Governor Davis

Attached, please find Governor Davis' press release describing his
framework of a recovery plan. In addition, the Governor made the
following comments during his press conference.

He is currently negotiating with the IOUs. He expects positive news
next week, however, only two of the three IOUs are open to his plan at
this point. He did not indicate which IOU is holding out, but it has
been widely reported that PG&E does not like his plan.

He has received informal signals from FERC that they are not adverse to
state ownership of the grid.

He expects the "significant contribution" from the parent companies to
exceed the previously reported tax refund.

He refused to give a projected price for the grid other then to say it
would be some multiple of book.

His office has briefed both the Senate and Assembly Democrats. He
believes Democrats will reach agreement on a legislative package by the
end of next week, and vote that package out by the end of the following
week.

He continues to speak to generators, however he has not briefed them
specifically on this plan. He hopes this plan will provide assurances
to generators that he is working towards a solution but he can not
guarantee that the new IOU funds will cover existing debt.

He acknowledged that eminent domain would likely lead to a significant
withdrawal of private capital and continues to believe his plan is
feasible.

http://www.governor.ca.gov/state/govsite/gov_htmlprint.jsp?BV_SessionID=@@@@03
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