----- Forwarded by Steven J Kean/NA/Enron on 02/28/2001 02:19 PM -----

	Miyung Buster@ENRON_DEVELOPMENT
	02/26/2001 09:03 AM

		 To: Ann M Schmidt/Corp/Enron@ENRON, Bryan Seyfried/LON/ECT@ECT,
dcasse@whwg.com, dg27@pacbell.net, Elizabeth Linnell/NA/Enron@Enron,
filuntz@aol.com, James D Steffes/NA/Enron@Enron, Janet
Butler/ET&S/Enron@ENRON, Jeannie Mandelker/HOU/ECT@ECT, Jeff
Dasovich/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, John
Neslage/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John Sherriff/LON/ECT@ECT,
Joseph Alamo/NA/Enron@Enron, Karen Denne/Corp/Enron@ENRON, Lysa
Akin/PDX/ECT@ECT, Margaret Carson/Corp/Enron@ENRON, Mark
Palmer/Corp/Enron@ENRON, Mark Schroeder/LON/ECT@ECT, Markus
Fiala/LON/ECT@ECT, Mary Hain/HOU/ECT@ECT, Michael R Brown/LON/ECT@ECT, Mike
Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mona L Petrochko/NA/Enron@Enron,
Nicholas O'Day/AP/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Peggy
Mahoney/HOU/EES@EES, Peter Styles/LON/ECT@ECT, Richard
Shapiro/NA/Enron@Enron, Rob Bradley/Corp/Enron@ENRON, Roger Yang/SFO/EES@EES,
Sandra McCubbin/NA/Enron@Enron, Shelley Corman/ET&S/Enron@ENRON, Stella
Chan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steven J Kean/NA/Enron@Enron, Susan
J Mara/NA/Enron@Enron, Mike Roan/ENRON@enronXgate, Alex
Parsons/EU/Enron@Enron, Andrew Morrison/LON/ECT@ECT, lipsen@cisco.com, Janel
Guerrero/Corp/Enron@Enron
		 cc:
		 Subject: Energy Issues

Riverside Press 2/23: "Power line plan has new foes"

Contra Costa Times, 2/23: "GOP in a fix over power crisis"

Sac Bee, Fri 2/23: "Davis says State has tentative deal for Edison grid"

SF Chron 2/23: "Utilities Search for Long-Term Fix During Breather..."

SJ Mercury 2/23: "State's Energy Price Tag Increases"

LA Times 2/23: "Paying for power still a big question"

Long Beach Press 2/23: "Lowenthal returns utility money"

Sac Bee 2/23: Columnist Dan Walters: "A power grab by politicians"

SF Chron, 2/23: "Discount Urged Near Power Plants"

Sac Bee 2/23: "At last, power alerts are lifted..."

Sac Bee 2/23: "Davis' deadlines on energy much easier set than met"

SF Chron, 2/23: "GOP Sees Power Crisis as Davis' Achilles' Heel"

Contra Costa Times 2/23: "Pressure Is on Utilities to Accept Grid Sale"

SF Chron 2/23: "Energy Firms Won't Pay All of Monster Debt
PUC reverses, taxpayers could foot the bill "

San Diego Union, 2/23: "Small electric producers OK big price cut"
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Power line plan has new foes
La Cresta residents vow to keep electricity equipment out of the Cleveland
Forest and a wilderness area.

By Thomas Buckley
The Press-Enterprise
LAKE ELSINORE
A new group has raised its objections to Lake Elsinore's proposed
hydroelectric plant and the power lines that might carry its electricity to
San Diego County.
On Thursday, the Elsinore Valley Municipal Water District board set aside for
further study later this month a motion by Director Gary Kelley to ensure
that both the lines and the actual power plant that make up a $450 million
proposal from Enron North America proceed together.
But residents of La Cresta, a mountaintop community near where the lines
might run, did not care whether the plant and lines happened together. Many
of them do not want the lines to be there at all.
"We are resolved to keep power lines out of the Cleveland National Forest and
the San Mateo Wilderness Area," said La Cresta resident Bill Stockmar. "Our
constituents and the local residents impacted by the proposed project are
outraged and respectfully demand immediate intervention to stop this project
at the planning level."
As it stands now, the power lines from the hydroelectric plant would run from
Temescal Canyon to Camp Pendleton along the ridge line of the Elsinore
Mountains just west of the lake. Those lines could run in a narrow strip of
forest land just west of the La Cresta community.
Enron project manager Rob Bakondy said the final determination of where the
lines might run is not set, but he said the power lines could be built at
least a year before the plant itself.
Besides serving the hydroelectric plant, the power lines could be used to
replace lines San Diego Gas and Electric wants to build through Murrieta and
Temecula to bring power to San Diego.
The water district also announced it is considering financing and building
the lines itself.
District General Manager John Rossi said Wednesday that it was too early to
say exactly how the lines would be built, but that the district's building or
owning the lines, or both, in cooperation with Enron is "one possibility."
Board President Kris Anderson said it is too early to tell whether it would
benefit the district to become so directly involved in the project. But he
said the district would be able to borrow the approximately $50 million
needed to build the lines at a lower interest rate than a private company
could get. That difference, Anderson said, could mean extra dollars for the
district.
How Governor Davis' proposal to purchase thousands of miles of transmission
lines from the ailing utilities will affect the project is not yet clear,
said Enron spokeswoman Kathy Russeth.
The timing of the construction of the project, if it is approved by state and
federal regulators, will not be finally known until a contract between Enron
and the water district has been agreed upon. That is expected to happen by
the end of May.
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GOP in a fix over power crisis
Leaders seek solutions that won't undercut past support for deregulation
By Daniel Borenstein
TIMES POLITICAL EDITOR
California Republican Party leaders are trying desperately to politicize the
state's electricity crisis by blaming Gray Davis, but it seems that the
harder they try the more popular the Democratic governor becomes.
The latest GOP push will come today when party leaders, meeting in Sacramento
for the start of their three-day state convention, hold a hastily organized
workshop on energy.
"We should be explaining to California that Gray Davis was asleep at the
switch last year," said one of the scheduled speakers, Republican strategist
Dan Schnur. "But that message can only work if it's coupled with a proposal
for an alternative solution."
So far, that hasn't happened. For all the complaints about Davis, Republicans
are moving even slower. Looking to 2002, when Davis will stand for
re-election, the GOP has run radio ads attacking the governor for delays. But
the party has yet to distinguish itself with a solid plan of its own.
"If Republicans are able in the next couple of months to articulate a clear
plan, which is different from the Democratic plan, yes, we can use it as a
political message," said Stuart DeVeaux, spokesman for the California
Republican Party.
"Are Republicans in Sacramento going to come up with a plan that articulates
a future for our energy problem? I'm not telling you it's going to be
revealed this weekend. It's my hope it will be articulated this weekend."
Republicans are caught in an ideological quagmire. Pushing for re-regulation
of electricity conflicts with the party's basic tenet of less government
interference. Conversely, arguing for full deregulation puts Republicans at
odds with a solid majority of Californians.
A Los Angeles Times poll taken Feb. 14-15 found that 60 percent of
Californians want to go back to a regulated electricity industry, while 25
percent are opposed.
The GOP problem is exacerbated because there is no easy policy solution to
the energy mess, said Jack Pitney, government professor at Claremont McKenna
College. "It's difficult to see how we get out of this situation without
considerable cost. If there were a silver bullet, somebody would have found
it by now."
Republicans have attacked Davis for his plan to buy power lines from private
utilities. "Everybody agrees there's $1 billion or $2 billion in deferred
maintenance," said GOP consultant Sal Russo, another speaker at the party's
convention today. "We need to be in this business like a hole in the head."
But the Times poll found that Californians, by a 52-36 margin, favor the
idea. Moreover, Davis' job approval rating has climbed this year. In January,
49 percent approved and 25 percent disapproved. In February, it was up to
57-26. Californians give Davis better marks for handling the electricity
crisis than they give President Bush.
Republicans are going to have difficult time laying the political blame on
Davis. "It's 'Murder on the Orient Express.' Everybody did it," Pitney said.
"Although you can make a case that Davis was slow in reacting, no one can
seriously pin him with the primary blame for the problem."
The deregulation bill passed the Legislature in 1996 with the strong support
of both parties and a Republican governor, Pete Wilson. Senate Minority
Leader Jim Brulte, R-Rancho Cucamonga, is considered one of the Republican
Party's top strategists. He was also one of the leading proponents of the
deregulation bill.
For all of those reasons, Garry South, Davis' political strategist, said he
does not fear a GOP attack on electricity. "If the Republicans want to get
into a full-out firefight over how this mess came about, I'm more than
willing to play. They don't have a very good story to tell."
For now, Davis' political strength is stable. But the 2002 primary elections
are still more than a year away, and the general election is a political
eternity from now.
"If this isn't resolved, there is nothing to guarantee that there won't be a
voter backlash against the government," said political analyst Sherry Bebitch
Jeffe. "And right now the government in California is the Democratic Party."
That's the message the Republicans want to drive home. But if they can't come
up with their own alternative, they might have a hard time playing the blame
game.
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Davis says state has tentative deal for Edison grid

Updated: Feb. 23, 2001 - 4:42 p.m.
LOS ANGELES -- After a week of intense closed-door negotiations with utility
representatives, Gov. Gray Davis said Friday he had reached an "agreement in
principle" with Southern California Edison to buy the utility's power lines
for an estimated $2.7 billion.

The deal also requires Edison International, the parent company of Edison, to
sell cheap power to the state for a decade.

"This is the framework of a good, balanced deal," Davis said. "It's not a
final deal. There's a lot of work to be done, But we're making progress."

The governor said he did not expect customer rates to increase as a result of
the deal.

Edison did not immediately return calls seeking comment.

The state has been in talks for a week to buy a total of 26,000 miles of
transmission lines from Edison, Pacific Gas and Electric and Sempra Energy,
which operates San Diego Gas & Electric. The total cost of the lines could
range from $4.5 billion to $7 billion.

The effort is intended to help restore the financial health of the state's
two largest utilities, PG&E and Edison, both of which are near bankruptcy.
The $2.7 billion price for the Edison lines amounts to 2.3 times the
estimated book value, Davis said.

The utilities say they have lost nearly $13 billion since June, trapped
between soaring wholesale power prices and state-imposed rate caps for
consumers. The tentative plan announced by Davis would allow Edison to issue
bonds for a substantial portion of its losses.

Davis said the state is making good progress in its talks with Sempra and
"some progress" with PG&E. Thursday, Davis said he will not sign off on any
grid buyout without all three utilities' participation.

"I do not believe we can make a satisfactory arrangement without 60 percent
of the transmission grid, and that would require cooperation with PG&E," he
said Friday.

PG&E spokesman Ron Low said Thursday night that talks had ended with no
resolution that day.

"These are complicated problems that will not be solved overnight," Low said.
"There are clearly some issues where we are very far apart."

Still, PG&E chief executive officer Robert Glynn Jr. said Friday the meeting
with Davis was a "milestone in the resolution of California's energy crisis"
and said he was willing to meet further to discuss the utility's proposal.

"Each utility's issues and opportunities in this crisis are different, and we
believe that PG&E has proposed a detailed solution that balances ratepayer
and shareholder interests," Glynn said in a statement issued Friday before
the governor's news conference.

The company said it would have no further comment.

The tentative agreement also calls for:

Edison parent Edison International to make payments to the utility of about
$420 million.
Edison International to commit the entire output of its Sunrise Mission power
project at low, cost-based rates for 10 years. Davis said that arrangement
could save ratepayers $500 million over the next two years.
Edison to provide cost-based rates from generating plants it owns for another
10 years.
Edison to drop its lawsuit against the California Public Utilities Commission
claiming that imposed rate caps were illegal under federal law.

"This entire transaction, which I believe is fair and balanced for both
sides, will be accomplished within the existing rate structure," Davis said.
"We will not be asking any more of consumers to allow this transaction to
come to pass."

Davis said negotiations will continue in the coming days.

Consumer advocate Harvey Rosenfield called the governor's plan "an outrageous
giveaway" and predicted that if lawmakers didn't halt it, voters would
revolt.

"The most outrageous part of this isn't even paying 2.3 times what the lines
are worth, but then allowing the parent companies that siphoned off billions
of dollars to pay only the tax payment they already owe," Rosenfield said.

The Public Utilities Commission already regulates how much the utilities can
charge for power their own plants generate, Rosenfield said.

--By Leslie Gornstein, Associated Press Writer
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Utilities Search for Long-Term Fix During Breather
State purchase of power lines under discussion

Friday,?February 23, 2001
,2001 San Francisco Chronicle
Sacramento -- A break in the weather and a break in the energy crisis
coincided yesterday, as California enjoyed its first day in more than a month
without a power alert.
With the short-term picture for power improving, representatives of the
state's three troubled utilities met separately with Gov. Gray Davis and his
staff to work on a longer-range fix for the power crisis that would include
state purchase of the firms' transmission lines. Trouble loomed in at least
one set of talks, however, as Pacific Gas and Electric Co. said it was "very
far" from reaching a deal.
The California Independent System Operator, which coordinates the flow of
electricity through the state's power grid, removed all power alerts at about
9 a.m. yesterday. Spokeswoman Lorie O'Donley said that with springtime
approaching and weather improving, and with some power plants coming back to
full output from maintenance, the overall picture is brightening.
"We're optimistic," she said. "We're coming into the spring season, the
majority of generators have had their maintenance completed. But everything
is dependent on the weather and temperature."
The last day California had no power alerts was Jan. 13. Since then, there
have been two days of rolling blackouts in Northern California and many other
days of Stage 3 alerts -- when power reserves dip below 1.5 percent of
available capacity.
The mildest alert, Stage 1, is declared when reserves are between 5 and 7
percent of capacity.
The supply of power has been helped by warmer temperatures in other Western
states, cutting demand there, and by an increase in generators on line in
California, O'Donley said.
Last week, when the state was still in Stage 3 alerts, 10,500 megawatts were
offline in California. Yesterday, there were 8,200 megawatts offline, a
difference that provides enough power for a couple million homes.
O'Donley warned that the supply picture in California is still tight, and
conservation still necessary. But the focus of attention was turning to
Sacramento and Davis' talks with the utilities.
Davis announced a plan last week for the state to purchase 26,000 miles of
utility-owned transmission lines in exchange for backing bonds that allow the
utilities to repay the almost $13 billion in debt they say they owe.
While Southern California Edison and San Diego Gas and Electric have
indicated willingness to sell their lines, PG&E has refused to comment on the
proposal.
It is not clear if PG&E is unwilling to sell or simply trying to strike a
harder bargain. The utility had accumulated more debt than its Southern
California counterparts, and also owns the largest part of the transmission
line grid.
Talks between Davis' staff and PG&E did not start until late yesterday
afternoon, and indications were that they were more difficult than
negotiations involving the other two utilities.
"They're just on a different page," Michael Peevey, the former Edison
president who is Davis' chief negotiator, told Bloomberg News.
PG&E spokesman Ron Low said, "These are difficult problems that cannot be
solved overnight. There are clearly some areas where we are very far apart."
Davis hopes to make an announcement with at least one of the utilities before
leaving today for the four-day National Governors Association meeting in
Washington, D.C.
The union that represents some 11,000 PG&E employees, meanwhile, called on
Davis to negotiate state ownership of two power plants under construction in
which PG&E holds large stakes.
Jack McNally, business manager of the International Brotherhood of Electrical
Workers, Local 1245, in Walnut Creek told Davis in a letter that a
transmission line takeover would be a "grand experiment" fraught with danger.
Acquiring the two prospective power plants, in Kern and San Diego counties,
would do more to address energy shortages than taking over transmission lines
that need hundreds of millions of dollars in maintenance, union officials
said.
Davis spokesman Steve Maviglio countered that state acquisition of
transmission lines "would not affect one union job," as the state would
simply lease the grid back to the utilities. Maviglio predicted union jobs
would increase with investment in new capacity and system upgrades.
Chronicle staff writers Patrick Hoge and Robert Salladay contributed to this
report.
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State's energy price tag increases
Published Friday, Feb. 23, 2001, in the San Jose Mercury News
BY DION NISSENBAUM

Mercury News Sacramento Bureau

SACRAMENTO -- California's energy crisis took another big bite out of the
state budget Thursday when finance aides to Gov. Gray Davis announced that
the cost of buying energy may top $3 billion by mid-March.
In a move that raised new alarms for lawmakers, the governor's finance team
for the third time this month asked for $500 million to buy electricity in
the coming weeks while Davis tries to work out a deal to bail out the state's
near-bankrupt utilities. That, combined with money spent last month to buy
energy, could drain the state coffers of $3 billion by St. Patrick's Day.
The request for more cash came on the same day that California spent its
first day in weeks without an official energy emergency and Davis held
critical talks with the heads of Pacific Gas & Electric Co. and San Diego Gas
& Electric Co. The talks are aimed at rescuing the two companies and Southern
California Edison from financial collapse.
While Davis had expressed hope last week of working out a deal by today,
sources said that an agreement still remains elusive.
Until a compromise can be hammered out, the state is being forced to pay
upward of $50 million a day from the general fund to buy electricity.
State leaders expect that the money will eventually be repaid to the general
fund under a $10 billion bond package. But lawmakers are growing increasingly
concerned about the short-term impact on the state fiscal plan.
Assemblywoman Carole Migden, D-San Francisco, said the latest request for
more money could create ``greater concern and anxiety'' among lawmakers and
added that the energy crisis was going to make it harder to fund other
programs, such as support for abused children.
``It's going to be a bleak year for other budget priorities,'' said Migden,
who is chairwoman of the powerful Assembly Appropriations Committee.
Earlier this week, the state's independent financial analyst warned that the
energy crisis could eat into state money the governor wants to spend on other
things such as the environment and public safety.
While lawmakers have so far bitten their tongues about the growing power
price tag, Migden said the Legislature might be hesitant to allow the costs
to go any higher.
``I can't imagine another infusion after this being required,'' Migden said.
``I think this has to be the last request because we're going to hit
fundamental core programs.''
Waiting for bailout plan
California stepped in to buy the energy last month after PG&E and Southern
California Edison lost the financial wherewithal to do it themselves. At the
time, state leaders reluctantly agreed to buy the energy for a short period
of time as part of a larger plan for California to sign long-term contracts
with power generators.
But those negotiations have failed to produce much energy so far, and Davis
said earlier this week that the power producers are hesitant to sign any
deals until California agrees to a bailout plan for the utilities. On
Thursday, one power producer -- Williams Cos. -- announced that it had signed
a 10-year contract with the state to provide up to 1,400 megawatts of power
to California.
In a bid to work out the bailout plan, Davis and his advisers met Thursday
and were to meet again today with top executives from all three electric
utilities in financial trouble. The Democratic governor wants to buy 26,000
miles of high voltage transmission lines owned by the three companies in
exchange for helping the utilities pay off $13 billion in debts. The
utilities are being asked to protect thousands of acres of wilderness lands
they own, hang onto power plants that provide the state with its cheapest
electricity, and drop explosive lawsuits that could allow the companies to
dramatically raise customer rates.
But sources said talks have bogged down on the transmission line deal, which
PG&E has been reluctant to accept.
Alternative energy helps out
While talks slogged along in the governor's office, state lawmakers announced
that another key piece of the puzzle needed to solve the energy crisis was
falling into place.
State Sen. Jim Battin, R-Palm Desert, and Assemblyman Fred Keeley, D-Santa
Cruz, said that alternative energy producers had agreed to dramatically lower
their prices in a deal that could save California $3 billion to $4 billion.
Those energy producers, nearly 700 wind, solar and natural gas-fired plants,
provide about a third of the state's energy.
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Paying for power still a big question
POWER CRISIS
PG&E doesn't like the plan the PUC proposed to collect electricity costs
By Mike Taugher
TIMES STAFF WRITER
Three weeks after Gov. Gray Davis signed into law the state's centerpiece for
stabilizing energy costs, big differences remain over how the solutions will
be implemented and who will pay for them.
The plan, outlined in legislation known as AB1X, was intended first to stop
the financial bleeding of California's two largest utilities by asking the
state to buy enough unsecured power to keep the lights on. Next, the state
would enter long-term contracts for less expensive power that would
eventually lessen the need for more costly, last-minute electricity.
But the state has balked at buying the entire portfolio of last-minute
electricity that is needed, and a disagreement emerged Thursday over what
portion of consumers' bills should be used to reimburse state coffers.
Meanwhile, progress on completing contracts has been slow, although two were
signed Thursday.
A spokesman for Davis said more contracts for relatively low-cost power would
be signed once the state bought the utilities' transmission lines and other
assets, because then the utilities could pay their past-due bills. The
governor said last week that he expected a deal with the utilities by today,
but that might not happen.
"Clearly, there's been challenges getting long-term contracts, but we've
turned the corner," said Davis spokesman Steve Maviglio. "We've got three in
the bank and 10 more once we get these deals (with the utilities) done."
Also Thursday, the Public Utilities Commission was poised to allow the state
to collect the entire amount that customers pay specifically for electricity.
But Pacific Gas & Electric Co. said it is entitled to deduct other costs from
customers' payments before reimbursing the state. That would reduce payments
from PG&E to the state by about half, according to the company.
The PUC proposal was in response to a request from the state Department of
Water Resources that it be allowed to start collecting money so that energy
companies would be more willing to sell power to the agency.
The two Republican-appointed commissioners of the PUC blocked the move, which
needed four of five commissioners' approval to reach the agenda.
"DWR's (action) is exacerbating a problem AB1X was meant to alleviate," said
Commissioner Richard Bilas. "It is pushing the utilities closer to
bankruptcy."
PG&E spokesman John Nelson said the proposal brought by PUC President Loretta
Lynch would have been unfair to the utilities because AB1X allows them to
deduct expenses for buying electricity and generating energy at their own
power plants before reimbursing the state.
"All of those costs need to be paid going forward. Otherwise, you still leave
the utilities to bleed," Nelson said.
That stance appeared to be at odds with the office of Assemblyman Fred
Keeley, the Boulder Creek Democrat who wrote AB1X.
"For PG&E to think it can keep money for electrons it never even owned is
astounding to us," said Guy Phillips, a Keeley aide.
While nothing has gone smoothly, Phillips and others expressed optimism that
the state's biggest effort to date to fix the energy crisis would work.
"We think those will be sorted out," said Phillips, who acknowledged there
has been much confusion about what lawmakers intended in AB1X.
For example, Keeley's office said lawmakers wanted the water resources agency
to make up the entire amount of electricity that the state's two largest
utilities had not secured ahead of time. The high cost of this last-minute
electricity -- and the utilities' heavy reliance on it -- is what drove PG&E
and Southern California Edison to the brink of bankruptcy.
But the water agency has balked at buying electricity offered at prices it
calls "unreasonable." While state officials have refused to say how much
electricity it has left to utilities to purchase, the state is paying about
$55 million a day to keep electricity flowing.
And that amounts to about 90 percent of the electricity purchased on behalf
of the utilities on the same day it is needed, according to Phillips.
The state's reluctance to buy all of the so-called real-time electricity has
led to fears that the utilities will continue to run up debt and that power
companies will not collect money owed to them. That dispute has landed in
federal court, where a Sacramento judge is forcing three major power
suppliers and a marketing company to continue selling power in the state.
If a settlement is not reached today, U.S. District Judge Frank C. Damrell is
expected to decide whether to extend his order, to modify it or to drop it.
Staff writer Andrew LaMar contributed to this story.
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Lowenthal returns utility money

By Will Shuck
From our Sacramento Bureau

SACRAMENTO Assemblyman Alan Lowenthal, D-Long Beach, this week joined a small
group of legislators who returned campaign contributions to California
utility companies and other energy firms.

He sent $5,000 back to Southern California Edison and $500 to Sempra Energy,
parent company of Southern California Gas. It was a small portion of the more
than Lowenthal $500,000 Lowenthal had raised in 2000 for his re-election
campaign.
He said he returned the money, as did nine other Assembly members, at the
urging of the consumer advocacy group Global Exchange.
"We think it's fantastic that he has recognized that in the eyes of the
public there is a very serious potential conflict of interest," said group
spokeswoman Medea Benjamin. "We applaud him for wanting to ensure the
integrity of the legislative process."
While Benjamin says it's critical that lawmakers not be tainted by energy
money during the state's power crisis, others wonder where the line should be
drawn.
"In the real world of politics it costs money to run for office and you have
to get that money somewhere," said Paul Schmidt, a political science
professor at Cal State Long Beach. "To say that you can only make decisions
on things involving individuals that haven't given you any money would result
in paralysis of government."
Benjamin and other consumer advocates say the power crisis calls for special
consideration.
"There are not many cases in which they're actually voting whether a company
will survive with billions of dollars of taxpayer money or go bankrupt, as
they're doing with the utility companies," Benjamin said.
Lowenthal agreed. "I thought it was an appropriate request," he said. "These
are unique circumstances, and I just think it's in the public's best interest
that I return that money."
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Dan Walters: A power grab by politicians

(Published Feb. 23, 2001)
Slowly, but inexorably, control over the generation, acquisition and
distribution of electric power in California is being shifted from
professional utility managers and independent regulators into the hands of
politicians.
The 1996 utility "deregulation" scheme enacted by the Legislature was an
initial foray into politicization. Legislation granting the governor more
control over the makeup of the Public Utilities Commission was another. But
the current power supply/price crisis has led to even more direct political
influence over -- or interference with -- electric service. One hastily
enacted bill, for example, gives the governor direct control of the
now-misnamed "Independent System Operator," which operates the statewide
power grid.
More political intrusion is in the works, from a state takeover of the
intercity power transmission grid to the creation of a state power authority
that would buy, generate and sell electricity directly. And while local
public utilities function well, a state power agency might operate on the
whims of professional politicians. The Legislature, for example, wants
appointments to the board that would direct a state power authority, and big
state power projects would be subject to the same kind of pork-barrel
mentality that distorts other public works appropriations. Where power plants
were to be built, or where high-voltage lines would be strung, might well
depend on who could, and could not, bring political influence to bear, rather
than what the system needed to work efficiently.
Clues to the potential pitfalls of a state-operated power system are found in
the approaches of Capitol politicians to the current crisis. There is, for
example, the unspoken goal of avoiding big power rate boosts until after the
November 2002 election -- even if it means running up billions of dollars in
debts to do it. Would future rates charged by a state power authority be
raised or lowered to enhance the prospects of the dominant party or an
incumbent governor? There's no evidence in past performances to indicate they
wouldn't be.
And then there's the knotty question of who would get vital power supplies in
the event of shortages -- a situation that is already looming and could
become worse in future months.
Emergency legislation already gives the state the right to sell power as it
pleases, without competitive bidding or even public notice. There's nothing,
really, to prevent politically influential power customers such as big
industrial enterprises from cutting their own supply deals with politically
directed state officials.
And whose juice would be cut off if shortages mean blackouts? Approximately
45 percent of current power customers are effectively exempt from rolling
blackouts because they are connected to circuits (called "blocks") that also
include vital services, such as hospitals, fire and police agencies, water
supply systems and communications centers. The Capitol, not surprisingly, is
in one of those noninterruptible blocks.
With the threat of further blackouts looming, legislation is being drafted to
designate which customers will suffer and which will not -- thus taking that
authority out of the hands of utilities and regulators. And that, in turn, is
generating pressure from lobbyists from all sorts of interest groups to place
their clients on protected lists. Should farmers be cut off, or biotechnology
facilities, or computer chip plants, or schools?
When politicians control any process or system, one can be certain that they
will always make expedient political decisions, regardless of the long-term
or wider consequences. Thus, we may someday regret allowing the Capitol's
self-serving politicians to get their hands on our electric power system.
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Discount Urged Near Power Plants
Senator urges electricity rate break for neighbors of generators

Friday,?February 23, 2001
,2001 San Francisco Chronicle
As California officials propose building 32 new "peaker" power plants across
the state by July, one legislator from plant-rich eastern Contra Costa County
thinks residents should get a discount on their power bill for having a
generator in their backyard.
The proposed bill would provide a little payback for residents of state Sen.
Tom Torlakson's district, which is home to a half-dozen plants and has three
more in the construction pipeline.
Under the bill introduced yesterday by Torlakson, D-Antioch, people living
within a 20-mile circle around a power plant would receive a 20 percent
discount on their electricity bill and be exempt from blackouts.
The legislation was partially inspired by San Jose officials' rejecting a
proposal to build a 600-megawatt power plant in the Coyote Valley, as well as
Gov. Gray Davis' plan to build 5,000 megawatts of new generating capacity by
July 1.
"It's a question of fairness," Torlakson said. "People in communities who are
shouldering the burden for having plants in their backyard should get some
benefit from it."
Torlakson said consumers who lived in communities without plants could pick
up the tab for the discounts. "But the utilities would have to figure that
out within their rate system," he said.
A PG&E spokesman said yesterday that the company does not comment on pending
legislation.
While consumer advocates, environmentalists and power generators were
lukewarm to the proposal yesterday, many admit that the state has not thought
about how to -- of even if they have to -- offer communities a little
incentive to approve a power plant within their borders. However, the state
has allocated $30 million for plants that get online by July 1.
"As far as incentives, I'd think most communities would see the value of the
employment they'd get and the increase to the tax base," said Larry Hamlin,
the governor's recently appointed project manager for the plant-building
campaign.
A spokesman for California's Environmental Protection Agency, which permits
plants, said the plan might be a "worthwhile idea for making power plants
more palatable to Californians."
Michael Shames, head of Utility Consumer Action Network in San Diego said the
bill was attacking a "not in my back yard" problem that doesn't exist. "Many
San Diego communities are clamoring for plants in the hope that they would
bring stability to the market," he said.
James Peters of Mirent, the Atlanta-based company formerly known as Southern
Energy, said the plan wouldn't encourage generators to build the number of
plants needed to solve the energy crisis.
Already, communities like Pittsburg have cut deals with power generators
before letting them build. In exchange for letting the Calpine Corp. build
two large plants in town, Pittsburg received the lifetime option to purchase
100 megawatts of power at below-market rates.
Next week, a Pittsburg group is going to begin gathering signatures demanding
that city leaders use the estimated 26 megawatts it would take to light
residences and businesses to give local residents a break on bills. The group
will hold an organizational meeting at 7 p.m. Tuesday at the Los Medanos
Community Hospital, 2311 Loveridge Rd. in Pittsburg.
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At last, power alerts are lifted: Enjoy respite because crisis far from
resolved, experts say
By Carrie Peyton
Bee Staff Writer
(Published Feb. 23, 2001)
As oddly as it arrived, California's electric emergency lifted Thursday
morning.
At 9 a.m., the Independent System Operator, which controls most of
California's grid, ended a Stage 1 alert.
It was the first time since Jan. 13 that the state hadn't been under a power
emergency, declared when low supplies threaten grid stability. The alerts
included 32 straight days of Stage 3 emergencies, the black clouds that
gather before rotating outages.
The clouds cleared on a day when predicted peak use was low -- but not the
lowest it has been for the last five weeks. Many power plants were back on
line after repairs -- but more plants had been operating during at least one
Stage 3 day.
So what happened?
A little luck, a little planning and maybe a little group psychology, said
those who have closely watched recent gyrations of the state's electric
roller coaster.
"It is a roll of the dice," said Gary Ackerman, head of the Western Power
Trading Forum, which represents plant owners and marketers. "If it continues
for the next three or four weeks I wouldn't be too surprised. That'll be our
respite. Enjoy it."
The end of a 40-day string of emergencies could mean a few more lights in
store aisles or a little less worry about running an electric furnace. Some
speculated it might also mean lower wholesale prices.
But major changes are not likely in the steady rain of conservation calls
that have fallen on Californians since the north state was twice plunged into
rotating blackouts last month.
"I hope people don't just go back to wasteful ways," said Mike Florio of The
Utility Reform Network, a consumer group.
Now that the emergencies have dissipated, "we don't have to talk about
imposing hardships on people, but prudent use of energy is an idea we're
going to have to live with for a long time," he said.
At the ISO, longer days and slightly warmer weather was credited with
decreasing peak demand for electricity. Supplies are up within the state, and
power imports from the Pacific Northwest have risen significantly, said Jim
Detmers, who manages grid operations.
Plus, in one of the biggest changes, the state Department of Water Resources
has begun getting more power supplies lined up at least a day in advance, he
said.
Since the department stepped in to buy power on behalf of cash-strapped
utilities, it has often managed to line up about 70 percent to 75 percent of
what the state needed to supplement utility-controlled supplies, according to
Detmers. That meant grid operators had to scramble to buy the rest on very
short notice.
But starting last Friday, the state began to schedule about 90 percent of its
purchases at least one day in advance.
"The operators are able to enter a day with a lot more confidence about being
able to make it," Detmers said. "You don't have to search to find those
megawatts at the last minute."
Closely in sync with increased purchases by the state, the ISO dropped from a
Stage 3 emergency to Stage 2 on Friday, and then slid to a Stage 1 Wednesday.
The stages are based on how much reserve power is left for unexpected crises;
a Stage 3 is declared when reserves slip below 1.5 percent.
For their part, power buyers at the water resources department weren't sure
what has made the difference over the past few days.
"It's certainly not that people are lining up to sell us power at cheap
prices," said Jim Spence, the department's director of emergency operations.
"We're just buying whatever we can, and it turned out that it was easier to
make ends meet."
He said he couldn't make any prediction about how long that would last.
The string of power emergencies has been unpredictable from the start,
erupting in winter, when California's hunger for electricity traditionally
declines and supplies are usually so flush that plants close for tune-ups.
Consumer advocates and power traders blamed finances for the emergencies,
rather than a fundamental lack of supply, as fears of utility bankruptcies
triggered a descent into market chaos and high-stakes political maneuvering.
But basic supply shortages are expected to move to the forefront by summer,
when temperatures rise and demand soars.
Meanwhile, the brief respite -- whatever the reason -- brought palpable
relief to those charged with keeping the power grid stable.
"When we found out yesterday during the board meeting that we were only in
Stage 1, we broke out in applause," said Florio, who sits on the five-member
ISO board.
The change also could be good news for consumers, who may one day be paying
higher rates for the wholesale electricity now being purchased by the state.
"Getting out of a Stage 3 typically means prices are going to ease," Florio
said. "When you're even in a Stage 1, that's a signal to everybody, 'They're
short, that means we can hold them up now.' "
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Davis' deadlines on energy much easier set than met
By Emily Bazar
Bee Staff Writer
(Published Feb. 23, 2001)
Exactly one week ago, Gov. Gray Davis sounded hopeful, optimistic even, when
he predicted that the state and its debt-ridden utilities would forge an
agreement by today on a plan to save the companies from financial doom.
Problem is, it won't work out that way.
Negotiations between state officials and the investor-owned utilities have
produced no comprehensive agreement to announce today.
Davis' predictions during the energy crisis have been wrong before.
For weeks, he has set deadlines for agreements and legislative action that
haven't been met. On deadline days, even when there's little substantive
progress to report, Davis often holds news conferences anyway -- many of them
on Friday afternoons after financial markets close.
The Democratic governor's office scheduled an "announcement" for today in Los
Angeles, even though one utility representative said agreement is far away.
Davis' actions have fueled speculation that he's trying to force consensus by
setting artificial deadlines and putting a spin on the news, and tarnishing
the state's credibility in the process.
"I can't see how you would negotiate such a complex deal, like the purchase
of the transmission grid, in such a short period of time. It doesn't seem
realistic," said Gary Ackerman of the Western Power Trading Forum, an
association of wholesale generators. "I guess the people I represent have
turned it off. They have stopped listening. They hear it and say, 'OK, sure.
Here's another photo op.' "
Last Friday, Davis told a gathering of reporters that state officials and the
utilities would agree by today on a rescue plan for the utilities.
"I believe we'll have agreement before next week is out, on exactly what
should go in a piece of legislation," he said at the time. "And hopefully,
that legislation will be passed by the end of the following week."
Legislative veterans said his comments were ill-advised and unrealistic.
Davis met into the night Thursday with top officials of Pacific Gas and
Electric Co., but no agrement was reached.
"These are complicated problems that will not be solved overnight," said PG&E
spokesman Ron Low. "On some issues, we are very far away from agreement."
Sources said PG&E has been unwilling to negotiate sale of its transmission
lines, which Davis has said is a necessary component of a deal. More progress
was reported with the two other near-bankrupt companies -- San Diego Gas and
Electric Co. and Southern California Edison -- although sources said talks
with them were far from concluded.
Davis has been setting specific deadlines for himself and the Legislature for
months:
In November, the governor promised to present a comprehensive "plan" by Dec.
1 to stave off a full-blown energy crisis, but ended up offering only a
modest slate of proposals.
Davis called Feb. 12 a "drop dead" date by which he hoped to cement a deal
between lawmakers and the utilities. There's no deal yet.
Davis told reporters that he and the state's legislative leaders would reach
a "consensus agreement" on the proposal to take to utilities by last Friday.
It didn't happen; he made the announcement alone.
Leon Panetta, a White House chief of staff under former President Clinton,
said it's important that the governor set deadlines because the nature of
politics is to delay.
However, he cautioned against missing deadlines.
"You have to be careful that you keep the deadlines you establish, because
the more that you establish and not meet, the more that begins to lose its
value as a political tool," Panetta said.
The governor can't continue to indefinitely set deadlines without facing
consequences, cautioned Steven Fetter, managing director of the Global Power
Group at Fitch, a credit-rating agency based in New York.
At some point, he warned, creditors and power suppliers may push the
utilities into involuntary bankruptcy, which would trigger an official
deadline that can't be ignored. The dispute would be tied up in court at a
judge's discretion.
"Eventually, there is going to be a real deadline," Fetter said. "The problem
is it's probably not a deadline that will be set by Gov. Davis. It's a
deadline that will be set by the banks and the (electricity) suppliers."
In several cases when deadlines haven't been met, Davis has held a news
conference regardless, unveiling little new information and scant detail.
On Jan. 26, for instance, the governor promoted the broad framework of a plan
to save the utilities rather than a detailed plan that had been anticipated.
One prong of the plan: "Aggressively promote energy efficiency, conservation
and demand reduction among consumers, businesses and public entities."
Davis spokesman Steve Maviglio said that the governor continues to set
deadlines because it's important to show that the state is making progress,
particularly to Wall Street.
He added that it's not the governor's fault the deadlines have been missed.
"Many of the dates have been blown away by factors no one has been able to
foresee or have control over: court decisions, actions by creditors, weather,
you name it," Maviglio said. "The governor sets deadlines that continue to
move the ball forward and he has been successful at doing that."
Many of these announcements came after 2 p.m. on Fridays, triggering
suggestions that the governor has attempted to spin the facts and manipulate
the markets.
Timing announcements after the close of East Coast financial markets is
commonly used by politicians who don't want to send stocks soaring or
tumbling by making an announcement, Panetta said.
"You want people to evaluate what's happening so there isn't a panic reaction
to a news flash going over the wire," he said.
But market analysts say that ever since PG&E and Edison stocks plummeted in
early January, the governor's statements haven't significantly affected their
performance.
"There has been so much news that has been so negative for the companies that
I don't think it makes much of a difference," said Ed Schuller, a senior vice
president for the full-service brokerage firm Sutro & Co. "It's beyond that
point now."
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GOP Sees Power Crisis as Davis' Achilles' Heel
Republicans line up to run for governor

Friday,?February 23, 2001
,2001 San Francisco Chronicle
Democratic Gov. Gray Davis, politically wounded by the state's power woes,
has become the target of a growing pack of Republicans looking to turn him
out of office.
"Four months ago, Davis looked on track to get re-elected by a voice vote,"
said Dan Schnur, a GOP strategist. "But the energy crisis has exposed
vulnerabilities that have encouraged others to look at the (2002 governor's)
race."
The governor's backers, however, are confident California voters will
recognize Davis is dealing with a problem that has been brewing for years,
through previous Republican administrations.
"If the Republicans want to have a full-out firefight over who brought this
(energy crisis) down, we're ready for it," said Garry South, the governor's
top political adviser. "It's a fight they can't win."
With the primary election still more than a year away, no one but Davis is a
sure bet to leap into the contest, but at least three names will be
circulating when California Republicans meet in Sacramento this weekend for
their state convention.
Secretary of State Bill Jones, Los Angeles investor Bill Simon Jr. and actor
Arnold Schwarzenegger all have made noises about challenging Davis, but so
far their incipient campaigns have been more talk than action.
Simon's effort might be the farthest along, but he also has the longest way
to travel. A political unknown, the 49-year-old Simon runs his family's
investment company and has been active in a number of charitable
organizations in Southern California.
Simon, whose father was treasury secretary under President Richard Nixon, has
brought in veteran GOP consultant Sal Russo to study a possible run for
governor.
"Bill Simon feels we need a governor who's prepared to lead and not one who's
focused on fund-raising or the next political office," Russo said in a jab at
Davis.
Simon was an assistant U.S. attorney in New York, but founded William E.
Simon & Sons with his brother and late father in 1988. The $2 billion private
investment firm owns a number of companies and has also invested heavily in
South of Market real estate in San Francisco.
Wealthy political outsiders don't have an enviable record in recent
California elections. Republican Michael Huffington spent $29 million to lose
a 1994 Senate race to Dianne Feinstein. Darrell Issa dropped around $13
million in a losing race for the 1998 GOP Senate nomination. Al Checchi spent
about $38 million of his own money to lose the Democratic primary to Davis in
1998.
While Simon likely would be spending plenty of his own money on a governor's
bid, he's working to get outside support, both political and financial,
before committing to the race, Russo said.
With the state's problems mounting and the economy increasingly shaky, the
time may be ripe for a political unknown, he added.
"When things start going bad, people are willing to look outside for a new
face, someone who will get things done," Russo said.
Jones is anything but a political outsider. A veteran legislator from the
Fresno area, he is now serving his second and last term as California's
secretary of state. He managed to hang onto his job during the GOP's 1998
electoral debacle, which cost the party every other constitutional office.
While Jones has long talked about a run for governor, he's still playing coy.
"We have not made any decision and probably won't make one until early
March," said Rob Lapsley, one of Jones' top advisers. "Right now we're
putting together information for Bill to make a decision."
While Jones' role as the state's top GOP officeholder makes him an obvious
choice to challenge Davis, he's made a number of political enemies over the
years, many of them in his own party. His surprise decision last year to
switch his support from George W. Bush to Arizona Sen. John McCain in
California's presidential primary won him no fans among Bush supporters and
could hurt his attempts to raise money for a gubernatorial bid.
Money is a major problem for Jones, who listed $118,000 in his campaign fund
last month, compared with nearly $26 million for Davis. Some of his opponents
have suggested that fund-raising woes may force Jones to run for an office
other than governor.
"Right now, we're focused on the governor's race," Lapsley insisted.
The real Republican wild card is Schwarzenegger, the movie action hero who
would be instantly recognized by nearly every California voter.
While Schwarzenegger's publicist told The Chronicle last month that he had no
plans to get involved in next year's governor's race, the Austrian-born star
was on the telephone to a Los Angeles Times columnist days later, talking
about his love for politics and his political ambitions.
Fame, however, has its drawbacks, as the 53-year-old Schwarzenegger has
found. An article in Premiere magazine entitled "Arnold the Barbarian"
accused him of groping women on movie sets and generally boorish behavior,
while the supermarket tabloids have him on the cover this week, suggesting
that his marriage to Maria Shriver is on the rocks.
South, Davis' political adviser, gleefully sent copies of the Premiere
article to reporters across the state, suggesting that "the piece lays out a
real 'touching' story -- if you get what I mean."
Whoever ends up with the GOP nomination still will face an uphill battle
against Davis, a popular governor and a "take no prisoners" campaigner.
"I've been predicting since Day One that the GOP would find some moneybags
candidate to throw against Gray," South said. "That's why we've kept our
political and fund-raising operation going since election day."
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Pressure Is on Utilities to Accept Grid Sale

Energy: Gov. Davis wants accord today, but Edison executive says company
might prefer bankruptcy.

By DAN MORAIN and NANCY VOGEL, Times Staff Writers

?????SACRAMENTO--His credibility at risk and California's energy future on
the line, Gov. Gray Davis on Thursday turned up the heat on the state's
utilities to accept today a series of tentative rescue accords that would put
the companies' transmission systems into public hands.
?????How far the utilities are willing to bend to the governor's intensified
pressure was unclear late Thursday. Given Davis' mandate, a top executive of
Southern California Edison said his company is now being forced to seriously
contemplate whether it might fare better in Bankruptcy Court.
?????"We are weighing two very unpalatable alternatives," he said.
?????Two alternatives facing the utilities are either to sell their
electrical transmission systems to the state at a price they consider too low
or gamble in Bankruptcy Court that they could hang onto their valuable assets.
?????After nearly a week of negotiations, Davis administration officials said
they hoped to announce today a partial deal that would calm the utilities'
jittery creditors and help subdue California's runaway electricity market.
?????State officials said Thursday they were close to agreements with Edison
and San Diego Gas & Electric but remained at odds with the state's biggest
utility, Pacific Gas & Electric, which has balked at giving up its
transmission grid.
?????"These are complex issues that cannot be resolved overnight," said PG&E
spokesman Ron Lowe. "There are clearly some areas where we are very far
apart."
?????On Thursday, Edison Chairman John Bryson conferred with members of his
utility's board of directors. But by evening, the company's top executives
still had not decided whether to acknowledge that an agreement is near.
?????Although the utility has begun to contemplate the protections of
bankruptcy, it is unclear when, or if, such a dramatic action would occur.
?????Davis is believed to be offering roughly $7 billion for the utilities'
transmission grids. The companies could use the cash to restructure their
debt, which resulted from the utilities' inability to pass along their
soaring wholesale electricity costs to ratepayers.
?????Davis has significant political and fiscal reasons for wanting to make
an announcement today. He is scheduled to arrive in Washington for the
National Governor's Assn. conference this weekend, meet with U.S. Energy
Secretary Spencer Abraham on Sunday, and attend the Democratic Governors
Assn. annual fund-raising dinner Monday night.
?????Davis, a prodigious fund-raiser, is chairman of the Democratic Governors
Assn., and the dinner is expected to raise more than $5 million. Of that
amount, Davis' political organization raised in excess of $1 million, said
Garry South, his chief political advisor.
?????Any progress Davis can cite could help improve his national political
standing. But his aides say it's especially important to be able to show at
least a semblance of an agreement when he travels to New York on Wednesday to
confer with Wall Street analysts.
?????On Thursday, those analysts reacted exuberantly to early hints from the
governor's office that settlements with the utilities might be announced.
?????The recently anemic stocks of Edison International and PG&E Corp. soared
on the New York Stock Exchange on a day when most utility stocks closed lower.
?????Edison jumped $1.50 per share, or 11.15%, to close at $14.95 while PG&E
gained $1.49, or 11.41%, to $14.55 per share.
?????"That suggests that someone thinks something good is happening in
Sacramento," said analyst James D. von Riesemann of Morgan Stanley Dean
Witter & Co.
?????But some analysts fear investor enthusiasm might be hasty.
?????"I'm concerned that the governor's optimism may not coincide with all
the parties at the table and it may not coincide with the Legislature," said
Paul Patterson, utility analyst at Credit Suisse First Boston Corp.
?????Davis met Thursday with Steve Baum, chairman of Sempra, the parent
company of SDG&E. Administration officials are confident that an agreement
can be reached. But the San Diego company is the smallest of the state's
three major private utilities, and its debt is far smaller--$605 million,
compared to the combined $12.7 billion that Edison and PG&E say they have
amassed.
?????"[Baum] is willing to listen," said Sempra spokesman Doug Kline. " . . .
We're on the record as stating that we are willing to consider the sale of
those [transmission] assets if it helps solve the crisis."
?????PG&E executives had been scheduled to start meeting with Davis at 11
a.m. Thursday. But in what was seen a slight against PG&E, Davis' aides did
not summon negotiators for the Northern California utility, including company
Chairman Robert Glynn, until after 3:30.
?????Although the parties continued to wrangle over details, there was
progress Thursday on the sidelines.
?????State officials announced they had signed a long-term contract for a
relatively small amount of electricity with a major energy supplier--an
achievement that was perhaps more symbolic than substantive.
?????Tulsa-based Williams Cos. said it had agreed to a 10-year deal to sell
power to the Department of Water Resources. By April, the company will
provide at least 175 megawatts--enough electricity to supply 175,000
homes--at times of the day when demand for electricity soars. Such peak
supplies will increase through next summer and reach 900 megawatts by 2006,
according to Williams.
?????The agreement is only the second such long-term contract since Davis
signed a bill Feb. 1 putting the Department of Water Resources into the
power-buying business for many years to come.
?????At least 10 other power suppliers have reached understandings with the
state, Davis said Wednesday. But those companies refuse to sign deals, the
governor said, until the state finds a way to help California's two biggest
utilities pay off their billion-dollar debts.
?????"As soon as we revitalize the utilities," the governor said, "I think
you'll see a lot of movement on long-term contracts."
?????Another small but important piece of the state's energy plan emerged
Thursday when legislation was introduced by Sen. Jim Battin (R-La Quinta) to
slash the rates paid to alternative energy producers--a move expected to
shave $3 billion or more in annual costs charged to the big private
utilities. Reducing the amount paid to producers of renewable energy such as
solar, wind and biomass power is considered a crucial step in keeping
expected consumer rate hikes down.
?????And, after 40 days of dangerously low electricity supplies, the state
got a reprieve Thursday morning when grid officials lifted the state's
"electrical emergency" status for the first time since Jan. 13.
?????So far, the state has spent nearly $2 billion buying electricity on
behalf of the utilities, according to the Department of Finance, which
informed the Legislature on Thursday that it will release another $500
million for electricity purchases.
---
?????Times staff writers Nancy Rivera Brooks, Nancy Cleeland and Mitchell
Landsberg in Los Angeles and Julie Tamaki and Jenifer Warren in Sacramento
contributed to this story.
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Energy Firms Won't Pay All of Monster Debt
PUC reverses, taxpayers could foot the bill
Christian Berthelsen, Chronicle Staff Writer
Friday,?February 23, 2001

 Under a ruling yesterday by state regulators, California taxpayers could be
on the hook for hundreds of   millions of dollars in power purchases the
state has made in behalf of two troubled utilities.
The California Public Utilities Commission voted unanimously to absolve
Pacific Gas and Electric Co. and Southern California Edison of responsibility
for any costs above the revenue they collect from ratepayers.
The ruling reversed a position taken earlier by the commission, which had
said the utilities were responsible for making up the difference between the
state's costs and their own revenue.
John Tremaine, a PG&E spokesman, said the funding needed to make up the
difference could come in the form of a surcharge imposed on customers who use
130 percent of the baseline amount of electricity. That is one option under a
bill passed last month by the Legislature, he said.
But Steve Maviglio, a spokesman for Gov. Gray Davis, said the governor does
not believe the money will come from ratepayers' electric bills. The costs,
Maviglio said, could be covered by the $10 billion bond measure the state
recently issued to cover power purchases.
As California tries to resolve its power crisis, state officials are working
out the precise way that should be done.
Under the state's deregulation plan approved in 1996, the utilities have been
forced to absorb skyrocketing wholesale electricity costs while being
prevented by law from passing the increases on to customers through higher
rates.
Since the California Department of Water Resources began buying power last
month, details showing how it will be repaid, how much or by whom have not
been established.
Yesterday's PUC decision was an attempt to begin setting the repayment
criteria.
A precise accounting of how much money is at stake is impossible to determine
at this point, officials said, because PG&E declines to release ratepayer
revenue figures, and the state is refusing to say exactly how much it has
spent buying power. Officials estimate the state will spend $2.3 billion by
the beginning of March and Davis authorized the expenditure of $500 million
more yesterday.
The state's Department of Water Resources became the buyer of record on Jan.
17 when the two utilities' credit was so damaged that they were no longer
able to buy power.
Both utilities had opposed the commission's previous position that they be
responsible for all power costs.
The PUC's shift yesterday was summed up by Commissioner Richard Bilas, who
said he could not support holding the utilities responsible for the revenue
shortfall. "The DWR is not about to go bankrupt; the utilities are," he said.
Yet consumer advocates downplayed the commission's ruling yesterday. Nettie
Hoge, executive director of The Utility Reform Network, said the ruling only
dealt with the narrow issue of who has to account for the revenue shortfall,
and did not reach an overarching decision about who, ultimately, will be
financially responsible for it.
"This is not a huge deal," she said.
The state has been buying the lion's share of its power in the real-time
market run by the Independent System Operator since the demise of the longer-
term California Power Exchange, said Jesus Arredondo, a spokesman for the
exchange.
The state has been paying premium prices because it is buying in a market
that was designed to handle last-minute emergencies.
The governor's office has been seeking cheaper, long-term power contracts
with only modest results.
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Small electric producers OK big price cut

By Ed Mendel
STAFF WRITER
February 23, 2001

SACRAMENTO -- Legislators said yesterday that small generators who produce
about 30 percent of the state's power have agreed to cut their power prices
in half, an important step toward easing the electricity crisis.
Negotiations continued on what Gov. Gray Davis has called the final step: the
state purchase of the transmission systems of the three investor-owned
utilities in exchange for paying off their huge debt.
Meanwhile, the amount that the state is spending to buy power for the
customers of the utilities grows. Officials gave notice that an additional
$500 million will be needed in 10 days, bringing the total to $2.6 billion.
But for the first time in nearly six weeks the state did not declare an alert
yesterday due to power shortages. More power was available from other states,
and some power plants that had been shut down for maintenance resumed
operation.
Two legislators, Sen. Jim Battin, R-Palm Desert, and Assemblyman Fred Keeley,
D-Boulder Creek, said they introduced legislation that sharply reduces the
prices paid to small generators after weeks of difficult negotiations.
"Ultimately, this bill will reduce the cost of energy to the state and its
ratepayers by billions of dollars," said Battin, who represents eastern San
Diego County.
About half of the small generators use "renewable" technologies such as
solar, wind, geothermal and biomass. The rest is "co-generation," when fuel
is used for industrial purposes and electricity is generated as a by-product.
The small generators have grown to produce nearly a third of California's
power under a two-decade-old federal "qualifying facilities" program, which
requires utilities to buy their power.
Battin and Keeley said that under the bill, SB 47X, the average price for
these QF contracts could drop from the current 17 cents per kilowatt-hour to
about 8 to 8.5 cents per kilowatt-hour.
"We believe that the rates are at least that low, if not lower," said Jan
Smutny-Jones, executive director of the Independent Energy Producers, which
represents small and large generators.
The small generators support the bill because it will give them a stable
price for five years, avoiding ups and downs and the possibility that state
regulators might make a more unfavorable price cut.
Much of the current price formula is based on the price of natural gas at the
California border, which has soared this winter. The legislation spreads the
price bench mark over a five-year period.
"We encourage the Legislature to take quick action to approve SB 47X as
quickly as possible to help stabilize the electricity crisis," Smutny-Jones
said.
He said one of the side agreements to the legislation is the creation of a
portfolio of long-term contracts to purchase natural gas for some
co-generators, lowering their production costs.
The legislation was applauded as "a major step forward" by a group of small
generators who formed a creditors committee last week and threatened to take
the utilities into bankruptcy.
"We call on the Legislature and the governor to act on it immediately," said
Chris Thompson, a spokesman for the group.
Thompson said Southern California Edison continues to collect money from
ratepayers, as the state buys power for its customers, but is not paying
anything to the small non-polluting generators.
A spokesman for a geothermal generator in El Centro, which filed a lawsuit
seeking $45 million from Edison for power provided since November, welcomed
the legislation for giving generators stability and ratepayers cheaper power.
But Vince Signorotti, a spokesman for CalEnergy, said it would be "premature"
to consider dropping the lawsuit.
Battin and Keeley said that payment of the small generators depends on the
governor's attempt to negotiate the purchase of the transmission systems of
Edison, Pacific Gas and Electric, and San Diego Gas and Electric in exchange
for payment of their debt.
As part of the governor's plan, the utilities would agree to provide low-cost
power for five to 10 years from their generators, which provide about a third
of the state's power.
Davis aides are attempting to negotiate long-term contracts with generators
for the remaining third of the power required by the state, sharply reducing
the cost of buying power on the expensive spot market.
But the governor said this week that many generators are reluctant to sign
long-term contracts until they know how the utilities will pay their debt for
previous power purchases.
The state called off all power alerts yesterday for the first time since
mid-January, rescinding a Stage 1 alert declared Wednesday. Grid operators
made the change after increased power supplies became available.
"The supply situation this week has gradually been improving," said Lorie
O'Donley, a spokeswoman with the California Independent System Operator,
which manages most of the state's power supplies.
However, she said the improvements shouldn't deter consumers from
conservation.
"It is good news to be out of electrical emergencies but we just want to
remind everybody that we are looking at a long-term power supply situation
here," she said. "And the high-demand summer is just around the corner. So we
would ask that people continue with their conservation efforts."
In San Francisco yesterday, state power regulators decided unanimously that
the Department of Water Resources is responsible for buying any power that
cash-strapped utilities are unable to generate or buy on their own -- no
matter what price wholesalers are charging.
But the PUC voted 3-2 against taking action that would have allowed the DWR
to receive a portion of ratepayer revenues from the utilities to help cover
the cost of buying electricity.
The state, through the DWR, was authorized by a recent law to buy power for
the utilities. Edison and PG&E have such low credit ratings that no power
companies will sell to them. SDG&E's rating is much better, but its debt also
was mounting.
The DWR purchases that portion of electricity beyond what the utilities
provide through their own generating plants and through existing long-term
contracts. But the DWR has refused to buy power beyond a certain price. That
means more last-minute power purchases on the expensive spot market.
The utilities and the state had disagreed over how the DWR will be reimbursed
-- whether through state bonds or ratepayer dollars -- and the extent of its
power-buying role.
The author of the bill authorizing the long-term contracts, Assemblyman
Keeley, said the legislation's intent was to fully cover the one-third of the
power that utilities purchased on the spot market, either through extended
contracts or through the state ISO.
Staff writer Karen Kucher and The Associated Press contributed to this
report.


Dear all,

these are the issues from the last legal meeting that need further attention:

1). European Jurisdictions Peculiarities
Slovenia, Cpoatia, Romania must be added to Phase 1 reviews. Products that
considered are gas and power both physical and financial. 15 Jurisdictions
reviews are already received. So far they do not reveal any fundamental
problems with the overall structure. There are few recommendations on the
wording of PAA, ETA and GTC to come. CC (Tim Hueges) is summarising all the
replies and will forward a list of problematic issues for each jurisdictions
by Monday (14th) lunch time.

Possible complications are:

 All documents for French and Spanish customers may need translation into
French and Spanish, as part of these  jurisdictions requirements.

 Sweden and Italy have particularly strict regulations on checking  validity
of signatures => it may need to be reflected in the business processes.

It was suggested to have PAA on the screen as well, so that potential
customers may print them out, fill in and mail to Enron.

2). Read Only Access for some customers
instead of ETA read only customers have to click on Read Only Agreement,
therefor it has to be drafted ASAP.

3). Product Descriptions
A decision was made that they will be reviewed by internal legal team (Justin
Boyd, Mark Taylor) but not CC or S&C.

4). Timetable
GTCs in English should be finalised by the end of June.  First two weeks of
July CC will spend validating marketing data.  Project timetable was promised
to CC to be e-mailed yesterday.

5). Translation
Translation of GTCs, ETA and PPA will be done internally . The first priority
languages most likely will be French, German and Spanish.
Actions:

Translations of those GTCs that we already have must be started ASAP (Justin
Boyd to co-ordinate).

Identify languages to  translate into (Elena Kapralova to co-ordinate with
Justin and traders)

6). Taxes
Questionnaires similar to the one that was sent to European jurisdictions
must be sent to Canada (Janine Juggins to co-ordinate).

7). Web Page Wording
The words "I accept" and "Delete" in the box that appears after a customer
clicked on price, are to be changed into "Submit" and "Clear". Lawyers are
comfortable with this.

8). Different Entities on Counterparty Side
If there are a few different entities trading for the same company,  for ex.
Morgan Stanley International (MSI) and Morgan Stanley (MS), they should be
treated in the system as two separate clients and be granted two separate
System Administrator passwords. This is necessary for tax considerations. It
is confirmed once again that there will be one ETA acceptance click per
System Administrator.

9). Authorisation Risk
Because Online Trading will be Enron's software, all problems arising from
authorisation errors, for ex.  when customer that was supposedly authorised
to trade only UK Gas was able to trade power, will be entirely Enron's
liability => it highlights again an importance of very thorough testing of
authorisation functionality of the system in July and August.

10). Written and Electronic Confirmations
It appears to be a difference between UK and US practices in treating
superiority of written vs. electronic confirmations. According to the UK law,
an electronic confirmation will overwrite a paper one, generated and mailed
by the Back Office, similar to the current practice for transactions done
over the telephone, when phone conversation overwrites all paper
conformations. In the US the situation is opposite. For the deals done over
the phone, written confirmations still take priority over the phone
conversation tape. In Texas anything that is not in writing, is not
enforceable.

The situation with priority of confirmations of Online trades in US must be
investigated further (Mark Taylor to co-ordinate). The result should be
reflected in US version of  ETA.

This leads to a further question, whether sending written confirmations in UK
is still necessary?

11). UN E-Commerce Directive
There is a daft of UN Directive on e-commerce, which currently has very
strict rules regarding time when transaction is considered complete. It
requires mutual exchange of written confirmations etc. Enron might be in
position to lobby few items in this Directive (Justin and Regulatory Dept.)

12). Suspending Trades by Counterparty
A few traders are very keen on being able to suspend trades by counterparty,
for instance in a situation when they see a counterparty making a number of
deals in the same commodity. It arises two issues:
IT -  the system should be able to put a name of the counterparty on the
transaction summary page (bottom of the price page)

Legal - CC has to investigate and give a view whether it is permitted by law.

Price Check Idea
Just a thought, whether  it is technically possible to amend a price check
(the one done when the customer submitted a price, and database does credit,
GTC and price check) in a way that customer is notified about the price
change not for all changes but only when the price has moved against Enron,
i.e. if price moved in Enron's  favour transaction should go forward at the
price customer had agreed to earlier. Legally it is OK. Jay, can the system
do it?

Internal Issues still to be addressed:

1). Global Liquids Books management, i.e. how responsibilities for price
update will be managed  between London and Houston desks.
2). FX conversion including IT, business processes, tax, risk managment
issues (David Port, Janine Juggins, Jay Webb)

All comments are welcome,
Regards,
Elena


Before I finalize this, I'd like to get your reaction to what I have
drafted.  I still need to get Ken Culotta's and John Cogan's input.

Thanks

 <<302P01!.DOC>>

                    Confidentiality Notice
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 - 302P01!.DOC


It would probably be easier if Paige picked him up at the CC, don't you think?

Kay

"Neil Mann" <nmann@erac.com> on 12/14/2000 09:22:15 AM
Please respond to <nmann@erac.com>
To: "C. Kay Mann (E-mail)" <Kay.Mann@Enron.com>
cc:

Subject: michael's schedule

Michael's class party is tomorrow at 2:15 followed at 3:15 by the gym class
party.

Next Wednesday school is out at 11:30 and he should be picked up in the car
pool line. The Children's Center is open until 6pm that day if needed.

Thanks for taking care of me last night and this morning.

Love, Neil

I forgot to write a check for the Astros tickets last night. Do you want to
write it and get it over to John?  Twenty games would be $2,377.20.


We have not decided "to prevent any regulated utility from completing any
financial transactions" online.  If we have already satisfactorily concluded
the necessary due diligence with respect to a particular utility, they will
be approved.  It is only with respect to those utilities which have not yet
been researched that we are withholding approval.  The due diligence required
involves asking the utility for certain information concerning their
organization and regulatory situation, hiring local counsel in the relevant
state and having research done into the laws and regulations in place there
and into any public utility commission orders respecting the particular
utility in question, and on occasion requesting an opinion letter from the
utility's counsel.  We usually begin that process only when a trader believes
there is a likelihood of a sufficient volume of trading with the utility to
justify the time and expense.  FYI, the due diligence process has in the past
revealed circumstances which prevented the utility from trading derivatives
or required actions to authorize such trading which had not been taken.

A recent count showed about 10 executed master agreements and another 30 to
40 in one stage or another of the due diligence/negotiation process.

Louise Kitchen
10/06/99 02:46 PM
To: Mark E Taylor/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT
cc: Debbie R Brackett/HOU/ECT@ECT, William S Bradford/HOU/ECT@ECT, David
Port/LON/ECT@ECT, Bob Shults/HOU/ECT@ECT, David Forster/LON/ECT@ECT
Subject: Customer Data

On Friday we will be receiving the remaining customer list from credit, due
to the timescales I am asking for turnaround on the customer matrix and
master agreement review by the end of play Tuesday 12th October.

Any problems with this please notify me immediately as we are now running up
against very tight deadlines in terms of getting all of the information in
the system for the launch schedule.

Thanks

Louise

Mark,
On another note we are requesting a review of the blanket decision which has
been made to prevent any regulated utility from completing any financial
transactions, if we are not prepared to do the due diligence on which ones
can transact and which ones can not - is this our responsibility or theirs?
ie their decision whether to trade or not.
Louise


MARKET NOTICE
January 16, 2002
Revised Operating Procedure M-401
Real-Time and Forward Intra-Zonal Congestion Management
ISO Market Participants:
On December 12, 2001 the ISO posted on its web site a version of ISO
Operating Procedure M-401 that included certain language potentially giving
the impression that the ISO determines what is and what is not a reasonable
competitive bid.  Additionally, this version of the Operation Procedure
included a provision for the exclusive use of Reliability Must-Run (RMR)
units in areas the ISO has deemed to be noncompetitive and this provision is
in conflict with the requirements of Section 4.1 of the Must-Run Service
Agreement.
The ISO has removed the December 12, 2001 version of operating procedure
M-401 from the ISO web site and posted a revised version at
http://www.caiso.com/thegrid/operations/opsdoc/marketops/.  The revised
version includes procedures for:
*	Eliminating "competitive" and "non-competitive" intra-zonal
congestion areas;
*	Modifying the use of RMR units for resolving intra-zonal congestion
to reflect the requirements of the Must-Run Service Agreement;
*	Eliminating the ISO's review of market bids for "reasonableness",
while retaining the ISO's obligation to report bids it considers potentially
noncompetitive to the ISO's Department of Market Analysis and to the Federal
Energy Regulatory Commission; and
*	Modifying the steps the ISO will take to relieve intra-zonal
congestion it predicts may occur due to pre-scheduled clearances.
The revised Operating Procedure M-401 has been posted on the ISO web site at
www.caiso.com/thegrid/operations/opsdoc/marketops.
If you have questions, please contact The ISO Operating Procedures Control
Desk at procctrldesk@caiso.com <mailto:procctrldesk@caiso.com>  or your
Account Manager.
Client Relations Communications.0715
CRCommunications@caiso.com


We need to sell all the EES all the time.
The imbalance is always zero...it doesn't matter what the beep prints(unless
its negative-then you can bet we will get charged!!!).

Any ideas, or advice for them?
Let me know.

Bill

---------------------- Forwarded by Bill Williams III/PDX/ECT on 04/12/2001
08:29 AM ---------------------------
To: Bill Williams III/PDX/ECT@ECT
cc: Daniel Kang/HOU/EES@EES, Jubran Whalan/HOU/EES@EES

Subject: CAISO Notice - Distribution of Funds for January Preliminary Invo ice

Bill,

We are still in a bad position with the ISO.  I have noticed that you have
not been able to sell all of our length in the real time market. Given the
below statement by the ISO we would ask your traders to get as aggressive as
possible on the sales (ie just sell it) . Receiving  cents on the dollar from
the ISO is not a sound business proposition for us.  Do you have any ideas,
we welcome your advice ....

Thanks

NFB
---------------------- Forwarded by Neil Bresnan/HOU/EES on 04/12/2001 07:22
AM ---------------------------

"Woertz, Byron" <BWoertz@caiso.com> on 04/11/2001 06:31:30 PM
To: ISO Market Participants
<IMCEAEX-_O=CAISO_OU=CORPORATE_CN=DISTRIBUTION+20LISTS_CN=ISO+20MARKET+20PARTI
CIPANTS@caiso.com>
cc: SC Settlements Contacts
<IMCEAEX-_O=CAISO_OU=CORPORATE_CN=DISTRIBUTION+20LISTS_CN=SCSETTLECONTACTS@cai
so.com>
Subject: CAISO Notice - Distribution of Funds for January Preliminary Invo ice

  ISO Market Participants:
  Cash clearing related to the preliminary invoice for January
2001 was scheduled for April 3, 2001.  Due to a shortfall in receipts from
market debtors, the ISO was required to perform calculations in accordance
with ISO Tariff Section 11 and Settlements and Billing Protocol ("SABP")
Section 6 to determine the appropriate pro-rata distributions to scheduling
coordinators.  These calculations have been completed, and a distribution of
available funds was made today.
  A total distribution of $5,980,329 was made against accounts
payable of $835,450,697, resulting in a pay-out percentage of 0.7%.  Total
market related collections were $12,952,985, which were reduced to the
$5,940,329 to cover GMC short-payments and other adjustments.
  The ISO will provide a comprehensive reporting of the
January preliminary settlement later this week, and will thereafter
distribute a current certification of amounts owed.
  Phil Leiber
  Dir. Financial Planning & Treasurer
  California ISO
  916 351-2168
  916-351-2259 (fax)

  Byron B. Woertz, Jr.
  Director, Client Relations
  (916) 608-7066
  (800) 481-7037 - Pager


Please review the current risk policy.

Thanks
---------------------- Forwarded by Jeffrey C Gossett/HOU/ECT on 02/20/2001
09:20 AM ---------------------------

From:  Cassandra Schultz @ ENRON
               02/18/2001 10:26 PM

To: Bob M Hall/NA/Enron@Enron, Leslie Reeves/HOU/ECT@ECT, Jeffrey C
Gossett/HOU/ECT@ECT, Peggy Hedstrom/CAL/ECT@ECT, Stacey W White/HOU/ECT@ECT,
Brent A Price/HOU/ECT@ECT, Scott Earnest/HOU/ECT@ECT, Sheila
Glover/HOU/ECT@ECT, D Todd Hall/HOU/ECT, Cindy Horn/LON/ECT@ECT, Brenda F
Herod/HOU/ECT@ECT, Mike Jordan/LON/ECT@ECT, Howard Carter/EU/Enron@Enron,
Andrew Cornfield/LON/ECT@ECT, James New/LON/ECT@ECT, Orjan
Agdesteen/OSL/ECT@ECT, James New/LON/ECT@ECT, Marcelo Parra/NYC/MGUSA@MGUSA,
Louis Colarusso/NYC/MGUSA@MGUSA, Heidi
Mason/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jan-Erland Bekeng/AP/Enron@Enron,
Kevin Rhodes/EU/Enron@Enron, Naomi Connell/LON/ECT@ECT
cc: Sally Beck, Shona Wilson, Chris Abel
Subject: To Ops - Revised February BOD Approved Risk Management Policy

Attached is the revised Risk Management Policy incorporating the BOD's
changes - please discard the previously circulated version I sent out prior
to the BOD meeting.  I've also included a recap of substantive changes since
the October 2000 version that was circulated to you in conjuction with the
compliance certificates last fall, but you should read the policy to enhance
your understanding, and distribute it to your groups as some changes are
significant and are detailed further in the policy.  I did notify the Office
of the Chair for each of your business units of these changes earlier this
week, and I will also provide them with a copy of the revised policy.

If you have any questions, feel free to give me a call at x 30429.

Regards,
Cassandra Schultz
Market Risk Management


Please update with other info.

Jim


Ed,

Sara asked me to forward this agreement to you.  She said you can send it to
ABN AMRO Bank.

Kaye


Sally,

I anticipate the following EES groups to integrate into the following PRC meeting dates below.    Please let me know if you prefer cross calibration of EES employees coming into your group to occur otherwise.   Please refer to the schedule in prior e-mail for further consideration.

Neil Hong's group (Risk Analytics) to participate in the June 5th Pre-PRC (Gas/Power Risk Management) with Bob Hall/Leslie Reeves/Jeff Gossett.

Meredith Eggleston's group (Strategic Ops); Mark Evans' (Sr. Director Info. Mgmt), Karin Williams (Director GCP) , and Colette Weinreich (Contracts Management) to participate in the  May 31st  (ENW Global Risk) Pre-PRC with Beth Apollo's group.

Russell Kavanaugh/AK Matheson's group (Deal Capture) to participate in the June 6th Pre-PRC (ENW Gas/Power Settlements Deal Clearing/Volume Mgmt) with Leslie Reeves/Bob Hall's group.

Thanks,
hgm

 -----Original Message-----
From: 	De La Paz, Janet
Sent:	Wednesday, May 02, 2001 3:37 PM
To:	Keprta, Dovie
Cc:	McLoughlin, Hector; De Jesus, Frank
Subject:	PRC Meeting Update

Date: May 31st
Estimated Meeting Time:  TBD
Meeting:  ENW Global Risk
Meeting Location:  TBD
Business Unit Head:  Beth Apollo
HR Representative:  Hector McLoughlin/Frank deJesus
Facilitator: Hector McLoughlin
HR Assistant / PC Driver:  Janet De La Paz
PRC Coordinator:  Dovie Keprta
Number in committee:  13
Equipment Needed:  Yes
Laptop:  Yes
Desk Top Printer:  Yes
Projector:  yes	with Freeze:  yes

Date: June 4th
Estimated Meeting Time:  TBD
Meeting:  ENW Gas Logistics
Meeting Location:  TBD
Business Unit Head:  Bob Hall
HR Representative:  Frank deJesus
Facilitator:  Frank deJesus
HR Assistant / PC Driver:  Janet De La Paz
PRC Coordinator:  Dovie Keprta
Number in committee:  9
Equipment Needed:  Yes
Laptop:  Yes
Desk Top Printer:  Yes
Projector:  yes	with Freeze:  yes

Date: June 5th
Estimated Meeting Time:  TBD
Meeting:  Gas/Power Risk Mgmt
Meeting Location:  TBD
Business Unit Head:  Bob Hall / Leslie Reeves
HR Representative:  Frank deJesus
Facilitator:  Frank deJesus
HR Assistant / PC Driver:  Janet De La Paz
PRC Coordinator:  Dovie Keprta
Number in committee:  13
Equipment Needed:  Yes
Laptop:  Yes
Desk Top Printer:  Yes
Projector:  yes	with Freeze:  yes

Date: June 6th
Estimated Meeting Time:  TBD
Meeting:  ENW Gas/Power Settlements Deal Clearing/Volume Mgmt
Meeting Location:  TBD
Business Unit Head:  Leslie Reeves/Bob Hall
HR Representative:  Hector McLoughlin/Frank deJesus
Facilitator:  Hector McLoughlin
HR Assistant / PC Driver:  Janet De La Paz
PRC Coordinator:  Dovie Keprta
Number in committee:  8
Equipment Needed:  Yes
Laptop:  Yes
Desk Top Printer:  Yes
Projector:  yes	with Freeze:  yes

Date: June 8th
Estimated Meeting Time:  TBD
Meeting:  ENW Energy Ops Final Meeting
Meeting Location:  TBD
Business Unit Head: Sally Beck
HR Representative:  Hector McLoughlin/Frank deJesus
Facilitator:  Frank deJesus
HR Assistant / PC Driver:  Janet De La Paz
PRC Coordinator:  Dovie Keprta
Number in committee:  17
Equipment Needed:  Yes
Laptop:  Yes
Desk Top Printer:  Yes
Projector:  yes	with Freeze:  yes

Dove - The Analyst & Associate meeting I scheduled for June the 7th will not be taken place.  We have also moved the Final ENW Energy Ops Final Meeting to Friday June 8th.  Please let me know if you have any questions.

Thanks,
Janet


okay skilling

 -----Original Message-----
From: 	Allen, Margaret
Sent:	Wednesday, November 14, 2001 3:11 PM
To:	Arnold, John
Subject:	RE:

whatever. i'll call when i'm walking out and i'm sure i'll wait 45 minutes. asshole.

 -----Original Message-----
From: 	Arnold, John
Sent:	Wednesday, November 14, 2001 3:09 PM
To:	Allen, Margaret
Subject:

...since I waited half an hour for you last time


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Debra,

Could you call me when we're set to trade w/ Cinnabar?  Thanks for your help,
I appreciate it.

Kevin
x3-6320


Not unreasonably withholding consent and agreeing to the assignment are a bit
different in my mind.

	Enron North America Corp.

	From:  Mitch Robinson                           12/06/2000 02:57 PM

To: Kay Mann/Corp/Enron@Enron
cc: Don Miller/HOU/ECT@ECT, Stuart Zisman/HOU/ECT@ECT

Subject: Re: SWPC Transfer

Are we not saying the same thing?

Kay Mann
12/06/2000 12:13 PM
To: Mitch Robinson/Corp/Enron@Enron
cc: Don Miller/HOU/ECT@ECT, Stuart Zisman/HOU/ECT@ECT

Subject: Re: SWPC Transfer

2.  I believe SWPC further agreed that the assignment to the LLCs (and the
subsequent transfer of equity) will not affect the terms of the contracts,
including the warranties.

	Enron North America Corp.

	From:  Mitch Robinson                           12/05/2000 06:38 PM

To: Don Miller/HOU/ECT@ECT
cc: Stuart Zisman/HOU/ECT@ECT, Kay Mann/Corp/Enron@Enron

Subject: SWPC Transfer

Don -

Please forward on to Allegheny.

In order to facilitate the smooth transfer of the assets, to close out the
turbine purchase contracts, and to provide Allegheny with unused generation
capability at Gleason, we are entering into an agreement with Siemens
Westinghouse Power Corp ("SWPC") which will effect the Gleason and Wheatland
facilities in the following way.

1.  Increase the permissible power level at Gleason on each of the turbines
from 182mw to 185mw.  Specifically, SWPC will allow the three Gleason units
to each have a maximum operating capability of 185,000kw and will reset the
control curves accordingly.  SWPC further will agree that operation of the
Gleason units up to and including 185,000 kw is within normal operating
parameters and operation up to and including this level will not invalidate
the warranty.  SWPC has agreed to make this change within one week after we
give them authorization.

2.  SWPC agrees that the Gleason and Wheatland contracts and associated
warranties may be assigned to limited liability companies owned in whole or
in part by an Enron entity pursuant to the terms and conditions of the
Gleason and Wheatland contracts, and that SWPC's consent to such assignments
will not be unreasonably withheld.  SWPC will honor warranty claims currently
outstanding or asserted in the future by the contract assignee, assuming such
assignment is in accordance with the terms and conditions of the Gleason and
Wheatland contracts.

3.  SWPC agrees to assist Enron in providing technical information, including
redacted copies of the purchase contracts, applicable technical bulletins,
etc. to Allegheny.  This information will be limited to information which is
currently available to Enron and of a technical nature only.

I believe all of these features are significantly beneficial to Allegheny.
Please ask Allegheny for feedback, as we will be entering into the agreement
by the end of the week.

Regards,

Mitch Robinson


Mark:  (1)  Did you consider my voice mail about updating authorized trader
lists and resolutions (by Samantha or Tana)?

(2)  Have you thought about electronic notice provisions?  Shouldn't
default/termination notices be in writing to the appropriate counsel/Corp.
secretary?  And, can we agree to "electronic notices" at all?  There is no
electronic address for a Documentation Desk or Assistant General Counsel.  I
am seeing this type of provision in electronic trading agreements.

Thanks.  Sara


i like that you think that you have a big mouth.  i think that it's funny.  i know that you were drunk.  i think that you might be a light weight!  :)


In discussing the Omnibus with outside counsel on a deal, I am not clear that
the definition of "Loss" picks up the concept of "Unpaid Amounts."  Arguably
it does (although the concept of "Unpaid Amounts" is built into the ECT
Master upon which the Omnibus was based for Early Termination for Events of
Default but not followed through entirely for Accelerated Termination Date).
My guess is that we decided that Omnibus "Loss" pv of economic loss includes
both past amounts owed/subsequent valuation.  Can you recall?


---------------------- Forwarded by Kay Mann/Corp/Enron on 03/30/2001 08:59
AM ---------------------------

Kay Mann
03/30/2001 06:30 AM
To: "Campbell, Carolyn" <CCampbell@KSLAW.com>, jkeffer@kslaw.com,
mreuter@kslaw.com
cc:

Subject: Anna Claire Sole

AC arrived around 200am today, weighing in at 7 1/4 lbs, 19 inches.  All are
fine, with the exception of Papa, who suffered a slightly bruised ego when he
fainted around 205.  As Carlos mentioned in his voice mail "the women were
quite amused".  The syncope episode was attributed to a hot delivery room.

Right.

Anyway, I don't intend to communicate with Carlos about the Delta deal.  He
has his hands full.

Talk to you later today,

Kay


John,

I'm sorry I missed you before you went off to Dhabi.  I had difficult
mornings while in town.  I'll call you next week to discuss the weather
organization structure and the best way to move forward.

Have a good holiday.  I think you'll like the UAE.

Mike