DOWNEY, BRAND, SEYMOUR & ROHWER

M E M O R A N D U M

TO: MIKE JASKE, CEL

ED YATES, CLFP

FROM: DAN L. CARROLL, CIU

DATE: June 12, 1996

RE: COMMENTS ON "CONSIDERATIONS INFLUENCING PHASING OF DIRECT ACCESS"

Following are some brief comments on your able first cut at phase-in issues. They follow the structure of your outline.

II. B: Hypothesized "Success Guarantee" Rationales for Limiting Eligibility.

One of the premises for this hypothesis is that "it would be 'unwise' to allow full eligibility, since to do so might jeopardize successful implementation." (p.2.) Without necessarily agreeing with that premise, we believe that incorporation of rationales aimed at enhancing the likelihood of successful implementation into any phase-in is vital. This may lead to an allocation of initial eligibility across customer classes that does not precisely mirror current system usage patterns. The reason for this is simple: Insofar as a "shake out" of the new industry is expected in the first year, some customers may be more able and more willing to take the risks and absorb the costs of such a "shakeout".

II.C: Hypothesized Equity Concerns for Limiting/Controlling Eligibility.

3. Restrictions on participation to maintain parity in energy costs among similarly situated firms competing within a given industry.

We agree that II.C.3 presents a principle issue for any phase-in of eligibility. However, we do not necessarily agree with this phrasing of the issue, since we are not in favor of artificial "restrictions on participation". We are instead in favor of the speediest possible phase-in of direct access. The more rapidly that occurs, the smaller will be any problem of "parity".

However, recognizing the possibility of some phase-in, we agree efforts must be made to identify industries where parity will be an issue, and to structure the phase-in to maintain such parity. We expect Team A to engage in substantial and thoughtful discussion of this issue.

III. C: Existing UDC Billing Systems.

Next Steps (1): We believe this issue should properly remain with URDWG.

III. F: Participation of All Customer Classes.

DAWG Committee: We believe that elements of this issue will and must also be addressed by Team A, the implementation team. See comments under II. C above.

III. H: Restrictions on Participation to Maintain Industry Parity.

DAWG Committee: We believe this is properly within Team A's area of responsibility (that is, the implementation team).

Next Steps: We agree with Step (1), but disagree with the phrasing of Steps (2), (3), and (4), since we favor the speediest possible phase-in. "All or none" and "eligibility control" with respect to customers who face parity issues should be choices of last resort, not first.

cc: DAWG Team A Website

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