To add to Scott's comments:

The average price of the contracts over 10 years are $69/Mwh, about
one-fourth of the average price the state had been paying.  Some of those
$69 contracts are locked in at that price and not subject to gas escalation.
The contract rates are also not adjusted for inflation, so the relative
price may drop over the contract term.

DWR predicts that the contracts will meet 70% of the state's overall needs
for the next 10 years.

About 25% of the state's purchases this month are on the spot market, down
from 100% earlier this year.

The state feels it has purchased all the "around the clock" power it needs,
but still has a need for more "dispatchable" power.  The strategy is to
leave some room to take advantage of a better market if it develops.

A question was asked about Reliant, presumably its 2 cent "bring your own
gas" offer (the questions were inaudible).  Freeman said Reliant failed to
respond rapidly enough to make good on its offer.

The current spot price is $121, which they admitted could go higher
depending on weather, etc.  The state is at less exposure, however,
according to Freeman, because only a quarter of the state's purchases will
now be on the spot market.

When asked about the length of the deals, Freeman said the state's only
leverage was to offer to buy power now into what he called an upcoming
"period of uncertainty."  Otherwise, there was no reason for producers to
offer lower prices.

The contracts contain clauses that allow DWR to bring in its own gas if gas
prices are too high.  Freeman indicated that the state has a source
available but did not elaborate.

Freeman expects the public power authority to take an active role "unlocking
the Path 15 bottleneck" and that it will be completed within the lifetime of
the majority of contracts.

Freeman said the state is "not out of the woods" and that "no one is
declaring victory or saying the crisis is over. "  He said prices could once
again go through the roof occur unless FERC implements a ceiling.


----- Original Message -----
From: "Scott Govenar" <sgovenar@govadv.com>
To: "Hedy Govenar" <hgovenar@govadv.com>; "Mike Day" <MDay@GMSSR.com>; "Bev
Hansen" <bhansen@lhom.com>; "Jeff Dasovich" <jdasovic@enron.com>; "Susan J
Mara" <smara@enron.com>; "Paul Kaufman" <paul.kaufman@enron.com>; "Michael
McDonald" <Michael.McDonald@enron.com>; "Sandra McCubbin"
<Sandra.McCubbin@enron.com>; "Rick Shapiro" <rshapiro@enron.com>; "Jim
Steffes" <james.d.steffes@enron.com>; "Alan Comnes" <acomnes@enron.com>;
"Steven Kean" <Steven.J.Kean@enron.com>; "Karen Denne" <kdenne@enron.com>;
<Harry.Kingerski@enron.com>; "Leslie Lawner" <Leslie.Lawner@enron.com>;
"Robert Frank" <rfrank@enron.com>; "Ken Smith" <ken@kdscommunications.com>;
"Janel Guerrero" <Janel.Guerrero@enron.com>; "Miyung Buster"
<Miyung.Buster@enron.com>; "Jennifer Thome" <Jennifer.Thome@enron.com>;
"Eric Letke" <eletke@enron.com>; "Mary Schoen" <Mary.Schoen@enron.com>;
"David Leboe" <David.Leboe@ENRON.com>; "Ban Sharma" <ban.sharma@enron.com>
Sent: Friday, June 15, 2001 1:19 PM
Subject: Contracts


> DWR released 38 power purchase contracts today.  I have already
> purchased one copy which I am sending to Jeff Dasovich.  I am trying to
> purchase additional copies, however they are in short supply.  The
> document is approximately 1,000 pages long and I will not be able to
> make photocopies in time to catch FedEx.  If I do obtain additional
> copies today I will forward one to Houston and one to San Francisco.  I
> should be able to get additional copies early next week.
>
> David Freeman made the following comments during his press conference:
>
> Half of the contracts are specifically tied to gas prices;
> David Freeman believes the PPA could supply cheap gas if gas prices get
> too high;
> In 2004, DWR purchased 100% of the projected net short;
> The contracts are not subject to renegotiation or inflation;
> DWR expects few if any of the companies to exercise their July 2
> cancellation option;
> DWR believes the contracts are just and reasonable, and many state that;
>
> The bulk of the power contracts are for Southern California;
>
>
>
>
>
>
>