Privileged and Confidential 

Lisa and Michael,

I  talked with two representatives from PG&E today, Robert Orbeta and Fong Wan, regarding the reconciliation of amounts included in Enron's Proof Of Claim, which total almost $404 million dollars,  to the books and records of PG&E.  Both Robert and Fong agree that 1) no significant differences have been found, 2) the total variance, including IBM,  is approximately $2 million dollars, and 3) the reconciliation is substantially complete and therefore, the results should not change materially.  Diann Huddleson will call her counterpart, Mike Alexander,  this afternoon to request a schedule, by account, of these variances.  As you know, Enron's Proof of Claim is a compilation of charges/credits reflected on PG&E invoices, and therefore, the only differences should have been the result of omissions, duplications, or other query failures.  All things being equal, the reconciliation should have been a simple comparison, but at an account level.  The sheer number of accounts for several months of activity,  made this reconciliation a challenge. 

Both Robert and Fong made remarks regarding Enron's claim for the IBM dual bill accounts.  Mr.  Fong also commented that another outstanding item, in his opinion, was the "FERC refund case".   I suggested that these items be included on the agenda for the settlement discussions scheduled for next week. 

Let me know if you need anything further. 

Thanks,
Wanda