Please see the email below from Ron Carroll regarding FERC's order 
establishing the section 206 proceeding.  Let me know what you think.

Sarah


---------------------- Forwarded by Sarah Novosel/Corp/Enron on 08/30/2000 
09:53 AM ---------------------------


"Ronald Carroll" <rcarroll@bracepatt.com> on 08/29/2000 05:06:43 PM
To: <jhartso@enron.com>, <snovose@enron.com>
cc:  

Subject: RCR Re: California Investigation


Joe and Sarah,

As you know, FERC recently established an investigation into whether market 
activities and design in California are resulting in anamolous prices that 
are unjust and unreasonble.  FERC also established a refund effective date 
under FPA Section 206 to begin 60 days after the Federal Register notice is 
published.  (The refund effective date will thus apply to periods on and 
after approximately November 1, 2000.)   Although FERC hinted that refunds 
were not likely in this matter, by establishing a refund effective date, it 
held open the possibility that it could order refunds for such periods.

This raises several interesting legal questions.  For instance, can FERC, 
under FPA Section 206, establish a refund effective date where there is no 
known defendant and no specific allegation of improper conduct.  We (Dan and 
I) do not know the answers to these questions but believe that they are worth 
researching if you have concern for possible refunds.  Depending on the 
results of our research, it may be prudent to seek rehearing of the 8/23 
order if for no other reasons than to preserve a possible appeal.  (This 
raises the ancillary question as to whether this is now ripe for raising 
these issues or whether we should wait until when (and if) refunds are 
actually ordered.)

After consulting with Dan, we believe an RCR of approximately $8,000 for the 
research and request for rehearing (if necessary) would be appropriate.  
Rehearing must be filed on or before 9/22.

Ron