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----- Original Message -----  
From: Steven Kelly 
To: Wayne  Kawamoto ; Ward Scobee ; Tony  Wetzel ; Thomas  Heller ; Steve 
Ponder ; Steve  Iliff ; Ross Ain ; Robert Frees ; Pete Levitt ; Paula Soos ; 
Paul  Wood ; Nam Nguyen ; Milt Schultz ; Marty McFadden ; Ken Salvagno ; Ken 
Hoffman ; Jonathan Weisgall ;  Joe Ronan ; Joe Greco ;  Jack Pigott ; Hap 
Boyd ; Frank Misseldine ; Ed Tomeo ; Ed  Maddox ; Duane Nelsen ; Doug Levitt 
; Doug  Fernley ; Dean Gosselin ; Bob  Escalante ; Bob Ellery ; Bill Woods ; 
Bill Carlson ; Bill Adams ; Alex  Sugaoka ; Lucian Fox ; Rich  Dyer ; Ted 
Cortopassi 
Cc: Jan  Smutny-Jones ; Katie  Kaplan ; Carol  Hudson ; Steven  Kelly ; Doug  
Kerner ; Andy  Brown 
Sent: Sunday, January 14, 2001 5:33 PM
Subject: UPDATE ON QF DISCUSSIONS IN DC

Late Sat. night, the Principles Group met to  discuss the status of the 
overall progress made in various DC working  groups.? At that time, it was 
clear that a number of outstanding issues  remained unresolved, including the 
issue of "credit worthiness" going forward,  forbearance of past amounts due, 
and what program (if any) would resolve the  utilities' cash position while 
maintaining reliability.? Discussions are  continuing, and Tuesday is a 
critical deadline as the utilities (particulalry  SCE) has a large payment 
due that date.
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The California legislature is developing  legislation to address some, or all 
the issues required, including we have heard  QF SRAC payment reform.
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Regarding QF issues, reform of the QF energy  payments is viewed by many as a 
critical means to increase the utilities' cash  position.? While no 
resolution of that matter was reached as of end of day  Saturday, Governor 
Davis indicated during the Principles meeting that the CPUC  was going to 
render a decision on Thursday this week to address that  matter.? Most people 
inferred from this comment that the CPUC would take up  the Wood PD or some 
modification of that PD.? 
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IEP believes that the approval of the Wood PD (or  an alternate) creates 
serious procedural questions and legal questions.? We  are drafting comments 
to the Wood PD which will be filed on Monday or Tuesday  which will address 
these issues.? In addition, Jan spoke during the  Principles Group meeting on 
Saturday, noting particularly that the Wood PD, if  voted out, would raise 
the spector of a significant amount of in-state  generation not able to 
operate, thereby raising significant reliability  concerns.
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The QF working group addressing  modifications/reform of the existing SRAC 
payment structure was? not able  to reach consensus as of noon Sunday.? Talks 
are expected to continue with  the utilities on Monday, in San Francisco at 
11:00 a.m. at PG&E.? In  addition, given the signals from the governor and 
others, some QFs have  proceeded with bilateral discussions with their 
utility contract holders to work  out contract modifications/reforms on a 
bilateral basis.? 
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[Note, I haven't yet checked all my emails, but I  believe we postponed the 
Friday Restructuring/Transmission conference call to  Monday, Jan 15 at 9:00 
a.m.? This will give us an opportunity to fully  brief you.
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