EXECUTIVE SUMMARY
?	California Budget Resolved
?	FERC Ordered Energy Settlements Stall MOU/Plan B 

BUDGET
California legislators in the House have once again established a tentative reserve amount for the state's depleted budget.  Both sides are reportedly uneasy with the $2.74B compromise and sources indicate that the four Republican votes needed to pass the budget  in the Assembly are likely far more obtainable than the one Republican vote needed in the Senate.  California's current redistricting process may provide Republicans with future seats that could translate into immediate bargaining power in energy and budget matters.  Adding to the frustration, sources indicate that consumer activist Harvey Rosenfield plans to pressure State  Treasurer Angelides into battling with legislators for progress on the budget and revenue bonds.

ENERGY SETTLEMENTS
Today marked opening negotiations for California state energy officials and the several large energy providers who are charged with price gouging Californians.  Sources close to California State Sen. Burton report that the results from the15 days of negotiations before the FERC appointed Administrative Law Judge, Curtis Wagener, will significantly influence the state's efforts in promoting any Plan B or MOU.  Burton indicated that FERC would need to order between $3 and $4B in generator refunds before the state would finalize a SoCal bail-out.  Of that amount, SoCal would most likely be infused with $1B, however, without substantial contributions from power providers that sold into California and currently fall outside FERC's jurisdiction (i.e. BC Hydro & LA DWP), a $3 to $5B refund would be impossible to achieve.  Regardless of legislators' desires, sources believe that  consistent with the PG&E bankruptcy advisor's view, a multibillion dollar refund from FERC is unlikely.  Sources will continue to monitor and report on these negotiations.