FYI
---------------------- Forwarded by Mary Hain/HOU/ECT on 09/28/2000 03:45 PM 
---------------------------


Christopher F Calger
09/25/2000 08:00 AM
To: James D Steffes/HOU/EES@EES
cc: Tim Belden/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, Chris H 
Foster/HOU/ECT@ECT, David Parquet/SF/ECT@ECT, Michael McDonald/SF/ECT@ECT, 
Laird Dyer/SF/ECT@ECT 
Subject: Re: California Strategy RE: PG&E  

Thanks Jim.  ENA is very interested in this topic.  I was talking with Mona 
last week about my view that a strategy with PG&E should be supportive, not 
adversarial.    ENA is extremely interested in a gas management position with 
PG&E and they have made it clear to us that our public positions against them 
are a significant commercial issue.  I will spend some time with Portland and 
SF to get an ENA consensus on these points.

Chris



James D Steffes@EES
09/21/2000 09:28 PM
To: Tim Belden/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, Chris H 
Foster/HOU/ECT@ECT, Christopher F Calger/PDX/ECT@ECT
cc:  
Subject: California Strategy RE:  PG&E

FYI.  

If you are not aware, PG&E is pushing for immediate end of their retail rate 
cap (so they can collect wholesale energy costs).  

EES is considering its positions in that matter to prepare for CPUC and 
legislative proceedings.

I want to make sure that you are aware of these internal discussions.  Key 
from EPMI include (1) endorse Cal ISO report conclusions, (2) competititve 
default supplier, (3) increasing rate freeze for all customers, and (4) 
transfer of PG&E Hydro to affiliate at $2.8B (to offset current 
undercollection).

Please let me know if these positions make sense to you.  While I think that 
our general position is retail volatility, given the current situation in 
SDG&E that is simply impossible politically.

Please feel free to call.

Jim



---------------------- Forwarded by James D Steffes/HOU/EES on 09/21/2000 
10:39 PM ---------------------------
From: Harry Kingerski@ENRON on 09/21/2000 03:54 PM
To: James D Steffes/HOU/EES@EES, Paul Kaufman/PDX/ECT@ECT, Jeff 
Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Susan J Mara/SFO/EES@EES
cc: Richard Shapiro/HOU/EES@EES, Roger Yang/SFO/EES@EES 
Subject: 

I met with Dennis Benevides, Jim Wood and Scott Gahn about the PG&E strategy 
we discussed and the EES perspective.  Suggestions:

Endorse the recent CAL ISO report on causes of the problem (no utility 
forward buying, no demand responsiveness, etc) and say, with a few tweaks, 
their proposals were on target.

Get CTC roll-off no earlier than Spring '01.  Retroactive roll-off would be 
devastating.

Use PG&E $15 billion exposure as leverage to get competitive default supplier 
in place (get them out of merchant supply).

Impose a stair-step shape on the rate increase, to prompt customer migration.

Keep PG&E somewhat at risk for wholesale cost recovery, delay recovery of 
under-recoveries until out years. 

Keep rate freeze (which is preferable to rate cap) to as short a period as 
possible, post '01.

Here is a rework of Jim's bullet points to incorporate these thoughts:
  Keep in mind the numbers are all just placeholders and are not meant to be 
definitive.  Once we start to hone in on the concept, we can develop the 
right numbers.

From a retail perspective, this blends protection of the book with 
advancement of new market opportunity.  I may still get more feedback from 
the EES guys, but wanted to give you what I got so far.