It is because we are required to due certain corporate due diligence prior to
trading, which we don't do unless they really want to trade financial.  Most
of these counterparties are really interested in trading physical products,
so we don't bother to do the necessary due diligence.  If they really want to
trade financial, we could transact w/o a master, we'd just have to check
their corporate documents, file Consents to Service of Process, etc.  If
we're doing all that we tend to say let's just get the master in place while
we're at it.

	Justin Boyd
	01/25/2001 03:07 AM

		 To: Tana Jones/HOU/ECT@ECT
		 cc:
		 Subject: Re: Femsa Empaques, S.A. de C.V.

Hi Tana

Many thanks for this, and in due course I'll let you have updates for Europe.

I have a question for Mexico, Argentina and Chile:  Why is their a necessity
to have Master Agreements in place for commodity derivatives? I would imagine
this is driven by the Credit Dept and their preference for netting?  I can't
think why there could be any legal objections - and I have read advice
obtained by Brent H. for Chile and Mexico and no such restrictions are
mentioned.

And also in relation to Mexico, could you find out what corporate due
diligence is required of Mexican companies, in particular of the entity
mentioned below, Femas Empaques SA de CV.

Many thanks

J

From: Tana Jones on 24/01/2001 15:35 CST
To: Francisco Pinto Leite/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Justin Boyd/LON/ECT@ECT

Subject: Re: Femsa Empaques, S.A. de C.V.

FYI-attached is my list of notes on online approvals, which includes the
South American countries we currently trade with.

Justy-if you have any updates to the European countries, they would be most
appreciated.  I have had no updates since Edmund fell ill.

	Francisco Pinto Leite@ENRON_DEVELOPMENT
	01/24/2001 03:18 PM

		 To: Justin Boyd@ECT
		 cc: Lara Fields@ECT, Tana Jones@ECT
		 Subject: Femsa Empaques, S.A. de C.V.

Justin:

 I am the "new" lawyer in charge of our financial trading operations in
Mexico.

I am told that we do not trade financial with any Mexican counterparty
without going through our normal due diligence process.  At the end of the
day we need a Master in place with any Mexican counterparty with whom we
trade (financial) online or otherwise.  I checked and we do not have a Master
in place with this counterparty.

FPL


Attached below is a follow-up from my recent trip to London.  After reading
through the document, I would like James to  schedule a teleconference
meeting for Friday to discuss this further before forwarding it to the
Commercial team.  I can meet anytime after 7:30 am Houston time.

Thanks,
Todd


Richrd - I'd like to stop by in the next few days for a quick update me on
the CA litigation - I've been away on vacation and hear there have been a few
recent developments.  Thanks


Management Committee Meeting
Date:		Monday, October 1
Time:		11:00 a.m. (Central)
Location:	50th Floor Boardroom
Video:		Connections will be established with remote locations upon request.
Conf. Call:	Please contact me for dial-in number and passcode.

Please indicate if you plan to attend this meeting and through what medium.

_____	I will attend in person
_____	Via video conference
_____	Via conference call
_____	I will not attend

Please return your response via e-mail by Friday, September 28.

Thanks,
Joannie
3-1769


Kim, here is your draft for Noresco. Call me if you have any questions. I realize the name is wrong on the file I will change this, it is correct in the contract.

 dp

Debra Perlingiere
Enron North America Legal
1400 Smith Street, EB 3885
Houston, Texas 77002
dperlin@enron
713-853-7658
713-646-3490 Fax


So sorry for not getting back to you sooner - it seems I've acquired two new
jobs in addition to the full time schedule I already kept. But tonight still
works for me - just let me know when and where.

Kate

John Enders <jenders@ap.org> on 04/25/2001 10:28:41 AM
To: Kate.Symes@enron.com
cc:

Subject: Re: a beer

Are we on, or off?


I'm still looking for other emails.

---------------------- Forwarded by Chris Germany/HOU/ECT on 07/05/2000 02:58
PM ---------------------------

nbartlo@columbiaenergygroup.com on 01/13/2000 09:02:45 AM
To: Chris Germany/HOU/ECT@ECT
cc: "        -         *sgoodel@columbiaenergygroup.com"
<sgoodel@columbiaenergygroup.com>, Judy Townsend/HOU/ECT@ECT, Colleen
Sullivan/HOU/ECT@ECT, NOTES -PDREXEL * <pdrexel@columbiaenergygroup.com>
Subject: Re: Equitrans

Chris, I don't believe that this is real. Sounds like a CES system mistake.
Let
us know what you find Scott. Thanks.

cgerman@ect.enron.com on 01/12/2000 07:27:18 PM
Please respond to cgerman@ect.enron.com

To: Noel Bartlo/CES/ColumbiaGas@COLUMBIAGAS, Paul Drexelius
[NOTES.pdrexel]@LMSOV
cc: csulliv@ect.enron.com, jtownse@ect.enron.com,
sgoodel@columbiaenergygroup.com
Subject: Equitrans

I have very little info on this deal.  Who pays for the FT on Equitrans?
Contract 270, volume=1,000/day, start date = 7/1/97, max demand, all receipts
and all deliveries, AND the end date is 10/31/2099 (looks suspicious to me).
Scott is trying to find the term of this deal from Equitrans.  I believe
Equitrans did say this is a capacity release deal.

Scott, I'm going to list this as a wholesale deal for now.  It was not on my
wholesale transport worksheet from Mark Breese.  Please email everyone with
the
end date when you find out.  Also, please find out who the releasing shipper
is
and the primary receipt and delivery points.

Thanks


We have received the executed EEI Master Power Purchase and Sale Agreement
dated 1/26/01 from the referenced CP.  Copies will be distributed to Legal
and Credit.


For March 27 run:
NGPROpt book 1084746 copied into 1085734(with skew)
calls 1085788 and 1085790(with skew)
puts 1085015 and 1085016(with skew)
done with Jeremy's excutible of port_calc on stage.

 -----Original Message-----
From:  Quigley, Dutch
Sent: Friday, March 23, 2001 12:55 PM
To: Wei, Dave; Jeremy Wong/HOU/ECT@ENRON
Cc: Griffith, John; McLaughlin, Errol; May, Larry
Subject: Skew Project

Dave,

To follow up on our conversation about the Pipe Option Book, Errol will
provide post id's for Friday's COB
to calc the pipe options book with the skew table. As I asked on the phone
please provide two calcs, one calc
for the pipe options deals with and with out skew and another calc with the
NYMEX options deals with and without skew.

In addition to this, please recalc  1078960 & 1078963 for the ngpropt book.
These calcs are for puts and for calls for COB 3-23.

If you have any questions please contact me at 3-9257 with any questions

Dutch


Steph,

Good morning! How are you doing? It seems like I haven't seen you or Scott forever. Things are going well here in Portland. The bankruptcy of Enron has been a bit rough, but I am optimistic that the auction on January 11th will see the trading portion of our business bought out by a credit-worthy entity. If we are bought out, we should be back up and running by early spring. Right now, I am just working on systems upgrades and trying to learn as much as I can so we are ready to rip when we have credit again. Portland has been fun the past couple weeks, there are a few new clubs and living downtown continues to be a blast. I enjoy being able to walk everywhere and being downtown has really aided the Christmas shopping. I haven't been up to Seattle in a long time but I need to get up there. I am thinking about coming up for New Year's... any good ideas?

Anyway, hope you are doing well and are all ready for the holidays.
Take care,

Bill


Bob -

Here is a revised version of the Memo to Prebon.  Please let me know if there
are any further changes or comments.  If not, I will forward this to Lee and
Nanette, together with the applicable Exhibit A.

Mark
Senior Counsel, ENA
Phone:     713-345-8897
Facsimile: 713-646-3940
E-Mail:      Mark.Greenberg@enron.com


That's OK, I was going to use it in the presentation, but it wasn't
essential.  Was my talk what you were looking for?

Celeste Roberts@ECT
07/17/2000 02:41 PM
To: Steven J Kean/HOU/EES@EES
cc:
Subject: Re: Welcome Lunch for new hire analysts - Monday, July 17 from 12:00
p.m. to 12:30 p.m.

Sorry I did not get this prior to your presentation.  We do have this
information if you would still like a copy.  Let me know if you need it and
by when.

Steven J Kean@EES
07/17/2000 07:45 AM
To: Celeste Roberts/HOU/ECT@ECT
cc:
Subject: Re: Welcome Lunch for new hire analysts - Monday, July 17 from 12:00
p.m. to 12:30 p.m.

Do you have an "alumni" list of analysts/associates in key positions at Enron?

Celeste Roberts@ECT
07/14/2000 03:05 PM
To: Steven J Kean/HOU/EES@EES
cc: Joseph W Sutton@Enron
Subject: Welcome Lunch for new hire analysts - Monday, July 17 from 12:00
p.m. to 12:30 p.m.

Steve

Thanks for stepping in and backing up for Joe Sutton on Wednesday.  I wanted
to provide you with talking points for your speaking engagement with our new
hire analysts during their orientation.  As a reminder, you are scheduled to
speak over lunch on Monday, July 17 from 12:00 p.m. to 12:30 p.m. at the
Doubletree Hotel in the LaSalle Ballroom.

Purpose of the luncheon:  Welcome the new hire analysts and impart to them
our important this program is to Enron.

The analyst program is the ultimate pipeline of top entry-level talent,
strategically deployed to meet anticipated business needs.  We look to this
program to provide the company with our future business leader.
The program is a premier partner in providing exciting career challenges in
areas of Finance, Origination/Structuring, Technology, Risk Management, Sales
and Marketing, Trading, Valuation, and Accounting.
The analyst program is also an avenue for providing the solid foundation of
knowledge and skill needed in a competitive and dynamic global corporation.
We are very excited to have you on our team.  This is a very exciting company
that is always reinventing itself.  The opportunities are endless.

There will be 75 new hire analysts attending this orientation.  Other than
the recruiting process, this is their first impression of Enron and Senior
Management.  The first week of their orientation will consist of
presentations given by all business units/operating companies.  Weeks two and
three will consist of technical training (i.e., modeling, valuation, working
styles, communicating effectively and computer training).  Additionally, we
have social events scheduled to allow them to network with peers and
management.  Additionally, I have attached a calendar of the orientation for
your review.

Steve, let me know if you require additional information.  Thank you for your
support in our new hire orientation efforts.

Regards,
Celeste Roberts


This is very good, just like the real thing!  Did you try to call my cell yesterday, it rang and your cell number popped up on the caller ID but when I answered there was no reponse.  I hope that you know that it is OK for you to call me when you want to.  Drop me a line or call and tell me what night is good for you this week.

Take care,

Don
 -----Original Message-----
From: 	"shannontyer" <shannontyer@email.msn.com>@ENRON
Sent:	Sunday, January 27, 2002 10:51 PM
To:	Kari Tracey; Baughman Jr., Don
Subject:	Fw: HOW TEXANS EXPLAIN ENRON'S BUSINESS

----- Original Message -----
From: Milly Jeffers << File: mailto:mjeffers@texed.net >>
To: Undisclosed-Recipient:; << File: mailto:Undisclosed-Recipient:; >>
Sent: Saturday, January 26, 2002 6:51 PM
Subject: Fw: HOW TEXANS EXPLAIN ENRON'S BUSINESS

Subject: ENRON'S BUSINESS
Feudalism - You have two cows. Your lord takes some of  the milk.
Fascism - You have two cows. The  government takes both, hires
you to take care of them, and sells you the  milk.
Communism - You have two cows. Your  neighbors help take care
of them and you share the  milk.
Totalitarianism - You have two cows.  The government takes
them both and denies they ever existed and drafts you  into the
army. Milk is banned.
Capitalism -  You have two cows. You sell one and buy a
bull. Your herd multiplies, and the  economy grows. You sell them
and retire on the  income.
Enron Venture Capitalism - You have  two cows. You sell
three of them to your publicly listed company, using  letters of
credit opened by your brother-in-law at the bank, then execute
debt/equity swap with an associated general offer so that you get
all  four cows back, with a tax exemption for five cows. The milk
rights of the  six cows are transferred via an intermediary to a
Cayman Island company  secretly owned by the majority shareholder
who sells the rights to all seven  cows back to your listed
company. The annual report says the company owns  eight cows, with
an option on one more.


Any updates on the Gdansk refinery, or should I assume that the deal is dead?

Jeff


We have received the executed EEI Agreement from the referenced CP dated
12/22/00.  Copies will be distributed to legal and credit.


For your reading pleasure, I'm sending a copy of the infamous 97-10.

Kay


Mark Johnson w/TCO gas control approved 79,000 overinjection for 5/23/00.
  Total net 126,700dth into storage.

thanks
joann

---------------------- Forwarded by Joann Collins/Corp/Enron on 05/22/2000
09:13 AM ---------------------------

	Enron North America Corp.

	From:  Joann Collins                           05/19/2000 11:53 AM

To: Dick Jenkins/HOU/ECT@ECT, Chris Germany/HOU/ECT@ECT, Victor
Lamadrid/HOU/ECT@ECT, Katherine L Kelly/HOU/ECT@ECT, Joan
Veselack/Corp/Enron@ENRON, Robert Allwein/HOU/ECT@ECT
cc:

Subject: STOI Overinjection for May 20th - 22nd

Don w/TCO gas control approved 57,000 overinjection for 5/20-22.
  Total net 105,000dth into storage.

thanks
joann


Ben,

Here is an updated contact list. I have highlighted in yellow the areas
where I think something is missing, some of which is ours and we are
continuing to work on it.

Regards,
                James J. Heckler
  Global Energy & Project Finance
  (212) 325-5809
  CREDIT | FIRST
  SUISSE | BOSTON

 <<E2 Investor List 8_28.xls>>

[INFO] -- Content Manager:
This message is for the named person's use only.  It may contain
confidential, proprietary or legally privileged information.  No
confidentiality or privilege is waived or lost by any mistransmission.
If you receive this message in error, please immediately delete it and all
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the right to monitor all e-mail communications through its networks.  Any
views expressed in this message are those of the individual sender, except
where the message states otherwise and the sender is authorised to state
them to be the views of any such entity.
Unless otherwise stated, any pricing information given in this message is
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deal at any price quoted.
Any reference to the terms of executed transactions should be treated as
preliminary only and subject to our formal written confirmation.

 - E2 Investor List 8_28.xls


Harry,
I think the concern about the PX price disappearing remains.
We need to be able to calculate the price and the PX price is iffy.
Thoughts?

From: Harry Kingerski@ENRON on 01/25/2001 12:56 PM
To: JMB <JBennett@GMSSR.com>
cc: "Gordon Savage (E-mail)" <gsavage@enron.com>, "Harry Kingerski (E-mail)"
<Harry.Kingerski@enron.com>, Jeff.Dasovich@enron.com, mulrich@enron.com,
sstoness@enron.com, "'tjohnso8@enron.com'" <tjohnso8@enron.com>
Subject: RE: FW: Letter re: PG&E Advice letter 2073-E

Let's follow Jeanne's first option.  There is no longer anything to protest.

	JMB <JBennett@GMSSR.com>
	01/25/2001 12:47 PM

		 To: "'tjohnso8@enron.com'" <tjohnso8@enron.com>
		 cc: "Harry Kingerski (E-mail)" <Harry.Kingerski@enron.com>, "Gordon Savage
(E-mail)" <gsavage@enron.com>, sstoness@enron.com, mulrich@enron.com,
Jeff.Dasovich@enron.com
		 Subject: RE: FW: Letter re: PG&E Advice letter 2073-E

Tamara--

A couple of thoughts.  First, the reason why the Energy Division nixed
PG&E's advice filing had nothing to do with its proposal to price the
retained generation at the ISO ex post energy price, but rather with the
proposal contained therein to transfer the balances in its gen memo accounts
to its TCBA.  Thus, it is very possible that PG&E could turn around and
refile the advice letter, removing this element, and focusing solely on the
substitute pricing mechanism.  If they did that, we could protest at that
time.

The other option is that we could send a letter to the Commissioners,
advisors, and energy division stating our concern about the PX becoming a
dysfunctional market and not an adequate basis to develop the PX credit.

Jeanne

-----Original Message-----
From: tjohnso8@enron.com [mailto:tjohnso8@enron.com]
Sent: Thursday, January 25, 2001 10:28 AM
To: JBennett@GMSSR.com
Cc: Harry Kingerski (E-mail); Gordon Savage (E-mail);
sstoness@enron.com; mulrich@enron.com; Jeff.Dasovich@enron.com
Subject: Re: FW: Letter re: PG&E Advice letter 2073-E
Importance: High

Jeanne,

I have some more background on the PX Credit issue that leads me to believe
that we should still comment on PG&E's Advice Letter.

The current PX credit calculation relies on the existence of a PX price
   The PX price does not consistently reflect market prices.
   Market prices are only reflected if:
     buyers and seller are willing to take on credit risk by transacting in
     the market
     the legalities of "who is liable for what" in case of default are
     unclear (according to a VP at EPMI), so the liquidity will not
     increase until there is certainty

From our perspective, the market value as posted on the PX is better for PX
credit calculations than a constrained ISO price.  (There is no
unconstrained ISO price available.)  Although -- it's a risk.

However, if the PX becomes so dysfunctional that prices, if any, do not
reflect real market pricing at all, the CPUC cannot delay dealing with this
issue because there will be no status quo for them to leave in place, there
will be a void.

I suggest that we support the CPUC decision to delay hearing the advice
letter with a big HOWEVER.  I think we should highlight the questionable
viability of a PX price and bring forward the requirement that the CPUC
must act if the PX becomes completely dysfunctional (we could ask Neil
Bresnan for help in defining "dysfunctional").

/Tamara.

JMB <JBennett@GMSSR.com> on 01/25/2001 10:54:38 AM

To:   "Tamara Johnson (E-mail)" <tjohnso8@enron.com>, "Harry Kingerski
      (E-mail)" <Harry.Kingerski@enron.com>, "Gordon Savage (E-mail)"
      <gsavage@enron.com>
cc:
Subject:  FW: Letter re: PG&E Advice letter 2073-E

Well, we do not have to worry about protesting PG&E's advice letter
changing
the PX credit. The Energy Division nixed it and told PG&E to take up the
issue in the rate stabilization proceedings.

Jeanne
-----Original Message-----
From: Avendano, Nel [mailto:NCO1@pge.com]
Sent: Wednesday, January 24, 2001 3:47 PM
To: 'jbushee@sablaw.com'; 'kmccrea@sablaw.com';
'rogerberliner@bcjlaw.com'; 'rcsstl@cdmnet.com';
'mbrubaker@consultbai.com'; 'anchau@shellus.com';
'keith-sappenfield@reliantenergy.com'; 'jsmollon@newwestenergy.com';
'jlyoung@sempra.com'; 'napedersen@jonesday.com';
'athomas@newenergy.com'; 'fchristi@arterhadden.com';
'kmcspadd@milbank.com'; 'hchoy@isd.co.la.ca.us'; 'lgurick@calpx.com';
'douglass@arterhadden.com'; 'randy_britt@mayco.com';
'frank.cooley@sce.com'; 'glwaas@calpx.com'; 'uwua@worker.com';
'fmo@sdcity.sannet.gov'; 'jleslie@luce.com'; 'julesan@aol.com';
'mshames@ucan.org'; 'jparrott@sempra.com'; 'kmelville@sempra.com';
'bill.mccallum@ci.fresno.ca.us'; 'btenney@landuselaw.com';
'ronknecht@aol.com'; 'furutanj@efawest.navfac.navy.mil';
'mdjoseph@adamsbroadwell.com'; 'rcosta@turn.org';
'bfinkelstein@turn.org'; 'theresa_mueller@ci.sf.ca.us';
'jjz@cpuc.ca.gov'; 'chrisw@greenlining.org'; 'joseh@lif.org';
'jnnc@chevron.com'; 'jlondon@gralegal.com'; 'imoosen@gralegal.com';
'phanschen@mofo.com'; 'epoole@adplaw.com'; 'rschmidt@bartlewells.com';
'chilen@llgm.com'; 'lys@aelaw.com'; 'jsqueri@gmssr.com';
'jbennett@gmssr.com'; 'bloomje@la.whitecase.com'; 'pbray@newpower.com';
'rick.counihan@greenmountain.com'; 'thoulihan@mdbe.com';
'mday@gmssr.com'; 'jmalkin@orrick.com'; 'edwardoneill@dwt.com';
'smoss@hooked.net'; Huffman, Mark (Law); Edwards, William (Law);
'ssmyers@worldnet.att.net'; 'pat.williams@dhcmail.com';
'wbooth@booth-law.com'; 'jerryl@abag.ca.gov'; 'mgomez1@bart.gov';
'askaff@energy-law-group.com'; 'hf@energy-law-group.com';
'pjpowerlaw@aol.com'; 'difellman@energy-law-group.com';
'nryan@environmentaldefense.org'; 'psly@ebmud.com';
'rrcollins@n-h-i.org'; 'patrickm@crossborderenergy.com';
'tomb@crossborderenergy.com'; 'brbarkovich@earthlink.net';
'pjmuller@ricochet.net'; 'pmcdonne@wenet.net'; 'berry@apx.com';
'sberlin@mccarthylaw.com'; 'scottst@mid.org'; 'cmkehrein@ems-ca.com';
'jweil@aglet.org'; 'abb@eslawfirm.com'; 'bpowers@seniors.org';
'dcarroll@dbsr.com'; 'dkk@eslawfirm.com'; 'ed@clfp.com';
'howens@seniors.org'; 'sgreenberg@realenergy.com'; 'smutny@iepa.com';
'lmh@eslawfirm.com'; 'jtachera@energy.state.ca.us';
'hodgesjl@pacbell.net'; 'rpernell@energy.state.ca.us';
'kmills@cfbf.com'; 'rliebert@cfbf.com'; 'aorchard@smud.org';
'mpa@aelaw.com'; 'jcpaine@stoel.com'; 'mhg@hetrading.com';
'dws@keywaycorp.com'; 'hbd@gweiss.com'; 'gerhordt.herbert@msdw.com';
'cread@steptoe.com'; 'jogg@jhenergy.com';
'peter_fox-penner@brattle.com'; 'sdefrawi@efaches.navfac.navy.mil';
'ad046@detroit.freenet.org'; 'bob_anderson@apses.com';
'gdreed@sidley.com'; 'robert.d.schasel@fritolay.com';
'georgeperrault@msn.com'; 'foxba@sce.com'; 'picketse@sce.com';
'jsilva@edisonenterprises.com'; 'LVanWagenen@sempra.com';
'jbarthrop@powersavers.com'; 'foothill@lmi.net';
'kpoole@adamsbroadwell.com'; 'fosterbc@sce.com'; 'ljhubbard@sempra.com';
'ktilton@gralegal.com'; 'paul.harris@bridge.com';
'oshirock@pacbell.net'; 'natutt@duanemorris.com'; Migocki, Joe;
'cafield@pirg.org'; 'derkp@newsdata.com'; 'luluw@newsdata.com';
'tom.oneill@abnamro.com'; 'mmattes@nossaman.com'; Peters, Roger (Law);
Lucha, Ed; Frazier-hampton, Janice; Kjellund, Niels; Helgens, Ronald;
'ConsumersFirst@worldnet.att.net'; 'normkr@aol.com'; 'gtbl@dynegy.com';
'joe.paul@dynegy.com'; 'honest@compuserve.com'; 'jyoung@ebmud.com';
'emitchel@angnewspapers.com'; 'rbw@mrwassoc.com'; 'dmarcus@slip.net';
'jeff@hmhresources.com'; 'ed@apx.com'; 'chrism@mid.org';
'fwmonier@tid.org'; 'rmccann@cal.net'; 'blaising@braunlegal.com';
'melanie_gillette@rmiinc.com'; 'twetzel@thermoecotek.com';
'Slayman@energy.state.ca.us'; 'jdh@eslawfirm.com'; 'ddavie@hesinet.com';
'karen@klindh.com'; 'cpeyton@sacbee.com'; 'thaines@smud.org';
'huse@eesconsulting.com'; 'mer@cpuc.ca.gov'; 'ang@cpuc.ca.gov';
'cmw@cpuc.ca.gov'; 'ctd@cpuc.ca.gov'; 'dlf@cpuc.ca.gov';
'fua@cpuc.ca.gov'; 'jlo@cpuc.ca.gov'; 'kok@cpuc.ca.gov';
'kth@cpuc.ca.gov'; 'kim@cpuc.ca.gov'; 'gig@cpuc.ca.gov';
'rtf@cpuc.ca.gov'; 'raw@cpuc.ca.gov'; 'sfc@cpuc.ca.gov';
'car@cpuc.ca.gov'; 'ztc@cpuc.ca.gov'; 'nevillm@hdcdojnet.state.ca.us';
'dwrlegal1@water.ca.gov'; 'ath@cpuc.ca.gov';
'LKristov@energy.state.ca.us'; 'randy.chinn@senate.ca.gov';
'rtavares@energy.state.ca.us'; 'mschwebs@energy.state.ca.us'
Cc: Shaw, Susan
Subject: Letter re: PG&E Advice letter 2073-E

Today the attached letter was received by PG&E from Paul Clanon, Director,
Energy Division, pertaining to Advice 2073-E, filed January 18, 2001. (cc:
Service List - A. 00-11-056)

 <<Letter_PGE_AL_2073-E.doc>>

Thank You,
Nel Avendano (nco1@pge.com)
Rates (415-973-3529)

(See attached file: Letter_PGE_AL_2073-E.doc)


Thanks for the information.  It will be very useful to the team!

>>> "Mary Hain" <Mary.Hain@enron.com> 09/07/00 03:50PM >>>

You requested the publicly available information underlying our slides, so you
could independently verify Enron's conclusions.  If you have any other
questions
please call me.
---------------------- Forwarded by Mary Hain/HOU/ECT on 09/07/2000 12:47 PM
---------------------------

TIM HEIZENRADER
09/07/2000 12:30 PM

To:   Mary Hain/HOU/ECT@ECT
cc:   Tim Belden/HOU/ECT@ECT
Subject:  Public Hydro Data Sources

Mary:

The public data sources that we routinely use for historical, realtime and
forecast hydroelectric data are:

     http://www.nwd-wc.usace.army.mil This site is operated by the Northwest
Division of the US Army Corp of Engineers, and includes both historical and
near-realtime water and power data for all Corp Columbia basin projects, as
well
as major USBR projects and non-federal mid-Columbia plants;

     http://www.nwrfc.noaa.gov This site is operated by the Northwest River
Forecast Center. It includes both assessments of current Columbia basin
streamflow conditions and forecasts of future conditions;

     http://www.mp.usbr.gov This is a Bureau of Reclamation site that
publishes
current data and forecasts for California's Central Valley Project (CVP)
plants;

     http://www.uc.usbr.gov  This is a Bureau of Reclamation site that
publishes
data and forecasts for Colorado River Storage Project (CRSP) plant water
releases and power production;

     http://h2o.usgs.gov  This is a Geological Survey site that publishes
near-realtime data from automated streamflow gages, and

     http://www.cbr.washington.edu/dart/ This is a site operated by the
University of Washington that provides convenient access to historical
Columbia
River and tributary water data.

Of these, the sites most relevant to recent markets are probably the Corp'
Northwest Division site, which offers enough near-realtime generation data to
directly account for 75% to 80% of Columbia River energy production, and the
River Forecast Center, which provides snowpack-driven, long range volume
runoff
forecasts. The CVP data are a helpful index of California hydro conditions,
but
only represent about 10% of the state's installed hydro capacity.

Please forward this information to appropriate FERC staff.


Your free trial expires today...

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PS -- When you subscribe you also receive these added benefits:

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 - rt010417exn.pdf


Great. So you can tell Ginger I'll be attending the dinner and ask her to
make a reservation at the hotel for me.  Please make sure all this info. Is
on my calendar.

Lysa Akin|PDX|ECT wrote on 7/25/00 8:33 am:

>Please book the follwoing
>flights for Mary Hain:
>
>12 Sept.
>United #920 departs
>Portland (PDX) 8:45 am /
>arrives Dulles (IAD) 4:38 pm
>
>13 Sept.
>United #921 departs Dulles
>(IAD) 5:30 pm / arrives
>Portland (PDX) 8:09 pm
>
>Thanks!


we have a tee time for noon on sat at longwood.


The Globalist/Stephan Richter <theglobalist@theglobalist.com> on 03/22/2001
12:11:56 PM
To: "'klay@enron.com'" <klay@enron.com>
cc:
Subject: Dornbusch on Income Inequality and Pricing AIDS Medications to a
Human Scale

Dear Dr. Lay:

New this week on www.TheGlobalist.com:

RUDI DORNBUSCH ON INCOME INEQUALITY
Poverty is bad -- but income inequality is not. MIT Professor Rudi
Dornbusch makes the argument that the development community
should not confuse inequality with poverty -- even though at the
bottom they might feel the same.

Coming Monday: A New Globalist Paper
PRICING AIDS MEDICATIONS TO A HUMAN SCALE
In a scramble for good publicity, pharmaceutical companies have
started a downward bidding war in pricing AIDS medications for
African markets. To add a much-needed measure of fairness to
the process, we propose a better alternative -- adjusting the price
of treatment to per-capita GDP.

Best regards from Washington,

Stephan Richter
Publisher and Editor-in-Chief
www.TheGlobalist.com

-------------------------------------------------------

Also this week:

JAPAN -- DON'T TRUST ANYONE OVER 55!
During the course of its decade-long economic malaise, Japan
has tried just about every trick in the book to get its economy
growing again. We may have found the answer -- but be warned,
those over the age of 55 may not like it!
http://www.theglobalist.com/nor/gdiary/2001/03-21-01.shtml

CHINA'S CARIBBEAN ISLAND HIDEAWAY
Why does China have an embassy on the tiny Caribbean island
of St. Lucia -- an island 8,000 miles away from Beijing and with which
it has few economic or political ties?
http://www.theglobalist.com/nor/gdiary/2001/03-19-01.shtml

Coming Friday: A New Globalist Bookshelf Feature
ROBERT KAPLAN ON THE TURKEY-ISRAEL AXIS
Turkey is in the midst of an economic crisis -- and Israel's relations
with the Palestinians have steadily deteriorated. So what do these
countries have to gain by forming a strategic alliance?

__________________________________________________________________________

To unsubscribe from this service, click here:
http://www.tafnet.com/TAFmailer/uns.asp?Unsub=klay@enron.com
[Tracking ID:985284327|6188]


is it real?

 -----Original Message-----
From: 	"Zerilli, Frank" <fzerilli@POWERMERCHANTS.COM>@ENRON [mailto:IMCEANOTES-+22Zerilli+2C+20Frank+22+20+3Cfzerilli+40POWERMERCHANTS+2ECOM+3E+40ENRON@ENRON.com]
Sent:	Tuesday, September 25, 2001 8:25 AM
To:	Arnold, John; 'John.Corcoran@ubsw.com'
Subject:	FW: Unbelievable Picture

-----Original Message-----
From: Bill Horton [mailto:bhorton@tnsk.com]
Sent: Tuesday, September 25, 2001 7:58 AM
To: fzerilli@powermerchants.com
Subject: FW: Unbelievable Picture

-----Original Message-----
From: Fred Sherman [mailto:fsherman@tnsk.com]
Sent: Tuesday, September 25, 2001 6:43 AM
To: Steve Bruns; William Lewis; William Simpson; Bill Horton; Erik Lood;
Christa Hodnett
Subject: FW: Unbelievable Picture

-----Original Message-----
From: frussel1@txu.com [mailto:frussel1@txu.com]
Sent: Monday, September 24, 2001 3:16 PM
To: fsherman@tnsk.com; slooney1@txu.com; bsmith5@txu.com;
jcarter7@txu.com
Subject: Unbelievable Picture

This picture was taken by a tourist atop  the World Trade Center. His
camera was found in the rubble, he has not yet been  found.

[IMAGE]

(See attached file: ATT209678.jpg)
(See attached file: ATT209678.jpg)

(See attached file: ATT209678.jpg)

 - ATT209678.jpg << File: ATT209678.jpg >>


----- Forwarded by Jeff Dasovich/NA/Enron on 03/02/2001 07:40 PM -----

	JBennett <JBennett@GMSSR.com>
	03/02/2001 04:53 PM

		 To: "Jeff Dasovich (E-mail)" <jdasovic@enron.com>, "Sue Mara (E-mail)"
<smara@enron.com>
		 cc:
		 Subject: Comments-re:DWR Creditworthiness/Letter-re:Direct Access

 <<X22350.DOC>>  <<BILASALT.DOC>>

 - X22350.DOC
 - BILASALT.DOC


Kevin Sweeney forwarded this message to me.  Fernley may have made you aware
of his decision with Tani when you and he talked yesterday.  If not, I
thought that you might be interested in this.  --Sally
---------------------- Forwarded by Sally Beck/HOU/ECT on 03/09/2000 09:04 AM
---------------------------

Kevin Sweeney
03/08/2000 12:36 PM
To: Sally Beck/HOU/ECT@ECT, Bjorn Hagelmann/HOU/ECT@ECT
cc:
Subject: Organisational Announcement - Tani Nath

Did not see your names below
---------------------- Forwarded by Kevin Sweeney/HOU/ECT on 03/08/2000 12:36
PM ---------------------------

Enron Europe General Announcement
03/08/2000 12:18 PM
Please respond to Fernley Dyson/LON/ECT
To: ECT London, ECT Helsinki, ECT Singapore
cc: Robert J Bonin/HOU/ECT@ECT, Kara L Boudreau/HOU/ECT@ECT, Matt A
Brown/HOU/ECT@ECT, Michelle Bruce/HOU/ECT@ECT, Robert B Cass/HOU/ECT@ECT,
Olga Compean/HOU/ECT@ECT, Mary Jane Denson/HOU/ECT@ECT, Scott
Earnest/HOU/ECT@ECT, Diane Ellstrom/HOU/ECT@ECT, Mark Fondren/HOU/ECT@ECT,
Sue Foust/HOU/ECT@ECT, Alexia Gonzales/HOU/ECT@ECT, Bjorn
Hagelmann/HOU/ECT@ECT, Kreg Hall/HOU/ECT@ECT, Mason Hamlin/HOU/ECT@ECT, John
Hayes/Corp/Enron@ENRON, Cindy Horn/HOU/ECT@ECT, Trisha Hughes/HOU/ECT@ECT,
Laura Karl/HOU/ECT@ECT, Nanette Kettler/HOU/ECT@ECT, Mark J
Leskowitz/HOU/ECT@ECT, James N Lessor/HOU/ECT@ECT, Linda K
Loukanis/HOU/ECT@ECT, Arlene Mendieta/HOU/ECT@ECT, Richard A
Miley/HOU/ECT@ECT, Michelle Nelson/Corp/Enron@ENRON, Frank G
Newman/HOU/ECT@ECT, Glenda D Mitchell/HOU/ECT@ECT, Chad Pennix/HOU/ECT@ECT,
Frank Prejean/HOU/ECT@ECT, Marilyn M Schoppe/HOU/ECT@ECT, James
Scully/HOU/ECT@ECT, Lynn E Shivers/HOU/ECT@ECT, Shirley Gail
Sidler/Corp/Enron@ENRON, Karen Snow/HOU/ECT@ECT, Alicia
Solis/EPSC/HOU/ECT@ECT, Patrick Stafford/Corp/Enron@ENRON, Leah
Stephens/Corp/Enron@ENRON, Shelly Stubbs/Corp/Enron@ENRON, Kevin
Sweeney/LON/ECT@ECT, John Swinney/HOU/ECT@ECT, Brandi
Wachtendorf/HOU/ECT@ECT, Nicole White/Corp/Enron@ENRON, Veronda
Willis/HOU/ECT@ECT, Sony Wilson/HOU/ECT@ECT, Joan Winfrey/HOU/ECT@ECT, Allen
B Childress/HOU/ECT@ECT, Suzanne B Clapp/HOU/ECT@ECT, Shannon
Cobb/Corp/Enron@ENRON, Dustin Collins/HOU/ECT@ECT, Andrea Frate/HOU/ECT@ECT,
Michael J Gasper/HOU/ECT@ECT, John H Harrison/HOU/ECT@ECT, Helen M
Jeschke/HOU/ECT@ECT, George R Lachner/HOU/ECT@ECT, Kristi I
Louthan/HOU/ECT@ECT, Dan Masters/HOU/ECT@ECT, Ina Norman/HOU/ECT@ECT, Michael
Philips/HOU/ECT@ECT, Peggy Rathmell/HOU/ECT@ECT, Rhonda Cyd
Reyes/HOU/ECT@ECT, Kathleen Salerno/HOU/ECT@ECT, Sharon
Stringfellow/HOU/ECT@ECT, Tomas Tellez/HOU/ECT@ECT, Jackie
Travis/HOU/ECT@ECT, Lisa Walker/HOU/ECT@ECT, Bill F Briggs/HOU/ECT@ECT, David
J Botchlett/HOU/ECT@ECT, Phil Clifford/HOU/ECT@ECT, Rudy Dautel/HOU/ECT@ECT,
Marc De La Roche/HOU/ECT@ECT, Wade Doshier/HOU/ECT@ECT, Steven M
Elliott/HOU/ECT@ECT, Alan Engberg/HOU/ECT@ECT, Douglas S
Friedman/HOU/ECT@ECT, Jim Goughary/HOU/ECT@ECT, Adam Gross/HOU/ECT@ECT, Paul
Henking/HOU/ECT@ECT, Wade W Hicks/HOU/ECT@ECT, Joong-Gie Hong/SIN/ECT@ECT,
Lee Jackson/HOU/ECT@ECT, Jung-Ah Kim/SIN/ECT@ECT, Joe King/HOU/ECT@ECT, Doug
Leach/HOU/ECT@ECT, Melinda Joyce Lynn/HOU/ECT@ECT, Patrick
Markey/HOU/ECT@ECT, John Mee Jr/HOU/ECT@ECT, Lisa Nemec/HOU/ECT@ECT, John L
Nowlan/HOU/ECT@ECT, Petra Olvera/HOU/ECT@ECT, Ted Robinson/HOU/ECT@ECT,
Niambi Sablo/HOU/ECT@ECT, Don Schroeder/HOU/ECT@ECT, Clayton
Seigle/HOU/ECT@ECT, Linda Shoup/HOU/ECT@ECT, S Craig Story/HOU/ECT@ECT,
Claude Straub/HOU/ECT@ECT, Helen Marie Taylor/HOU/ECT@ECT, Sameer
Vasudev/Corp/Enron@Enron, Spencer Vosko/HOU/ECT@ECT, Vickie J
Weaver/HOU/ECT@ECT, Bill White/Corp/Enron@Enron, Pavel Zadorozhny/HOU/ECT@ECT
Subject: Organisational Announcement - Tani Nath

I am pleased to announce that, effective immediately, Tani Nath, currently VP
in Asset Development in London, will be moving to take up a newly created
role as Head of Global Products Trading Support.

Tani will report to me and be responsible for leading and co-ordinating all
trading support functions for our world-wide operations in Global Products.
Kevin Sweeney and Tim Poullain-Patterson, Controllers in Houston and London
respectively, will report directly to Tani.

Please join me in congratulating Tani and welcoming her in her new role.

Fernley Dyson
Vice President
Chief Accounting Officer


yes

	Linda Robertson
	03/01/2001 07:47 AM

		 To: Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron
		 cc:
		 Subject: Senator Feinstein

Apologized that she could not meet with Steve yesterday.  She would like to
have this meeting.  She asked that we schedule this for your next trip to
DC.  I think we should do this meeting soon.  Do you want me to get on her
calendar and then build a day of meetings around her meeting?  Or wait until
you are otherwise back in town?


Steve--I am at 925-600-2085, and Jim Macias is at 925-600-2306. Thanks.


Please see the following articles:

GOVERNOR DAVIS SENDS LETTER TO SECRETARY OF ENERGY ABRAHAM
2/26/2001, www.governor.ca.gov

Pacific Gas & Electric Co. Makes Partial Payments to Suppliers
3/1/2001, bloomberg.net

Governor Davis Comes to Wall Street
3/1/2001,Merrill Lynch report

Energy Deal May Take a Month, Davis Tells Analysts

3/1/2001, LA Times

PUC chief says summer outages not inevitable
3/1/2001, Sac Bee

Dan Walters: Why has probe stopped short?
3/1/2001, Sac Bee

					PG&E's gas rates to ease in March
3/1/2001, Sac Bee

Davis optimistic about fed approval for power line deal
2/28/2001, San Diego Union Tribune

Partial Power Payments / Governor asks that generators take less
3/1/2001 SF Chronicle

PG&E May Be Ready To Deal / Lawyers to advise it on selling lines
3/1/2001 SF Chronicle

Generating Ideas / Deregulation, done right this time -- not state control --
is the answer to Calfiornia's energy woes
3/1/2001, SF Chronicle (editorial)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
--------------------
GOVERNOR GRAY DAVIS SENDS LETTER TO SECRETARY OF ENERGY ABRAHAM
2/28/1 15:25 (New York)

(The Following is a reproduction of a press release from The State of
California. This document was obtained from www.governor.ca.gov.)

GOVERNOR DAVIS SENDS LETTER TO SECRETARY OF ENERGY ABRAHAM

February 26, 2001

The Honorable Spencer Abraham
Secretary, U.S. Department of Energy
1000 Independence Avenue, SW
Washington, D.C. 20585

Re: Update on California's Energy Efforts

Dear Secretary Abraham:

The purpose of this letter is to update you on California's significant energy
conservation and efficiency efforts, as well as our generation development
initiatives.

Energy Conservation and Efficiency

Estimates by the California Energy Commission indicate that the State as a
whole
used approximately 2,000 fewer megawatts in January 2001 than might have been
expected, absent conservation and efficiency efforts. As you know, since
January, we have implemented the following major initiatives:

Directing more than $800 million for programs to improve conservation and
efficiency.

Implementing aggressive conservation measures in state buildings, resulting in
about 200 MW of savings during energy emergencies.

Developing a comprehensive outreach and education campaign to reach
businesses,
organizations, and millions of California consumers.

Partnering with other governmental entities, including school districts to
ensure that all 475 cities, 58 counties, and 8,300 schools in California
reduce
consumption.

Adopting the strongest energy efficiency standards in the world for
residential
and non-residential buildings and appliances.

Incorporating energy efficient, sustainable building designs in new state
building projects.

Issuing 13 Governor's Executive Orders on energy.

Additional State Conservation Outreach Efforts

The State Department of Consumer Affairs has launched the first stage of a $20
million paid media campaign to encourage California's consumers and businesses
to conserve energy and become more energy efficient. The first three
commercials
have run in all 12 major metropolitan markets, the most recent of which
encourages consumers to turn down their thermostats.
We are coordinating our conservation efforts with many businesses and business
associations. For example, Safeway agreed to print an energy conservation
message on its supermarket grocery bags. In addition, it will place an energy
conservation message in its weekly advertisement insert, which reaches 11
million households in every major California newspaper each week. Safeway also
has offered to donate 10 to 15 seconds on its advertising buys for the state
energy conservation message. In addition, McDonald's is placing four million
tray liners with the energy conservation message in its 1,100 restaurants
throughout the State.

The Department of Motor Vehicles (DMV) puts conservation and efficiency
messages
on Vehicle Registration and Driver's License Application and Renewal
envelopes.
DMV envelopes are expected to the reach 19.6 million vehicle owners and eight
million drivers who apply for or renew licenses this year.
The approaching tax season has enabled the Franchise Tax Board (FTB) to reach
nearly 300,000 Californians a week with the energy message. This past week
alone, FTB included an energy insert in nearly 24,000 Return Information
Notices, reached 71,000 visitors to the FTB home page, which features the
energy
conservation message, and played a recorded energy conservation message for
nearly 193,000 taxpayers who used the FTB call center.

The California Lottery Commission is placing conservation messages on certain
game tickets and on 7,000 television monitors in stores throughout the State.
The Department of Consumer Affairs, the Franchise Tax Board, California Energy
Commission, and other agencies play energy conservation information during on-
hold telephone messages.

The Department of Consumer Affairs reached an estimated 2.5 million
Californians
with the energy conservation and efficiency message during Consumer Protection
Week through public appearances, media interviews, handouts, and letters.

The Governor's Office of Planning and Research has worked with your Department
of Energy to get the conservation message to all federal employees and
facilities in California. These communications will reach as many as 265,000
civilian employees and 100,000 military personnel in California. Distribution
is
provided by the Department of Energy's Seattle Regional Office to key facility
managers and other federal offices throughout the state.

Every state agency website features the state's "Flex Your Power" logo and
energy conservation message. For example, the Energy Commission's home page
features in-depth conservation and efficiency information and receives 3
million
hits a month. The Energy Commission also has established an 800 number and web
form to handle consumer conservation ideas and inventions. This allows people
to
make suggestions directly to government.

Articles on energy conservation have been placed in trade publications and
newsletters, such as the Employment Development Department's California
Employer, which reached some 900,000 employers, and the CalPERS PERSpectives,
which reached one million subscribers.

The Technology, Trade, and Commerce Agency e-mailed and broadcast faxed an
energy conservation letter to approximately 97,000 businesses, associations,
and
partners.

The California Science Center, a state museum in Los Angeles that has 1.3
million visitors a year, including 800,000 children, is providing conservation
tips in English and Spanish to all visitors.

Two weeks ago, I issued an Executive Order that requires retail
establishments,
particularly shopping malls, gas stations, auto dealerships, and other
commercial properties, to reduce unnecessary outdoor lighting during non-
business hours. The Executive Order is directed at the large banks of
decorative
and marketing illumination that often stay on all night and do not serve a
public safety function.

Quantifying Impact of Outreach Efforts

The State and Consumer Services Agency is working with the Electricity
Oversight
Board, the California Energy Commission, the Department of General Services,
and
cabinet agencies to attempt to quantify the impact of our outreach efforts on
energy efficiency and conservation. Preliminary estimates for January 2001
indicate that the State experienced an overall reduction of approximately
2,000
megawatts from what the State's overall anticipated load should have been,
absent recent conservation and efficiency efforts. This estimate measured
overall impact by comparing monthly peak load data against data from the same
month one year earlier, while adjusting for projected load growth from last
year
to this year, significant changes in weather conditions, and other factors.

In addition, we are attempting to measure the overall impact of state agency
conservation efforts by gathering monthly utility bills of state buildings and
facilities and comparing them to the same month in 2000. Some preliminary
highlights include:

The DGS Telecommunications headquarters at 601 Sequoia Pacific Blvd.
(Sacramento) consumed 20.5% less kilowatt hours of electricity in January 2001
when compared with data from January 2000.

The Office of State Publishing facility at 344 N. 7th Street (Sacramento)
consumed 26.6% less kilowatt hours of electricity in January 2001 when
compared
with data from January 2000.

Caltrans indicated that the electricity bill for its Sacramento headquarters
went down 23.8% last month, compared with January 2000.
The Department of Housing and Community Development reports a 40.5% reduction
in
energy usage at its Sacramento headquarters building.

Generation Development Initiatives

Objective: 5,000 MW on line by July, and 20,000 MW by 2004.

Since August 2000, I have issued a series of Executive Orders and signed
urgency
legislation that created:

Fast-track licensing procedures for environmentally-preferred facilities; some
plants will be licensed in as little as 21 days

A State Air Emissions offset bank so fast track plants can obtain air permits
up
front.

Ability to increase power production at existing facilities and to allow
construction of plants 24/7.

ISO outage scheduling tools so shut downs occur while system reliability is
maintained

Intergovernmental "Green Team" strike force to cut red tape at federal, state
and local levels.

Performance awards for plants that accelerate construction and come on-line
before July, 2001.

I have requested that President Bush direct federal agencies to expedite
federal
permit reviews for power projects; President Bush granted this request.

I have written Chairman Hebert to urge the FERC to further extend the waiver
of
certain operating and efficiency restrictions on qualifying facilities from
April 30, 2001 until October 15, 2001; California awaits the Chairman's
response.

I anticipate that by July, 2001, these measures will result in the addition of
1,320 MW from three large power plants, a 320 MW plant licensed under
expedited
permitting procedure in December, 2000, up to 2,400 MW of "peaking" power
projects, up to 1,266 MW by restarting or expanding production at existing
thermal and renewable power projects - some of this production depends upon
the
FERC's response to my request, and 145 MW of wind, biomass and other renewable
energy projects receiving California financial incentives

California remains committed to achieving a significant reduction in energy
consumption and to an aggressive program to develop generation for this summer
and beyond.

Best regards,

Gray Davis
Governor

(bh) PN
-0- (CRL) Feb/28/2001 20:25 GMT
------------------------------------------------------------------------------
------------------------------------------------------------------------------
----
Pacific Gas & Electric Co. Makes Partial Payments to Suppliers
3/1/1 9:32 (New York)

Pacific Gas & Electric Co. Makes Partial Payments to Suppliers

     (For more on the California power crisis, see {EXTRA <GO>})

     New York, March 1 (Bloomberg) -- Pacific Gas & Electric Co.,
California's largest investor-owned utility, will make partial
payments of $228 million instead of $1.442 billion to its
suppliers, a filing with the Securities and Exchange Commission
said.
     Kent Harvey, a senior vice president and chief financial
officer at the utility, told investors in a Feb. 1 conference call
that the utility was paying power suppliers 15 percent of invoices
received. The company would rather ``make partial payments than no
payments at all, to keep electricity flowing to customers,'' he
said.
     The cash-strapped utility, which has defaulted on more than
$731 million of commercial paper since Jan. 17, is conserving
money in order to stave off filing for bankruptcy protection.
     Pacific Gas & Electric paid soaring wholesale energy prices
since last summer, which California regulators prohibited it from
passing on to customers. The utility accumulated $6.6 billion of
debt through the end of 2000 for such power purchases. The filing
didn't update the undercollections through January.
     Edison International's Southern California Edison, the
state's No. 2 utility, has said its unreimbursed costs were $5.47
billion through January 31. Sempra Energy's totaled $605 million.

                        Some Power Payments

     Pacific Gas and Electric's filing said it is making partial
payments for January power deliveries from certain suppliers,
known as qualifying facilities, and for December deliveries from
the California Independent System Operator, which oversees about
75 percent of the state's transmission grid.
     As of Jan. 16, the utility had drawn $938 million of a $1
billion credit line. On Jan. 17, banks refused to lend the utility
additional money causing it to default on maturing commercial
paper. The utility and its parent, PG&E Corp., have been shut out
of the commercial paper markets and unable to raise money from
sources other than banks since late December.
     Pacific Gas & Electric has an additional $142 million of
commercial paper maturing by the end of this month, according to
an audit ordered by the California Public Utilities Commission. It
recently had $1 billion of cash reserves, based on a Feb. 14 SEC
filing.
     California Governor Gray Davis has proposed buying the
utilities' transmission systems as part of a broader plan,
including buying power on their behalf, to help PG&E and Edison
avoid bankruptcy.

--Liz Goldenberg in the New York newsroom at (212) 893-3940 or at
egoldenberg2@bloomberg.net and Dennis Walters in Ojai, California,
through the New York newsroom (212) 318-2300 /jm

Story illustration: For more information on electricity markets
and prices, type {VOLT <GO>}.
------------------------------------------------------------------------------
--------------------------------------------------------------
Governor Davis Comes to Wall Street
3/1/1 9:47 (New York)

                      M E R R I L L  L Y N C H        Research Bulletin
  Fixed Income Research                               Reference Number
10906001
  United States                                       Mar/01/2001 09:47
  Leo J. Kelser                                       (1) 212 449-7803

Highlights of This Issue

Governor Gray Davis of California met with a group of sell-side and rating
agency analysts in New York yesterday.  The Governor outlined his plan for
restoring the utilities to financial viability so that they can meet their
obligations.  Below we summarize a few highlights from the meeting.

Trying to Fit Solution Within Existing Rate Structure

The Governor talked about the need to find a solution to the utilities'
problems within the context of their existing rate structures. He indicated
that the temporary 9% rate hike from January 2000 would be made permanent and
that a 10% rate reduction that went into effect in January 1998 would be
reversed in March 2002.

Status of Negotiations with PG&E

As we noted in a February 26(**th) comment, the Governor has reached an
agreement in principle with Southern California Edison (EIX: B3/CC) to address
that utility's past under-collections.  He hopes to also have an agreement
with
PG&E within the next 30 days, suggesting that progress was made in particular
in the last 2-3 days.  However, the Governor acknowledged that reaching an
agreement with PG&E was more difficult due to its larger under-collected
balance and lower rates compared with SCE.

Some Generators Agree to Haircut

The Governor indicated that a couple of unnamed generators have voluntarily
agreed to accept less than 100 cents on the dollar for their past due
receivables. When pressed about which parties they've had constructive
discussions with, he identified Williams (WMB: Baa2/BBB-), Enron (ENE:
Baa1/BBB+) and Dynegy (DYN: Baa2/BBB+).  We note that most of the generators
and marketers with exposure to California have established reserves against
possible losses.  Importantly, the Governor said that he hoped that the banks
and bondholders would not be asked to take a haircut.

Prospects for Legislation and Possibility of Ballot Initiative

The Governor said he is quite confident that he can reach an agreement with
the
utilities that the legislature can support.  Although he admitted that he
couldn't prevent someone from proposing a ballot initiative, the governor said
that in the end, the acid test with the public is how it affects their pocket
books.  Thus, if there is ultimately a ballot initiative, Governor Davis is
optimistic that the public will be supportive of his plan given the limited
impact on electric rates.

Status of Defaulted Utility Debt

As we have commented in the past, it appears unlikely that the resulting
legislation will pass with the required 2/3majority to go into effect
immediately.  Accordingly, there will be a several month lag before the
utilities receive any cash.  In response to a question, it appears that the
state will not step in to help the utilities pay off any maturing or defaulted
commercial paper.  But the Governor and his advisers hope that legislation
will
provide enough certainty so that the companies can get bridge financing.
Essentially, it appears the Governor is leaving it up to the utilities to find
the money from their banks.

Governor's Strategy to Keep the Lights On

The Governor stated that a key reason that deregulation failed in California
was that no new power plants were built in the state for over twelve years.
In
the intervening time, demand caught up with supply.  In response, he has
proposed various conservation initiatives and is trying to expedite the
construction of new power plants.  He set a goal of having 20,000 megawatts
(mws) of new supply on line by 2004.

In addition, the governor highlighted the need for additional investment in
the
transmission infrastructure.  In particular, he cited the need to expand the
capacity to import more power from Arizona as well to improve the ability to
move power from south to north within the state. He suggested that part of the
rationale for the state taking over the utilities' transmission grids was to
ensure that the additional investment takes place.  He also suggested that the
state would lease the transmission lines back to the utilities to allow them
to
continue to operate them.

In the meantime, the focus is to move away from California's over-reliance on
the spot market.  In that vein, Calpine (CPN: Ba1/BB+) yesterday announced the
signing of two long-term contracts with the state's Department of Water
Resources (DWR).  One of those contracts was to sell up to 1,000 mws over a
ten-
year term.  The other was to provide up to 495 mw of peaking capacity under a
20-year contract.  Earlier in February, CPN had reached agreement with the DWR
on a separate 10-year contract for an additional 1,000 mws.

(EIX, WMB)  MLPF&S was a manager of the most recent public offering of
securities of this company within the last three years.
Copyright 2001 Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S).
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 Provider ID: 10906001
-0- Mar/01/2001 14:47 GM
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Thursday, March 1, 2001

Energy Deal May Take a Month, Davis Tells Analysts

Power: Wall Street experts appear cool to governor, who tries to convince
them he is solving the state's electricity crisis.
California members of Congress vow to keep seeking wholesale price caps.

By DAN MORAIN and RICHARD SIMON, Times Staff Writers

?????As a hopeful Gov. Gray Davis extended his East Coast barnstorming tour
before skeptical Wall Street utility analysts Wednesday,
 members of California's congressional delegation vowed to continue their
campaign for caps on wholesale electricity prices after a tense
 standoff with a top federal regulator.
?????Davis completed his five-day trip by raising about $200,000 for his 2002
reelection campaign at private events in Manhattan, and then
 conferring with analysts in an effort to persuade them that he is solving
California's energy crisis.
?????Although Davis delivered some good news--that some electricity suppliers
would accept less than the full payments owed to them by the
 state's debt-ridden utilities--he acknowledged that it probably would take
more than a month to complete his plan to enable the utilities to stave
 off bankruptcy.
?????"Did they leave without doubt? I don't know that is ever the case,"
Davis said of his select audience of 35 analysts. "But I do believe they left
thinking I'm sincere, I'm making progress, and am confident that I will fix
it."

?????Reaction Varies
?????Analysts who attended the hourlong meeting came away saying Davis
offered little that they didn't already know. Some questioned why he excluded
many analysts who closely track utility bond debt, given that Southern
California Edison and Pacific Gas & Electric Co. have defaulted
 on several bond payments.
?????Michael S. Worms, senior vice president of Gerard, Klauer & Mattison,
described Davis as "very cognizant of the situation," adding that the
governor appears to understand the fundamental problem that California lacks
sufficient power plants to supply the populace.
?????"I got the impression he is on top of it. He understands the issues,"
Worms said.
?????Others were far less charitable. Davis' lack of specificity added to
their skepticism.
?????"I'd like to see specifics," said Steven M. Fetter of Fitch Inc., which
rates companies' credit-worthiness. "I didn't expect specifics, and he lived
up to my expectations."
?????Davis told the analysts that some power generators have agreed to forgo
full payments from the utilities. State regulators have barred Edison
 and PG&E from passing on to consumers the skyrocketing wholesale power costs
charged by independent power generators and marketers, leaving the utilities
owing billions.
?????Davis spokesman Steve Maviglio confirmed Wednesday that two generators
made "unsolicited offers" to the governor to write off some of
 their debt. He did not identify the independent generators or say how much
they would trim from their debt.
?????Representatives of the energy companies that have sold more than $1
billion in electricity to the state since January reacted coolly to Davis'
suggestion that they not receive full payment for their goods.
?????"The best insurance against continued energy shortages is full payment
for all deliveries that have been made in the past," said Gary Ackerman
 of the Western Power Trading Forum, a group of energy marketers and
generators.
?????Davis last week said he and Edison had agreed to the outlines of a deal
by which the state would give the utility $2.76 billion in exchange for
its share of the statewide electricity transmission system.
?????At the time, he said he hoped to have a more detailed version of the
plan by the end of this week, as well as one to buy transmission lines
 from San Diego Gas & Electric.

?????Fund-Raising Events
?????However, on Wednesday, the governor said a final agreement between the
state and Edison will not be reached for as long as a month,
maybe longer. A deal with PG&E, the state's largest utility, "could take a
little longer," Davis said, adding that the company's debt is far larger
 than Edison's.
?????"This transaction is going to be scrutinized for decades to come," he
said. "I'm determined to do it fairly but do it in a way that withstands
scrutiny."
?????After conferring with Bush administration officials and attending a
governors conference in Washington, D.C., over the weekend, Davis
arrived in New York on Tuesday to be feted at a fund-raising dinner hosted by
Richard Medley, an economic strategy consultant and head of Medley Global
Advisors. On Wednesday, Davis attended a breakfast fund-raiser at the
headquarters of the banking and financial services firm Citigroup, whose
chairman, Sanford Weill, served as host.
?????The governor raised an estimated $200,000 in all for his 2002 reelection
campaign, a source said, requesting anonymity. Neither Medley
 nor Weill could be reached for comment. Both men are significant political
donors to national campaigns.
?????While Davis sought to make the case for his utility rescue plan, members
of California's congressional delegation focused on efforts to reduce
 the high wholesale power costs at the heart of the crisis. The bipartisan
group of lawmakers pledged to press ahead with legislation that would impose
temporary price caps, after they met behind closed doors with Curt Hebert
Jr., chairman of the Federal Energy Regulatory Commission. Hebert is a
free-market advocate and has vigorously opposed price controls.
?????"You heard me screaming?" asked Rep. Bob Filner (D-San Diego) after the
meeting with Hebert.
?????"Almost everyone argued with Mr. Hebert that we need help from FERC,"
said Rep. Henry A. Waxman (D-Los Angeles), citing Democratic
 and Republican support for temporary limits on wholesale prices. "Mr. Hebert
didn't care."
?????"It didn't make any difference whether you were a conservative
Republican or a liberal Democrat," Waxman said. "We all felt that we were
 not getting the help we need from the Federal Energy Regulatory Commission."
?????But Waxman said he considered the meeting worthwhile "because it had to
impress upon Mr. Hebert" the strong support for price controls shared by many
California lawmakers.
?????Several Republicans who attended the session were less critical of the
agency and its chairman but expressed support for providing a
legislative fix in the absence of FERC intervention.
?????"The chairman is not going to be supportive of our bill, but he's at
least willing to talk with us and listen to us," said Rep. Duncan Hunter
(R-Alpine)
?????So far, only about half the delegation has endorsed the price cap
legislation. Filner noted that he and his ideological opposite, Hunter, have
 found common ground on this issue after hearing from constituents squeezed
by higher fuel costs.
?????During the meeting, Hebert declined--on his attorney's advice--to take a
stand on Davis' proposal to have the state take control of the
electrical transmission system, according to some of those attending. The
takeover would require FERC approval, and Hebert reportedly
expressed concern about taking a position on a matter that his agency has not
yet considered.
?????Hebert bristled when a reporter, chasing him down a hallway, asked if
FERC were doing enough to help California.
?????"We've worked so hard on California that we have a backlog of 2,000
cases right now," he snapped, adding that Davis never asked to meet
 with him.
?????Asked if he was aware of talk that another chairman might be named, he
said, "You'd have to ask the president that."
?????In other developments Wednesday:
?????* California's electricity grid was jolted into a Stage 2 power
emergency after several large electricity plants tripped offline in the
morning.
The outages were not related to the Seattle earthquake, which had no
significant effect on regionwide electricity operations, a grid spokesman
 said.
?????* Millions of Californians would receive rebates of 10 cents for every
kilowatt-hour of electricity they conserve this summer, under legislation
introduced by state Sen. Don Perata (D-Alameda). The bill, SB 63X, would set
aside $1 billion to reward consumers who reduce their power
 use compared with that of the same month a year earlier.
?????* Calpine Corp. said it signed two more long-term electricity contracts
with the state Department of Water Resources valued at $8.3 billion.
?????* Southern California Gas Co. agreed to provide as much as 30 million
cubic feet of gas per day to PG&E in the next month to help ease the
utility's difficulties in obtaining supplies. Under the agreement, PG&E will
guarantee payment to the Los Angeles gas utility by pledging gas
accounts receivable as security for unpaid balances that cannot exceed $16.5
million. Gas Co. Chairman Edwin A. Guiles said the agreement
should have no adverse effects on natural gas costs or service for any of the
company's 5 million customers.
---
?????Times staff writers Nancy Rivera Brooks and Nicholas Riccardi in Los
Angeles, Miguel Bustillo and Nancy Vogel in Sacramento and Tim Reiterman in
San Francisco contributed to this story.
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---------------------------------------------------------------
PUC chief says summer outages not inevitable
By Jim Sanders
Bee Capitol Bureau
(Published March 1, 2001)
California Public Utilities Commission President Loretta Lynch defended her
handling of the energy crisis in a speech Wednesday but made no promises that
blackouts won't occur this summer.
"We can probably dodge the bullet" if Californians reduce their electricity
use by 10 percent this summer, she said.
But the key will be Mother Nature. If temperatures soar far beyond a normal
year, she said, "We're going to have serious problems."
Gov. Gray Davis, meanwhile, sought to reassure stock analysts about
California's plans to cope with the crisis on a trip to New York, where he
outlined steps the state is taking to reach a deal to retire utilities'
debts.
But electric emergencies returned to plague California's grid, as imported
power from the Pacific Northwest dwindled.
After five days without issuing any power alerts, which warn that backup
electricity supplies have dipped too low, the Independent System
Operator declared a Stage 2 alert at 9:40 a.m. Wednesday. The warning was
scheduled to stay in place through midnight.
Unexpected power plant breakdowns and low imports triggered the alert, said
spokesman Patrick Dorinson.
California energy experts have predicted the state could be thousands of
megawatts of electricity short this summer, enough to leave millions of homes
without lights and air conditioning.
Lynch, who has been on the front lines as the state has spent billions of
dollars to keep the power on, declined to predict whether rates will rise
 to help solve California's electricity problems.
Rates will depend on many factors, she said, including the state's success in
securing long-term contracts at bargain rates, increasing power generation
and encouraging conservation.
Davis has vowed to keep rates "within the existing rate structure," but that
does not rule out ending a 10 percent rate freeze imposed several
 years ago or increasing rates for heavy energy users of debt-ridden Southern
California Edison and Pacific Gas and Electric Co.
Lynch said the state is on track to achieve stability in the electricity
industry through its proposal to buy 32,000 miles of power transmission
lines.
Lynch, a former campaign volunteer for Davis, was director of his Office of
Planning and Research before being named to the PUC in December 1999.
She started her speech Wednesday to the Sacramento Press Club with a
whimsical reference to the biblical character known for his suffering.
"I now understand what Job must have felt like," Lynch quipped.
She blamed the energy crisis largely on the fact that California's
electricity deregulation forced utilities to sell many of their power plants
and left
 them vulnerable when out-of-state generators failed to meet supply
expectations and wholesale prices soared.
"That lack of vision has come at an extraordinary price for California,"
Lynch said.
Asked what the PUC, in retrospect, could have done to avert the crisis, Lynch
pointed again to deregulation.
Officials should have seen that deregulation wasn't working, she said, and
either reversed it or re-evaluated it.
"From my perspective, the system we created was built on theory, hope and
promise," she said. "The promise was not realized because the
theory was faulty."
Deregulation of the industry did not lead to the heavy competition that was
predicted to provide ample supply and lower prices.
Lynch defended the PUC against criticism that it exacerbated the crisis by
reacting too slowly to requests that would have allowed utilities to
 raise rates and/or negotiate long-term energy contracts at lower-than-market
rates.
Lynch said the PUC has voted consistently since last August to allow the
utilities to enter into long-term power contracts.
"When the utilities asked, we gave them the authority -- and in some cases at
lightning speed," she said.
In recent legislative hearings, utility officials said the PUC's votes did
not solve their problems because the agency reserved the right to determine
 in years to come whether the contracts were reasonable. If the PUC
ultimately decided against the utilities, the officials said their
shareholders
 could be left holding the bag for large sums of money collected years prior
to the "reasonableness review."Thus, the utilities hesitated to enter
 into long-term pacts.
Lynch said her agency has a responsibility to protect consumer interests
regarding rate hikes.
"It was their business decision not to (negotiate long-term contracts)
fully," she said of Edison and PG&E.
Lynch also said the Federal Energy Regulatory Commission's actions in
December helped send electricity rates soaring 500 percent in five days.
Before FERC acted, she said, "the utilities were bleeding, but they weren't
hemorrhaging."
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----------------------------------------------------------------

Dan Walters: Why has probe stopped short?

(Published March 1, 2001)
Earlier this year, as California's energy squeeze morphed into a full-blown
crisis, the state Assembly's leadership opened what it said would be
an in-depth investigation, modeled after the much-acclaimed probe of former
Insurance Commissioner Chuck Quackenbush.
A special subcommittee, chaired by Assemblyman Darrell Steinberg,
D-Sacramento, was established, investigators, many of them veterans of
 the Quackenbush probe, went to work, and a few days of hearings were
eventually held.
The reality didn't live up to the advance billing. Utility executives and
other players were grilled, but the hearings fell far short of laying out who
 made what decisions that brought the utilities to the edge of bankruptcy and
left California scrambling to find and pay for enough juice to keep
its lights burning. And then the hearings ended abruptly, the apparent victim
of a partisan conflict.
Republicans have been demanding a deeper inquiry into what the Public
Utilities Commission, and inferentially Gov. Gray Davis, did or not do
 last summer when the crisis first began to make itself felt. And their
partisan interest is also clear: Pinning the crisis on Davis and the PUC would
 be ammunition for the 2002 election, when Davis is seeking re-election.
Democrats want to move into aspects of the energy crisis, such as
shortages of natural gas and the electricity supply prospects for next
summer, that would not expose the governor or the PUC to any
 embarrassing revelations.
Steinberg insists that he's not trying to protect Davis. But only this week,
after Republicans exerted behind-the-scenes pressure, did he send
 a letter to the PUC backing the GOP demand for extensive access to critical
documents and interviews of key participants in last summer's
 actions.
Utilities executives say they pleaded with the PUC and Davis last summer to
acquire long-term, low-cost contracts with suppliers, but that they
 were rebuffed. The issue is critical, because the lack of long-term
contracts meant that utilities ran up many billions of dollars in debts to
pay for
 power at soaring spot market prices -- a form of deficit financing that the
state is continuing. How much of that debt should be eaten by utilities,
 and how much should be recovered from ratepayers is, perhaps, the single
most controversial aspect of the crisis.
The touchiness of the issue was underscored Wednesday when PUC president
Loretta Lynch appeared before the Sacramento Press Club and
 dismissed as "one of the biggest myths" and "a tremendous canard" the
allegation that the PUC had blocked long-term supply contracting. She
 said the PUC had granted long-term contracting authority to the utilities,
but they allege that the permission came with too many financial strings
 to be practical.
Lynch also denied that the PUC has dragged its feet in responding to demands
for documents, citing the overwhelming volume of both the
 demands and the inquiries from several legislative committees. Earlier last
month, PUC executive director Wesley Franklin complained in one
response to legislators that the demanded documents "may include confidential
information" and complying with the requests would "entail
considerable time and effort for us to compile ... "
Whether the legislative hearings ever return to last summer's events is
uncertain. The Republicans' partisan motives aside, however, it is important
 to establish what role Davis and the PUC played so that the public can judge
any Davis-brokered settlement of the utilities' debts. It's also an
 important test for Assembly Speaker Bob Hertzberg, who is very proud of the
investigation of Republican Quackenbush and has pledged that
 other official shortcomings would be ruthlessly examined regardless of their
partisan origin.
DAN WALTERS' column appears daily, except Saturday. Mail: P.O. Box 15779,
Sacramento, CA 95852; phone (916) 321-1195;
 fax: (781) 846-8350
E-mail: dwalters@sacbee.com
Recent columns: http://www.capitolalert.com/voices/index_walters.html
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Newswatch: PG&E's gas rates to ease in March

(Published March 1, 2001)

Rates for natural gas will inch down in March but will remain more than twice
as high as a year ago, Pacific Gas and Electric
 Co. said Wednesday.
Household gas bills will average $95 this month, up from $45 in March 2000,
but down from this winter's high of $125 in
January, the utility said.
Gas rates are high nationwide as the result of years of reduced exploration
while prices were low. But they have been far
higher in California and various analysts have suggested a range of reasons:
pipeline and storage shortages; soaring
demand by power plants; and market manipulation.
PG&E figures a different rate each month, based on how much it expects to
spend buying gas for households and small businesses. Large businesses are
responsible for lining up their own supplies.
An average March household bill will be about 16 percent lower than an
average February bill, which PG&E calculated at
$113.
-- Carrie Peyton
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Davis optimistic about fed approval for power line deal

ASSOCIATED PRESS
February 28, 2001
WASHINGTON ) California Gov. Gray Davis is hopeful federal energy officials
will back a proposal aimed at easing the state's energy crisis by purchasing
a wide swath of transmission lines.
While the Davis administration continued negotiations with three
investor-owned utilities Wednesday, the state's weeklong respite from power
alerts came to an end.
Four Western power plants shut down unexpectedly, prompting grid officials to
call a Stage 2 alert with electricity reserves expected to drop below 5
percent, said spokeswoman Lorie O'Donley of the California Independent System
Operator. The plants included two in Montana and one each in Oregon and
Northern California.
In addition, several California plants were down for scheduled repairs,
O'Donley said.
The state has been besieged with electricity problems in recent months. They
include the near-bankruptcy of Southern California Edison and Pacific Gas and
Electric Co. and a lack of power that resulted in rolling blackouts twice
last month in Northern California.
On Friday, the governor announced a deal to purchase Edison's power lines and
require Edison International, the utility's parent company, to sell cheap
power to the state for a decade.
Davis gave the Edison proposal to Energy Secretary Spencer Abraham on Tuesday
and expects a response by the end of the week.
Abraham "wants this problem solved and he's been very supportive," Davis
said. "He's recommended approval on every request I've made, and I believe he
will support our proposal."
Supporters say the $2.7 billion plan to buy Edison's transmission system and
have the state spend several billion more to buy the power lines of its other
two investor-owned utilities, could lead to quick improvements to a
bottlenecked system overdue for repairs. Critics contend it would saddle the
state with an antiquated network that could prove costly to fix.
The Davis administration continues negotiating with PG&E and San Diego Gas &
Electric. In all, Davis' plan would put 26,000 miles of power lines under
state control at a total price that could range from $4.5 billion to $7
billion.
Edison officials said Tuesday they would prefer a deal that includes all
three utilities, but might agree to sell Edison's transmission lines alone as
long as it is not held responsible for any of PG&E's debts.
As a member of the California Power Exchange, Edison agreed to pay a share of
any default by any other member.
A group of power generators have sued the exchange because they were charged
a portion of the debt owed by Edison and PG&E. That lawsuit is on hold while
the issue is being decided by the Federal Energy Regulatory Commission.
"Clearly it is simpler and a lot cleaner if all three utilities are
ultimately a party to some sort of agreement with the state," Ted Craver,
chief financial officer of Edison International, said during a conference
call with creditors. "It's not necessarily the only way it can be done."
The governor feels the state won't "have a satisfactory arrangement without
having 60 percents of the transmission lines and that requires that we have
an agreement with PG&E," spokesman Roger Salazar said.
Edison and PG&E say they have accumulated nearly $13 billion in losses
because the state's 1996 deregulation law prevented them from passing the
true costs of wholesale energy ) which have soared since last June ) to their
customers.
The governor's plan would infuse the utilities with part of the cash they say
they need to remain solvent.
Some state lawmakers have said the long-term costs of the plan outweigh the
immediate benefits because the transmission lines need repairs that could
cost an estimated $1 billion a year.
Assembly Minority Leader Bill Campbell, R-Villa Park, said Republican
lawmakers are unlikely to support the governor's plan, which needs
legislative approval.
Without Republican support, the measure could still pass, but it would take
effect 90 days after the governor signed it, rather than immediately.
"That's a hurdle, waiting 90 days in these delicate times," Campbell said.
Addressing a lunch for the California State Society attended by members of
the state's congressional delegation, Davis outlined his plans to resolve the
energy crisis, in part by speeding up power plant construction.
"We have a real challenge this summer and the following summer," he said.
"The third year I think enough generation will be online so that we're in
much better shape."
Davis has issued executive orders to shorten the approval process for new
plants and expects to gain 5,000 megawatts by summer ) enough to power about
5 million homes.
In addition to increasing power production, Davis emphasized the need for
greater conservation, advising his state's consumers to turn off lights in
empty rooms, unplug unused appliances and lower thermostats.
"In my house, my wife has the thermostat down to 55 degrees," he said. "Going
to the kitchen in the middle of the night is like a trip to Antarctica."
??

On the Net:
California Energy Commission: www.energy.ca.gov
U.S. Department of Energy: www.energy.gov
California Independent System Operator: www.caiso.com
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---------------------------------------------------
BUSINESS
Partial Power Payments / Governor asks that generators take less
Christian Berthelsen
?
03/01/2001
The San Francisco Chronicle
FINAL
Page B1
(Copyright 2001)
California Gov. Gray Davis yesterday suggested that power generators accept
partial payment for the electricity they have supplied to the state's
financially troubled utilities.
Analysts at the meeting said the governor made reference to a company that
had agreed to do so. However, he did not identify the company or offer
details about how much it would accept.
Davis' comments at a closed meeting with analysts in New York City are
significant because they represent an apparent departure from the power
companies' position that they be repaid in full.
The move is in line with the governor's view that the generating companies
selling electricity to California 's utilities should contribute "modestly
and voluntarily" to solving the crisis.
Said Richard Cortwright, an analyst for Standard & Poors: "It came across
pretty loud and clear that he felt they could afford to take less than a
hundred cents on the dollar and still do pretty well for themselves."
Several power companies, including Enron Corp. and Reliant, both of Houston,
were quoted by Bloomberg News as saying they were surprised by the governor's
statements.
Davis went to Wall Street yesterday for the first time during the California
power crisis to reassure the financial world's opinion- makers he is doing
all he can to resolve the problem.
During the meeting, Davis presented a history of how California 's
investor-owned utilities came to be in the sorry financial shape they are in.
He was also said to have emphatically ruled out electricity rate increases,
saying they are politically unfeasible and would be easily undone by a voter
initiative.
Davis also said he will have a deal within 30 days to purchase transmission
lines from Pacific Gas & Electric Co. and Southern California Edison.
Financial analysts are looking forward to that deal as a way of providing the
utilities with some cash to work their way out from under a combined debt
load estimated at $13 billion. The utilities have been barred by law from
passing high wholesale power costs on to customers.
At a press conference after the meeting, Davis told reporters that
negotiations are improving between the state and PG&E for a deal similar to
the one announced with Edison last week. In that transaction, the state would
buy Edison's power lines for $2.76 billion, and Edison would issue bonds to
recover its wholesale power costs.
Yesterday's meeting was closed to the media and investors, and no Internet
broadcast or teleconference of the event was available. That frustrated some
investors and analysts who had hoped for greater access -- particularly
bondholders of the two utilities, who have the greatest power to push the
utilities into bankruptcy if they decide to do so.
But a transcript of the session was being prepared yesterday and is expected
to be made available this morning on the governor's Web site,
governor.ca.gov.
Analysts who attended the meeting said the Davis visit was productive, though
not likely to produce any immediate change in equity recommendations or bond
ratings.
"There wasn't any news that's new," said Dave Hitchcock, director of Standard
& Poor's state and local government group. "He reiterated he expects an
agreement with PG&E in 30 days. So we have a date we can watch."
Indeed, there appeared to be little immediate reaction in the market during
the 45 minutes or so of trading that was left after the meeting broke.
Trading volume for PG&E remained under 25,000 shares, and the stock closed at
$13.96, down 9 cents.
Trading was heavier in Edison shares, which ended the day down 4 cents at
$14.90. Both stocks are trading at around half of their 52- week highs.
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BUSINESS
PG&E May Be Ready To Deal / Lawyers to advise it on selling lines
David Lazarus
?
03/01/2001
The San Francisco Chronicle
FINAL
Page B1
(Copyright 2001)
Pacific Gas and Electric Co. has retained outside counsel to advise it on
selling its transmission lines to the state, The Chronicle has learned.
The move represents a potential breakthrough in the stalemated talks between
PG&E and representatives of Gov. Gray Davis on California 's plan to buy the
utility's power lines for perhaps more than $7 billion.
Southern California Edison already has voiced willingness to part with its
transmission lines. But sources familiar with the negotiations said PG&E has
remained largely inflexible, insisting that its lines are not for sale.
That stance could be changing.
According to an internal memo sent to some PG&E employees this week, the
utility is bringing in attorneys from an unspecified law firm to offer
guidance on a potential sale of assets.
"The company has hired a law firm to help deal with a possible purchase of
the electric transmission system by the state, as proposed by Gov. Davis as
part of a deal to resolve the utility debt problem," the memo said.
It added: "Don't read anything into this regarding an agreement by PG&E to
sell or not to sell."
Ron Low, a PG&E spokesman, refused to confirm the contents of the memo or
even that such a memo was issued.
Choosing his words carefully, Low said: "We are not aware of the alleged
memo. We cannot speculate on a memo we have not seen." He said he was
speaking on behalf of the public relations department.
Asked whether outside counsel had been retained, Low said, "It would be
inappropriate to comment on ongoing discussions with the governor."
Nevertheless, sources within the utility said the new lawyers are being given
workstations in PG&E's land department, where records of real estate holdings
are kept.
The sources interpreted this as a sign that the utility is eager to place a
higher value on its assets -- almost certainly more than the governor has
offered so far.
Edison already has agreed to sell its power lines for $2.76 billion, which is
about 2.3 times book value, or the value placed on the system for accounting
purposes.
If PG&E were to accept a similar premium on its lines, the sale price would
be $7.2 billion.
Sources within the utility said that if a deal is reached, it will likely be
for above this amount. The new lawyers, presumably, are intended to help PG&E
drive a harder bargain.
"They're trying to play hardball, but I'll bet they submit," said Richard
Bilas, who sits on the California Public Utilities Commission. "Getting more
than two times book value doesn't sound like a bad deal."
The governor told Wall Street analysts in New York yesterday that the
negotiations with PG&E could last another month.
On Tuesday, he said U.S. Energy Secretary Spencer Abraham is open to
California 's buying the utilities' power networks. Federal approval is
necessary for the plan to work.
The Bush administration and federal regulators have been less forthcoming,
however. Privately, they have expressed skepticism about a public entity's
taking over private energy assets.
California is hoping to return the state's cash-strapped utilities to
solvency by handing over billions of dollars in return for hard assets. PG&E
and Edison have racked up nearly $13 billion in debt as a result of the
state's bungled efforts to deregulate electricity prices.
Sources familiar with the talks said Edison's parent company, Edison
International, appears eager to get out of the utility business, while PG&E's
parent, PG&E Corp., would prefer to remain a player in the industry.
"The companies are structured differently," said the PUC's Bilas. "I believe
Edison has a much broader operation than PG&E."
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EDITORIAL
OPEN FORUM
Generating Ideas / Deregulation, done right this time -- not state control --
is the answer to Calfiornia's energy woes
Kenneth L. Lay
?
03/01/2001
The San Francisco Chronicle
FINAL
Page A23
(Copyright 2001)
BLACKOUTS, skyrocketing electricity prices and the threat of bankruptcy of
two large utilities must mean the failure of deregulation, right?
No, it's not right.
What has happened in California over the past four years is not deregulation.
It is misguided regulation.
Deregulation does not mean eliminating customer choice and competition for
most customers. Deregulation does not mean limiting new market entrants.
Fewer than five percent of customers in California are served by competing
suppliers.
Deregulation does not mean creating a single central power pool from which
all participants must buy and sell their wholesale power; the state Power
Exchange effectively replaced three monopoly buyers with one monopoly buyer.
Deregulation does not mean buying all of your commodity at the last minute,
on the spot market, rather than planning ahead and purchasing most of the
power under long-term contracts that lock in prices.
The situation in California is the result of continued regulation,
complicated by a series of natural and man-made factors.
In the past two years, California has enjoyed an economic boom fueled by a
burgeoning technology industry. Since 1995, demand for electricity in
California has grown by 5,500 megawatts. Supply, on the other hand, has not
kept pace.
California was clearly headed for major problems when nature pushed it over
the edge. November and December 1999 were the warmest in the previous 100
years. Those same months in 2000 were the coldest in the last century. Add a
sharply reduced snowpack that has dried up hydro sources from Northern
California and the Pacific Northwest. Add tight gas supplies across the
country, and you have an electricity supply problem in the West and an
electricity supply crisis in California .
The problem in California 's energy market is simple: There is too little
supply and too much demand. As a result, every potential solution must
address either or both of those factors, and the test for any proposal must
be: Does it increase supply? Does it decrease demand?
California desperately needs new generation. While Enron and other companies
have built peaker generation facilities in as little as 10 months in other
states, it takes years to construct a power plant in California .
The state also suffers from a congested transmission system, which prevents
the delivery of power to where it is needed. California needs quicker siting
for power plants and expanded transmission facilities.
California also needs real-time pricing -- pricing that reflects the
difference in the cost of providing electricity at peak periods as compared
to non-peak periods.
As a country, we're power hungry. Virtually all of our daily amenities are
fueled by electricity. We flip switches and use electricity anytime we want,
with no thought to the cost at a given moment.
But if customers, particularly large commercial and industrial customers,
received real-time price signals, they'd know how much they were paying for
electricity at any given time. This would encourage conservation or shifting
usage to off-peak times to reduce electric bills.
This would also spread California 's scarce electricity supplies over more
users (including those residential customers who don't have the flexibility
to reduce or shift demand) and reduce the risk of rotating blackouts.
A complementary demand-side solution would be to purchase demand reductions.
If utilities or the state are willing to pay $75 for a megawatt hour, they
ought to be willing to pay $75 for a "negawatt" hour.
This would free up still additional megawatts to meet peak demand.
Blackouts are not voluntary, but by giving customers incentives to reduce
demand, the choice is theirs, and the result is less disruption to business
and the economy.
Customer choice is absolutely essential in creating a competitive market and
in allowing consumers to realize the benefits of competition.
Just ask utility customers in San Diego, whose supplier purchased most of its
power on the spot market. When prices jumped, those hikes were passed along
to the consumer. The only customers who were protected were those who chose
alternative suppliers like Enron and had locked in a price, thus avoiding the
sharp price increases.
California needs to rely less on the spot market. A balanced portfolio of
short- and long-term purchases by customers would sharply reduce
Californian's exposure to volatile prices and would bring down prices in the
near term.
California needs to restore the creditworthiness of the utilities, which is
necessary to attract new generation and long-term supply commitments. The
state has made a significant first step by allowing the state Department of
Water Resources to purchase power on behalf of the utilities.
In a crisis, it is equally important to understand what won't work.
We cannot afford to waste time on things that don't work or make matters
worse. California does not need state control of the power business.
There is no reason to believe -- and every reason to doubt -- that government
will do a better job than private firms in rapidly constructing new
facilities and operating them efficiently. In every other developed nation,
governments are getting out of the power business, not trying to get in it.
What California does not need is price caps, which don't work because they
neither increase supply nor decrease demand. In fact, they worsen the
situation. Price caps discourage investment in the development of new
generation.
When the state imposed price caps last October, companies such as Enron were
forced to cancel plans for more than 1,000 megawatts of peaking generation
that would have been online by this summer. Peaking plants are designed to
run fewer than 30 days a year -- only on days when supplies are tight. And if
price caps are in place, companies cannot recover their capital investment.
Price caps also discourage conservation and sales of power into the state
from power plants in other states.
If done right, deregulation means choice and competition. Deregulation means
lower prices. Deregulation means innovation. California has the opportunity
now to get it right.

GRAPHIC; Caption: PAUL LACHINE/Special to The Chronicle