----- Forwarded by Jeff Dasovich/NA/Enron on 01/04/2001 10:28 AM -----

	Susan J Mara
	01/04/2001 12:40 AM
		 
		 To: Alan Comnes/PDX/ECT@ECT, Angela Schwarz/HOU/EES@EES, Beverly 
Aden/HOU/EES@EES, Bill Votaw/HOU/EES@EES, Brenda Barreda/HOU/EES@EES, Carol 
Moffett/HOU/EES@EES, Cathy Corbin/HOU/EES@EES, Chris H Foster/HOU/ECT@ECT, 
Christina Liscano/HOU/EES@EES, Christopher F Calger/PDX/ECT@ECT, Craig H 
Sutter/HOU/EES@EES, Dan Leff/HOU/EES@EES, Debora Whitehead/HOU/EES@EES, 
Dennis Benevides/HOU/EES@EES, Don Black/HOU/EES@EES, Dorothy 
Youngblood/HOU/ECT@ECT, Douglas Huth/HOU/EES@EES, Edward 
Sacks/Corp/Enron@ENRON, Eric Melvin/HOU/EES@EES, Erika Dupre/HOU/EES@EES, 
Evan Hughes/HOU/EES@EES, Fran Deltoro/HOU/EES@EES, Frank W 
Vickers/HOU/ECT@ECT, Gayle W Muench/HOU/EES@EES, Ginger 
Dernehl/NA/Enron@ENRON, Gordon Savage/HOU/EES@EES, Harold G 
Buchanan/HOU/EES@EES, Harry Kingerski/NA/Enron@ENRON, Iris Waser/HOU/EES@EES, 
James D Steffes/NA/Enron@ENRON, James W Lewis/HOU/EES@EES, James 
Wright/Western Region/The Bentley Company@Exchange, Jeff Messina/HOU/EES@EES, 
Jeremy Blachman/HOU/EES@EES, Jess Hewitt/HOU/EES@EES, Joe 
Hartsoe/Corp/Enron@ENRON, Karen Denne/Corp/Enron@ENRON, Kathy 
Bass/HOU/EES@EES, Kathy Dodgen/HOU/EES@EES, Ken Gustafson/HOU/EES@EES, Kevin 
Hughes/HOU/EES@EES, Leasa Lopez/HOU/EES@EES, Leticia Botello/HOU/EES@EES, 
Mark S Muller/HOU/EES@EES, Marsha Suggs/HOU/EES@EES, Marty Sunde/HOU/EES@EES, 
Meredith M Eggleston/HOU/EES@EES, Michael Etringer/HOU/ECT@ECT, Michael 
Mann/HOU/EES@EES, Michelle D Cisneros/HOU/ECT@ECT, Mike M Smith/HOU/EES@EES, 
mpalmer@enron.com, Neil Bresnan/HOU/EES@EES, Neil Hong/HOU/EES@EES, Paul 
Kaufman/PDX/ECT@ECT, Paula Warren/HOU/EES@EES, Richard L 
Zdunkewicz/HOU/EES@EES, Richard Leibert/HOU/EES@EES, Richard 
Shapiro/NA/Enron@ENRON, Rita Hennessy/NA/Enron@ENRON, Robert 
Badeer/HOU/ECT@ECT, Roger Yang/SFO/EES@EES, Rosalinda Tijerina/HOU/EES@EES, 
Sandra McCubbin/NA/Enron@ENRON, Sarah Novosel/Corp/Enron@ENRON, Scott 
Gahn/HOU/EES@EES, Scott Stoness/HOU/EES@EES, Sharon Dick/HOU/EES@EES, 
skean@enron.com, Tanya Leslie/HOU/EES@EES, Tasha Lair/HOU/EES@EES, Ted 
Murphy/HOU/ECT@ECT, Terri Greenlee/NA/Enron@ENRON, Tim Belden/HOU/ECT@ECT, 
Tony Spruiell/HOU/EES@EES, Vicki Sharp/HOU/EES@EES, Vladimir 
Gorny/HOU/ECT@ECT, Wanda Curry/HOU/EES@EES, William S Bradford/HOU/ECT@ECT, 
Mike D Smith/HOU/EES@EES, Donna Fulton/Corp/Enron@ENRON, Jeff 
Dasovich/NA/Enron@Enron, Richard B Sanders/HOU/ECT@ECT, gfergus@brobeck.com, 
rcarroll@bracepatt.com, Kathryn Corbally/Corp/Enron@ENRON
		 cc: 
		 Subject: Update Day 1 Second Session FERC CA Settlement

In the Room

Conference attended by all in-state generators, a few munies, the IOUs and a 
few others. One attorney from CPUC, but on phone. Barbara Barkovich attended 
for CA Large Consumers.  Nader sent someone.  No other consumers.  One other 
ESP -- Strategic Energy (only operates in San Diego).
Judge reports that only 6 offers have been submitted to FERC for sales to the 
IOUs (note; Enron submitted one of the offers). The offers total 2000 MW. The 
prices are quite divergent.  He expresses concern at the little offered.
Generators suggest that more could be offered if FERC could be more flexible 
on terms (FERC required 24/7 offers).
IOUs and others press judge to seek offers from others not present (e.g., 
BPA, other marketers, SW utilities), but judge does not offer to do so.
Barkovich says can't throw large customers into non-core market now.
Everyone agrees that we are all looking for a blended wholesale rate (part 
existing gen, part OFs, part forward contract and part spot) that meshes with 
the IOUs' ability to recover the costs in rates -- so tied to CPUC rate 
increase.
Discussion of CPUC PD -- not enough
Enron able to take low profile.
SDG&E suggested terminating the settlement talks at FERC, saying nothing 
could be achieved.
Not much happens until 4:30 pm, when judge blows up -- judge directed 
epithets at SDG&E and SCE.  SCE had refused to cooperate from the beginning.  

Out of the Room

Separate talks between PG&E and SDG&E and some of the generators.
Late in the day, Judge meets with IOUs.
Parties agree informally that forum does not work well given lack of CPUC 
involvement, but some believe that FERC is only hope for a workable 
resolution.

Next Steps -- The Judge Speaks

Judge asked everyone to consider how to "Share the Pain" for Thursday's 
meeting and said not to expect any "win:win" scenario. His view is that FERC 
is better than the CA legislature or bankruptcy court.
His focus will be on Wolak proposal to share the pain, as submitted in 
12/1/00 comments to FERC -- forces all sellers to CA to sell most of its 
supply (either generation or marketer offers) as cost-based rates in forward 
contracts, or lose ability to sell at market-based rates.  Generators oppose 
this, I believe.
Enron planning to continue low profile but to discuss options with ENA.