----- Forwarded by Jeff Dasovich/NA/Enron on 03/04/2001 12:06 PM -----

A meeting with Sen. Bowne's staffer Lawrence Lingbloom took place on 3.2.01 
to discuss fixing the DA prohibition in AB1X.
About 30+ other interested parties attended.  
On 3.1.01 Bowen's office had distributed a complex proposal; and the meeting 
was convened to discuss the proposal.
The proposal distributed by Lingbloom was unacceptable and rejected but at 
least it acknowledged the need to allow some level of DA, i.e., moved away 
from a complete prohibition on DA.
After much discussion, Lingbloom left the meeting for a while, during which 
time the group engaged in a productive discussion with CDWR/CA Dept. of 
Finance.
The group asked DWR/Finance if they could agree to a program that: 
a) treats bond financing costs as a nonbypassable charge designed to cover 
the period during which the customer consumed power subsidized and purchased 
by DWR;

b) includes an exit fee for customers switching to DA if, and only if, there 
are actual costs associated with power contracts signed by DWR that might be 
"stranded";

c) permits an open season for "free switching" to DA when demand exceeds the 
sum of DWR's firm contract portfolio, retained generation and QF cost. This 
would mean that the amount of load covered by DWR's spot purchases, plus new 
load growth, should not face restrictions on Direct Access.

DWR wanted to include an agreement on information exchange, which might 
include noncore customers advising DWR in advance when they will switch to DA.
In return, DWR offered to post information about their power contracts and 
terms AFTER contracts were executed. 
Enron's outside attorney is drafting language to capture the concepts 
discussed at the 3.2.01 meeting.
The draft will be distributed and discussed on Monday, 3.5.01.