The article deals with the Cal ISO credit risk and the effect on power
prices. This is on the Enron web site.
Maybe we work this into the talking points response?

Reliant Energy: Selling Pwr To Cal ISO Could Be Risky
Of DOW JONES NEWSWIRES

Dec. 11, 2000
Dow Jones Energy Service
(Copyright © 2000, Dow Jones & Company, Inc.)

(This article was originally published Friday) By Mark Golden

LAS VEGAS (Dow Jones)--BC Hydro's concerns about the California
Independent System Operator's credit have spread quickly this week
to other suppliers, forcing the grid operator to pay premium prices
when it can't find electric supplies, Reliant Energy's (REI) vice president
for western U.S. trading, Reggie Howard, said Friday.

Suppliers are concerned about the ISO's financial guarantees from the
investor-owned utilities, for whom it buys: Edison International (EIX),
PG&E Corp. (PCG) and Sempra Energy (SRE).

PowerEx, the power marketing unit of provincial utility BC Hydro,
demanded letters of credit from the utilities for ISO purchases this week.
Edison complied, while PG&E refused. Sempra said that the state of
California should make the guarantee as part of a declared state of
emergency.

Reliant is looking at the ISO credit issue, but so far has demanded no
such letters of guarantee, Howard said.

Other risks in selling to the ISO include the possibility that state
politicians will tell the ISO not to pay its bills.

"when you have state Sen. Steve Peace telling San Diego residents not
to pay their electric bills two months ago, you worry about what
might be said to the ISO. There are political risks," Howard said in
an interview with Dow Jones Newswires. Peace, a democrat from the
San Diego area, is chairman of the California Senate Budget Committee.

Suppliers also risk that prices on sales to the ISO could be reviewed
by the Federal Energy Regulatory Commission anytime 24 months
after the transaction occurs, under the proposed FERC order on
California. Prices could be lowered retroactively, and refunds from the
suppliers could be ordered. Sales to other western utilities face no
such review.

Taken together, these risks have forced the ISO to pay a premium of at
least 10% more than market prices, according to several traders
attending the Day of the Trader industry conference in Las Vegas
Thursday and Friday.

"It could be 5% or 20%. We have a number, but we won't disclose it
because that's proprietary," Howard said.

Reliant, which has 3,800 megawatts of generators in California, has no
plans to build any more plants in the state. The company is
building a plant in Nevada, just east of the California border. The
optimal location for any new plant, Howard said, is near California, but not
inside the state.

Howard said that Reliant isn't looking for offers to sell its
California plants, but if a good offer came up, they would consider it.

-By Mark Golden, Dow Jones Newswires; 201-938-4604;
mark.golden@dowjones.com