California PUC Proposed Decision

Attached are notes from a press conference that CPUC President Lynch held e=
arlier today. Sue Mara works in our SF office.

As a note, all of these concepts must still be approved tomorrow at a CPUC =
public meeting with 3 votes. We expect passage.

Call with any questions. =20

Jim

----- Forwarded by James D Steffes/NA/Enron on 03/26/2001 02:06 PM -----

=09Susan J Mara 03/26/2001 01:14 PM =09 To: Alan Comnes/PDX/ECT@ECT, Ange=
la Schwarz/HOU/EES@EES, Beverly Aden/HOU/EES@EES, Bill Votaw/HOU/EES@EES, B=
renda Barreda/HOU/EES@EES, Carol Moffett/HOU/EES@EES, Cathy Corbin/HOU/EES@=
EES, Chris H Foster/HOU/ECT@ECT, Christina Liscano/HOU/EES@EES, Christopher=
F Calger/PDX/ECT@ECT, Craig H Sutter/HOU/EES@EES, Dan Leff/HOU/EES@EES, De=
bora Whitehead/HOU/EES@EES, Dennis Benevides/HOU/EES@EES, Don Black/HOU/EES=
@EES, Douglas Huth/HOU/EES@EES, Edward Sacks/Corp/Enron@ENRON, Eric Melvin/=
HOU/EES@EES, Erika Dupre/HOU/EES@EES, Evan Hughes/HOU/EES@EES, Fran Deltoro=
/HOU/EES@EES, Gayle W Muench/HOU/EES@EES, Ginger Dernehl/NA/Enron@ENRON, Go=
rdon Savage/HOU/EES@EES, Harold G Buchanan/HOU/EES@EES, Harry Kingerski/NA/=
Enron@ENRON, Iris Waser/HOU/EES@EES, James D Steffes/NA/Enron@ENRON, James =
W Lewis/HOU/EES@EES, James Wright/Western Region/The Bentley Company@Exchan=
ge, Jeff Messina/HOU/EES@EES, Jeremy Blachman/HOU/EES@EES, Jess Hewitt/HOU/=
EES@EES, Joe Hartsoe/Corp/Enron@ENRON, Karen Denne/Corp/Enron@ENRON, Kathy =
Bass/HOU/EES@EES, Kathy Dodgen/HOU/EES@EES, Ken Gustafson/HOU/EES@EES, Kevi=
n Hughes/HOU/EES@EES, Leasa Lopez/HOU/EES@EES, Leticia Botello/HOU/EES@EES,=
Mark S Muller/HOU/EES@EES, Marsha Suggs/HOU/EES@EES, Marty Sunde/HOU/EES@E=
ES, Meredith M Eggleston/HOU/EES@EES, Michael Etringer/HOU/ECT@ECT, Michael=
Mann/HOU/EES@EES, Michelle D Cisneros/HOU/ECT@ECT, mpalmer@enron.com, Neil=
Bresnan/HOU/EES@EES, Neil Hong/HOU/EES@EES, Paul Kaufman/PDX/ECT@ECT, Rich=
ard L Zdunkewicz/HOU/EES@EES, Richard Leibert/HOU/EES@EES, Richard Shapiro/=
NA/Enron@ENRON, Rita Hennessy/NA/Enron@ENRON, Robert Badeer/HOU/ECT@ECT, Ro=
salinda Tijerina/HOU/EES@EES, Sandra McCubbin/NA/Enron@ENRON, Sarah Novosel=
/Corp/Enron@ENRON, Scott Gahn/HOU/EES@EES, Scott Stoness/HOU/EES@EES, Sharo=
n Dick/HOU/EES@EES, skean@enron.com, Susan J Mara/NA/Enron@ENRON, Tanya Les=
lie/HOU/EES@EES, Tasha Lair/HOU/EES@EES, Ted Murphy/HOU/ECT@ECT, Terri Gree=
nlee/NA/Enron@ENRON, Tim Belden/HOU/ECT@ECT, Tony Spruiell/HOU/EES@EES, Vic=
ki Sharp/HOU/EES@EES, Vladimir Gorny/HOU/ECT@ECT, Wanda Curry/HOU/EES@EES, =
William S Bradford/HOU/ECT@ECT, Jubran Whalan/HOU/EES@EES, triley@enron.com=
, Richard B Sanders/HOU/ECT@ECT, Robert C Williams/ENRON_DEVELOPMENT@ENRON_=
DEVELOPMENT, dwatkiss@bracepatt.com, rcarroll@bracepatt.com, Donna Fulton/C=
orp/Enron@ENRON, gfergus@brobeck.com, Kathryn Corbally/Corp/Enron@ENRON, Br=
uno Gaillard/EU/Enron@Enron, Linda Robertson/NA/Enron@ENRON, Ren? Lazure/We=
stern Region/The Bentley Company@Exchange, Michael Tribolet/Corp/Enron@Enro=
n, Phillip K Allen/HOU/ECT@ECT, Christian Yoder/HOU/ECT@ECT, jklauber@llgm.=
com, Tamara Johnson/HOU/EES@EES, Mary Hain/HOU/ECT@ECT, Greg Wolfe/HOU/ECT@=
ECT, Jeff Dasovich/NA/Enron@Enron, Dirk vanUlden/Western Region/The Bentley=
Company@Exchange, Steve Walker/SFO/EES@EES, James Wright/Western Region/Th=
e Bentley Company@Exchange, Mike D Smith/HOU/EES@EES, Richard Shapiro/NA/En=
ron@Enron, Leslie Lawner/NA/Enron@Enron, Robert Neustaedter/ENRON_DEVELOPME=
NT@ENRON_DEVELOPMENT, Steve Walton/HOU/ECT@ECT, psmith3@enron.com, mjackso7=
@enron.com, Janel Guerrero/Corp/Enron@Enron, Mark Fillinger/SF/ECT@ECT, Jen=
nifer Rudolph/HOU/EES@EES, Martin Wenzel/SFO/HOU/EES@EES, wgang@enron.com, =
Joseph Alamo/NA/Enron@Enron, Tracy Ngo/PDX/ECT@ECT, Ray Alvarez/NA/Enron@EN=
RON, Steve C Hall/PDX/ECT@ECT, mday@gmssr.com, sgovenar@govadv.com cc: S=
ubject: CPUC News -- From Press Conference as we Speak=09

Lynch started out castigating FERC for the "failure to act", sellers for hi=
gh prices forcing CA into this action. Has some charts in the press packag=
e. Talked about how wonderful the Govs proposals have been. Said net shor=
t is 34%. Sellers "have us over a barrell" for those sales. Attorney Gen =
continues investigation of the sellers. These are all for going forward cos=
ts -- this doesn't address the "$ for the hot dog, which is being taken car=
e of in Sacramento." She said these proposals ensure reliability and allow=
Treasurer to issue bonds. Continues to castigate FERC throughout the call=
. Wants new appointments to FERC from the states -- "our cries have fallen =
on deaf ears"

Lynch announced the following votes for tomorrow:

1. Wood's proposal -- modified -- Order that the IOUs to pay the QFs begin=
ning 4/1 on a going forward basis only. Modified existing formula in Secti=
on 390 (Legislative change to this section did not pass yet). Shifts the S=
RAC gas index from Topoc (where Wood says the prices are being mnipulated) =
to Malin, where prices have been more stable.

2. Sets the CA Procurement Adjustment -- Orders the IOUs to pay the DWR for=
purchases. At one point she said that the order would be for all power fo=
r purchased by the state beginning Jan 19; at another point she said that t=
he payments are for going forward costs. "It's time to pay the power bills =
for California." CPA calculated based on the "residual" method, rather tha=
n the proportional method. Payments to DWR made on the proportional method=
, however.

3. Lynch alternate setting a 3 cents/kWh increase in accordance with AB 1X=
. (The ALJ decision said no rate increase.) Makes the 1 cent temp charge pe=
rmanent (we believe that this is additive with the 3 cents - 4 cent total) =
Believe this covers ALL needs on a going forward basis. According to ABX =
1, small customers with 130% over baseline get no increase, small customers=
with 200% increase, get a 9 % increase -- the rest get socked, I guess. A=
dopted TURN's accounting proposal implying that the Rate Freeze is not yet =
over. Will look at rate design in a future proceeding. Takes IOUs 30-45 d=
ays to charge the rates (although could come earlier); will conduct a rate =
design proceeding during that time period (see # 5).

4. Orders an investigation into the Utility holding company structure to se=
e if it is best for the public utilities to be outside holding companies.

A new proceeding was also identified.

5. Lynch is issuing an Assigned Comissioner ruling proposing a new rate st=
ructure. (I presume to have rates that increase greatly with more use) Nee=
d information from DWR to calculate rates and DWR has not yet provided it. =
Described the need to have a record on this. As mentioned in #3 above -- w=
ould expect this to be comepled with a decision in 30- 45 days.

In one of the above orders, Lynch said that she orders the utililities to g=
o after sellers using all legal means for the unjust and unreasonable price=
s.