I would also consider letting Jeff know the following:  1.  We have pending a 
complaint against SCE at the PUC to compel SCE to pay the negative CTCs to 
us.  ALJ and Commissioner for Complaint are same ALJ/Comm. proposing this 
treatment.  So no chance of different outcome there.  2.  SCE should drop its 
"affiliate market abuse" counterclaim that it filed in that proceeding.  3.  
Proposed order also implies that no cash payment--only bill credit--will be 
recognized for negative CTC.  [no suggesting mentioning this to Bryson].  4.  
Mike Day raised another alternative which would be that, for now, just get 
SCE to support "bifurcation" and deferral of negative CTC issue and then 
enter negotiations on payment afterwards.   

 -----Original Message-----
From:  Kingerski, Harry  
Sent: Monday, June 25, 2001 9:29 AM
To: Curry, Wanda; Williams, Robert C.; Mara, Susan; mday@gmssr.com
Cc: Steffes, James; Shapiro, Richard
Subject: Re: ATTORNEY CLIENT PRIVILEGE - CPUC Decision

First cut response to Jim's message - see below.  Please respond to me ASAP.

ISSUE:  Enron's PX credits with SCE of $---- million may be "stranded" if a 
PUC proposed decision is approved, as is expected to occur Thursday, June 28.

SCE stopped making PX credit payments January 5, 2001, supposedly because of 
its financial situation.  SCE asked the PUC for authority to reflect the 
accumulated credits on the customer's bill, and suspend any cash payments of 
such credits  The proposed decision grants this request.

SCE has also asked the PUC to formally clarify the manner in which PX credits 
are calculated.  Prior to January 19, 2001, the PX credit was based on the 
actual Power Exchange clearing prices.  On January 19, 2001, the Power 
Exchange effectively stopped operations.  SCE's proposal is to determine the 
PX credit post-January 19, 2001 as the weighted average of its own retained 
generation and QF contract costs.  The PUC has not yet said when it would 
rule on this issue.  Enron's position before the PUC is that the credit 
should continue to be based on a market measure, like NP 15 and SP 15 indices.

Enron's P X credits with SCE could become "stranded" if they are interpreted 
to accrue to the account of the individual customers receiving service and 
not Enron.   Once Enron's customers were re-sourced back to the utility, new 
account numbers were established for these accounts.  This creates a loophole 
which allows SCE and the PUC to interpret the accumulated credits as applying 
to specific customer accounts and not to services purchased by Enron. 

Core Issues for a settlement with SCE on PX credit issue:

Cash payment of owed PX credits through January 18, 2001.  (For Enron, this 
is $123 million.)

Agreement to use SCE-proposed method of PX credit calculation starting 
January 19, 2001.  (Enron drops market proposal.)

PX credits accrued starting January 19, 2001 can be paid in the form of bill 
credits to any account so designated by the Energy Service Provider for 
receipt of such credits.  (Enron credits are transferable to services 
rendered for other Enron customers.)
 
Other SCE debts (????) are not called in immediately.





	James D Steffes 06/24/2001 10:20 AM 	   To: Harry Kingerski/NA/Enron@Enron, 
Susan J Mara/NA/Enron, Robert C Williams/Enron@EnronXGate, mday@gmssr.com  
cc: Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Jeff 
Dasovich/NA/Enron@Enron  Subject: ATTORNEY CLIENT PRIVILEGE - CPUC Decision


Harry & Sue --

Please work with Mike Day on Monday am to develop the following -

1. Outline of a proposed SCE - Enron - WPTF Stipulation that resolves SCE's 
request for suspension of payment of PX Credit.
2. Talking points for Jeff Skilling to call Bryson to discuss.

Get these to Skilling through Rick early Monday so that he can call.  
Skilling is going to try and convince SCE to settle and not let the CPUC 
decide this issue.

I know it's a long-shot on getting a deal done and before the CPUC on 
Wednesday, but this may be our last best hope to hold this element of the 
Proposed Decision.

Call me on Monday am to discuss (I'll be in DC).

Thanks,

Jim