Just for your information

Again, one issue which is key for Enron.  In my view, It took too much time 
for us to put a stick on the ground. Back in April, Regulatory Affairs 
identified all the riks, opportunities and key success factors one should 
face in the rationing.  Now distributors have [finally] agreed that Annex V 
is key. The Government proposal to kill Annex V is obscene. 

LM
---------------------- Forwarded by Luiz Maurer/SA/Enron on 05/23/2001 11:37 
AM ---------------------------

	Debora Klinger
	05/22/2001 07:06 PM
	
To: Luiz Maurer/SA/Enron@Enron
cc:  

Subject: Re: Generators want to kill Annex V

Maurer,

O primeiro t?pico abaixo foi em sua homenagem!!
A prop?sito, vi Voc ontem no Jornal Nacional, ao lado do Pedro Parente.....??Abra?os??---------------------- Forwarded by Debora Klinger/SA/Enron on 05/22/2001 ?07:11 PM ---------------------------??	Debora Klinger?	05/22/2001 07:45 PM?	?To: Sergio Assad/SA/Enron@Enron?cc: Orlando Gonzalez/SA/Enron@Enron, Luiz Maurer/SA/Enron@Enron, Fred ?Sampaio/SA/Enron@Enron, Joao Carlos Albuquerque/SA/Enron@Enron, Joe ?Kishkill/SA/Enron@Enron, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT ??Subject: Re: Generators want to kill Annex V  ??I just attended to the Fiscal-Legal Seminar promoted by ABCE. The first topic ?presented by ABCE,s President by the opening of the Seminar was the ?importance of the maintenance of the Annex V of the Initial Contracts.  ??Among other matters, it was discussed during the event the Concession ?Contract and Rationing. Prof. Caio T?cito (one of the most well known and ?respected scholars) was one of the speakers. According with him, the losses ?in sales and revenues that the D/Cs will suffer as a result of the cut of the ?load may be recovered by D/Cs based on the principle of the re-establishment ?of the economic-financial balancing ("equilibrium") of the concession ?agreement. Prof. T?cito further emphasized his belief that the surcharge ?("sobretarifa") sum that is to be collected should be reserved in favor of ?the D/Cs, so as to compensate partially such losses. Finally, Mr. T?cito ?suggested that in order to avoid legal controversies, the Government could, ?alternatively, conceive using the surcharge ("sobretarifa") collected as ?future credits to be used by consumers when rationing is over.??David Watenberg also ratified such understanding. He further expressed his ?belief that the surcharge ("sobretarifa") has no legal grounds to survive. ?This is so, because according to Paragraph One, Article 6 of the Concession ?Law (Law n. 8987/95) every concession shall render adequate services, ?meaning, among other things, the moderation of the tariffs.??Regards,?D,bora??????Sergio Assad?05/20/2001 11:53 AM?To: Orlando Gonzalez/SA/Enron?cc: luiz maurer, debora klinger, sergio.assad@enron.com, Luiz ?Maurer/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlos ?Albuquerque/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Jose ?Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT ??Subject: Re: Generators want to kill Annex V  ??Orlando??Acho desnecess?rio o conference uma vez que a Debora est? corret?ssima no que ?diz rspeito a impossibilidade da ANEEL intervir no anexoV.  Al,m da D,bora, ?falei com Jos, Em?lio, David Waltenberg e Alo?sio Miranda (Ulhoa Canto) e ?todos tm a mesma opini?o, ou seja: somente uma lei (ou medida provis?ria)  
pode alterar o contrato inicial. 

O exemplo mais claro dessa possibilidade de intervens?o foi a lei do plano 
Real que alterou todos os contratos administrativos.
Quanto . posi??o ENRON, temos unanimidade quanto a cren?a de se respeitar os 
contratos. Estamos executando um forte  advocacy nessa linha.
Sergio Assad 
Sergio Assad



Orlando Gonzalez
05/19/2001 09:32 AM
To: sergio.assad@enron.com
cc: Luiz Maurer/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlos 
Albuquerque/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Jose 
Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: Generators want to kill Annex V  

After today's round of meetings please schedule a  call  tomorrow to review 
Enron's position on  all these points.  Sergio Please coordinate and ask 
Cristina to set up.  I suggest mid morning on Sunday so we have time to 
adjust.  I do not want to defend two or three points of view on the same 
subject as Enron.



Luiz Maurer
18/05/2001 22:21
To: Debora Klinger/SA/Enron@Enron
cc: Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlos 
Albuquerque/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron, Joe 
Kishkill/SA/Enron@Enron, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: Generators want to kill Annex V  

Debora

Good points.

Economic Equilibrium. You are right. We can claim it. However, it may be 
virtually impossible to claim the opportunity cost of a foregone long 
position. I would not take this risk.

Your statement that ANEEL has no power to change Annex V makes me feel more 
confortable. It makes me believe that the right way of approaching the issue 
is to prepare a position paper on Monday and to deliver/explain it directly 
to Minister Pedro Parente. No need to spend time on consensus building on 
issues which are "zero sum game" by nature (two years of COEX have taught me 
this lesson).  Let's preempt the issue by being  faster and smarter. 

LM



	Debora Klinger
	05/18/2001 09:46 PM
	
To: Luiz Maurer/SA/Enron@Enron
cc: Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlos 
Albuquerque/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron, Joe 
Kishkill/SA/Enron@Enron, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: Generators want to kill Annex V  

Maurer,

This is a very important issue. Although in case of loss to Elektro, we would 
always be eligible to claim for the reestablishment of the economic-financial 
balancing of the concession agreements, we would be, with no doubt, in a 
better position in case we can maintain the Annex V.

Regarding the ANNEL sympathy towards generator,s pressure, I don't believe 
ANEEL has the authority to interfere in a duly executed agreement, as it is a 
perfect legal act ("ato jur?dico perfeito"). Only the Union is competent to 
intervene in such acts, based on the public interest and the social well 
being.

I will work hard on the analysis of the matter and come back with further 
comments.

Thanks,
D,bora




Luiz Maurer
05/18/2001 09:02 PM
To: Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Joao Carlos 
Albuquerque/SA/Enron@Enron
cc: Orlando Gonzalez/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Jose 
Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Debora Klinger/SA/Enron@Enron 

Subject: Generators want to kill Annex V

The rumor mill says that generators want to revoke Annex V. No surprise. The 
bad news is that it seems that Aneel likes the idea.

This may represent a US$ 60 million loss to Elektro, only in 2001. 

Distribution companies are [aparently] against this measure. However, D/Cs is 
short position will [likely] applaud the idea (to avoid costly exposures in 
the MAE)

An Abradee group was created to think about the issue. Joao and Fred will 
participate tomorrow.

A few supporting arguments.

1) Contract sanctity. Why changing the rules in the middle of the game if 
Annex V was designed specifically to deal with rationing conditions? 

2) More subtle argument. The risk of  being exposed is the only economic 
incentive  for a D/C to reduce its load. Otherwise, we will have a classical 
"free ride" problem: D/Cs will not put any effort to reduce their 
loads/revenues and will advocate for an ex-post adjustment on ICs based on 
verified load reduction. We can build a case that in the absence of this 
exposure, D/Cs will have no incentives to work hand in hand with their 
clients to foster load reduction and the whole program will fail.

Debora is working on the legal aspects of Annex V, taking into account the 
new MP. Sergio has talked to a few lawyers to get their views/written 
opinions.

What about writing a letter to Pedro Parente as Enron, exploring those issues 
and explaining why Annex V is so important to the success of the whole 
program? (the free ride issue)

LM
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