Jeff;
In response to your questions, I cannot explain why everyone missed this
bill in the past, I have raised it to the attention of my clients twice in
the last two months.  However, now that it is moving they have got the
message.  Williams (Kern River) is going to host a meeting today to create a
coalition to oppose the bill.  Bev Hansen knows where the meeting will take
place.  In addition to Williams, I understand that Questar, WSPA, and other
retail customer groups will join the coalition and oppose the bill.  My
client Wild Goose will also be listed in opposition, but they don't carry
that much clout or name recognition so far.  I am hopeful that other groups
will surface soon.

As for the bill itself, the problem is two fold.  First, the CPUC decides
what infrastructure to build at the request of the utilities.  They take
input from customers, but Loretta is a command and control type all the way,
and she will try to scare away private capital investment by interstate
pipelines by mandating that the utilities build a gold-plated
state-regulated system.  While the bill does not (and cannot legally) bar
interstate pipelines from coming into the state, it has provisions which
will prevent large customers from signing up with the interstates.  The
large customers have to commit to take firm service on a 5 year basis with
exit fees.  If they don't take this, they can only get interruptible service
from the utilities.  Many if not all large customers, especially generators
cannot afford to take partial service from an interstate and have only
interruptible access to the LDC system.  This is the same dilemma that the
RLS tariff caused.  My belief is that the obligation on the part of the
commission to provide the utilities with cost recovery for the new
investments will be used as justification by the utilities for another
attempt to reinstitute the RLS tariff or an onerous peaking rate.  The
Commission will impose a premium price on service to customers who have not
undertaken the firm 5 year commitment and will therefore be unable to
economically take partial requirements service from an interstate.  My view
is based on Sempra's reaction to the current peaking rate proposed decision
and statements by Lynch's office.  This could interfere with Enron gas sales
over the interstates, and would certainly threaten any Transwestern plans
for building across the border into California, although that does not
appear to be a high priority at this time.  This bill will also make it more
costly to develop gas supply arrangments for new power plants which had
hoped to direct connect to interstate pipeline capacity for a portion of
their needs.

Please call if you have further questions.  Mike Day

-----Original Message-----
From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com]
Sent: Tuesday, July 17, 2001 10:09 AM
To: James.D.Steffes@enron.com
Cc: Harry.Kingerski@enron.com; Paul.Kaufman@enron.com;
Susan.J.Mara@enron.com; Leslie.Lawner@enron.com; MDay@GMSSR.com
Subject: Re: AB 23XX Bad Bill Alert



I've taken a quick look at the bill and have attached for easy viewing.
Few questions.

Mike,
   I understand from our conversation yesterday that your following this on
   behalf of Questar.  Do we know if the other pipelines have been active
   in any discussions on this bill?
   What about the generators?  Have then been involved, since presumably,
   their in need of lots more capacity (and they're referenced in the
   bill)?
   What about large customers?  They been screaming for more
   infrastructure, too, and many have blamed SoCalGas (and the PUC) for not
   delivering it.
   Do we know if pipelines, generators, large customers are supporting or
   opposing the bill?  I'll try to check around, too, in between the
   electric mayhem.
   There doesn't seem to be anything in the bill that prevents the
   interstates from building into the state.
   If that's true, wouldn't the PUC take those projects into account when
   doing its analysis and only require the utility to construct (and
   noncore to take) capacity that isn't already being met by others (i.e.,
   interstates) bringing pipe into the state?

Any info you can provide on these fronts would be very useful.  Don't want
Enron too far out in front of opposition until we find out a bit more
regarding 1) whose fer and agin it and 2) analysis of what the bill
actually does/does not do.

Thanks again for the heads up.

Best,
Jeff

(See attached file: 23XX.pdf)




                    James D

                    Steffes              To:     Harry
Kingerski/Enron@EnronXGate
                                         cc:     Jeff
Dasovich/NA/Enron@Enron, Susan J
                    07/17/2001           Mara/NA/Enron, Paul
Kaufman/Enron@EnronXGate
                    07:43 AM             Subject:     AB 23XX Bad Bill Alert








Harry --

Can you track down this bill and determine impact?  We'll discuss on
Thursday.

Jim
---------------------- Forwarded by James D Steffes/NA/Enron on 07/17/2001
07:43 AM ---------------------------


MDay <MDay@GMSSR.com> on 07/16/2001 06:03:33 PM

To:   "'Bev Hansen, Enron lobbyist'" <bhansen@lhom.com>, "'Hedy Govenar,
      Enron Sacto lobbyist'" <hgovenar@govadv.com>, "'Scott Govenar, Enron
      lobbyist'" <sgovenar@govadv.com>, "'Harry Kingerski'"
      <hkingers@enron.com>, "'Jim Steffes, Enron'" <jsteffe@enron.com>
cc:

Subject:  AB 23XX   Bad Bill Alert

Is AB 23XX moving with a chance of passage?   I just learned that this
Pescetti bill that was AB 1425 was revived as a 2X bill.  It is very
anti-competitive, and could hurt a number of TW, EES, or ENA gas deals by
binding customers to 100% utility service through the imposition of large
exit fees by the CPUC.  If there is a chance that it moves, we need to
discuss the effect of this bill.  Mike Day


http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/abx2_23_bill_20010625_amend

ed_sen.pdf