I think that the goal of Govt Affairs should be to (1) ensure that customers 
never on utility service post Jan 17 should not pay, and (2) try and find a 
compromise with the other parties to allow customers who leave by some date 
certain will only pay for the unrecovered cost  on a $/mwh basis.

Basically I am arguing that Enron should require DWR to calculate its unpaid 
balance on some date certain and determine the appropriate surcharge.   I 
know that this is a very long shot.  We should make this recommendation as a 
help to our business teams even if we are going to lose.

Do  we need a conference call with Lobbyists to work through this on Thursday?

Jim

 ---------------------- Forwarded by James D Steffes/NA/Enron on 07/03/2001 
02:30 PM --------------------------- 


Scott Stoness@EES
07/03/2001 09:33 AM
To: Harry Kingerski/NA/Enron@Enron
cc: Don Black, James D Steffes/NA/Enron@Enron, James W Lewis/HOU/EES@EES 

Subject: Draft Bond Legislation Language

As discussed, we have two possible approaches:
1) Home Run Strategy: The following change: The commission shall, within 30 
days from the date of the application, issue a bond financing order 
establishing a DWR Bond Charge that shall be applicable to all electric power 
delivered in California by electric corporations subject to the jurisdiction 
of the commission, with the exception of electric power delivered by 
suppliers other than the utility, who contracted for such delivery prior to 
the effective date of this legislation.
We use San Diego large customers as our example of customers who should be 
exempt from a surcharge because they have been off bundled rates for the 
duration of the turmoil.
Risk is that our customers will not be fully on until about August 15.  Thus 
if the wording gets changed to "who are taking delivery as of the effective 
date of this legislation" we have failed.
Positive is that it removes the CPUC (anti enron) discretion.

2) 1st Base Strategy: The following change: c) The commission shall conduct 
such proceedings as it deems necessary to inform the public of the revenue 
requirements  and to establish rates to enable the department to recover the 
revenue requirement.  Such rates will be designed  i) such that the bond 
revenue requirements will be recovered, and ii) to reflect the amount of DWR 
bond costs that the customer or customer class caused.
Risk is that the CPUC will interpret these words unfavorably to us.  ie.  If 
we touch the system once we pay the whole surcharge.

Scott

---------------------- Forwarded by Scott Stoness/HOU/EES on 07/03/2001 09:14 
AM ---------------------------


Scott Stoness
07/03/2001 08:40 AM
To: Harry Kingerski/NA/Enron@Enron
cc: Don Black, James D Steffes/NA/Enron@Enron, James W Lewis/HOU/EES@EES, 
Dennis Benevides/HOU/EES@EES 
Subject: Draft Bond Legislation Language

Harry.  I read through the proposed legislation.  In summary it:
Imposes a DWR Bond surcharge applicable to all electric power delivered in 
California .... subject to the jurisdiction of the commission.
The commission would approve the adjustments to the DWR Bond Charge as may be 
necessary to ensure timely recovery....
The commission would conduct hearings to establish rates to allow the DWR to 
recover their revenue requirements.
The DWR Bond Charge shall take precedence over all other costs and 
disbursements to be padi from the fund and shall be paid from revenue derived 
from rate levels in effect on July 31, 2001.

Although we could live with this legislation the issues I see are:
IBM would not escape a surcharge even though they may not have caused any DWR 
costs.
SImilarly, large San Diego customers, who have not caused any DWR costs, 
would be subject to a surcharge.
I am having a hard time understanding what they intended to achieve with the 
clause "The DWR Bond Charge shall take precedence over all other costs and 
disbursements to be paid from the fund and shall be paid from revenue derived 
from rate levels in effect on July 31, 2001."
Does the 2nd half of this sentence freeze the Jul 31, 2001 rates until the 
bond is paid off; or
Is it just an attempt to define that rates should not go up to pay for the 
bonds; or [this is the most likely meaning in my mind]
Is it just defining that the act comes into effect on July 31, 2001

If it is possible, we should advocate:
Regarding, SDG&E, customers who did not contribute to DWR costs:
Imposes a DWR Bond surcharge applicable to all electric power delivered in 
California .... subject to the jurisdiction of the commission.
The commission would conduct hearings to establish rates to allow the DWR to 
recover their revenue requirements.  Such rates will be designed  i) such 
that the bond revenue requirements will be recovered, and ii) to reflect the 
amount of DWR costs that the customer or customer class caused.

And we should get a legal interpretation of  "The DWR Bond Charge shall take 
precedence over all other costs and disbursements to be paid from the fund 
and shall be paid from revenue derived from rate levels in effect on July 31, 
2001."  To make sure that we are not going to get surprised.

Scott