Author: Alan suding at PSC-LADWP
Date:    5/7/97  11:05 AM
Priority: Normal
TO: Paul Gribik at PSC-LADWP
TO: Hemant Lall at Not-Mac
TO: Dariush Shirmohammadi at PSC-LADWP
CC: Shashi Pandey at PSC-LADWP
cC: gbackusboulder.earthnet.netsmtp at x400po
Subject: Follow-up opportunity for PSC from George Backus
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     As a follow-up from the group meeting McMenamin had which included Paul and
     George, George was invited in yesterday b Treasurers to talk with a group
     of SCE VP's which included Willie Hell er (Strategic Planning) and vi kram
     Budhraja. (He met later in the day with SCE UDC folks too but that's not
     important right now.) The VP meeting turned out to be a tough group
     interview of George. He was grilled particulary hard by Willie Heller.
     Apparently Willie was satisfied because he wants George to set up a system
     and process for SCE to evaluate gaming options when dereg starts. Willie
     told him to get whatever additional help he needs. WH doesn't care if it's
     from PSC, Arthur Anderson, or McKinsey. George got the impression WH would
     prefer it not be McKinsey in order to maintain neutrality. This project is
     very confidential within Edison. George sees the following as what needs to
     be put together.
     1) George's SD model
     2) Paul's insights (and model) into how the ISO works, where are the holes
     in the ISO process, which ones should be plugged, which should be used,
     etc.
     3) Massive data input from the ISO/PX when it's running
     4) Expert statistical skills (with a commodoties emphasis) in order to
     analyze whether results are due to model recommendations or just
     coincidence. (George mentioned Backsholes method and co-integration method
     as two examples of what he's thinking about.)
     5) set up a data "intelligence" process to determine when PG&E, Enron,
     southern, or any other entity is manipulating the market vs. just random
     market activity. How can Edison's maneuvers be "hidden or "obscured".
     Willie wants to set up a gaming system so that hourly, daily, and monthly
     moves in the market can be explored, tested, analyzed, and then used. AS
     well as an overall strategy to guide the tactical decisions.
     can PSC provide assistance with items 2 thru 5 in working with George? I'd
     like to get back to George later today or tomorrow at least with a
     preliminary indication of PSC's interest.