CDWR Update

Gentlemen:

I have spoken with CDWR several times since we submitted our proposal. They
are immediately interested in a 5 year power sale and then want to discuss
Pastoria. I updated a price for Freeman for 200MW Peak SP-15 5 Year
($124/MWh). I also spoke with their lawyers a couple of times to start
trading comments. I volunteered to send a team to LA today or tomorrow, but
so far they prefer to discuss by phone. Their lawyers acknowledge that the
primary issue for suppliers is credit. They are working on an agreement with
CPUC that would ensure that CDWR would have an adequate revenue stream to
support the contracts. Their intent is to make the supply contracts have
priority over the bonds. Until that happens, we maintain that we require a
cash prepayment or letter of credit to support any deal. I expect to hear
from them again later today. I will keep you posted.

Regards,

Chris