Re: Daily Update/Information on CA Legislative Activity ,
 Bruno --

We should contact Mike Day as soon as possible and have him prepared to dra=
ft=20
legislative fixes for any bill that would come out looking like the Wood=20
Draft Decision consistent with the issues you outlined below.  I want to ma=
ke=20
sure that we are prepared for this possibility. =20

FYI, given the information I have, the Wood Draft Decision is more favorabl=
e=20
for Enron's attempt at becoming the wholesale supplier to SDG&E.  It looks=
=20
pretty tough to beat the Duque Decision.

Jim








Bruno Gaillard
08/22/2000 09:02 PM
To: Edward Hamb/HOU/EES@EES, Jennifer Rudolph/HOU/EES@EES, Chris=20
Hendrix/HOU/EES@EES, Greg Cordell/HOU/EES@EES, Harold G Buchanan/HOU/EES@EE=
S,=20
Martin Wenzel/SFO/HOU/EES@EES, Douglas Condon/SFO/EES@EES, James M=20
Wood/HOU/EES@EES, Gary Mirich/HOU/EES@EES, Dennis Benevides/HOU/EES@EES,=20
Roger Yang/SFO/EES@EES, David Parquet@ECT, mday@gmssr.com, SF Directors, Pa=
ul=20
Kaufman/PDX/ECT@ECT, Marcie Milner/Corp/Enron@ENRON, Mary Hain@Enron, Harry=
=20
Kingerski/HOU/EES@EES, James D Steffes/HOU/EES@EES, Richard=20
Shapiro/HOU/EES@EES, Peggy Mahoney/HOU/EES@EES, Karen Denne@Enron, Mark=20
Palmer/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron
cc: =20
Subject: Daily Update/Information on CA Legislative Activity =20

The events described below represent what has happened today. The situation=
=20
is in constant flux. However, we need to know our position in case any of t=
he=20
bellow does occurred.
=20
Scott Baugh, Republican Assembly Leader, had a press conference in which th=
e=20
republicans declared that:

They accept Duque's Decision as is.=20

They are going to, request a special legislative session starting September=
 1

The legislative session is going to look into supplementing focusing on=20
granting the Governor emergency power for supply side issues and streamlini=
ng=20
sitting. Furthermore, they will propose to provide relief in addition to=20
Duque's decision, by providing  an extra $300 MM, retroactive to June 1,=20
2000,  to schools, hospitals and local government in the form of a tax cred=
it=20
or cut and from the general fund. =20

They do not support the Davis/Alpert Bill (SDG&E Rate Freeze). (However, th=
e=20
San Diego Republicans will probably vote for it).

This also seems to take some wind out of the Pescetti bill (Freeze Extensio=
n).

This seems to be a political play. We do not believe that the republicans=
=20
think that the Governor will actually declare a special session. The Alpert=
=20
bill will  most likely be heard tomorrow. We do not know in which form and=
=20
whether or not it will be amended.

There also is a current rumor that a new bill may be introduce that would p=
ut=20
the Wood Draft Decision into a bill. Our comments on the Wood decision focu=
s=20
mostly on the recovery mechanism, limiting the application of the cap to=20
bundled customerrs, and insuring that only those that benefited from the ca=
p=20
paid for the costs associated with  the cap.

Attached is a brief summary of Woods proposal.
caps the energy component of bills for residential, small commercial and=20
street lighting customers at 6.5 cents/kwh
creates a balancing account to ensure that SDG&E is "made whole"
uses all revenues generated by SDG&E-owned or managed assets (e.g. qualifyi=
ng=20
facilities, San Onofre Nuclear Generating Station, bilateral and interutili=
ty=20
contracts) to finance the cap (large customers likely to feel cheated by th=
is=20
provision)
offers large customers a voluntary "bill smoothing" option (but no caps)
states that purchases made by SDG&E from the PX are no longer per se=20
reasonable and indicates that the Commission will investigate SDG&E=01,s pa=
st=20
procurement practices (seems to counter previous promises of keeping SDG&E=
=20
=01&whole=018)
goes through December 2003

Please provide comments as to our position on Wood's proposal
bruno.gaillard@enron.com