Message-ID: <8518283.1075856587002.JavaMail.evans@thyme>
Date: Mon, 30 Apr 2001 05:10:00 -0700 (PDT)
From: vasant.shanbhogue@enron.com
To: vince.kaminski@enron.com
Subject: Non-firm power curve building
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Hi Vince,

 Amitava and I have received a request to build a non-firm power curve for 
each region from David Hoog's Double Trigger folks.  The objective, as they 
explain it, is to allow the Desk to buy non-firm from the market, buy David's 
outage product, and sell firm to the market.  Accountants would like a curve 
to mark the non-firm position.
 My initial thought is that the desk should provide this non-firm curve, but 
it seems that this market is very illiquid and they are reluctant so they 
have put the ball in David Hoog's court to build the curve if David wants to 
sell his product internally to the desk.  
 Assuming we build the curve, the next issue is how to define "non-firm"?  
The only way I can think of is to tie the non-firmness to a specific 
generation unit or group of units.  This will allow the purchase of David's 
outage product to cover the non-firmness risk.  Tying the definition of 
non-firmness to a whole region seems implausible --- what does it mean to 
give a marketer the option to not deliver power if there is any problem 
anywhere in the region?  Consequently, the non-firm curve takes on a 
unit-level interpretation, and not a region-level interpretation.  
Consequently, I do not see how we can talk about the "non-firm curve for the 
region"?  We will need to build a non-firm curve for each generation unit or 
group of units.

Maybe I could get your thoughts later today.

Thanks,
 
Vasant