"Plan B"
As folks know, there's a group of moderate Democrats in the CA Assembly that 
has been working on a "Plan B."
They've been working on it because they're not satisfied with the Governor's 
MOU with Edison.
The Plan B group has been talking to a broad array of stakeholders, including 
Republicans, to get input into how "Plan B" can improve upon the MOU.
First the good news about Plan B:  a fairly bright group of legislators is 
rolling up its sleeves and attempting to come up with a centrist solution to 
the problem, and they're at least creating the appearance of trying to be 
bi-partison about it.  (There is at least one idea in Plan B that is 
attributable to a Republican--Keith Richman--that Ken Lay met with a couple 
of weeks ago.) So the beginnings of a process to resolve California's crisis 
may be emerging.
Now the bad news:  because they are trying to build a consensus, Plan B is a 
mish-mash, isn't focused, includes some pretty bad ideas, excludes some good 
ideas (like re-establishing Direct Access immediately), and is going to 
require a lot more work to get right.
Update on Efforts to Achieve a Settlement
In the meeting with the suppliers that Steve Kean and I participated in 
yesterday, one of the financial consultants hired by the Governor criticized 
several of the Plan B proposals as unworkable.
On today's call with the Governor's staff and suppliers it became somewhat 
apparent that the Governor isn't going drive a resolution, but will leave it 
to the Legislature to take the lead role.
The staff emphasized repeatedly that the lawsuits, investigations, etc. were 
not on the table for discussion in any global settlement talks, and that 
attempting to bring them in to the negotiations was a nonstarter.
Instead, the Governor's staff said that the group should focus on the size of 
the discount that suppliers would be willing to take.
The suppliers pushed back, stating that including haircuts in the talks while 
excluding the lawsuits, investigations, etc. is one-sided and unworkable.
The staff urged the group to begin negotiations with the Legislature, but 
made it fairly clear that the Governor would not be the one to pull the 
necessary principals together in a room to hammer out a solution; his staff 
implied instead that it's up to others, i.e., the suppliers, to get the 
process of negotiations underway.
Next Steps
If the Governor's financial consultants are prepared by Friday, they will 
brief suppliers on the ways in which the administration is attempting to 
resolve the State's creditworthiness issue to encourage suppliers to do power 
deals with CDWR.  It they are not ready by Friday, the suppliers will meet 
separately to discuss next steps.
Finally, there's been some confusion.  My apologies.  
Sandi faxed to Jim and Harry yesterday a copy of "Plan B."  Sandi mentioned 
that the Governor gave the Plan B group an analysis of the Plan.  For those 
that have a copy of Plan B, see the 10-page memo dated May 12th, attached to 
the back of the Plan.  The memo is from Joe Fichera to John Dutra, Fred 
Keeley and Joe Nation (3 of the Plan B Democratic legislators).  Joe Fichera 
is the head of Saber Partners, a financial consulting group that the Governor 
hired to advise him on the crisis.  
If anyone has not yet received a copy of Plan B, please let me know and I'll 
get it to you.

Best,
Jeff