Can't thank you enough.  Great report and I wish that I'd been there with you 
to experience it.  I'd like to stay in touch.  It's a high priority of mine 
to come down there (as I've mentioned a few times).  I'm going to try and do 
it before the month's out.  I hope we can have lunch or something and compare 
notes about all this stuff.  This won't be going away for quite some time.

Thanks again for your help.

Best,
Jeff



	Dana Perino <dana@gablegroup.com>
	11/14/2000 02:49 PM
		 
		 To: jdasovic@enron.com
		 cc: 
		 Subject: Notes from FERC Meeting

Hi, Jeff --

I'm so glad you called today and that I could run over to the FERC 
meeting.  Always interesting!

Here are my notes -- I apologize in advance if they are a little 
rough.  Over the past few years I've become a much faster typist than when 
I write longhand.

Gov. Gray Davis
November 14, 2000
FERC Hearing in San Diego

Serious flaws in the energy market in California.  Rates are not reasonable 
nor just.  Two points:

1.  Given FERC's findings, you must order refunds. If you don't, then what 
was the point of the findings.  Believes FERC has the authority to issue 
the refunds and called on them to order them sooner than later.
2.  Impose hard price caps and big caps that will protest consumers from 
another anticipated crisis in summer 2001.

Davis said he believes that deregulation can work eventually, if market is 
competitive and all parties act responsibly.  But he believes it will take 
4-5 years to get to a competitive market.  Without the price caps, he 
believes there will be a lot of unwarranted pain inflicted on the consumers 
and businesses of CA.

He said there is no justification for the huge profits the energy companies 
netted in the third quarter.  He said he won't stand to allow CA companies 
to be brought to their knees.  The market is dysfunctional.  People in SD 
believe the marketplace is being manipulated for obscene profits.  Wants to 
level off dereg for 4-5 years to allow market to work and for more power 
plants to come online.

He said he believes in people making money and that dereg can work -- but 
only when it's competitive.

Strong belief in wholesale price caps.  Angry that FERC stripped CA ISO's 
ability to protect consumers against price spikes.  He said FERC's plan is 
a reckless deregulation experiment and that the Commission's plan will only 
make things worse next summer. Davis asked FERC to modify its order.

He said that FERC doesn't believe that CA can get the plants 
online.  Doesn't blame them given the history of CA, but that he has taken 
measures to speed up from 1 year to 6 months to site new plants.  He's 
allocated $50 million from the general fund and $500 million for demand 
reduction, renewables and conservation programs.  He believes he can reduce 
demand and increase supply without public health risks or environmental 
degradation.

He said he wants to have someone accountable/electable to the ISO and the 
Power Exchange Boards, that the state should have the right to include 
people from CA on those Boards.  He talked about the negative effects the 
actions in CA will have on other states watching this "great deregulation 
experiment."

He said FERC's proposed solution does nothing to lower prices.  To the 
contrary, it's to bring businesses and consumers to their knees.  And Davis 
predicted "a ratepayers revolt that will strip FERC of its authority and 
take matters into their own hands."  He said he believes strongly that FERC 
has the remedies to protect consumers, give them rebates and prevent this 
from happening again.

He said if FERC just focuses on getting more plants online, all hell is 
going to break loose. That FERC can't sit in Washington, 3,000 miles away 
and take action on CA -- that will only cause more problems.

Dana speaking again --  If any of this doesn't make sense or you have 
additional questions, please let me know. I have a few things scribbled in 
the margins that may help piece it together better.

Again, thanks for the opportunity to help.  I look forward to talking to 
you again soon.

Best,

Dana


Dana Perino
dana@gablegroup.com
619-234-1300 ext. 238