ERC Financing ,
 Joe and Louise:

I was on a conf call today re ERC Financing.  Legal and Finance were on the call.  The consensus was that it would be difficult.  

The structure involves selling the ERC's at market to an entity controlled by the bank; buying a call from that entity; selling a put to that entity; having a price swap (fixed/floating) with entity.  The bank would also want to understand market liquidity, price transparency and the rules of every district we have ERC's in.  The Texas SOX deal recently put into this vehicle was much simpler in a more liquid market, but it took 4 months and $1MM of legal fees to put together.  The lawyers involved believe that it would be more difficult and likely more expensive for the California ERC's - we have several districts and several products.  

$1MM+ internal resources seems like a lot for a $20MM-$30MM balance with an  expected term of one year - especially with uncertain success due to the price transparency issues (no index price).

Any thoughts?

Chris Calger
503-464-3735
louise.kitchen@enron.com, joseph.deffner@enron.com