differently. The management of the existing utilities may not be up to the challenges deregulated markets present. Now the markets are not fully deregulated except, maybe, in places like California. Some mergers like PEPCO and BG&E have fallen through and the newly merged companies will take a while to know what they have got and how to use it to best advantage while fighting off competition. It will be very interesting; however, IMO different than the telephone deregulation because the structure and dynamics of the industry are different. Terry