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From: "Ken Smith" <ken@kdscommunications.com>
To: "Sandra McCubbin" <smccubbi@enron.com>, <Janel.Guerrero@enron.com>,=20
"Scott Govenar" <sgovenar@govadv.com>
Subject: Hertzberg Press Conference
Date: Tue, 29 May 2001 15:02:42 -0700
Organization: KDS Communications
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Hertzberg Press Conference Announcing New  FERC Filing

Speaker Hertzberg began by announcing that he had  received word that the 9=
th=20
Circuit Court of Appeals had rejected the  suit filed by Sen. John Burton a=
nd=20
the Speaker asking FERC to impose price caps.  A story from KFWB radio in L=
A=20
said that the 3-0 decision was that the issue  "does not warrant interventi=
on=20
of this court."=20

The Speaker had received notice just moments before  entering the press=20
conference and had no further details, nor had he talked to  lead counsel o=
n=20
the case.

Today=01,s announcement was regarding a request for  rehearing of FERC=01,s=
 April=20
26 order. He said the genesis for the request came  from discussions that=
=20
occurred during his trip to DC following the order. Both  sides of the aisl=
e,=20
he said, indicated that there were opportunities to address  what he said=
=20
were errors in the original order.

Speaker pro Tem Fred Keeley said these errors  included:

The April 26 order finds that wholesale electric  rates will not be just an=
d=20
reasonable absent commission intervention, but the  commission does not=20
demonstrate that the price mitigation it orders will  ensure just and=20
reasonable rates;
Limiting price mitigation to system emergencies  rather than on a 24/7 basi=
s;
Prices were pegged to the oldest, dirtiest and  costliest plants, which=20
continues to allow inappropriately high wholesale  prices;
There is no relation between costs and  pricing;
Tying price mitigation to establishing a Regional  Transmission Organizatio=
n.

This is a request for a "different type" of order  that they characterized =
as=20
"middle ground" with a "market approach" rather than  another request for=
=20
price caps. He did not elaborate on how the filing takes a  market-based=20
approach since it asks for intervention by FERC, but said FERC  commissione=
rs=20
had indicated that this would be a more "palatable" approach.  Hertzberg=20
added that he had met with Republicans in the House dining room and  told=
=20
them he was not proposing price caps.

Keeley said the April 26 order was a "toothless  tiger" that didn=01,t impl=
ement=20
penalties for violation. The request for rehearing  asks for 100% penalties=
=20
for any violations.

A copy of the filing and press release have been  forwarded to Houston and=
=20
are also available by contacting Scott  Govenar.
hgovenar@govadv.com, mday@gmssr.com, bhansen@lhom.com, jdasovic@enron.com, 