I would like to help you succeed with this challenge.

Jeff

The attached "Rough & Tumble" is an electronic clipping service targeted at California politicos and policy wonks. It carried the LA Times version of the Lockyer comments a couple days ago. Today, it has the NY Times article on Ken Lay. It's pretty clear that in the near-term, Enron and it's leadership are at risk of being engulfed in a political firestorm which bounces from coast to coast, gaining strength each step of the way.

However, it is the long-term challenge that draws my attention. From my research to date, I am left with the strong impression that the Enron's capacity for acquiring, distilling and assessing business information is much stronger than it's abilities with public policy information.

Ken Lay, you and your team have shaped a innovative and entrepreneurial company rooted in agile arbitrage of business knowledge. Like Goldman Sachs, it is hard for the "man on the street" to understand precisely what Enron does. However, because of your presence in businesses that play out daily in homes, schools and small businesses, Enron will be scrutinized in a way the Goldman couldn't imagine in it's worst nightmares.

From my perspective, the success of Enron's business model demands a sure footing in both business and public policy. Going forward, these two areas of expertise need become intertwined to assure the success of the highly sophisticated, ethical, innovative and insightful global corporation known as Enron.

I would like to help you succeed with this challenge. I look forward to our discussions.

Kevin
213-926-2626

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Updated Friday, May 25, 2001 8:54 Pacific Time

Companies pushed up price of power -- After months of investigation, state regulators say they have evidence suggesting that power companies have deliberately driven up wholesale electricity prices. Now they must decide whether those companies have done anything illegal. State Attorney General Bill Lockyer said Thursday he believes the evidence ``strongly suggests'' power companies acted illegally to drive up prices. He has said that he would love to put top energy executives in jail. Brandon Bailey and Chris O'Brien in the San Jose Mercury -- 5/25/01
Davis blackout warnings -- a significant policy change aimed at minimizing business and consumer disruptions, Gov. Gray Davis ordered state officials Thursday to enact a three-tier blackout warning system. Forecasts of blackouts will be issued 48 hours beforehand, Davis said. General areas will be identified in warnings issued 24 hours before likely outages. Precise locations will be announced an hour before the power is cut, he said. Dan Morain and Nancy Vogel in the Los Angeles Times Greg Lucas and Lynda Gledhill in the San Francisco Chronicle Noam Levey and Dion Nissenbaum in the San Jose Mercury John Hill in the Sacramento Bee Ed Mendel in the San Diego Union Robert Garrett in the Riverside Press Michael Coit in the Santa Rosa Press -- 5/25/01
Davis' popularity plunges in poll -- With California's energy crisis mounting, Democratic Gov. Gray Davis has suffered a precipitous fall in his job approval rating and image among state residents, according to a Field Poll released yesterday. For the first time since his November 1998 election, more Californians have an unfavorable view of Davis' performance than favorable. Carla Marinucci in the San Francisco Chronicle Hallye Jordan in the San Jose Mercury John Marelius in the San Diego Union -- 5/25/01
Poll puts Riordan, Davis in tight race -- Californians' assessment of Gov. Gray Davis has plummeted drastically as he has struggled to handle the state energy crisis, placing outgoing Los Angeles Mayor Richard Riordan in a virtual dead heat with him for the 2002 governor's race, according to a Field Poll released Thursday. Though Riordan has given no clear indication that he intends to run for governor, 42 percent of registered voters said they would support the Republican mayor should he challenge Davis, the Democratic incumbent. Forty-three percent said they would vote for Davis. Emily Bazar in the Sacramento Bee -- 5/25/01
California to gain from GOP's loss -- A single party switch in the Senate on Thursday handed California's Democratic Sens. Dianne Feinstein and Barbara Boxer new clout with key leadership roles likely on issues ranging from military base closings to environmental cleanups. Vermont Sen. James Jeffords' announcement that he was quitting the Republican Party to be an independent affiliated with Democrats set up a takeover in which the Democrats, with a de facto 51-49 majority, will assume all Senate leadership posts and committee chairs. Bill Hillburg in the Los Angeles Daily News -- 5/25/01
PUC and 'baseline' rates -- Nine days after structuring the largest electricity rate increase in California history, state regulators on Thursday launched a reexamination of the unpopular baselines used to determine how much each residential customer will pay. If the indicators are revised upward, as most expect, that would grant some customers relief from the rate hike but could necessitate future ones to generate enough revenue for power purchases. Tim Reiterman in the Los Angeles Times Michael Bazeley in the San Jose Mercury Carrie Peyton in the Sacramento Bee -- 5/25/01
Enron Bush -- Curtis H?bert Jr., Washington's top electricity regulator, said he had barely settled into his new job this year when he had an unsettling telephone conversation with Kenneth L. Lay, the head of the nation's largest electricity trader, the Enron Corporation. Mr. H?bert, chairman of the Federal Energy Regulatory Commission, said that Mr. Lay, a close friend of President Bush's, offered him a deal: If he changed his views on electricity deregulation, Enron would continue to support him in his new job. Lowell Bergman and Jeff Gerth in the New York Times -- 5/25/01
Lockyer comes out swinging at oilman Davis has plenty of company in depths of poll -- The reaction from Gov. Gray Davis' camp to yesterday's poll showing him in the dumper was quick and blunt. "Tell me something I don't already know," adviser Paul Maslin said after being hit with the news that the latest Field Poll showed Davis' job rating down 18 points since January. "None of this is news to us," Maslin said. Matier & Ross in the San Francisco Chronicle -- 5/25/01
Water and power -- The California Public Utilities Commission authorized an increase in American States Water Co.'s rates at the Bear Valley Electric customer service area of its Southern California Water Co. unit to recover $2.4 million in deferred electric power costs. The amount will be recovered from customers over a five-year period. Sam Favate; Dow Jones Newswires -- 5/25/01
Muni power -- Gov. Davis said he received a pledge Thursday from municipal utility officials that their agencies will sell excess power to the state at prices much lower than in the past. Despite simmering resentment at subjecting their customers to rolling blackouts, the muni officials promised Davis they will keep cooperating with the state. Municipal utility customers, including those in the Modesto, Turlock and Merced irrigation districts, will continue to face power blackouts, officials said afterward. Jim Miller in the Modesto Bee -- 5/25/01
Edison merit raises -- Southern California Edison, which is struggling to stay out of bankruptcy, will hand out $19 million in merit raises to its 12,000 employees today, but top executives will forgo the raises because of the company's financial woes. Edison has doled out hefty merit raises in the past. But this year, the company will pay the minimum under its variable compensation program, which rewards employees for meeting certain company goals. Kate Berry in the Orange County Register -- 5/25/01
Cities with own utilities ask FERC to bar blackouts -- More than 15 California cities that have municipal utilities, including Anaheim, are asking federal regulators to exempt them from electricity blackouts ordered by the state's Independent System Operator. The city of Vernon was first to ask the Federal Energy Regulatory Commission to rule that the ISO cannot force it to participate in California's rolling blackouts to serve demand in other areas. Vernon's utility argued that it was ridiculous to subject its customers to blackouts when it had enough power to keep the lights on. Amy Strahan Butler in the Orange County Register -- 5/25/01
Utility tax windfall -- As electricity rates rise, consumers will get hit with a double whammy because of an obscure utility bill tax that many California cities have quietly been collecting for years. A member of the state Board of Equalization charges that some cities will reap windfalls from the utility user tax, and he is backing a grass-roots movement to slash or repeal it. Few local governments are hurrying to forfeit the money, saying that they need it to pay their own higher energy bills. Wendy Thermos in the Los Angeles Times -- 5/25/01
An air of discontent over diesel backups -- Gov. Gray Davis said yesterday that he may ask companies to run their emergency generators during Stage 3 electricity alerts as a way to stave off blackouts. And when blackouts do occur, thousands of tractor-trailer-size generators will whir to life, powering elevators and lights, hospital equipment, even assembly lines. But that prospect has created major concerns. Most of those industrial- strength generators run on diesel oil, a highly polluting fuel. Because they were intended for emergency use, generators have escaped most environmental regulations. What's more, they are likely to be called into service on the hottest, smoggiest days of the year. Carolyn Said in the San Francisco Chronicle -- 5/25/01
Power price controls -- The House Energy and Commerce Committee delayed consideration of a major energy bill Thursday as Republicans and Democrats met privately to explore a possible compromise placing price controls on soaring wholesale electric rates on the West Coast. The negotiations hinted at a possible watershed change in the Republicans' staunch opposition to price controls. An earlier effort to include such controls in the bill turned contentious and was defeated on a mostly partisan vote in subcommittee. Les Blumenthal in the Sacramento Bee -- 5/25/01
For seniors, the heat can kill, doctors warn -- As summer slouches toward Sacramento amid a drumbeat of calls to conserve electricity, doctors and advocates for the elderly are sounding a counter-theme. Heat can kill. And most often, it kills seniors. Year after year, heat waves around the United States are deadlier than hurricanes or floods, tornadoes or earthquakes, according to the National Oceanic and Atmospheric Administration. Carrie Peyton and Nancy Weaver Teichert in the Sacramento Bee -- 5/25/01
Outages could be fatal for disabled -- Around the clock, an electric pump supplies supplementary oxygen to 66-year-old Benny Pritchett's diseased lungs. Pritchett worries that a rolling blackout might kill him. "The electricity goes out, I'm a dead man," said the San Bernardino apartment dweller and former chain-smoker. "I've got a (back-up) oxygen tank. It lasts two hours. When it runs out, I'm dead." Rolling blackouts aren't expected to last much more than an hour, say Southern California Edison officials, but their Web site recommends that any customer dependent on electrically operated life-support equipment buy an emergency generator. Richard Brooks in the Riverside Press -- 5/25/01
Gasoline prices -- Average gasoline prices statewide are nearly $2 a gallon, and the Los Angeles region has once again been dubbed the nation's hub of traffic congestion. So, what's a good Southern Californian to do? Plan a road trip. Hugo Martin in the Los Angeles Times -- 5/25/01
Offshore drilling -- A federal advisory panel Thursday urged the Bush administration to identify the five most promising areas to drill for natural gas in coastal waters off California and other states, which have been off limits to drilling for nearly 20 years. Citing the nation's unmet energy needs, the advisory group to Interior Secretary Gale A. Norton suggested that locating the top reservoirs of natural gas would help determine if there "are grounds and support for a limited lifting of" moratoriums on offshore drilling. The ban now covers 610 million acres of ocean off the Pacific, Atlantic and Gulf coasts. Kenneth Weiss in the Los Angeles Times -- 5/25/01
Judge demands straight answers from El Paso Corp. -- An irate judge threatened yesterday to subpoena the president of a Texas energy firm accused of manipulating California natural gas prices, saying he couldn't get straight answers out of another high-ranking company executive. The eruption by Curtis Wagner Jr., the administrative law judge presiding over a federal probe of alleged market manipulation by El Paso Corp., prompted the company to schedule voluntary testimony by President William Wise today in Washington, D.C. Bernadette Tansey in the San Francisco Chronicle -- 5/25/01
El Paso executive and collusion -- The head of a Texas energy conglomerate personally endorsed a deal between two subsidiaries accused of manipulating the natural gas market in Southern California to drive up prices, a senior official of the firm testified Thursday. The testimony in a trial-like hearing before the Federal Energy Regulatory Commission raised questions about whether top officials of Houston-based El Paso Corp. violated FERC rules requiring arm's-length dealings within a corporate family. The admission by El Paso executive Ralph Eads marked a shift from his previous testimony and was elicited through sharp questioning by an angry judge who threatened to subpoena Eads' boss. Ricardo Alonso-Zaldivar in the Los Angeles Times -- 5/25/01
Riverside no blackouts -- Southern California Edison won't immediately challenge Riverside's decision against using rolling blackouts to save energy this summer, a spokesman said Thursday. Edison doesn't care how the city of Riverside curtails its energy use as long as the city makes the required cuts during a statewide power shortage, Edison spokesman Steve Hansen said. Dan Lee in the Riverside Press -- 5/25/01
Energy crisis hits muni bonds -- Investors fled the California municipal bond market last month, taking with them a net $3.5 billion, their departure prompted in part by the state's energy crisis and taxes, a fund analysis firm said Thursday. The withdrawals in April marked the worst such outflow in years, and it comes as the state is preparing this August to issue a record $13.4 billion in bonds to bail out utilities. Loretta Kalb in the Sacramento Bee -- 5/25/01
With a perfectly negative crisis record, Davis desperate for a win -- So far, Gov. Gray Davis has amassed an unblemished record in his handling of the energy crisis. Not one major aspect of the situation has moved in the positive direction Davis said -- and clearly hoped -- it would, to wit: Dan Walters in the Sacramento Bee -- 5/25/01
Hot days don't cut the power -- A combination of factors kept the state's beleaguered system out of the red this time. The heat wave didn't hit all areas of the state at the same time, and cooler weather in the Pacific Northwest got power flowing from that region to California again. Also, there have been no new power-plant malfunctions, and many of the smaller generating facilities that were AWOL a few weeks ago, when the last blackouts hit, are operating again. A huge potential contributor to blackout avoidance -- but one that's difficult to quantify -- is conservation. Jack Katzanek in the Riverside Press -- 5/25/01
Long Beach Boeing layoffs -- Reflecting a sagging market for 100-seat jetliners, the Boeing Co. will lay off about 600 employees this year at its commercial factory in Long Beach, the company confirmed Thursday. That decision followed an internal study by Boeing that was completed earlier this year, said spokesman Warren Lamb, who did not elaborate. Ian Hanigan in the Long Beach Press -- 5/25/01
Hahn -- His job is to both prosecute and defend. And with that tricky mandate, Los Angeles City Atty. James Kenneth Hahn for 16 years has led a law office that, in sheer numbers, would rank among the biggest in the country. With some 450 attorneys, responsibility for both criminal and civil cases, and an annual budget of $70 million, the office, like the city it serves, is big, diverse, complex. But a review of Hahn's record suggests that his performance has been mixed--deliberate and plodding, pragmatic and obstinate. Greg Krikorian and Patrick McGreevey in the Los Angeles Times -- 5/25/01
Villaraigosa and Hahn and housing -- It doesn't fire up voters like a stump speech on crime, schools or traffic congestion. But the sheer magnitude of the city's housing shortage has placed it squarely--albeit quietly--on the agendas of both candidates running for mayor of Los Angeles. Eight years of a widely criticized lack of mayoral attention to the housing problem combined with a high concentration of low-wage workers has earned Los Angeles a reputation as one of the most unaffordable, overcrowded metropolitan centers in the country, plagued by low home ownership rates and slum conditions. Lee Romney in the Los Angeles Times -- 5/25/01
Villaraigosa and Hahn annd crime and gangs -- Mayoral candidates Antonio Villaraigosa and City Attorney James Hahn continued Thursday to compare their plans to deal with crime as they near the June 5 runoff election. Hahn, filing papers in court to seek injunctions against two Wilmington gangs, touted his efforts over the past several years to control gang activity throughout the city. "The root of the violence is drugs and ... for turf and control," Hahn said of the two gangs -- but which, he added, applies to most gangs in the city. Rick Orlov in the Los Angeles Daily News -- 5/25/01
Dean Andal -- State Board of Equalization member Dean Andal is expected to announce today that he plans to run for state controller next year. The 41-year-old Republican from Stockton said he will run on a platform that includes lowering utility taxes paid by residents and businesses in Los Angeles, which are 10% and 12.5%, respectively. The story is in the Los Angeles Times -- 5/25/01
Jim Rogan -- President Bush on Thursday nominated former Congressman James Rogan to be undersecretary of commerce for intellectual property and director of the U.S. Trademark Office. The job pays $130,200 a year. Bush's selection of Rogan, which will require confirmation by the Senate, could be a positive sign for Hollywood, which has been lobbying for increased enforcement of copyright laws, including a crackdown on Internet piracy. Bill Hillburg in the Los Angeles Daily News -- 5/25/01
Living wage -- While attorneys speculated on the constitutionality of Santa Monica's newly approved living wage law, hotel housekeeper Blanca Mendez was just hoping Thursday that she can benefit if a raise to $10.50 an hour goes into effect next summer at large downtown and beach-side businesses. "It would be fantastic," said Mendez, who now earns $8.50 an hour after seven years at the Streamline Moderne-style Shangri-La Hotel near the ocean. "The economy is very difficult; everything is getting expensive, like gas, like energy." Oscar Johnson and Ofelia Casillas in the Los Angeles Times -- 5/25/01
9 tribes' casino plans put on hold -- Gov. Gray Davis won't approve any more agreements with Indian tribes to allow casinos until the federal courts resolve a legal challenge to California's Indian gaming law. So far, the governor's moratorium on new Indian gaming compacts, announced in a letter to nine California tribes, doesn't appear to affect three Sonoma County tribes that have announced plans for casinos. But it could delay the progress of the nine other tribes that have asked the governor to negotiate gaming agreements, including the Round Valley tribe in Mendocino County. Steve Hart in the Santa Rosa Press -- 5/25/01
Charity foundations growth -- California's charitable foundation assets--which were relatively modest as recently as two decades ago--are now growing at a rate faster than those in the rest of the country, according to a study by the new USC Center on Philanthropy and Public Policy. In 1978, California held 8% of national foundation assets; in 1998 it accounted for 14%, the study said. During the same period, the state's share of foundation grants grew from 7% to 11% of total giving nationwide, it said. "California is catching up and jumping forward," said Marcia K. Sharp, a research fellow at the USC Center on Philanthropy and Public Policy, and a co-author of the study. Anne-Marie O'Connor in the Los Angeles Times -- 5/25/01
Documents seized in S.F. minority contract probe are inadmissible -- In a potential blow to prosecutors, a U.S. judge said that federal investigators violated a San Francisco city official's privacy rights when they searched her office looking for evidence of fraud in a city minority contracting program. The FBI seized hundreds of pages of records from the San Francisco Human Rights Commission office of chief contract compliance officer Zula Jones in August 1999. Chuck Finnie and Lance Williams in the San Francisco Chronicle -- 5/25/01
Feinstein fast-tracks water storage plans -- California can't forestall a water crisis without building more storage facilities, Sen. Dianne Feinstein said yesterday in responding to environmental critics of her bill to reauthorize the CalFed ecosystem restoration program. Eric Brazil in the San Francisco Chronicle Michael Gardner in the San Diego Union -- 5/25/01
Californians' recycling efforts hit skids -- Californians are recycling a lower percentage of redeemable plastic, glass and aluminum beverage containers than they have in more than a decade, the state Department of Conservation reported Thursday. While officials note the recycling drop is partially due to an increasing number of products available for redemption, they also point to research suggesting consumers' habits may be slipping. Ed Fletcher in the Sacramento Bee -- 5/25/01
UC admissions policy -- A UC Berkeley request to be exempted from a University of California admissions policy is creating concern among administrators and faculty who object to looking at one campus in isolation. Instead, they said, the Berkeley request probably should be folded into a systemwide review of admissions already under way. Tanya Schevitz in the San Francisco Chronicle -- 5/25/01
Irvine cash crop: business -- Irvine One of the largest commercial developments in the county could be built in the next five to seven years, replacing checkered fields of strawberries and other crops. The 670 acres of fields and a scattering of industrial buildings just outside Irvine's northeastern border is large enough to host 12 Disneylands, but The Irvine Co. has other plans. Laura Corbin, Jennifer Hieger and Elizabeth Aguilera in the Orange County Register -- 5/25/01
Like a Rolling Tone -- It looked like a scene from the hotel karaoke lounge, where the microphone-hogging guy won't stop belting Tom Jones tunes and a few cocktail-sipping patrons keep their eyes glued to their drinks in embarrassment. But it was official state business at the state Capitol on Thursday when members of the Assembly attempted to pay tribute to Bob Dylan on his 60th birthday by feebly singing along with his 1973 recording of "Forever Young." Lesli A. Maxwell in the Fresno Bee -- 5/25/01
Joe Lockhart -- Barely six months after joining Oracle Corp. as a communications consultant to chief executive Larry Ellison, former White House press secretary Joe Lockhart has left the database software firm. Both sides yesterday denied a rift between the two men and blamed Lockhart's frequent trips from his home in Washington, D.C., to Oracle's Redwood Shores headquarters for the departure. Kelly Zito in the San Francisco Chronicle -- 5/25/01 More..
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