While I appreciate the virtue of flying below the radar if possible, the 
matter here is complicated by the fact that FERC's discovery rules (18 CFR, 
Subpart D) pertain only to "proceedings set for hearing . . . and to such 
proceedings as the Commission may order."  18 CFR 385.401.  In this case, 
FERC stated that "a trial-type hearing is not necessary . . . ." and 
specifically rejected the use of a "trial-type evidentiary hearing."  Slip 
op. at 47-48 & n.97.  Thus, while I have not researched the matter as yet, my 
preliminary view is that the CPUC's attempt to invoke FERC's discovery 
processes would appear to be outside the contemplation of FERC's Nov. 1 order 
and its regulations, unless FERC specifically orders discovery in this case.  
(The CPUC seems to recognize the relevance of this consideration when it 
specifically attempts to equate "paper" hearings with "trial-type" hearings; 
see page 1 of its Motion.)

The CPUC's motion may prompt FERC to decide whether or not to allow discovery 
in this case under Rule 401.  While the CPUC's motion does not apply directly 
to marketers, FERC's ruling will be precedent in the event the CPUC or 
someone else hereafter serves discovery on other parties.  As a result, we 
need to consider whether laying in the weeds risks losing an opportunity to 
present our views on whether FERC should allow discovery in a paper hearing 
with an expedited decisional track, particularly in light of the fact that 
Staff has already conducted.

>>> Jeffrey Watkiss 11/08/00 10:31AM >>>
Does anyone have an idea as to why marketers, including EPMI, are not 
included in the list of subject companies:  Exh. B?  Since EPMI is not a 
subject of the motion, why should it answer?  Lying in the weeds may be a 
more prudent course of action.

>>> "Fergus, Gary S." <GFergus@brobeck.com> 11/07/00 10:08PM >>>
I just spoke with Mary to make sure we have the same information.  Here are
the facts we have so far.  On November 4th, the CPUC filed a motion with
FERC to adopt the form of protective order that the CPUC entered, to compel
the production of documents and to shorten time to answer.  According to
Exhibit B (read to me by Nancy Pickover at Bracewell) the following CPUC
moved against the following entities:  AES, Williams, Duke, Dynegy, Reliant
and Southern.  Enron entities were NOT named in exhibit B.  This is not to
say that we could not be easily added to the group.  While the motion reads
as if the CPUC was moving against everybody, in fact, in footnote 2 they
state they are only moving against the entities named in Exhibit B.  We will
have Exhibit B in hand first thing tomorrow via FEDEX to confirm this.  To
repeat, Enron is not named yet.

Thanks
Gary

-----Original Message-----
From: Mary.Hain@enron.com [mailto:Mary.Hain@enron.com]
Sent: Tuesday, November 07, 2000 6:23 PM
To: dwatkiss@bracepatt.com; Susan.J.Mara@enron.com;
Richard.B.Sanders@enron.com; James.D.Steffes@enron.com;
Christian.Yoder@enron.com; Jeff.Dasovich@enron.com; mday@gmssr.com;
gfergus@brobeck.com; rcarroll@bracepatt.com; Alan.Comnes@enron.com;
Joe.Hartsoe@enron.com; Sarah.Novosel@enron.com
Cc: Tim.Belden@enron.com; Lysa.Akin@enron.com
Subject: Important - CPUC Motion - Confidential Attorney Client
Privilege and Work Product


As you may already know, the CPUC filed a motion at FERC asking for a
protective order and to compel production of the information they subpoened
from us in the CPUC's OII case.  Given the timing, we should discuss this
on our conference call scheduled for tomorrow.

They request that we be required:
   to answer their motion on Thursday,
   to provide the information within 5 working days of a FERC ordering
   production, and
   to provide of P&L information and spread sheets detailing our deals,
   specifically delivery point, delivery date, counterparty, volume and
   price.

We may not have a problem providing this information for use by FERC in its
proceeding subject to a confidentiality agreement but I think we would
oppose their requests for:
   the information to be provided for "government eyes only" -  this would
   prohibit EPMI from defending itself vis-a-vis other market participants.
   a FERC confidentiality order that would could allow FERC to "share" this
   information with the CPUC (for purposes of the PUC's OII proceeding)
   pursuant to 16 U.S.C. 824h(c).  16 USC 824g(c) requires the Commission
   to make information available to state commissions as may be of
   assistance in state regulation of public utilities.  We should argue
   that 16 USC 824h(c) does not apply here given that we are not a public
   utility nor does the PUC regulate how much market power wholesale
   marketers exercise or the level of market power mitigation (these are
   the bases the PUC provides for explaining why it should have this
   information.)
   the above contractual information to allow them to analyze the
   competitiveness of the forward market to evaluate the wisdom of the
   Commission's  decision to allow the UDC's "unfettered access" to the
   forwards market.  This argument is unpersuasive given that the CPUC can
   get information about the competitiveness of the forward markets from
   the Wall Street Journal's listing of NYMEX prices.


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