Governor's Proposals Go Public ,
 ----- Forwarded by Jeff Dasovich/NA/Enron on 12/01/2000 05:53 PM -----

=09Jeff Dasovich
=09Sent by: Jeff Dasovich
=0912/01/2000 05:31 PM
=09=09=20
=09=09 To: skean@enron.com, Richard Shapiro/NA/Enron@Enron, James D=20
Steffes/NA/Enron@Enron, mpalmer@enron.com, Karen Denne/Corp/Enron@ENRON,=20
Sandra McCubbin/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Alan=20
Comnes/PDX/ECT@ECT, Mary Hain/HOU/ECT@ECT, Susan J Mara/NA/Enron@ENRON, Mon=
a=20
L Petrochko/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, Sarah=20
Novosel/Corp/Enron@ENRON, Tim Belden/HOU/ECT@ECT, David Parquet/SF/ECT@ECT,=
=20
Robert Badeer/HOU/ECT@ECT, Dennis Benevides/HOU/EES@EES, Neil=20
Bresnan/HOU/EES@EES, Roger Yang/SFO/EES@EES, Harry Kingerski/NA/Enron@Enron
=09=09 cc:=20
=09=09 Subject: Governor's Proposals Go Public

In case folks haven't seen them yet, attached are Davis' press release and=
=20
the letter he sent to Hoecker today. =20

Best,
Jeff
----- Forwarded by Jeff Dasovich/NA/Enron on 12/01/2000 05:25 PM -----

=09"Karen Edson" <kedson@ns.net>
=0912/01/2000 03:10 PM
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=09=09 cc: "Julee Malinowski-Ball (E-mail)" <jmball@ns.net>
=09=09 Subject: Governor's Proposals Go Public

FOR IMMEDIATE RELEASE December 1, 2000
GOVERNOR DAVIS RESPONDS TO FERC WITH INITIATIVES ON ELECTRICITY PRICES,
SUPPLY
SACRAMENTO - Responding to a draft proposal by the Federal Energy Regulator=
y
Commission (FERC), Governor Gray Davis today announced several initiatives
to ensure reliable and affordable electricity in California.

In a letter to the federal regulators, the Governor outlined a variety of
regulatory and legislative actions to keep the state=01,s electricity price=
s at
the lowest reasonable cost. They include innovative measures to encourage
the siting of power plants in compliance with the state=01,s environmental
laws, restructuring the state=01,s power-buying agencies to eliminate confl=
icts
of interests, and promoting energy conservation and voluntary cutbacks by
larger users during periods of high electricity demand.

"If you do your job of protecting consumers by rectifying the wholesale
markets, the steps I have to take can be transitional in nature and limited
in scope," wrote Gov. Davis, who also reiterated his call to FERC to order
retroactive refunds to San Diego and Orange County consumers, and to impose
price caps on the price of wholesale electricity. "I cannot in good
conscience, however, forego any measure that would serve to protect the
people of California until I am satisfied that the sellers in the wholesale
markets will not victimize Californians again."

Governor Davis, who inherited the problems of deregulation as a result of
legislation signed by Governor Pete Wilson in 1996, said that "The free
market applied to electricity can work, but only if market conditions allow
for real competition, and if all parties act responsibly." The Governor
added "Even though FERC had recently concluded that California=01,s market =
was
=01+dysfunctional,=01, its draft proposal fails to include measures to stop
out-of-state electrical generators from price gouging, and would lead to
higher prices next summer."

The Governor=01,s proposals include:

Introducing legislation to dramatically change the membership of the ISO an=
d
PX, eliminating members of the board that have what he called "inherent
conflicts of interest" and replacing them with independent members;

Seeking legislation that will allow new approaches - such as emissions
credit trading - to aid in the siting of new power plants;

Calling on the state=01,s Public Utilities Commission (PUC) to promote
distributed generation and co-generation;

Accelerating voluntary efforts by the private sector as well as state
agencies to reduce their energy use during peak periods;

Expanding "forward contracting" by utilities that would allow multi-year
contracts to reduce price volatility and ensure reliability;

Asking the PUC to expedite its investigation of the state=01,s electricity
demand reduction programs for commercial users, and adopt new programs to
allow voluntary interruptions that will allow the reduction of electricity
use during peak power periods;

Reviewing new measures to coordinate power-plant maintenance and operating
activities;

Requiring utilities to retain their existing generation facilities instead
of selling them off at least until the market becomes competitive; and

Calling on the PUC and California Energy Commission (CEC) to study providin=
g
"real time price signals" (such as metering) to large energy users to reduc=
e
energy use.

Governor Davis noted that in the decade prior to his administration, no
power plants were built in the state. But since April 1999, six power plant=
s
representing 4,700 MW of new generation have been approved. Twenty more
applications are under review and 11 more are in the pipeline.

"This represents a significant change in policy and performance and respond=
s
to the fact that we must increase supply as rapidly as possible without
abrogating our commitment to state and federal public health and
environmental protection," he said.

The Governor=01,s initiatives announced today reflects his commitment to FE=
RC
Chairman James Hoecker at a hearing last month in San Diego to provide inpu=
t
into FERC=01,s final order on the California electricity market. That decis=
ion
could come as early as December 13, 2000.

The Governor will continue to meet with legislative leaders, consumer
groups, and other interested parties to discuss additional options. He said
a more complete plan cannot be developed until FERC=01,s final order has be=
en
announced and analyzed.
roger.yang@enron.com