SCE's Rate Stabilization Legislative Proposal ,
 I reviewed the proposed legislation written by SCE introducing changes to the 
PU Code for Rate Stabilization at the end of the AB 1890 Rate Freeze.  The 
following are my observations:

SCE realizes that maintaining the AB1890 Rate Freeze will most likely not 
help them recover their remaining CTCs and may in fact result in reducing the 
level of CTC revenues recovered thus far.  Under the AB1890 Rate Freeze, 
SCE's shareholders now incur the risks associated with the commodity market 
prices.
SCE also realizes that the CPUC, State of California, and public will not 
allow SCE to artificially end the rate freeze early and forego recovery of 
CTCs as revealed in the bill language: "which could cause such electrical 
corporations to elect to take a loss on collection of utility 
generation-related assets and obligations in order to terminate the rate 
freeze that is currently providing protection from the current high and 
volatile electricity prices."
Realizing that no one will allow customers to see high and volatile 
electricity prices, SCE has proposed and supports this Rate Stabilization 
Proposal, so that it  can exercise the option to artificially end the rate 
freeze early.
This type of option to PG&E and SCE could result in a financial loss to Enron 
Energy Services if the Rate Stabilization proposal does not equal apply to DA 
customers, as well as SO customers.
It is clear that the proposal is to require the CPUC to stablize rates after 
the AB1890 Rate Freeze.  It is not clear whether the proposal is a rate 
freeze or cap, that is left up to the CPUC.  Most of the implementation 
details are left to the CPUC, provided that the CPUC implemented a 
non-bypassable rate to customers who benefit and the stabilized rates remain 
in effect through March 31, 2003.
It  is not clear whether the Post Freeze Rate Stabilization proposal applies 
equally to DA customers, even though the bill states: "Customers who have 
chosen to purchase electricity through direct transactins may also be 
experiencing large increases in electricity costs."
It is clear the SCE wants to move to a new paradigm from the AB1890 Rate 
Freeze where SCE's shareholders incur the risks of high and volatile comodity 
prices to this Rate Stabilization Proposal (Rate Freeze or Cap) where 
ratepayers incur such risks.  (This clearly demonstrates why utilities are 
the wrong company for the job).
Despite our philosophical beliefs or future value propositions, if the Rate 
Stabilization Proposal allows utilities to end the rate freeze early and does 
not equally apply to DA customers, depending on when utilities will elect to 
end the AB1890 Rate Freeze, we may be talking about a $100 million hit or 
swing to our book.
Needless to say, we need to support parity between DA and SO under the Rate 
Stabilization Proposal.

Roger
dennis.benevides@enron.com, bruno.gaillard@enron.com, 