Article

Enron: ISO Credit Problems Are Those Of Calif Utilities
Of DOW JONES NEWSWIRES
12/13/2000
Dow Jones Energy Service
(Copyright © 2000, Dow Jones & Company, Inc.)

By Mark Golden

NEW YORK -(Dow Jones)- The credit problems of the
California Independent System Operator reflect the
credit problems of the state's three investor-owned
utilities, Enron Corp. (ENE) chief of staff Steven Kean
said Wednesday.

"We have expressed some concerns about the utilities'
creditworthiness," Kean said. "They wouldn't have
this credit issue if they had a government guarantee."

Standard & Poor's credit analyst for California
utilities, Richard Cortright, told Dow Jones Newswires that
such a guarantee is highly unlikely.

"There's no point in talking about it," Cortright said.

The credit-rating agency put California utility holding
companies PG&E Corp (PCG) and Edison
International (EIX) on watch with negative implications
Wednesday. The utilities have seen their debt
rating downgraded already this fall, but their debts are
piling up by the billions as they continue to pay
about 10 times more for power supplies than they can
charge customers.

"The sheer magnitute of the undercollected balance is
beyond belief," Cortright said. "Wholesale prices
have gotten worse, and every hour the situation gets
more dire."

Cortright said the only step that would save the
utilities' credit status is if California regulators raised the
rates the utilities can charge customers.

Late Wednesday, the California Public Utilties
Commission indicated that it may do so, reversing a
decision made just last week.

"With new generation coming on, you would expect the
rates to decline in a couple of years," Cortright
said.

The California Independent System Operator almost had to
institute rolling blackouts Wednesday
because 13 suppliers had stopped selling it power due to
concerns about the ISO's credit.

California Gov. Gray Davis said that Enron was one of
the "dirty 13."

Enron's Kean said that Enron was only offering very
limited amounts of power to the ISO.

"We are basically just a buyer and seller. We control
only 70 megawatts of generation in the state, which
we offered to the ISO today because of the emergency,
but the ISO declined to purchase that power,"
Kean said.

That small generating unit is located in the southern
California, while the ISO's supply problems were
most acute in northern California.

"We aren't selling any other power to them right now.
Everything else that we bought we've sold to other
buyers," said Kean, who added that Enron had sold to the
ISO as recently as Tuesday.

The ISO manages California's electricity grid and
purchases last-minute additional power on behalf of the
state's three investor-owned utilities. The ISO then
bills the utilities, which are PG&E Corp's Pacific Gas &
Electric Co, Edison International's (EIX) Southern
California Edison, and Sempra Energy's (SRE) San
Diego Gas & Electric Co.

The ISO has 70-day payment terms to suppliers.

For the past two weeks, and often during the summer, the
ISO has been purchasing about one-fourth of
the state's entire needs at very high prices. It's
current daily power purchases are running at $50 million to
$100 million.

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

Enron North America Corp.

From: Frank Hayden @ ENRON 12/14/2000 09:08 AM

To: Rebecca Phillips/HOU/ECT@ECT
cc:
Subject: Re: Article

I can't access the article without Enron's account number.. You wouldn't
happen to have that?

Frank

To: Frank Hayden/Corp/Enron@Enron
cc:

Subject: Article

http://nrstg2s.djnr.com/cgi-bin/DJInteractive?cgi=WEB_FLAT_PAGE&GJANum=3008059
88&page=wrapper/index&entry_point=1&user_bounced=1&entry_point=1

Here's an article about ENE and Cal. Looks like we control about 70 MW in
Cal.
r