TURN's Rate Stabilizaton Proposal

----- Forwarded by Jeff Dasovich/NA/Enron on 12/07/2000 12:38 PM -----

Roger Yang@EES
12/07/2000 12:36 PM

To: Gordon Savage/HOU/EES@EES, Scott Stoness/HOU/EES@EES, James W
Lewis/HOU/EES@EES, Dennis Benevides/HOU/EES@EES
cc: Mona Petrochko, Jeff Dasovich/NA/Enron@Enron, Susan J
Mara/NA/Enron@ENRON, Sandra McCubbin/NA/Enron@Enron
Subject: TURN's Rate Stabilizaton Proposal

In a non-descriptive article in today's SF Chronicle, an article reports on
some TURN plan to basically take the assets retained by the utilities and use
the assets to deliver 5 cent energy to customers. I imagine that TURN's plan
only covers small customers because there is obviously not enough capacity
for all customers. Whereas, we have seen the utility's attempts to get the
assets at below market prices in the past, it looks like TURN may be trying
to maneuver to get the assets below market for its customers. This leaves
either the C&I or utility shareholders holding the bag for undercollections.
I am sure that this is just some posturing, but CLECA/CMTA needs to be on top
of this issue so that they don't get stuck. It would be a double whammy for
CLECA/CMTA customers, because not only would they see the higher market
prices, but would have to bear a burden of undercollections that are not
offset by an appropriate valuation of retained assets.

We will need Government Affairs to stay on top of this issue for us.

Roger