-----Original Message-----
From: 	Dasovich, Jeff  
Sent:	Friday, November 02, 2001 5:55 PM
To:	Shapiro, Richard; Steffes, James D.; Dietrich, Janet; Blachman, Jeremy; Frazier, Lamar; Leff, Dan; Hughes, Evan; Smith, Alison; Smith, Mike; Williams, Robert C.; Delainey, David W.; Kean, Steven J.; Tribolet, Michael; Curry, Wanda; Mellencamp, Lisa; Mara, Susan; Kaufman, Paul
Subject:	Update:  Meeting w/Edison RE: recovery of Negative CTC Claim

?	We met with Edison yesterday in the attempt to settle our negative CTC claim.
?	Edison continues to take a very hard-line, extreme position.  This is it in a nutshell:
1.	all customers--bundled and DA alike--"contributed to Edison's undercollection" and all customers must pay it down; 
2.	bundled customers contributed through frozen rates and DA customers contributed through the negative CTC;
3.	Edison says it will pay ESPs past due amounts related to the negative CTC, but it intends to then turn around and assess a charge on all customer bills--DA and bundled alike--to recover its undercollection. 
4.	Edison intends to collect it over approximately 2 years.  Edison estimates that the charge to DA customers over this period would be about $25-27/MWH.
5.	Under Edison's plan, Enron would likely end up paying Edison, i.e., the present value of the "undercollection" charge would exceed the present value of the lump sum negative CTC payment.
?	Obviously, with respect to any settlement with Edison, we're extremely far apart and we're therefore considering other 	options.
?	In the meantime, the California PUC is engaged in DA and PX credit-related activities beginning next week and Edison 	will try to get the Commission to adopt their proposal.
?	We are working with other market participants and gearing up to vigorously oppose Edison's proposal at the PUC.
?	We will distribute something on Monday describing our approach and tactics at the PUC for folks to review and 	comment on.
?	We are scheduled to meet with Edison again next Thursday to try to knock some sense into them (the probability of 	which is low).

If you have any questions, let us know.

Best,
Jeff