Re: PHC Statement-Attorney/Client Privilege

I agree that it is difficult to stomach the idea of supporting a rate cap and
don't believe we should. However, a rate cap will not necessarily kill our
value proposition in CA. From a product standpoint, a rate cap will push us
back to a "discount off of frozen tariff" product as we will be able to
offfer some discount based on the shoulder months (assuming there are any
left) and based on how long the rate cap lasts. As you are aware, this is
the most successful product we have had in CA. and customers are comfortable
with it. If the caps last long enough, we can go past the rate freeze period
and offer pretty good discounts. Additionally, customers will probably want
to see this product post rate freeze based on this summer. Additionally, a
rate cap will probably benefit our risk management folks through next summer.

Please don't misinterpret this message. I believe we need to continue to
oppose the caps. In my opinion, this is the slippery slope of re-regulation
that opens the door to massive uncertainty that we cannot hedge. But, based
on the current political climate, it appears that they are inevitable. IF
they occur, it is not the end of our ESP business. As always, we continue to
adapt to the political wrangling that seems to occur daily.

Please call me if you wish to discuss this further. Thanks.

Susan J Mara
08/12/2000 02:39 AM
To: Mona L Petrochko/SFO/EES@EES
cc: douglass@arterhadden.com, Paul Kaufman/PDX/ECT@ECT, James D
Steffes/HOU/EES@EES, Douglas Condon/SFO/EES@EES, Martin
Wenzel/SFO/HOU/EES@EES, Roger Yang/SFO/EES@EES, Edward Hamb/HOU/EES@EES,
Dennis Benevides/HOU/EES@EES, Steven J Kean/HOU/EES@EES, Jeff
Dasovich/SFO/EES@EES, Bruno Gaillard/SFO/EES@EES
Subject: Re: PHC Statement-Attorney/Client Privilege

I have some questions and coments.

WHY DOES ENRON FEEL THE NEED TO FILE SEPARATELY? We can't we file with ARM?

WHY DO WE WANT THE DISCUSSION NARROWED TO SDG&E ONLY? I can see pros and
cons of each way.

I DO NOT SEE HOW WE CAN SUPPORT PRICE CAPS.....If we could not support them
on the wholesale side, how can we support them on the retail side? Doesn't
it kill the ESP business? Doesn't it eliminate any benefits of dereulation?
If we support them, we are givibng in to the unjustified terrorism that is
taking place in CA. We don't even now whrer the monry is coming from. What
if they expect to get it from us. Hey, can we sue -- we can't if we SUPPORT
price caps.

WE MUST STICK WITH THE PRINCIPLES WE'VE FOUGHT FOR ALL THESE YEARS -- SOME
THINGS ARE JUST WORTH FIGHTNG FOR.
I recommend opposition of the price caps -- the resukt of the knee=jerk,
weekly about -face by the CPUC which cannot possibly be considered to be
reasoned decision making

Mona L Petrochko
08/11/2000 04:23 PM
To: douglass@arterhadden.com, West GA, Paul Kaufman, James D
Steffes/HOU/EES@EES
cc: Douglas Condon/SFO/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, Roger Yang,
Edward Hamb/HOU/EES@EES, Dennis Benevides/HOU/EES@EES
Subject: PHC Statement-Attorney/Client Privilege

Unless we receive comments by 9 a.m. p.d.t. Monday, August 14, this will be
Enron's pre-hearing conference comments relative to the Investigation opened
by the Commission. These comments will be filed Monday. Please make sure
Bruno is copied on your comments.

NOTE:

Rather than opposing a cap for small consumers, which I believe is imminent,
I would prefer to advocate that it apply only to small consumers, under 20
kW, and only for a limited period of time. I would prefer to argue that the
cap should not apply to larger consumers, who already have access to market
solutions to insulate them from market volatility.

PLEASE LET ME KNOW ASAP IF WE CANNOT SUPPORT THIS POSITION.

Dan, only one addition to PHC. Will advise on filing.

---------------------- Forwarded by Mona L Petrochko/SFO/EES on 08/11/2000
02:01 PM ---------------------------

"Daniel Douglass" <douglass@ArterHadden.com< on 08/11/2000 01:12:49 PM
To: <Bruno_Gaillard@enron.com<, <mpetroch@enron.com<
cc: "Michelle Dangott" <MDangott@ArterHadden.com<
Subject: PHC Statement

After reviewing Mona's draft and making a few other cleanup changes, the
attached proposed final draft is attached for your review.

Since Mona and I are both on vacation, Bruno will coordinate with Michelle
Dangott of my office to finalize the filing on Monday. Bruno, if you have
any last minute changes, please call Michelle at (818) 596-2216. Remember it
has to be finalized by no later than 10 or so Monday morning, so we can do
the final duplicating and have the filing couriered to the CPUC in the midst
of the traffic disruption caused by the Democratic convention.

My thanks to all!

Dan

- PHC Statement - Final.doc