Weekly Report of 1/11/02

California:

CA Legislature. On Monday Jan. 7th the legislature recovenced and Gov. Davis delivered his State of the State Address on Tuesday. Davis focused on the projected $12.5 billion budget shortfall and increased education spending. Gov. Davis pledged he will not advocate increasing taxes and his proposed budget for closing the gap will include a combination of cutbacks, deferred spending, internal borrowing and accelerated revenue. On Thursday, Assemblyman Herb Wesson, Jr. was elected as Speaker of the Assembly. Assemblyman Wesson is a Culver City Democrat. Also on Thursday, Gov. Davis submitted his balanced budget without tax increases. Key and controversial provisions to cover the shortfall included borrowing from teacher and state worker pension funds, cashing in on future year revenues from the tobacco settlement and spending cuts of $5.2 billion largely from health and welfare programs.

I99-07-003 SoCalGas Unbundling. On Jan. 9th SoCalGas held a customer meeting to review their proposed unbundling implementation plan. This plan will be filed with the CPUC on Jan 17th. Other key dates included the beginning of the open season for the backbone receipt point capacity which will be held in three phases beginning May 29, 2002, with the third phase ending June 21, 2002 and implementation of transportation under the plan to begin July 1, 2002. The Core customers were reserved capacity of 313 mmcf/d at Needles. The remaining capacity of 487.5 mmcf/d will be placed in the open season for bids.

I00-11-002 Adequacy of SoCal Capacity. On Monday, the CPUC issued an ALJ ruling requesting parties to submit briefs on the implications of the Unbundling Decision to this proceeding. Briefs are due January 30, 2002. Additionally, in the Commissions Infratstructure Report issued last week they cite this system adequacy proceeding as the forum for addressing potential system constraints at two transmission locations (ie San Joaquin and Imperial Valleys).

PG&E Plan of Reorganization. Along with Enron Corp and Marketing, participated in a conference call regarding PG&E's Plan of Reorganization as related to establishing their backbone system as an InTERstate, open access pipeline. PG&E is seeking approval of its plan by the Debtors Committee and FERC by mid-2002. They filed a Section 7© Application on Nov. 30, 2001 to establish this interstate company given a temporary name of GTRAN. During this "transition" period current rates remain in effect. Their plan is to make a Section 4 filing after receiving FERC approval of the current filing. PG&E requested that Enron and Transwestern file in support of the plan. No committment was made as we are continuing to evaluate our position. Interventions are due January 29, 2002.