Mark,

Please prepare a term sheet which can be used as a Indicative Proposal for
our potential first Day Rate transaction.

The key issues other than call premium that need to be clarified are the
"posting language" and the determination period.

We will (if we reach agreement) be purchasing a series of calls and Chiles
Offshore LLC or Seacor Smit, Inc. (the entity which is currently the majority
owner of Chiles Offshore, LLC - but after the Chiles IPO, their interest will
be lowered to around 25%) will be selling the calls.

The Strike Price will be at a Day Rate of  US$70,000/day

The volume will be One (1) Rig * Day (rig multiplied times day).

Determination Period:  Jan 1, 2001 through Mar 31, 2001

Floating Price:  We need two sets of language here - to let the customer
choose from.

 a.   The floating price will be the Median of the High/Low of Day Rates for
Gulf Of Mexico, Jackups "Over 300' - C", as posted in the first printing of
the month of the Offshore Data Services, Offshore Rig Locator, page entitled
"Competitive Offshore Rig Day Rates",   (Mark, the day rates listed in the
June 2000 posting will be applied to each day of the preceding month (May
2000)).

or:

 b. The floating price will be the Median of the High/Low of the Day Rate
Range ($) for the Rigtype listed as JU-Over 300'-IC as posted each Friday of
the month.   (Mark, the price listed on Friday the 7th, will be for the first
7 days of the month)

I need to send this out Friday (tomorrow) afternoon.  As we discussed, we
need to include language that identifies that this is not definitive and
needs Enron Corp's board approval before becoming a deal.

I will carry a copy of the posting to your office before I leave this
evening.

John


There are some factual assertions in Brazos' memo that caught my eye.  I
wondered what information we have on these points:

1) at the bottom of p. 2 is a reference to a March 10, 1994 memo in which
someone claimed Tenaska planned to develop this site irrespective of Brazos.
The suggestion is that Tenaska would have an adequate remedy by selling
power elsewhere.  What is our reaction to that?

2) at the bottom of p. 5 is an assertion that we must be predicting that the
difference between market and contract prices will increase over time.  Is
that our position?  If we apply a contract v. market measure, I know we seek
to base the contract portion on the escalated contract prices, but what do
we use for market?  (Their piece of course does not address what is the
market.)

3)  in the middle of p. 6 is the claim that representations were made to
Brazos that Tenaska would earn a modest profit under the PPA.  Do we know
what that refers to?

4) at the bottom of p. 6 is a statement that under present market conditions
Brazos cannot even exercise this buyout option (presumably because its
payments under the PPA do not cause Brazos to be non-competitive).  That is
interesting.  If so, what is Brazos's complaint?

5) at the bottom of p. 7 is a claim that the option period was designed as
an alternative to Brazos's owning the plant at the end of the primary term.
What do we know about that?   What would be the effect of the pricing in the
renewal term?

          ++++++CONFIDENTIALITY NOTICE+++++
The information in this email may be confidential and/or privileged.  This
email is intended to be reviewed by only the individual or organization
named above.  If you are not the intended recipient or an authorized
representative of the intended recipient, you are hereby notified that any
review, dissemination or copying of this email and its attachments, if any,
or the information contained herein is prohibited.  If you have received
this email in error, please immediately notify the sender by return email
and delete this email from your system.  Thank You


Greetings!

Please find attached for your consideration the WENH February luncheon
notice.  Jeff Lund, Vice President of E&P Business Services for
Kerr-McGee Oil & Gas Corporation, will address the current mergers &
acquisitions climate in the energy industry.

 <<WENH February luncheon notice.doc>>
Please know that in an effort to increase your pre-lunch networking
opportunities and to improve the flow of "traffic" at the monthly
luncheon registration tables, WENH would very much like to receive your
payment and reply form by close of business, Thursday, February 7.
Receipt of payment by the response deadline will serve as your
reservation guarantee.  Thank you very much for your cooperation as WENH
continues to work to enhance the benefits of membership!

Also, please find attached the 2002 membership enrollment form.  By
enrolling or renewing as a 2002 WENH member, you will receive monthly
luncheon notices, quarterly reception invitations, newsletters, and the
WENH membership directory.

 <<2002 Membership Enrollment Form.doc>>

Please contact me if you wish to visit about WENH membership.

It's going to be an excellent year.  WENH volunteers and members look
forward to seeing you soon!

Best regards,

Tammy Dowe

Tammy Dowe
Government Relations
Greater Houston Partnership
*New contact information:
713.844.3626 (office)  .0226 (fax)
713.775.8818 (cell)
www.houston.org

 <<Tammy Dowe.vcf>>


Forwarding info. below per the request of Christi Nicolay.

gngr
713-853-7751
----- Forwarded by Ginger Dernehl/NA/Enron on 12/01/2000 07:57 AM -----

	Christi L Nicolay@ECT
	11/21/2000 02:52 PM

		 To: Ginger Dernehl/NA/Enron@Enron
		 cc:
		 Subject: EPMI's protests of RTOs

Please forward to Rick's group in North America, Canada and PR.  Thanks.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 11/21/2000
01:33 PM ---------------------------
From: Sarah Novosel@ENRON on 11/21/2000 02:20 PM
To: Christi L Nicolay/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Mary
Hain/HOU/ECT@ECT, Donna Fulton/Corp/Enron@ENRON, Joe
Hartsoe/Corp/Enron@ENRON, Damon Harvey/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:

Subject: RTO filings in word

----- Forwarded by Sarah Novosel/Corp/Enron on 11/21/2000 03:15 PM -----

	"Susan Buchheit" <sbuchheit@bracepatt.com>
	11/21/2000 03:11 PM

		 To: <snovose@enron.com>
		 cc:
		 Subject: RTO filings in word

Attached are all the RTO filings in word format.

 - gridfl.doc
 - spp.doc
 - rtowest.doc
 - SeTGRIDS.doc
 - pjm.doc


Vince,

I'm glad you liked it.  My next "Enron" task is to try and develop a better
understanding of the way you describe the use of BTU swaps to create a
synthethic multi-fuel plant.  I understand the basic concept but want to
learn more about the swaps (duration, cost, etc) which will impact a
company's decision to build a single vs multi-fuel generator.  Do you have
some example transactions or analyses that I might look over to learn more?

See ya in April (we're going to learn to "rope" calves this year).

Your friend,

John

At 06:03 PM 3/23/01 -0600, you wrote:
>
>John,
>
>Yes, I did. Looks great.
>Vince
>
>
>
>
>
>"John D. Martin" <J_Martin@baylor.edu> on 03/23/2001 05:02:05 PM
>
>To:   Vince.J.Kaminski@enron.com
>cc:
>Subject:  Re: Request
>
>
>Thanks Vince.  This is great.
>
>By the way, did you get copies of the journal with our paper?
>
>John
>
>At 04:59 PM 3/23/01 -0600, you wrote:
>>
>>John,
>>
>>No problem.
>>I look forward to it.
>>
>>Vince
>>
>>
>>
>>
>>
>>"John D. Martin" <J_Martin@baylor.edu> on 03/23/2001 09:04:44 AM
>>
>>To:   vkamins@enron.com
>>cc:
>>Subject:  Request
>>
>>
>>Vince,
>>
>>Would you mind making a few luncheon comments to the Texas Finance
>Festival
>>group at our sat luncheon?  I struck out with Andy and Sheridan thought
>>that you could relate very well to the group.  How about it?
>>
>>John
>>
>>John D. Martin
>>Carr P. Collins Chair in Finance
>>Finance Department
>>Baylor University
>>PO Box 98004
>>Waco, TX 76798
>>254-710-4473 (Office)
>>254-710-1092 (Fax)
>>J_Martin@Baylor.edu
>>web:    http://hsb.baylor.edu/html/martinj/home.html
>>
>>
>>
>>
>John D. Martin
>Carr P. Collins Chair in Finance
>Finance Department
>Baylor University
>PO Box 98004
>Waco, TX 76798
>254-710-4473 (Office)
>254-710-1092 (Fax)
>J_Martin@Baylor.edu
>web:    http://hsb.baylor.edu/html/martinj/home.html
>
>
>
>
John D. Martin
Carr P. Collins Chair in Finance
Finance Department
Baylor University
PO Box 98004
Waco, TX 76798
254-710-4473 (Office)
254-710-1092 (Fax)
J_Martin@Baylor.edu
web:    http://hsb.baylor.edu/html/martinj/home.html


Any chance they could email electronic version of this Agreement?

Mark Knippa
08/05/99 10:17 AM
To: Gerald Nemec
cc:
Subject: Gallup - Continental Divide's contract proposal

Gerald,

I am sending up a copy of the proposed contract structure from Continental
Divide
who is the local power utility associated with the Transwestern Gallup
station.

Overall the commercial terms seem to be in line with all the discussions that
have
been referenced, although there are some issues we want to make vary clear or
more apparent.

1) ECS is agreeing to a 3 yr term "to buy power from Continental Divide"
assuming
     the merger is completed and power is available to ECS through the No. 21
tariff.

2) They have provided none of the information concerning a split demand
charge
      that totals $12.21/kw.  Discussions reflect that $8.86/kw is avoidable
and tied to
      their monthly coincidental peak load and the remaining $3.35/kw is a
base type
      demand.  This is the basis of the rebate mechanism for TW.  Note this
is also
      a Tri-State portion and part of the tariff 21.

3) ECS is aware of more favourable contract structures that Tri-State has
negotiated
     and wants to maintain the ability to utilize a more favourable
tariff/contract structure
     or to negotiate specifics with Continental Divide post the Tri-State
merger.   We
     would still be buying from Continental Divide supporting their 3 yr term.

I am trying to get some written specifics from Continental Divide / Tri-State
relative
to the demand avoidance since they are currently using this structure today.
I'll let
you know.

Otherwise I wanted to get the document to you for your review.

Thanks


I'm leaving now.

"Neil Mann" <nmann@erac.com> on 02/09/2001 04:03:43 PM
Please respond to <nmann@erac.com>
To: "C. Kay Mann (E-mail)" <Kay.Mann@Enron.com>
cc:

Subject: michael

Are you ok to leave to pick up Michael? If not let me know and I can do it,
no problem.
Love, NM


SNG LNG has made the necessary filing to place its FERC Gas Tariff into effect on the proposed in-service date of the Elba Island facilities, 12/1/01.   The filing (which is 311 pages) includes revised initial rates for terminaling service.  Most of the tariff was approved in the certificate proceeding.  Substantive changes are explained in Exhibit Z1, which is in Set 7 below.

These are links to the tariff pages.  The links will open in an imaging program.  Use Ctrl-Page Up and Ctrl-Page Down to move between pages.  If you want to print anything, use the printer icon on the tool bar above the page and select "fit to page" under the Imaging Options drop down menu.

<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set1.tif>  (Pages 1-50)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set2.tif>  (Pages 51-100)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set3.tif>  (Pages 101-150)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set4.tif>  (Pages 151-200)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set5.tif>  (Pages 201-250)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set6.tif>  (Pages 251-300)
<http://rimsweb1.ferc.fed.us/MultiPageTiff/02218971Set7.tif>   (Pages 301-311)


Vlady..
this was the list John referenced the other day.
Ted
---------------------- Forwarded by Ted Murphy/HOU/ECT on 08/09/2000 02:30 PM
---------------------------

From:  Ted Murphy
06/28/2000 07:45 AM

To: Rick Buy
cc:
Subject: VAR Priorities

Rick,
This is my initial attempt to summarize our meeting with John.  The next
steps would be to solicit feedback from other interested parties and scope
the resources and responsibilities.
Ted

Rick Buy, John Lavorato and I met to discuss priorities as it relates to the
calculation of VAR.  We are making the following recommendations

 1) Inclusion of monthly index positions into VAR calculations as the
indicies set in North American Natural Gas
 2) Development of a methodology to re-run correlations (factor loadings)
including criteria, responsibilities and acceptance/rejection criteria
 3) Development of process by which to analyze the output of factor loading
process.  Database to store output and management reports.
 4) Finalize debate on the calculation of Forward/Forward volatility
 5) Scope a project to analyze the possibility of calculating hourly
volatility for power.

It was further recommended that we continue to not include unpriced index
positions in VAR calculation.


Thanks for your nice note.  I have fun being here, which makes all of this
even better!  --Sally

From: Jeffrey McMahon/ENRON@enronXgate on 01/16/2001 11:44 AM
To: Sally Beck/HOU/ECT@ECT
cc:
Subject: Promotion

Sally

Congrats on your promotion to MD.  If anyone around this place deserves it,
it's you!!  Hope all is well.


Great first cut.  Thanks very much.  Keep 'em coming.

Best,
Jeff


[IMAGE] [IMAGE]            [IMAGE] [IMAGE]   Should  You Consider Margin?   For  Customers with Margin Accounts: Margin Risk Disclosure  TD Waterhouse is furnishing this information to you to provide  some basic facts about purchasing securities on margin.  Securities purchased on margin are TD Waterhouse's collateral for the loan to you. If the securities  in your account decline in value, so does the value of the  collateral supporting your loan, and, as a result, TD Waterhouse  can take action, such as issue a margin call and/or sell  securities or other assets in any of your accounts held  with TD Waterhouse, in order to maintain the required equity  in the account. Please note that trading on margin may not  be appropriate for all customers. It is important that you  fully understand the risks involved in trading securities  on margin.   These  risks include the following:  You  can lose more funds than you deposit in the margin account. TD  Waterhouse can force the sale of securities or other assets  in your account(s). TD  Waterhouse can sell your securities or other assets without contacting you. You  are not entitled to choose which securities or other assets  in your account(s) are liquidated or sold to meet a margin  call. TD  Waterhouse can increase its "house" maintenance  margin requirements at any time and is not required to  provide you advance written notice. You  are not entitled to an extension of time on a margin call.    Should  You Consider Margin? If you are comfortable with the risks associated with margin,  you may want to consider adding margin privileges to your account.  Margin allows you to use the equity in your account as collateral  for a loan that may be used for the purchase of additional securities  or for overdraft protection if you have check writing privileges.      Add  Margin Privileges to Your Account    Please  note that margin privileges may be added to Individual, Joint  and other qualified account types. Certain accounts, including  retirement (IRA) and custodial accounts, are not eligible  for margin privileges.  If you have any questions, please call a TD Waterhouse customer  service representative at 1-800-934-4448 and press  4.     [IMAGE]  [IMAGE]  ?2002  TD Waterhouse Investor Services, Inc. Member NYSE/SIPC.   Access  to services and your account may be affected by market conditions,  system performance or for other reasons. Visit  our web site  for details.  This e-mail is  intended for TD Waterhouse customers only. If you have received  this message in error, please reply to this email or contact us  at customerservice@tdwaterhouse.com . [IMAGE]


Attached is a clean and blackline copy of the above-referenced document.


BLOOMBERG
aLL O.K.

PREBON WEST
Chris Mallory
deal 596370
Prebon shows cp as Reliant

AMEREX WEST
all deals o.k.


** Proprietary **

Michelle:  I had some questions for you regarding IT transportation on your system.  Like what kind of capacity is available and where can it go from the San Juan basin?

Terri Dickerson


I'm glad that Enron is in such stellar company.  We did not get out early
last night.  See you soon.

	"Kelly, Jacqueline" <Jacqueline.Kelly@schwab.com>
	02/12/2001 04:54 PM

		 To: "Jeff Dasovich (E-mail)" <dasovich@haas.berkeley.edu>
		 cc:
		 Subject: tonight

Hey Jeff,
Did we get out early last Monday?  Let me know, I am thinking of going home
to get my car and driving tonight.  If I do, I can give you a ride.

Here is a quote from Fortune's List of America's most admired
article...you're steppin' on our toes Jeff...
In the eight key areas of reputation by which the companies are ranked,
Schwab shone the most in "innovativeness," where it was second only to
Enron. ...

Jacqueline Kelly
Treasury
Charles Schwab & Co, Inc
(415) 667-3915

Warning: All e-mail sent to or from this address will be received or
otherwise
recorded by the Charles Schwab corporate e-mail system and is subject to
archival, monitoring or review by, and/or disclosure to, someone other than
the
recipient.


Tana:

The following CPs are NOT authorized to trade US power:

Parallel Petroleum Corp. - restricted by credit
Terra International, Inc. - restricted by credit
Utilities Commission City of New Smyrna Beach - we have a contractual
relationship with the City of New Smyrna but not w/the Utilties Commission.
Let me     know if this CP objects to their restriction for US power, and
I'll talk to them.

Leslie


Bookout purchase deal 551027 with sales deals 380492, 376880, and 551007.

I created a sale to New Power (deal 597332) for gas they take out of our pool
into their pool.

I created the following purchases from New Power
Deal Volume  Comment
597271 3674  EES supply at AO6
597290 4100  EOG supply at Broad Run
597293 3674  EES supply at Delmnt
597316 6160  Dynegy supply at Monclova

We should be hooking all these deals up to our transport.

Let me know if you have question.


Vince,

Good morning.

As you may know, last Thur. Enron honored this year's recipients of the
Enron MBA Excellence Fund Scholars at a dinner in Austin.  In addition to
the three recipients, Business School Dean May and several of my
colleagues, Enron attendees included Sally Beck, Cindy Justice, Karen
Marshall (newly-appointed coordinator of higher education initiatives for
Enron Community Relations Dept.) and Rick Causey.

I write you at this time to advise you I had occasion to discuss two
current Enron/UT issues with Rick:
I.  Spring 2001 Conference Participation by Jeffrey K. Skilling
II.  UT Participation in EnronTraining Activities
Per my conversation with Rick last Thur., I followed up on that discussion
with an e-mail this morn that touched on those two topics.

I.  With respect to the first, I wrote Rick this morning that:

1.  We at the UT Center for Energy Finance Education and Research (CEFER)
are planning a practitioner-industry Conference in Spring 2001 (late Feb.
or early March) to discuss four topics:  Risk management, Deregulation,
Real options, and International/globalization.
2.  The Conference will kick off with a dinner/keynote address Thur.
evening, then continue all day Fri.
3.  I have had several discussions with you regarding Conference timing,
structure, participation and content.
4.  Further to Rick's agreement to do so during our discussion last Thur.,
in today's e-mail I asked Rick to extend an invitation to Jeff Skilling to
be the keynote speaker at the Thur. evening dinner.

II.  With respect to the second topic, Rick and I also discussed UT
partcipation in Enron Corp. internal training for incoming Enron Corp.
analysts and associates.  Consequently, I e-mailed Rick this morning a
specific set of issues -- "Valuation and Risk Management in Energy Markets"
-- which my UT colleagues and I have covered in public as well as
customized exec ed settings, and which we would be pleased to customize for
presentation at Enron.  FYI, I am enclosing a copy of said topics at the
end of this e-mail.

I look forward to seeing you again soon, and to your UT visit on 10/11.  Best,
Ehud

Training Program:  "Valuation and Risk Management in Energy Markets"

Target Audience:  Associates, Analysts, Traders, Marketing/Sales, Risk
managers, Financial analysts

Program Objectives:
1.  Understanding the physical and financial U. S. markets for electricity
and natural gas
2.  Understanding the structuring, reverse engineering and valuation of
exchange-traded and OTC energy derivatives, including "exotic" options,
structured products, and spread and basis products
3.  Promoting a common language between trading and marketing personnel
regarding valuation and hedging of structured products
4.  Risk-management

Program Contents:
I.  "Electricity 101"
-- Problems in pricing
-- Spot markets
-- Forward markets
-- Trading:  Basis, fixed-price, volatility
-- Markets:  Characteristics and participants

II.  Valuation/Structuring/Hedging
1.  Fundamentals of Forwards and Futures Contracts:
-- Forward Contracts:  Definition, Payoff Diagram, Pricing by Arbitrage
-- Futures vs. Forwards
-- Commodity Futures
-- Swaps
-- Constructing Forward Curves:  Contrast with price forecast; Using the
spark spread; Incorporating regional bases

2.  Introduction to Option Pricing:
-- Payoffs
-- Put-Call Parity
-- Binomial Model
-- Black-Scholes Formula
-- Option "Sensitivities" (the "Greeks"); Delta and Gamma

3.  Uniqueness of Energy Derivatives:
-- "Term Structure" of Volatility
-- Convenience Yield / Seasonality
-- Basis

4.  Estimating Volatility in Energy Markets:
-- Estimating Volatility in Financial Markets
-- Hourly vs. Daily Vols
-- Historical or Implied Vols?
-- Characterizing the Volatility "Surface" Across Time and Strike

5.  Design and Valuation of Structured Products in Commodity Markets:
-- Valuation of European Call Options in Energy Markets
-- Average Options on Oil Futures Contracts
-- Spread and Basis Products
-- "Swing" Options in Power Markets
-- Weather Derivatives

6.  Risk-Management
-- Motivation for Structured Trades
-- Valuation of real options (e.g., valuation of power plant or gas field)
-- Value-at-Risk (one- and multi-factor models)
-- Repowering option

7.  Advanced Topics (for qualified audiences)
-- Relationship between forward prices and expected spot prices
-- The Importance of Hedging Volatility Changes
-- Consistent Method for Estimating Hourly, Daily and Monthly Term
Structures of Volatility
-- Practical Alternatives to Vega-Hedging
-- Applying Options Theory to the Valuation of Power Plants
-- Valuation of "Swing" Options under Ruthless and Non-Ruthless Exercise

==============================================
     Ehud I. Ronn
     Professor of Finance and Jack S. Josey Professor in Energy Studies
     Director, Center for Energy Finance Education and Research
     McCombs School of Business
     University of Texas at Austin
     Austin, TX. 78712-1179
     Voice:  (512) 471-5853
      FAX:   (512) 471-5073
      Internet:  eronn@mail.utexas.edu
=================================================


- Der Staat BURRITO.pdf


Good morning Mr. Catanese:

Your resume was forwarded to the Research Group and they would like
to conduct a telephone interview with you at your convenience.  We would
prefer the week of July 5 - 7 (Monday and Tuesday, the 3rd and 4th are
holidays), if at all possible.

Please let me know your availability and where you may be reached by
phone and I will coordinate the calendars.

The interviewers would be:

Vince Kaminski   Managing Director
Stinson Gibner   Vice President
P. V. Krishnarao   Director
Osman Sezgen   Manager

I look forward to hearing from you.

Sincerely,

Shirley Crenshaw
Administrative Coordinate
Enron Corp. Research Group
713/853-5290


Can you see if you can float out these tickets for tonights game... I cannot make it. I have all 4.

BT


Unfortunately the CEC did NOT approve our label proposal (reasoning below).
EESI has a couple of options for the product label, including (1)  2
different product labels for the 5000 product where one label is for
commercial customers receiving 100% green (ensuring these customers where
5000 kwh in demand p/mo or less) and one for industrial customers (with a
percentage green + system mix); and (2) aggregating all customers together
and weighting the green percentages accordingly.   George & Richard are you
available this afternoon to discuss?
---------------------- Forwarded by Stacey Bolton/HOU/EES on 08/18/2000 12:47
PM ---------------------------

"Robert Grow" <Rgrow@energy.state.ca.us> on 08/18/2000 11:15:28 AM
To: <sbolton@enron.com>
cc: <Cholmes@energy.state.ca.us>, <DJohnson@energy.state.ca.us>,
<Kgriffin@energy.state.ca.us>, <Mjones@energy.state.ca.us>
Subject: Re: Label Calculation

Stacey:

Our counsel has reviewed your proposal.  We find that it doesn't meet our
regulations, but it appears to represent a good faith effort to comply.  We
cannot give official approval to labeling that is not in accord with the
regs, but  counsel says we will not consider any sanction or punitive action
in this case.

The problem with your proposal is that the product is represented by two
labels, not one.  You could consider splitting the product into multiple
products, only one of which is 100% renewable.  Even so, we think consumers
should be able to understand the product as you have described it.

I hope this response is timely for your September billing.

Bob Grow
Program Manager
Power Source Disclosure
CA Energy Commission
(916) 654-5180

>>> "Stacey Bolton" <sbolton@enron.com> 08/15/00 04:58PM >>>

Bob:

Pursuant to our phone discussion today, outlined below is Enron Energy
Service's
(EESI) proposed label calculation for review by your counsel.  EESI's product
is
a 100% renewable product for the first 5,000 kilowatt hours per month.  (The
renewable energy in this product may exceed the 5,000 kwh per month depending
upon available renewable supply and the level at which the customer credit is
set.)   For any customer that exceeds 5,000 kilowatt hours of renewable energy
per month, the remainder of their product would be comprised of the California
System Mix.  Because the percentage of renewable energy that the end use
customer receives is dependent upon their size, (i.e. smaller commercial
customer might actually be receiving 100% renewable energy whereas larger
customers might be receiving only a little more renewable energy than is
contained in the CA system mix), this makes the label calculation difficult.
It
is EESI's proposal to have two separate labels for this one product.  The
first
label (label A) would be 100% renewable energy (representing the first 5,000
kwhs per month).  The second label (label B) would be the California System
Mix.
EESI would explain to customers that depending upon the customer size, some
customers would be receiving "label A", provided they are 5000 kwhs per month
in
usage or less.  For those customers that exceed 5,000 kwhs per month, the
power
they receive would look closer to "label b" (the California System Mix).

EESI is under a tight deadline and is intending to notify customers of this
product in the September billing.  We would like to confirm with your counsel
if
this arrangement is agreeable to the CEC and meets the standards set forth in
SB
1305.  Please feel free to contact me with any questions regarding the label
calculation.

We greatly appreciate your assistance in this endeavor.

Sincerely,
Stacey Bolton
Manager, Environmental Strategies
Enron
713-853-9916


Let me know if she doesn't solve your problems.
---------------------- Forwarded by John J Lavorato/Corp/Enron on 07/07/2000
04:14 PM ---------------------------
Beth Perlman @ ECT   07/07/2000 08:29 AM

To: John J Lavorato/Corp/Enron@ENRON, Kevin M Presto/HOU/ECT@ECT, Kristin
Albrecht/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT
cc: David W Delainey/HOU/ECT@ECT, Randy Matson/Corp/Enron@ENRON, Sally
Beck/HOU/ECT@ECT, Zhiyong Wei/HOU/ECT@ECT, Philippe A Bibi/HOU/ECT@ECT

Subject: Re: Power Port Calc Issues

John,

As of Wednesday, we have a resource from Sun Microsystems that is helping  us
isolate the problems we're having with the UNIX operating system and our
code.  This resource has requested that we bring on an additional application
specialist from SUN.  This has been authorized and the additional resource is
scheduled to be on site next week.  I also have my resources and the UNIX
administrators working along side the Sun resources.

As an aside, we are also experiencing performance problems with the gas side
of the business.  I met with Sally Beck's controllers yesterday and we are
putting a plan in place.  The increased trading volumes have seriously
impacted our through put and we now have a 'blitz' on to correct the issues.

These problems have not gone unnoticed.  I assure you that IT has been very
diligent in following through on these problems.  We're investing heavily in
additional hardware, bringing in contractors and hiring additional resources
at an average of 5 - 8 per week.  I will keep you posted as we continue to
enhance our existing systems.

Beth

	John J Lavorato@ENRON
	07/06/2000 07:46 PM

		 To: Beth Perlman/HOU/ECT@ECT, David W Delainey/HOU/ECT@ECT
		 cc:
		 Subject: Power Port Calc Issues

Beth

Please respond with a plan to solve these problems.

Thanks John
---------------------- Forwarded by John J Lavorato/Corp/Enron on 07/06/2000
07:42 PM ---------------------------

	From:  Kevin M Presto @ ECT                           07/05/2000 07:39 PM

To: John Lavorato
cc: David W Delainey/HOU/ECT@ECT, Kristin Albrecht/HOU/ECT@ECT, Beth
Perlman/HOU/ECT@ECT

Subject: Power Port Calc Issues

Guys,
This Enpower calc issue is a joke.   How can we be the most Innovative
Company in the world and cannot fix a risk book calculation problem.
Furthermore, how can we effectively grow our volumes and complexity of our
power transactions when our back office (risk books, position management,
settlements) is so unreliable from an IT standpoint.

In addition, we will start losing all of our key people in this area because
they are here until 8:30-9:00 every night and 4:00 pm on "holidays".  This
whole issue is a significant business risk for Enron and needs to be dealt
with accordingly.

Please advise.  Thank you.
---------------------- Forwarded by Kevin M Presto/HOU/ECT on 07/05/2000
07:27 PM ---------------------------

	Enron North America Corp.

	From:  Kristin Albrecht                           07/05/2000 11:30 AM

To: Beth Perlman/HOU/ECT@ECT, Randy Matson/Corp/Enron@ENRON, Jarod
Jenson/HOU/ECT@ECT, Christine Nguyen/HOU/ECT@ECT, Zhiyong Wei/HOU/ECT@ECT,
Ravi Ramachandran/HOU/ECT@ECT, Stacey W White/HOU/ECT@ECT, Jenny
Latham/HOU/ECT@ECT, Jenny Rub/GPGFIN/Enron@Enron
cc: Sally Beck/HOU/ECT@ECT, Kevin M Presto/HOU/ECT@ECT, Tim
Belden/HOU/ECT@ECT
Subject: Power Port Calc Issues

The Power risk group continues to experience severe instability with the
power port calc.  The same memory allocation issue which I discussed in the
message below is not resolved (we have had this problem for about four months
now).  Due to business reasons, we calculated the east power books on Monday
(Enron holiday).  We received all of the required data to calc by 9:30 AM and
should have been completely done by 11:30.  However, the calc crashed six
times and finally completed on the seventh try.  We were able to leave by
4:00.  The point I am trying to make is that I feel that we are at such a
state that there is risk that we could not provide positions to the traders
by the start of the next business day.  This could have a financial impact on
our company.  Once again, I am urgently and desperately asking for resolution
of this problem.
Furthermore, it came to my attention on Friday that EES is now using EnPower
and the power port calc and they too are using the same server that we are.
I question this decision since we cannot seem to support the existing
business that is using that server.  Per discussion with Kevin Presto, the
agreement made regarding EES's use of EnPower was there would be no expense
or degradation to ENA's business process.  I think they need to move to
another server.
Please call to discuss when this will be resolved.  Thank You.
Kristin Albrecht
3-4763

---------------------- Forwarded by Kristin Albrecht/HOU/ECT on 07/05/2000
09:35 AM ---------------------------

	Enron North America Corp.

	From:  Kristin Albrecht                           05/15/2000 09:48 AM

To: Beth Perlman/HOU/ECT@ECT, Randy Matson/Corp/Enron@ENRON, Jarod
Jenson/HOU/ECT@ECT, Christine Nguyen/HOU/ECT@ECT, Zhiyong Wei/HOU/ECT@ECT,
Ravi Ramachandran/HOU/ECT@ECT, Stacey W White/HOU/ECT@ECT, Jenny
Latham/HOU/ECT@ECT
cc:
Subject: athena vs quark

With regards to the message below, we must have athena (server) to run our
nightly risk books for the power group.  We run one of our three east power
calcs on this machine (the second largest one).  Since an acceptable solution
for the big power calc has not been provided to us, athena CANNOT be taken
away from us.  The east power calc crashed 3 out of 5 days last week.  We
usually start calcing at about 4:00.  The calc time is now running at 1.5
hours and we have about 1.5 hours' worth of work after the calc's successful
completion.  So you do the math on what time my group leaves the building
when the calc crashes at 4:30.
Furthermore, the West power calc has crashed 3 out of 5 nights weekly for the
last 3 weeks.  This is not acceptable.
We are about to enter the busiest and most volatile time of the year and our
system is not stable.  I feel like we have been very patient at the expense
of many late nights.  I am going to speak to Kevin Presto and Tim Belden
today about these problems.
I think we need to meet immediately about this problem and I am exhausted
with the finger pointing between different IT groups.
Thanks.
Kristin Albrecht
---------------------- Forwarded by Kristin Albrecht/HOU/ECT on 05/15/2000
09:27 AM ---------------------------

Christine Nguyen
05/12/2000 01:01 PM
To: Ravi Ramachandran/HOU/ECT@ECT
cc: Randy Matson/Corp/Enron@ENRON
Subject: athena vs quark

Ravi,
       Please advise your users that athena will be completely unavailable
starting
Wednesday17May2000.  The production server is quark (12gb RAMx18procs).
quark is configured to our standard for your use.
Thanks,
-Christine


Eli Long
105 North Market Street, Apartment B
Ligonier, PA 15658
mtbeli@hotmail.com

To Mr. Ken Lay,

I'm writing to urge you to donate the millions of dollars you made from selling Enron stock before the company declared bankruptcy to funds, such as Enron Employee Transition Fund and REACH, that benefit the company's employees, who lost their retirement savings, and provide relief to low-income consumers in California, who can't afford to pay their energy bills.  Enron and you made millions out of the pocketbooks of California consumers and from the efforts of your employees.

Indeed, while you netted well over a $100 million, many of Enron's employees were financially devastated when the company declared bankruptcy and their retirement plans were wiped out.  And Enron made an astronomical profit during the California energy crisis last year.  As a result, there are thousands of consumers who are unable to pay their basic energy bills and the largest utility in the state is bankrupt.

The New York Times reported that you sold $101 million worth of Enron stock while aggressively urging the company's employees to keep buying it.  Please donate this money to the funds set up to help repair the lives of those Americans hurt by Enron's underhanded dealings.

Sincerely,

Eli Long


I just looked down onto the mouse pad I've been using for the past four years
(literally) and I notice that it advertises the "Transwestern Pipeline
Company - An ENRON Company".

Insidious; it has influenced my every click over these past years...Oh, how
the Taht Moh turns!


Dear icruise Member,
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For even  more 7 day cruises under $500 go to http://www.icruise.com/incredible.htm

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To take yourself off our specials mailing list please go to
http://www2.i-cruise.com/unsubscribe.htm and follow instructions

All prices are per person, subject to availability, change without
notice, and are capacity controlled. Unless indicated, prices do not
include airfare, air taxes or government taxes/fees and port taxes. A
$11 shipping and handling fee will be added.


Kay,

I am glad you liked it.
Merry Christmas.

Vince

	From:  Kay Chapman                           12/19/2000 10:11 AM

To: Vince J Kaminski/HOU/ECT@ECT
cc:
Subject: Holiday Gift

Thank you so much for your thoughtfulness....This basket is absolutely
beautiful.....Thanks again for your thoughtfulness and for thinking of
me......

You have a wonderful Holiday......

Kay


For your information, the ALP Project presenation that Vince Kaminski
invited you to will be held in the Enron Bldg. in conference room EB49C1.
If you need any other information, please let me know.

Regards,

Shirley Crenshaw
Administrative Coordinator
Enron Research Group
713-853-5290
email:  Shirley.Crenshaw@enron.com


---------------------- Forwarded by Larry F Campbell/NA/Enron on 05/10/2001 04:39 PM ---------------------------

Zarin Imam@EES
05/10/2001 01:26 PM
To:	Larry F Campbell/NA/Enron@Enron
cc:

Subject:

Larry,

	YOU ARE THE BEST!   Thank you !   Look at it before you give it out!

Thanks

Z


---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 05/02/2000
05:52 PM ---------------------------

"FT.com" <ft.com.update@newsbyemail.ft.com> on 05/02/2000 05:22:43 PM
To: "FT.com Users":;
cc:  (bcc: Vince J Kaminski/HOU/ECT)
Subject: *** Tips and Tools from FT.com ***

Dear FT.com user

---------------------------------------------
Looking for an article from the FT newspaper?
---------------------------------------------
You'll find all articles from the FT in FT.com's Global Archive -
including today's edition. To find an article, simply select the
FT newspaper as your source, then carry out your search.
http://www.globalarchive.ft.com/

--------------------
Connectis - Issue 3
--------------------
Europe's e-business magazine profiles ten young entrepreneurs
shaping the e-commerce terrain, analyses the introduction of WAP
technology into the European arena and offers perspectives on
Europe's burgeoning e-economy - from online IPOs to online education.
http://www.ft.com/connectis/

Participate in the Connectis discussion forum to share your views on
e-business.
http://www.ft.com/forums/connectis/

---------------------------
Personal Office Newsletter
---------------------------
News, ideas and the latest developments about Personal Office
e-mailed to you each week. Sign up for your free at:
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--------------------------
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--------------------------
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Sign up for free at:
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Regards,
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Why not forward this e-mail to a friend or colleague who may find this
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http://registration.ft.com/registration/passwordLookup.jsp


Ben:
I am putting together a presentation for FPL and we are going to show them
our potential development sites.  Who do I talk to to just get the different
locations?  I am trying to get a draft to Ozzie tonight.  Thanks
Ben
3-7998


Let's cancel the meeting for this monday.  thanks. BT


Please let me know if there are any changes.

Dennis P. Lee
ETS
Gas Logistics
(713) 853-1715
dennis.lee@enron.com


Forwarding per John Sorrells...

Sally:
Attached are the scheduled projects for London.  Please review and give me
any comments.  I'll give you a call tomorrow to see if you've had a chance to
review.  Thanks.

John


- nuts.mpeg


?
Subject: Click and go to http://www.enerfax.com if can not view  properly.htm

?
[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]
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																										Click here for  a daily email link

																							Enerfax Daily

																																				[IMAGE]
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																															Enerfax  Daily? -? Page  ? -? November 3,  2000? -? ? Need a  Past Issue
-Click Here

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																														Enerfax  Daily? -? Page  ? -? November 3, 2000

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																															back up above $5.00 maybe as early as next week. Natural gas  for next day
delivery was up across the US and Canada yesterday as  the cash market
followed the futures rally. Natural gas for next day  delivery at the Henry
hub rose $0.11 to $4.47 per MMBtu. Cash prices  have fallen to a sharp
discount to futures, as heating demand is  expected to increase in December.

																																		[IMAGE]

																																	Columbia Pays for Imbalances

																																	Columbia Gas Transmission and Columbia  Gulf Transmission will have to pay
$27.5 million after an  investigation by FERC into natural gas imbalance
transactions. In  the order, FERC approved a stipulation and consent
agreement that  directed the pipelines to compensate customers that were
excluded  from an arrangement that allowed shippers to generate revenue
through seasonal price fluctuations.

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																																					Enerfax  Daily? -?  Page 5? -?  November 3, 2000

																																						[IMAGE]

																				NEB  Releases Energy Market? Assessment

																				? ?The National Energy Board has released its  latest in a series of Energy
Market Assessment? reports  entitled Canadian Natural Gas Market Dynamics and
Pricing. The  report identifies the factors that affect natural gas prices
and  describes the current functioning of the regional gas markets in
Canada. The Board's report concludes that Canada has become part of  an
integrated North American natural gas market. Natural gas can be  bought from
many supply sources and delivered to any market centre  through an extensive
North American pipeline grid. With the  increased integration of the markets,
regional supply and demand  forces are felt throughout the marketplace. It
also says that a  combination of strong economic growth in North America, a
preference  for natural gas fired electricity generation, and low natural
gas  prices led to sustained growth in demand throughout the 1990s.  However,
the growth in natural gas supply has lagged during the last  few

																																	years. This is primarily attributable to the low oil price  environment of
1997/1998 which reduced cash flow for the producing  sector. In turn,
drilling activity decreased throughout North  America. Since demand growth
has outpaced supply growth, natural gas  prices have increased significantly
over the last year. With oil  prices recovering sharply in 1999/2000, the
producing sector has  responded and drilling activity is at high levels.
Despite the  drilling activity, there is a lag between developing additional
gas  supplies and connecting those supplies to the market. In time, there
will be a supply and demand response and accompanying relief in  natural gas
prices is expected. A period of market adjustment is  necessary any time the
dynamic between supply, transportation and  demand is significantly changed.
It is difficult, if not impossible,  to predict with certainty any movements
in the commodity markets.  The Report found that recent increases in the
commodity

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																																							Enerfax  Daily? -?  Page 6? -?  November 3, 2000

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																																						Enerfax  Daily? -?  Page 7? -?  November 3, 2000

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																																		Transco SouthCoast Expansion in Service

																																		?  ? Williams has placed its SouthCoast Expansion project into  service,
increasing capacity on the Transco pipeline system by  204,099 dekatherms per
day to provide additional firm transportation  capacity to serve markets in
Alabama and Georgia. The $108 million  expansion loops 44 miles of 48, 42,
and 24-inch pipeline in Alabama  and Georgia and adds 31,500 horsepower of
compression at compressor  stations in Rockford, AL and Newnan, GA. The new
facilities increase  capacity on Transco's mainline from Station 85 in
Butler, AL to  mainline delivery points in Zone

																																					[IMAGE]				>

																																	Financial Summary

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Please see the following articles:

Sac Bee, Wed, 7/11: Mediator talked of a bigger refund: He reportedly
suggested a $4.5 billion deal midway through the failed talks

Sac Bee, Wed, 7/11: Davis repeats threat to sue FERC to get full refund

Sac Bee, Wed, 7/11: Dan Walters: Davis plays in a virtual world while the
energy reality continues

Sac Bee, Wed, 7/11: Energy Digest: Ratepayer panel shot down again

Sac Bee, Wed, 7/11: Missing megawatts: Conservation saving state from
blackouts (Editorial)

SD Union, Wed, 7/11: Governor tells FERC to be fair and then some

SD Union, Wed, 7/11: Calpine says deal with state close on alleged overcharges

SD Union, Wed, 7/11: Judge refuses to let ratepayers form official committee
in utility
bankruptcy case

LA Times, Wed, 7/11: Judge Bars Ratepayers Panel From PG&E Case

SF Chron, Wed, 7/11: Developments in California's energy crisis

SF Chron, Wed, 7/11: Enron Corp. sues to block Senate from forcing document
release

SF Chron, Wed, 7/11: Governor threatens to sue utilities for refunds
Davis says California won't settle for $1 billion

SF Chron, Wed, 7/11: News briefs on the California power crisis

Mercury News, Wed, 7/11: White House bends under energy conservation pressure

Mercury News, Wed, 7/11: Davis ups the voltage  (Editorial)

OC Register, Wed, 7/11: Lights go out on Davis' power show   (Commentary)

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

Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion
deal midway through the failed talks.
By David Whitney
Bee Washington Bureau
(Published July 11, 2001)
WASHINGTON -- Midway through the negotiations between California and power
sellers to settle the myriad issues arising out of the state's energy crisis,
the mediator told California's negotiating team that he thought a deal worth
more than $4.5 billion would be appropriate -- a much higher figure than he
suggested after the talks ended Monday.
Whether the statement by Curtis Wagner, the chief administrative law judge
for the Federal Energy Regulatory Commission, was a negotiating ploy or a
reflection of his evolving beliefs is not clear.
Before the settlement talks began two weeks earlier, Wagner said he thought
Gov. Gray Davis' demand for $8.9 billion in refunds was too high and that a
settlement probably would be in the range of $2 billion to $2.5 billion.
The disclosure that Wagner had contemplated a much higher figure midway
through the negotiations suggests the state had more support than the judge
let on Monday when he said after the talks foundered that he thought a deal
should involve "hundreds of millions, maybe a billion" dollars.
While the state wants $8.9 billion, $3 billion of that was for overcharges
during the five months preceding last October and are beyond FERC's scope of
review. Even as a starting point then, the $4.5 billion mentioned by Wagner
represented 75 percent of the money the state was demanding for alleged price
gouging between October and May.
The judge's $4.5 billion figure, divided between cash payments and savings
from long-term power contracts, was confirmed by three sources who asked to
be identified only as "close to the negotiations" because participants had
been required to sign confidentiality statements.
The sources gave virtually identical accounts of a July 2 meeting with Wagner
in which the judge also dismissed as "inadequate" a $670 million settlement
offer made by power generators and marketers.
By Monday, the settlement offer had risen to $716 million. But the state
refused to back off its $8.9 billion demand, and there never was any serious
back-and-forth negotiations during the 15-day period the regulatory
commission had given Wagner to craft a deal.
As a consequence of the failed talks, Wagner said Monday that within a week
he will send the five-member commission his recommendations on how it might
approach an order refunding power overcharges.
Among Wagner's suggestions is that the commission convene a hearing before a
different administrative judge to take testimony from generators, marketers
and the state on how to arrive at a fair settlement.
The options sketchily outlined by Wagner on Monday included limiting the time
when refunds are allowed -- something that could reduce state claims by about
one-third -- and changing the way power plant costs are calculated to a
formula more favored by generators.
It is not clear whether Wagner, who moved from one negotiating team to
another during his two-week quest for a deal, ever raised the $4.5 billion
settlement figure to the power marketers and generators.
Joel Newton, who represented Dynegy Power, Duke Energy, Reliant Energy,
Williams-AES and Mirant in the talks, said Tuesday he was bound by the
confidentiality pledge to keep silent on the internal negotiations.
Wagner also is refusing all media calls.
According to the account of the negotiations confirmed by sources Tuesday,
Wagner was angry at the snail's pace of progress after the first week of the
talks.
On Friday, June 29, Wagner called everyone into his hearing room and scolded
them. He condemned the California team, saying they all ought to wear "clown
suits" because they were "in the pocket" of Davis and refused to show any
independence.
He then turned to the generators and said that after a week of talks, nothing
had been heard from them. He told them he wanted them to produce "real
numbers, and hard numbers" over the weekend and that if they didn't, he would
-- "and you're not going to like it."
Wagner's admonition apparently moved no one toward a deal. On Monday, in the
meeting with the California delegation, one source quoted Wagner as saying
the settlement number he received from the generators and marketers "is so
low I can't even present it to you."
"I'm not happy with the figures, they're not adequate," others quoted the
judge as saying.
At that point, the sources said, Wagner said he was thinking of a settlement
of $2.5 billion in cash, $2 billion in long-term contract savings and other
money from out-of-state investor-owned utilities and even the federal
Bonneville Power Administration, which markets power from dams in the
Northwest.
But as the clock wound down on the negotiations, nothing much happened until
Friday and Saturday, when the California team met with the five largest power
generators.
It was at those meetings that the generators offered $510 million in refunds
to settle their disputes with the state. But the money would have gone to
reduce the tab for what they were owed by the state and California utilities,
and it was loaded with conditions, including the state dropping all of its
investigations and lawsuits.
Wagner declared the talks over Monday, saying he was unable to bring the
parties together.

The Bee's David Whitney can be reached at (202) 383-0004 or
dwhitney@mcclatchydc.com.

Davis repeats threat to sue FERC to get full refund
By Emily Bazar
Bee Capitol Bureau
(Published July 11, 2001)
Gov. Gray Davis shot words of caution at federal regulators Tuesday, warning
that he will sue them if they order power companies to refund anything less
than the $8.9 billion he and other state officials have demanded.
The Democratic governor also lobbed threats at state legislators, suggesting
that he may call a special session to prevent them from embarking upon a
monthlong summer break next week.
Instead of vacationing, Davis said, lawmakers must work to approve an
agreement between the state and Southern California Edison that would save
the utility from bankruptcy.
Though the governor has indicated previously that the state may take the
Federal Energy Regulatory Commission to court, his announcement Tuesday made
it clear he intends to follow through.
Settlement talks with power generators to determine how much, if any, the
companies overcharged California for electricity concluded Monday with no
resolution.
Now, the decision rests with the FERC's governing board, and Davis said the
state won't back away from the $8.9 billion figure it demanded during talks.
"You order what you think is fair," Davis said during a news conference with
the state's top negotiators. "We'll take what you order, and we'll see you in
court."
Davis acknowledged that a legal battle could drag out for months or years.
He added that he believes the disagreement -- or even a protracted court
battle -- will not affect a tentative agreement between the state and Edison.
Under terms of the deal, money to pay off the utility's debt would come from
a state purchase of its transmission lines and from a portion of consumers'
electricity rates.
According to the agreement, the Legislature must approve the deal by Aug. 15,
and Davis said he intends to hold lawmakers to that date.
Davis said the deadline is important because creditor committees will
scrutinize the Legislature's every move to determine whether to force Edison
into bankruptcy court rather than await a political deal.
Legislators are scheduled to leave for summer recess July 20 and return Aug.
20.
Davis threatened to use his executive powers to force lawmakers to remain in
Sacramento and work on the Edison agreement, if necessary.

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com.

Dan Walters: Davis plays in a virtual world while the energy reality continues

(Published July 11, 2001)
California still has a very real and very severe energy crisis, to wit:
The state is still running up massive debts as it pays more for power than it
can recover from ratepayers and is having trouble borrowing billions of
dollars to cover the debt.
There is a strong possibility, perhaps a probability, that when summer's heat
truly descends, there will be severe power blackouts as air conditioners
demand more juice than California can generate or buy.
One major utility, Pacific Gas and Electric, has filed for bankruptcy
protection and a second, Southern California Edison, is on the brink of
joining it.
There is, however, a virtual energy crisis consisting of political spin,
media leaks and made-for-television buzz words -- and it is rapidly becoming
dominant, while the real situation fades into the background.
This week's comic opera proceedings before a Federal Energy Regulatory
Commission administrative judge in Washington had little to do with reality
and everything to do with the virtual version.
Gov. Gray Davis and other officials demanded $8.9 billion in refunds from the
generators and brokers who have been selling California power for the past
year, alleging that California is, in Davis' words, "being gouged and ripped
off." But the number itself was more or less plucked out of thin air -- an
arithmetic exercise by the state power grid's traffic controller not intended
for a refund proceeding. And while Judge Curtis Wagner saw it as unrealistic,
Davis and other state officials insisted on its validity.
"There are refunds due that total hundreds of millions of dollars and maybe a
billion dollars," Wagner said as a final negotiating session collapsed. But
that's a far cry from the $8.9 billion that Davis insists is due. "If you
think California is going to settle for $1 billion in refunds, we will see
you in court," Davis said Tuesday.
Why is Davis being so belligerent? Because it's good politics. Ever since he
began berating out-of-state generators and accusing them of ripping off
California, Davis' approval ratings have been climbing. If he settled for
substantially less -- the power generators probably would agree to a couple
of billion dollars to rid themselves of the matter -- Davis would be
embarrassed. Politically, he's served by continuing to portray himself as
fighting for California and against the out-of-state generators.
That it's more political construct than reality is indicated by another event
this week, Davis' release of state power purchase data from early in the year
-- numbers that were made public only because a judge told him he had to do
it.
Davis and his minions have been accusing Texas-based generators and power
brokers of particularly egregious price gouging -- clearly playing on
Californians' instinctive mistrust of anything Texan and implying that Texan
George W. Bush is a co-conspirator. But the power purchase records -- which
were released only to journalists willing to pay a stiff fee -- indicate that
less than 10 percent of California's power purchase dollars were going to
Texas and the private sellers, in general, charged the state less than such
publicly owned utilities as the Los Angeles Department of Water and Power.
The clearly adverse position being taken by FERC and the purchase data that
undercut his jingoistic sloganeering are not, however, deterring Davis from
continuing to operate, at least for public consumption, in the melodramatic
virtual world.
One cannot, however, ignore reality forever. The likelihood of a
pro-generator decision from FERC means that there will be no easy out for
Davis, or for his pending deal to prevent Southern California Edison from
slipping into bankruptcy court. The Legislature has refused to act on the
Edison rescue plan while it awaited an indication of whether the utility's
debts would be slimmed down by FERC.
This week's farcical events make it more likely that the Edison deal will
stall out permanently in the Legislature and its creditors will force the
utility into bankruptcy court later this summer. That's part of that nasty
old reality that cannot simply be wished away.

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.com
.

Energy Digest: Ratepayer panel shot down again

(Published July 11, 2001)
SAN FRANCISCO -- U.S. Bankruptcy Judge Dennis Montali on Tuesday reaffirmed
his earlier decision to disband a ratepayers committee that would have given
consumers an official voice in the Pacific Gas and Electric Co. bankruptcy
case.
The judge said bankruptcy court isn't the right forum for refunding rates or
settling potential future claims.
He eliminated erroneous statements from the opinion he originally issued
seven weeks ago. U.S. bankruptcy trustee Linda Ekstrom Stanley, who had moved
for reconsideration, called the new version "a very careful decision" but did
not rule out an appeal.
Stanley on May 4 appointed an official committee of ratepayers to represent
PG&E customers, saying they might be forced to pay for the utility's massive
losses.
--Claire Cooper

Missing megawatts: Conservation saving state from blackouts

(Published July 11, 2001)

A public that doesn't believe that California's electricity crisis is genuine
is nonetheless acting as if it is. Experts are revising down scary
predictions of rolling blackout after rolling blackout as Californians have
opted to conserve rather than consume.
During June, Californians cut back on electricity use by roughly 4,750
megawatts when it mattered the most, on hot afternoons. Those decisions
shaved about 12 percent from the expected demand. That's equivalent to the
output of nine or 10 medium-size power plants. Last June, grid operators had
to call six shortage alerts. This June, which was hotter, they called none.
For a state that's been derided as selfish and wasteful, that's nothing short
of amazing.
Some of what Californians are doing now to conserve isn't likely to become
habit in the long run. Businesses may want to turn back on all the banks of
lights. Homeowners may decide that 82 degrees is the right temperature when
power is short but too warm when California's supply emergency is over.
Yet there's a huge potential payoff into the future if some of these changes
become permanent. It's encouraging that the most effective forms of
conservation -- switching to more energy-efficient appliances or
manufacturing techniques -- have yet to be implemented on a large scale.
Subsidies for these programs have yet to translate into changes in businesses
and in homes that will lower demand even further.
For a while this spring, some attempted to diminish the role of conservation.
Conservation is a "personal virtue," said Vice President Dick Cheney. But
Californians know it's become both a personal and public necessity. The
public may have thought the electricity shortage was an illusion, but
everyone knew that the higher electricity bills that began arriving in June
were real. And so was the risk that the lights would go out on hot days.
Yes, the state needs more supply to catch up with the growth in demand. Yet
long after the crisis is over, there will be plenty of potential on the
efficiency side of the equation as well, to protect the quality of life and
reduce the high electricity costs that will likely plague the state for years.

Governor tells FERC to be fair and then some

Davis firm on demand for $8.9 billion refund
By Ed Mendel
UNION-TRIBUNE STAFF WRITER
July 11, 2001
SACRAMENTO -- Gov. Gray Davis had a tough message for federal regulators
yesterday after the failure of settlement talks in California's bid to get an
$8.9 billion refund from electricity suppliers: "See you in court."
The governor said California will seek a full $8.9 billion refund for
electricity overcharges, even if federal regulators award the maximum refund
of $5.4 billion allowed under their guidelines.
"Our message is just order what you are going to order," Davis said of the
Federal Energy Regulatory Commission. "We believe you should order $8.9
billion. But you order what you think is fair. We will take what you order,
then we will see you in court."
Davis, joined by his negotiating team, made the remarks at a news conference
a day after two weeks of closed-door talks with suppliers in Washington
failed to reach an agreement.
An administrative law judge made a recommendation to the regulatory
commission that Davis' top negotiator, Michael Kahn, chairman of the
California Independent System Operator, expects to result in a refund of more
than $1 billion.
Davis said that a revealing decision will be made by the commission, which he
hopes has embarked on a "new path" with the appointment by President Bush of
two new members, Pat Wood of Texas and Nora Brownell of Pennsylvania.
"Are they on the side of consumers, as the federal power act envisions them
being," Davis asked, "or are they just there to do the industry's bidding, as
they have so often in the past?"
Kahn said rules adopted by FERC cut off the refund period at last October,
trimming $3 billion from the $8.9 billion overcharge claimed by California
dating to May 2000.
He said FERC has no jurisdiction over municipal utilities, such as the Los
Angeles Department of Water and Power, that sold power to the state. The
municipal districts overcharged the state by about $600 million, according to
Kahn.
As a result, he said, the maximum refund that FERC could order for California
is about $5.4 billion.
"We made it clear to everyone that if we did not settle for $8.9 billion, we
would seek redress in court for the remainder of the money above $5.4
billion," Kahn said.
Calpine of San Jose and several other generators have expressed interest in
the state's offer to negotiate one-on-one with the state while the federal
regulators consider their decision, Kahn said.

Calpine says deal with state close on alleged overcharges

By Don Thompson
ASSOCIATED PRESS
July 10, 2001
SACRAMENTO ) Calpine Corp. said Tuesday it is near agreement with California
officials over money the state says the company overcharged for electricity.
That would make it the first company to settle a part of the $8.9 billion the
state wants in negotiations before the Federal Energy Regulatory Commission.
However, San Jose-based Calpine has offered far less than the $236 million
the state claims it is owed.
"We obviously disagree with that number, because we disagree with some of the
assumptions" used for the estimate, said Calpine spokesman Bill Highlander.
"We don't think it's anywhere near that. We think it's a low number."
He wouldn't specify the company's counteroffer, but noted new FERC figures
showing the company did $29 million in business with the state in the first
five months of this year.
The California Independent System Operator estimated the company owed more in
overcharges than it had in total sales for the period from May 2000 to May
2001, a financial impossibility, Highlander said.
The ISO essentially multiplied what Calpine was able to produce by the amount
it charged for electricity, Highlander said, without taking into account how
much electricity the company actually sold.
ISO spokesman Michael Bustamante defended the projections by the state's grid
operator, estimates he said were validated during two weeks of FERC
negotiations that ended Monday. The ISO took the methodology adopted by the
federal regulator in a June 19 order capping electricity rates, then worked
backward to May 2000 to reach its estimate, Bustamante said.
Generators and state negotiators were unable to reach a settlement during the
two weeks of talks overseen by FERC chief administrative law judge Curtis L.
Wagner, leaving Wagner to make his own recommendation to the commission.
Wagner said Monday the state may be owed perhaps $1 billion in overcharges,
but said that could be offset by money the generators are owed for the power
they sold into the state.
California officials believe generators owe about $4 billion in refunds using
the June 19 order that Wagner adopted as his benchmark, even given Wagner's
determination that the commission can only consider overcharges after Oct. 2.
At one point during negotiations, Wagner told California officials he thought
an appropriate settlement should top $4.5 billion, according to one
negotiator who spoke on condition he not be named. Wagner suggested
generators could pay $2.5 billion in cash and $2 billion in long-term
electricity contracts at cheaper rates, the source said.
That was very different from the $670 million in refunds Wagner privately
said generators were offering. For instance, the source said, while Reliant
Energy on Monday offered $50 million in refunds, California believes
Reliant's share of overcharges is closer to $1 billion.
Jan Smutny-Jones, executive director of the Independent Energy Producers,
applauded the possibility that some generators will settle with the state
without waiting for a FERC decision and likely protracted court battle.
"We need to solve this problem and move on," Smutny-Jones said.
??
)
Associated Press writer Mark Sherman contributed to this story from
Washington, D.C.

Judge refuses to let ratepayers form official committee in utility bankruptcy
case

ASSOCIATED PRESS
July 10, 2001
SAN FRANCISCO ) The federal judge overseeing Pacific Gas and Electric Co.'s
bankruptcy case ruled Tuesday the utility's ratepayers cannot form an
official committee to represent their interests.
Ratepayer advocates had sought such recognition to ensure the utility would
not raise rates further as a way of paying off its debts.
But U.S. Bankruptcy Judge Dennis Montali agreed with PG&E and the official
creditors committee and rejected the idea for the second time in two months.
Montali suggested instead that ratepayers organize an informal committee to
bring their concerns to the court, and said the ratepayers also could bring
matters before the state Public Utilities Commission.
A separate committee of ratepayers would have been able to vote on the final
reorganization of the company, a plan that could affect power service and
rates.
PG&E filed for Chapter 11 bankruptcy April 6, and owes billions of dollars to
more than 50,000 creditors. It was brought down, in part, by California's
botched experiment with deregulation.

Judge Bars Ratepayers Panel From PG&E Case
Power: Customers are not creditors in the utility's bankruptcy, ruling says.
Action does not preclude refunds for consumers.
TIM REITERMAN
TIMES STAFF WRITER

July 11 2001

SAN FRANCISCO -- A federal judge Tuesday reaffirmed his decision to bar a
ratepayers committee from Pacific Gas & Electric Co.'s bankruptcy case and
denounced the committee's attorney for suggesting that the action could
prevent PG&E customers from receiving refunds for excessive energy charges.

Judge Dennis Montali ruled against a U.S. trustee and the ratepayers
committee in deciding that ratepayers as a group had no claims and were not
creditors when PG&E filed for bankruptcy on April 6.

But Montali criticized "misguided remarks" by a committee attorney on July 5
and news media accounts that followed the hearing. The judge said the reports
left the misconception that by disallowing a ratepayers committee, he would
reject all claims of ratepayers and they could lose out on future refunds.

The judge and PG&E officials emphasized that there are no matters involving
PG&E customer refunds before the state Public Utilities Commission.

State officials are seeking about $9 billion in refunds, however, from the
Federal Energy Regulatory Commission for alleged overcharges to Californians
by energy companies since last year.

The distribution of any ratepayer refunds would be decided by the PUC, and
customers would be paid whether or not they filed Bankruptcy Court claims by
a Sept. 5 deadline, the judge and PG&E attorneys said.

The judge took the highly unusual step of directing PG&E and U.S. Trustee
Linda Ekstrom Stanley to consider remedies to allay any confusion among
PG&E's 5.5 million customers.

He suggested publishing clarifications in newspapers that carried the
erroneous information, in PG&E customer bills and on Web sites.

Stanley had formed a ratepayers committee of business, government and
consumer representatives, saying they will be affected by PG&E's Chapter 11
reorganization.

But Montali decided that ratepayers do not qualify as creditors under
bankruptcy law and are not entitled to official status that allows them to
participate in the bankruptcy and receive funding from PG&E.

Stanley said she has not yet decided whether to appeal the ruling to federal
district court.
Copyright 2001, Los Angeles Times

Developments in California's energy crisis
The Associated Press
Wednesday, July 11, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state1
036EDT0129.DTL
(07-11) 07:36 PDT (AP) --
Developments in California's energy crisis:
WEDNESDAY=
* No power alerts Wednesday as electricity reserves stay above 7 percent.
TUESDAY=
* U.S. Bankruptcy Judge Dennis Montali again agreed with PG&E and the
official creditors committee, saying such a committee of Pacific Gas and
Electric Co. ratepayers has no legal standing in bankruptcy court. Ratepayer
advocates had sought the recognition to ensure the utility would not raise
rates further as a way of paying off its debts.
* PG&E has agreed to pay $4.1 million in tax penalties to 49 counties where
the utility owns property. The utility already paid $41.2 million in overdue
property taxes in May -- the additional amount covers a 10 percent fee for
paying those taxes late.
* Calpine Corporation says it is near agreement with California officials
over money the state says the company overcharged for electricity. That would
make it the first company to settle a portion of the $8.9 billion dollars the
state is seeking in proceedings before the Federal Energy Regulatory
Commission. But the San Jose-based company is offering much less than the
$236 million dollars the state claims it is owed.
* No power alerts Tuesday as electricity reserves stay above 7 percent.
* Shares of Edison International closed at $14.05, up 5 cents. PG&E Corp.
drop 55 cents to close at $13.55. Sempra Energy, the parent company of San
Diego Gas & Electric Co., closed at $27.67, up 15 cents.
WHAT'S NEXT=
* The Senate committee investigating possible price manipulation in
California's energy market meets Wednesday. The committee will vote on
contempt citations against generators Mirant and Enron, which failed to
comply with subpoenas for documents. The committee will meet again July 18 to
consider compliance by six other suppliers that have until Tuesday to turn
over documents.
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and
maintenance at aging California power plants are all factors in California's
electricity crisis.
Southern California Edison and Pacific Gas and Electric say they've lost
nearly $14 billion since June 2000 to high wholesale prices the state's
electricity deregulation law bars them from passing on to consumers. PG&E,
saying it hasn't received the help it needs from regulators or state
lawmakers, filed for federal bankruptcy protection April 6. Electricity and
natural gas suppliers, scared off by the companies' poor credit ratings, are
refusing to sell to them, leading the state in January to start buying power
for the utilities' nearly 9 million residential and business customers. The
state is also buying power for a third investor-owned utility, San Diego Gas
& Electric, which is in better financial shape than much larger Edison and
PG&E but is also struggling with high wholesale power costs.
The Public Utilities Commission has approved average rate increases of 37
percent for the heaviest residential customers and 38 percent for commercial
customers, and hikes of up to 49 percent for industrial customers and 15
percent or 20 percent for agricultural customers to help finance the state's
multibillion-dollar power buys.
Track the state's blackout warnings on the Web at
www.caiso.com/SystemStatus.html.
,2001 Associated Press ?

Enron Corp. sues to block Senate from forcing document release
DON THOMPSON, Associated Press Writer
Wednesday, July 11, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state1
212EDT0141.DTL
(07-11) 09:12 PDT SACRAMENTO (AP) --
Enron Corp. is suing state officials to stop a Senate subpoena of its
financial records in a dispute over alleged overcharges for its electricity
sales to California.
"They've sent two things to Texas -- our money and these documents, and they
saying we can't get either one back," said Laurence Drivon, special legal
counsel to the Senate Select Committee to Investigate Market Manipulation.
The suit came hours before the committee will consider asking the full Senate
to cite the Houston-based company for contempt Wednesday. The other subject
of possible sanctions, Atlanta-based Mirant Inc., appears to be cooperating,
Drivon said.
Committee chairman Joe Dunn, a Santa Ana Democrat, said the committee's
investigation will continue despite Enron's "pure act of intimidation. We're
not going to back down."
Enron's suit said the company's financial papers are outside the committee's
jurisdiction because most of its operations and paperwork are outside
California.
That shouldn't matter, Drivon said, citing last year's successful of
out-of-state documents during the investigation into the activities of former
Insurance Commissioner Chuck Quackenbush. Previous investigations have
included documents subpoenaed from other nations, he said.
Companies doing business in California cannot claim immunity from its laws or
oversight, Drivon and Dunn said. Houston-based Reliant Energy made the same
argument but then agreed to turn over 1,800 documents.
,2001 Associated Press ?

Governor threatens to sue utilities for refunds
Davis says California won't settle for $1 billion
Mark Martin, Chronicle Staff Writer
Wednesday, July 11, 2001
,2001 San Francisco Chronicle
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/11/M
N139275.DTL
Sacramento -- One day after a federal judge rebuked California's claim that
energy generators owe the state $8.9 billion, Gov. Gray Davis all but vowed
to sue the companies to recoup the money.
"If you think California will settle for $1 billion in refunds, we'll see you
in court," Davis said yesterday.
Continuing his heated rhetoric on the energy crisis, Davis blasted the energy
companies for being inflexible during a 14-day negotiation session in
Washington, D.C., that ended Monday. Both the state and power generators
argue each is owed money as a result of California's dysfunctional
electricity market.
Federal Energy Regulatory Commission chief administrative law Judge Curtis L.
Wagner ended the talks by saying the state was owed far less than it claimed,
but the FERC's governing board will make a final decision on who owes what to
whom in the coming months.
Yesterday, Davis made it clear he wouldn't accept a FERC decision that
strayed far from the state's calculations that power companies overcharged
California nearly $9 billion.
"The ball is in the FERC's court," he said. "They must step up and provide
the refunds we've asked for."
While Davis said California officials had gone to Washington prepared to
discuss ways to reach a settlement, including renegotiating long-term
contracts to buy power, an energy industry official faulted the state for its
unwillingness to compromise.
Generators put forward an offer even though they believe no refunds are owed,
said Jan Smutny-Jones, executive director of the Independent Energy
Producers.
Smutny-Jones said the state needed to stop thinking it would get the $8.9
billion.
"It's clear from the way the issue was characterized by the judge that $9
billion is not something the state is going to see any time in the near
future, " he added. "It is not based in reality."
Davis also took heat from Republicans yesterday.
"He desperately needs that refund, so he can renegotiate the dreadful
contracts he has entered into," said Rob Stutzman, a consultant for the
California Republican Party. "He's sitting at the poker table with very few
chips."
In other energy news yesterday, a judge refused to let a committee represent
the public in the Pacific Gas & Electric Co. bankruptcy case and said a
consumer lawyer's "irresponsible position" at a hearing last week could
mislead PG&E customers into filing needless refund claims with the court.
U.S. Bankruptcy Judge Dennis Montali said any refunds owed to customers were
unrelated to the bankruptcy case and would be determined by regulators.
At the hearing Thursday, attorney KaarenThomas argued that unless a committee
represented customers' interests, PG&E could try to bar all refund claims
that weren't filed by Sept. 5.
Montali ruled in May that the committee was not authorized by federal
bankruptcy law, and reaffirmed his ruling yesterday.
Chronicle staff writers Lynda Gledhill and Robert Egelko contributed to this
report.
E-mail Mark Martin at markmartin@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 3

News briefs on the California power crisis
The Associated Press
Wednesday, July 11, 2001
,2001 Associated Press
URL:
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state0
738EDT0118.DTL
(07-11) 04:38 PDT SAN JOSE, Calif. (AP) --
Energy supplier Calpine Corp. has reached a deal to purchase 236 billion
cubic feet of natural gas in Texas and New Mexico for $355 million plus
assumption of nearly $50 million of debt.
Company officials made the announcement Tuesday and said the purchase will
increase its natural gas reserves.
"This transaction meets our desire to own and operate production in a
strategic basin," said Cathy Piece, Calpine's director of land and
acquisitions. "These assets significantly strengthen our reserve base and
will help fuel our growing Western power program."
The San Jose-based company has agreed to purchase 35 wells in New Mexico that
produce 6 million cubic feet of gas per day from The Bayless Companies. The
second transaction involves the acquisition of a majority interest of Michael
Petroleum of Houston. The Texas company produces about 43 million cubic feet
of gas per day.
Calpine officials said the agreements will allow them to meet their future
capacity demands for both natural gas and electricity. The company wants to
generate more than 70,000 megawatts of electricity by the end of 2005 and
have natural gas reserves of 6.7 trillion cubic feet.
LOS ANGELES (AP) -- Newly elected Mayor James Hahn has postponed selling the
city's surplus power to the state so he can examine how it will impact
ratepayers.
Hahn's predecessor, Richard Riordan, said last month the city's Department of
Water and Power would sell its extra electricity -- about 500 megawatts a
day_ to the state at cost between July and September.
The contract was supposed to have been signed last week.
Steve Maviglio, a spokesman for Gov. Gray Davis, said Tuesday that the state
is ready to sign the contract.
"We're ready to sign," he said. "Like most negotiations that aren't final,
things go back and forth. The new (Hahn) administration wants to review the
document before it."
Davis had threatened to seize surplus power from municipal utilities, which
haven't been subjected to the California energy crisis, because he claimed
they were gouging the state.
TEMECULA, Calif. (AP) -- State officials said they are studying alternative
routes for a power transmission line proposed by San Diego Gas and Electric
Co.
The utility wants to run a 500,000-volt power line through southwestern
Riverside County connecting its power grid with Southern California Edison's.
The cost of the project is estimated at $271 million and must be approved by
the state's Public Utilities Commission.
But state officials listed alternative routes in papers released at a public
hearing Tuesday. Some of the other ideas include putting the transmission
line around the edges of an Indian reservation or running a route through the
Cleveland National Forest.
Once a final selection is made, the information will be given to PUC
commissioners who will either approve or deny the project.
Many residents who live in the path of the proposed transmission line don't
want the project. An attorney representing several groups that oppose SDG&E's
plans said there was no mention of alternative routes in environmental
documents submitted by the company.
"Looking at the various route segments offered by SDG&E as alternatives is
like trying to arrange the deck chairs on the Titanic," said attorney Mark
Mihaly.
,2001 Associated Press ?

White House bends under energy conservation pressure
Posted at 6:25 a.m. PDT Wednesday, July 11, 2001
BY H. JOSEF HEBERT

Associated Press Writer

WASHINGTON (AP) -- Under pressure to include more conservation measures that
reduce energy use, congressional Republicans are moving toward a compromise
to increase fuel efficiency requirements for sport utility vehicles as part
of an energy package.
Key House GOP lawmakers said Tuesday they expect some increase in fuel
economy requirements, especially for SUVs, in energy legislation working its
way through the House. Democrats, who have a majority in the Senate, also
favor requiring improved motor vehicle fuel efficiency.
At the same time, the Bush administration signaled its willingness Tuesday to
begin a rule-changing process that would allow the first increase in 25 years
in the federal corporate automobile fuel economy, or CAFE, standard.
Transportation Secretary Norman Mineta asked Congress to lift immediately a
six-year prohibition that bans the department from consideration of fuel
economy increases. Lawmakers already agreed this year not to extend the ban
beyond September, but Mineta said he wants to start examining possible
changes right away.
CAFE standards, which mandate fuel economy requirements for vehicle fleets,
have not been increased since their introduction in 1975. That year's law,
spurred by energy shortages in the early 1970s, required passengers cars to
meet a fleet average of at least 27.5 miles per gallon. Light trucks -- a
category that includes SUVs, vans and pickups -- have to meet a 20.7 mpg
fleet average.
With the widespread popularity of SUVs and vans in recent years, many
environmentalists have argued that the lower truck standard has compromised
the intent of the 1975 law. SUVs and vans comprise more than 40 percent of
the passenger vehicles on the road today.
As three committees began crafting energy legislation, lawmakers were
searching for a bipartisan compromise to increase fuel economy requirements
for motor vehicles. Some increase in the CAFE requirement was virtually
assured, several GOP lawmakers said, although disagreements remain on how
much of an increase, whether it should apply to automobiles as well as SUVs,
vans and small trucks, and the timetable for phasing in new requirements.
Energy legislation that the House Energy and Commerce Committee was taking up
later Wednesday contains no fuel economy provision.
But Rep. Billy Tauzin, R-La., the committee chairman, said discussions were
under way to work out a compromise on a fuel economy proposal. He said he
expects an amendment on CAFE to be added to the bill, either during
deliberations in his committee or on the House floor.
Rep. Joe Barton, R-Texas, chairman of the subcommittee drafting the energy
package, saw a good chance the truck standards will be raised and said the
automobile standard might be increased as well. Other GOP sources who talked
about the private discussions on condition of not being identified by name
said a likely outcome is that the truck standard will be increased three or
four mpg and the auto standard left alone.
Momentum for some CAFE increase has been growing in recent weeks as GOP
lawmakers came under increasing pressure to come up with additional
conservation proposals to those proposed in the White House's energy policy.
It largely focuses on production, with few specific measures to dramatically
curb energy demand.
Democrats have pressed for tougher automobile fuel economy standards.
Automakers have fought attempts to increase the standards. They say such
government edicts limit consumer choice and force manufacturers to build
smaller cars that customers don't want. Supporters of increased fuel economy
argue that new technologies are available to increase fuel efficiency without
decreasing vehicle size.
President Bush's energy blueprint would consider CAFE increases, but not
before a National Academy of Sciences report is issued, probably this month,
on impact of the standard on energy savings, safety and auto industry
competition.

Davis ups the voltage
Published Wednesday, July 11, 2001, in the San Jose Mercury News
Vow to sue for refunds may be a bluff, but he should keep pushing FERC
THE strategic choice facing Gov. Gray Davis in the struggle over electricity
price refunds has come down to three questions: When do you negotiate, when
do you demand, and when do you bluff?
Negotiations are over, Davis declared Tuesday. He demanded that the Federal
Energy Regulatory Commission order refunds now. ``The case is nearly a year
old,'' he said. ``They have to decide which side they're on.''
Probably no one but Davis knew to what extent he was bluffing when he also
said, ``If you think California is going to settle for $1 billion in refunds,
we will see you in court.''
A FERC administrative judge said Monday that the amount due the state may be
around $1 billion, or perhaps nothing at all, when counter-claims against the
state are subtracted.
Energy experts are divided about whether the state would win a suit to
overturn a decision by a federal commission. The federal courts have some
limited jurisdiction, according to University of California Energy Institute
director Severin Borenstein, but that a court would reverse a commission in a
case like this is ``extremely unlikely.''
Frank Wolak, a Stanford economist, had the opposite view, when asked whether
the state has a good chance of winning: ``I think so. It happens all the
time.''
At a Sacramento press conference, Davis continued to insist that there have
been overcharges of $8.9 billion. But other state officials conceded that
only $5.4 billion of that is actually on the table in the FERC proceedings.
Davis said he'll take what he can get there, and sue for the rest.
The state argues that because FERC has determined that wholesale prices have
not met the Federal Power Act's requirement to be ``just and reasonable,''
refunds are in order. But the commission has not defined what portion
exceeded ``just and reasonable.''
Throughout his press conference, Davis used the prospect of litigation like a
goad to spur the federal regulators into action. But if you listened
carefully, he also indicated he'll give them more time to consider the case.
Considering the iffy odds of winning in court, we suggest he keep goading the
federal commissioners -- while giving them all the time they need.

Wednesday, July 11, 2001

Lights go out on Davis' power show
Three new developments show that some economic reality finally is being
applied to California's electricity crisis:
First, "The nation's chief energy judge said Monday that California is owed
maybe $1 billion in refunds from power generators, a fraction of the $8.9
billion demanded by Gov. Gray Davis," reported the Register yesterday. Even
that $1 billion amount might be balanced by the amount the state still owes
the power producers.

To suggest workable and market-oriented solutions to the California
electricity crisis.

Judge Curtis Wagner's recommendation will be taken up by the Federal Energy
Regulatory Commission, which is being petitioned for the money by the state
of California.
Because the judge's words will bolster FERC's apparent desire not to grant
the "refunds," the state probably will go to court, where the matter could be
stuck for years.
"In the long term, this may indicate that competitive electricity has a
future even in California, but not thanks to the state," Robert Michaels, a
professor of economics at Cal State Fullerton, told us. He's referring to the
state's botched 1996 "deregulation" effort, which has been made worse by Gov.
Gray Davis and other officials since the crisis began a year ago.
"FERC since the 1980s favors competition, within the parameters of political
reality," Mr. Michaels added. "Now we're at square one: The industry doesn't
owe $9 billion to California." As this process continues, he said, another
positive aspect will be that a lot of facts will get aired. "We'll see what
has been happening in the markets" in which power is bought and sold.
Second, light already is shining on one area: This crisis was not "Made in
Texas'' by cronies of President Bush, as Gov. Davis and other Democrats have
been contending.
In May, the governor attacked the president for ignoring "the greed of these
Texas energy companies," such as Reliant and Dynergy.
In fact, according to information on state power contracts the governor
finally released Monday, Texas companies were way down on the list of
producers.
"In roughly the first five months of the year, the state shelled out $1.2
billion to Atlanta-based Mirant, the most any company was paid for
electricity, followed by $1 billion to Powerex, the marketing arm of BC Hydro
in British Columbia [in Canada]. It also paid $331 million to the Los Angeles
Department of Water and Power," reported the San Jose Mercury News.
Only about 10 percent of our state's power during this period came from
companies with headquarters in Texas.
Third, and finally, a new study by the Cato Institute shows what should be
done next:
lAbolish retail rate caps, allowing prices to be set by the market.
This would be a better system than the present one, where the state buys the
electricity and passes much of the cost along through the state budget (paid
by taxpayers) and bonds paid for by long-term electricity price increases.
Higher immediate prices would encourage conservation and production, leading
in time to lower prices.
lMove to real-time pricing so people shift activities such as washing to
off-peak hours.
lAbolish the Independent System Operator, which moves electrons around.
Give this function back to the utilities, who did it far better before
"deregulation." Gov. Davis should set the pace by ending his Clintonian blame
shifting and embracing these realistic solutions.


Brant, please do not put me on emails for day to day business, drafts of
masters and confirms.  Thanks.

	Brant Reves/ENRON@enronXgate
	03/27/2001 08:26 AM

		 To: Susan Bailey/HOU/ECT@ECT, Stephanie Panus/NA/Enron@Enron, Tana
Jones/HOU/ECT@ECT
		 cc: Janie Aguayo/HOU/ECT@ECT, Bianca Ornelas/NA/Enron@Enron
		 Subject: RE: National Energy Group

Trade qy8453 and qy9133 were both approved under the same credit terms.  The
$4MM LC that has been specified as an independant amount and the associated
$6MM credit line should be made a part of both confirmations and tied to both
deals.  Approval of these deals was based on the combined risk profile of the
trades, so securitization of both trades should be amalgamated.

thanks
brant

 -----Original Message-----
From:  Reves, Brant
Sent: Monday, March 26, 2001 1:56 PM
To: Bailey, Susan; Panus, Stephanie; Jones, Tana
Cc: Aguayo, Janie
Subject: National Energy Group

Please prepare an Annex B per terms of the attached credit worksheet and
provide a copy to the confirmations group for inclusion within trade qy8453's
confirmation.

thanks
brant

 << File: National Energy Group.xls >>