PRIVILEGED AND CONFIDENTIAL
SOLICITOR/CLIENT COMMUNICATION

Please see the attached memo from Rob Hemstock to Steve Kean and Rick Shapiro 
for your information.  The most noteable items are (a) the Power Pool 
Participant Behaviour Guidelines published in March 2000, and (b) the history 
of changes to the Power Pool of Alberta.

Regards, Peter Keohane
---------------------- Forwarded by Nella Cappelletto/CAL/ECT on 06/07/2000 
10:51 AM ---------------------------
   
	
	
	From:  Robert Hemstock                           06/06/2000 02:40 PM
	

To: Steven J Kean/HOU/EES@EES, Richard Shapiro/HOU/EES@EES
cc: Peter Keohane/CAL/ECT@ECT, Aleck Dadson/TOR/ECT@ECT 
Subject: Project Stanley - History of the Design of the Alberta Power Pool 
Model

I understand your call to me yesterday was to inquire about the vision the 
architects of the Power Pool of Alberta had when they were setting up the 
Power Pool, and more particularly, whether they envisioned that 
unsophisticated Pool Participant would be expected to obtain assistance from 
other more sophisticated Pool Participants to maximize the price that it 
would receive from the Power Pool for the energy it sold into the Power 
Pool.    I have reviewed the some materials (i.e. AEUB Decisions, Alberta 
Department of Energy documents) and have found nothing related to this.  This 
is not surprising as these market design issues were considered in Alberta in 
1994 and 1995, long before I arrived on the electricity scene in 1997.

I did speak to a consultant who was involved in the market design process in 
the early 1990's named Jim Fitzowich.  Jim joined TransAlta in 1986 and then 
worked for TransCanada Power until January 2000 when he established his 
current consulting practice.  Jim became a member of the Power Pool Council 
in late 1995 and stayed in that position until May 1998 when an independent 
Power Pool Council was appointed.  Jim and I are both on the Board of 
Directors of the Independent Power Producers Society of Alberta and I know 
Jim fairly well.  

Jim advised that the Alberta electricity industry design was quarterbacked by 
the Deputy Minister of Energy of the day named Rick Hyndman.  Under Rick 
Hyndman's direction a White Paper was apparently released in October 1994 in 
which a power exchange regime modelled on the exchange regime in the U.K. was 
thoroughly discussed and proposed for Alberta.   According to Jim Fitzowich, 
this White Paper was the initial blueprint for the Alberta market design.  I 
have met Rick Hyndman a few times and understand he left government a few 
years ago and is also a consultant.  I left Rick a message to call me and I 
intend to ask him to send me a copy of the White Paper and also inquire about 
the nature of his consulting work.  

On a related note, attached is an email I sent to Bill G and John L in March 
2000 advising them of the new Power Pool Participant Behavior Guidelines that 
were added to the Power Pool Rules in March 2000.  You can see the original 
notice of the rule change received from the Power Pool is also attached as 
are the actual Participant Behavior Guidelines (see Change 11a).  While I 
appreciate the determination of whether an offence occurred under the 
Competition Act would be independent of the compliance, or not, with the 
Power Pool Rules, I think it is noteworthy that the Power Pool incorporated 
these entirely new set of Participant Behavior Guidelines only recently, and 
after the acts that are the subject of Project Stanley had occurred.     

You should also be aware that there is a document on the Power Pool website 
(http://www.powerpool.ab.ca/index_links.html) entitled "Summary of Power Pool 
Rule Changes" that appears to list all the rule changes that have occurred 
since the Power Pool began operation in 1996.   

Regards,

Rob


---------------------- Forwarded by Robert Hemstock/CAL/ECT on 06/06/2000 
01:24 PM ---------------------------
	
	
	From:  Robert Hemstock                           03/23/2000 12:19 PM
	

To: Bill Greenizan/CAL/ECT@ECT, John J Lavorato/CAL/ECT@ECT
cc: Aleck Dadson/TOR/ECT@ECT, Peter Keohane/CAL/ECT@ECT 
Subject: Alberta Power Pool Rule Changes

Attached are a number of Pool Rule Changes that I expect will be approved 
today by the Power Pool Council.  The most noteworthy change is the addition 
of the new Rule 2.9 - "Participant Behavior Guidelines".

The Participant Behavior Guidelines contain very broad language but are 
intended to provide market participants with guidance from the Pool on the 
types of activities that it considers to constitute anti-competitive 
behavior.    It identifies three categories of "undesireable practices" 
namely: (a) sharing of competitive information, (b) abuse of dominant 
position (which includes physical or economic witholding of facilities or 
energy so as to adversely impact upon the efficient, fair, and openly 
competitive operation of the market), and (c) other practices including 
conduct that would cause a material change in price.

In my view, this new Rule does not extend any additional powers to the Power 
Pool or the Market Survelliance Administrator beyond the already broad 
authority given to the MSA in Section 9.1 of the Electric Utilities Act.  It 
is my sense from conversations I had with stakeholders at the IPPSA 
Conference that the Power Pool's motivation behind this new Rule was to send 
a message to Powerex and the PPA Owners that the Power Pool is concerned 
about their market power and is/will be monitoring them.   We need to be 
aware of these rules so we can mitigate the risk of our business not being 
conducted within them.  

It may be worthwhile for Peter and I to consolidate the relevant EUA 
provisions and the Pool Rules into one reference resource for the commercial 
group.   

Regards,

Rob
   

 
---------------------- Forwarded by Robert Hemstock/CAL/ECT on 03/23/2000 
09:56 AM ---------------------------


Kayan Brown <Kayan.Brown@powerpool.ab.ca> on 03/17/2000 10:40:30 AM
To: "'jenifer@telusplanet.net'" <jenifer@telusplanet.net>, 
"'pbartsch@utilicorp.com'" <pbartsch@utilicorp.com>, 
"'albert.lai@atcoelectric.com'" <albert.lai@atcoelectric.com>, 
"'ian.luco@atcoelectric.com'" <ian.luco@atcoelectric.com>, 
"'peter.wong@atcoelectric.com'" <peter.wong@atcoelectric.com>, 
"'jon.burkinshaw@atco.ca'" <jon.burkinshaw@atco.ca>, "'guido@cgeco.com'" 
<guido@cgeco.com>, "'john@canhydro.com'" <john@canhydro.com>, 
"'jrenter@city.lethbridge.ab.ca'" <jrenter@city.lethbridge.ab.ca>, 
"'mstroh@city.lethbridge.ab.ca'" <mstroh@city.lethbridge.ab.ca>, 
"'rodcro@city.medicine-hat.ab.ca'" <rodcro@city.medicine-hat.ab.ca>, 
"'alr@city.red-deer.ab.ca'" <alr@city.red-deer.ab.ca>, 
"'rolands_muiznieks@cdncxy.com'" <rolands_muiznieks@cdncxy.com>, 
"'rvesak@prpddmi.com'" <rvesak@prpddmi.com>, "'PGSCHUBERT@dow.com'" 
<PGSCHUBERT@dow.com>, "'jdpollock@duke-energy.com'" 
<jdpollock@duke-energy.com>, "'dlowther@enmax.com'" <dlowther@enmax.com>, 
"'rraymond@enmax.com'" <rraymond@enmax.com>, "'kwillis@enmax.com'" 
<kwillis@enmax.com>, Robert Hemstock/CAL/ECT@ECT, "'adunn@epcor-group.com'" 
<adunn@epcor-group.com>, "'rob.baker@eal.ab.ca'" <rob.baker@eal.ab.ca>, 
"'bobt@fcec.com'" <bobt@fcec.com>, "'ghowell@compusmart.ab.ca'" 
<ghowell@compusmart.ab.ca>, "'v.mantey@mercuryelectric.com'" 
<v.mantey@mercuryelectric.com>, "'eric_thompson@pancanadian.ca'" 
<eric_thompson@pancanadian.ca>, "'mike.macdougall@powerex.com'" 
<mike.macdougall@powerex.com>, "'jsmith@renaissance.ca'" 
<jsmith@renaissance.ca>, "'gbaden@coral-energy.com'" 
<gbaden@coral-energy.com>, "'bfriesen@saskpower.com'" 
<bfriesen@saskpower.com>, "'billvr@telusplanet.net'" 
<billvr@telusplanet.net>, "'claude_benoit@transalta.com'" 
<claude_benoit@transalta.com>, "'bob_low@transalta.com'" 
<bob_low@transalta.com>, "'marvin_mah@transcanada.com'" 
<marvin_mah@transcanada.com>, "'bourns@greenenergy.com'" 
<bourns@greenenergy.com>
cc:  
Subject: Power Pool Rule and Code Changes Proposed for Council Approval



 <<Rule Changes Proposed_Mar23.doc>>   <<Rule Changes Proposed
letter_Mar23.doc>>   <<Rule Changes Proposed letter_Mar23.txt>>   <<Code
Changes Proposed_Mar23.doc>>
Attached please find a covering letter and above-noted documents including
your feedback to be presented for approval at the upcoming Council meeting
scheduled for March 23, 2000.

Please note the covering letter is in "Text Only" format and the Rule and
Code changes are in "MS Word" format, because the Rules and Code changes
would not be legible in "Text Only" format.  If you can read Text only
documents please call the Power Pool and we will fax you the attached
information instead.

Thank you.

Kayan Brown
Power Pool.

 - Rule Changes Proposed_Mar23.doc
 - Rule Changes Proposed letter_Mar23.doc
 - Rule Changes Proposed letter_Mar23.txt
 - Code Changes Proposed_Mar23.doc
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