California Settlement

I spoke with John Nimmons regarding the subject settlement discussions on
Tuesday. He shared with me his view on several matters.

1. He's not sure what SCE is up to. He believes they will not move off of
their position of DG ownership however convoluted it may be (basically they
want to keep the "option open" of customer-side DG ownership). He also
believes they most likely will not participate in further discussions. He
has a call into SCE to see if he can come to some understanding on where they
stand. (He also said they indicated they are most likely going to drop out
of DPCA).

2. John believes PG&E was responding to the Commission's position regrading
DG ownership as outined in the Cmmisson's rule that states the Commission has
not found any compelling reason to prevent ownership of DG bu UDC's. He
thinks they are not interested in customer-side DG as a business but only as
an option to site mobile DG under emergency conditions. He also believes
that this issue is not a showstopper for them and they would most likely give
it up (DG ownership) if others such as DPCA and Enron would support a PBR
that gave them the right incentives.

3. Next Monday's meeting will focus on the distribution only wheeling tariff
issue (minutes of the last meeting and an agenda for Monday's meeting should
be out today). He thinks this will be the most contentious issue of all
based on his reading of the utilities' testimony. The utilities' postitions
are that you can't separate distribution from transmission when dealing with
the grid since their is much interdepence.

I think we should continue to participate in these meetings. I'm planning
on participating by phone. I don't expect SCE to participate but if we
change PGE's ownership position we would have 2 of the 3 utilities with us
which strengthens our position. It will also be interesting to see what the
utilities have to say regarding distribution only tariffs. ANy thoughts?