Jeff and all:  I agree with your thoughts as to the need for amendments re
DA customers that have never purchased DWR power, call it amend. 1.  I also
agree with your proposal re customers that leave bundled service for direct
access service only having to pay for the costs actually incurred by DWR on
their behalf, call it amend. 2.  I think it is a stretch, however, to
propose an exemption for any customer that leaves bundled for DA by
September 1, call it amend. 3.  This appears to be inconsistent with amend.
2.  I agree with you re amend. 4, deletion of language ending DA.  Bill

-----Original Message-----
From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com]
Sent: Thursday, July 05, 2001 2:07 PM
To: Ann.Cohn@sce.com; kmccrea@sablaw.com; mkahl@ka-pow.com;
jdasovic@enron.com; wbooth@booth-law.com; drothrock@camfg.com;
smutny@iepa.com; brbarkovich@earthlink.net;
dominic.dimare@calchamber.com; isenberg@hmot.com; jstewart@cmta.net;
mdjoseph@adamsbroadwell.com; lga@mother.com; debinorton@aol.com;
cra@calretailers.com; derek.naten@roche.com; vjw@cleanpower.org; John R.
Redding (PS, NE) (E-mail); Mike Florio (E-mail)
Subject: Bond Leg Language, etc.


Greetings:

Hope everyone had a pleasant 4th.

I've read the respective Burton and Hertzberg language on amending AB 1X.
The Burton language looks cleaner and simpler, though there may be reasons
to include some of the Hertzberg language, too.

I'm proposing to the group the following as potential amendments to the
bond bill.  I would appreciate your feedback.  The amendments would be as
follows:

Customers who were on Direct Access when DWR started buying power (Jan.
17th?), and are still on Direct Access when the bill passes, should be
exempt from paying for the bonds.

In short, customers should not be forced to pay for power twice--once from
their ESP, and once from DWR.  Since these customers receive power services
from their ESP, they never consumed DWR power in the first place and it
wouldn't be fair to require them to pay for it.

Customers who have been utility customers since DWR started buying power
but subsequently switched to Direct Access should only pay for power
provided by DWR that they actually consumed, no more and no less.

For example, if a customer was a utility customer when DWR started buying
power but switched to Direct Access on May 1st, then the customer would
only be responsible for reimbursing DWR for power deliveries that took
place from Jan. 17th thru April 30th.

I believe that we agreed on these concepts during the negotiations that
took place over the past 4-5 weeks.  Or if we didn't explicitly agree
during the talks, they seem to be principles on which we ought to be able
to agree pretty easily now. And rather than leave the issue hanging, which
can create unnecessary and costly uncertainty for customers, I suggest that
we include very clear and simple legislative language in the bond bill
clarifying what customers' obligations are.  Your thoughts are appreciated.

In addition, we have talked quite a bit about providing customers with
incentives in the attempt to get California out of the energy hole that it
finds itself in.  Providing (20KW and above) customers with an incentive to
switch to Direct Access as soon as possible could 1) reduce the net short
position that the state (and ultimately consumers) have to finance, thereby
reducing spot purchases and price volatility,  2) reduce electricity
purchasing costs, and 3) reduce the burden on the state budget.

With this in mind, I'm also proposing that the group consider an amendment
to the bond bill that would exempt from bond charges any customer that
switches to Direct Access by September 1st.

Finally, it seems odd that the language directing the PUC to suspend Direct
Access is still in the bill.  If a dedicated rate component is created,
that seems to eliminate altogether the need to suspend Direct Access.  And
if that's the case, would it make sense to delete that language from the
bill?

Look forward to your comments and working with you to get support for and
passage of the "core/noncore" proposal.

Best,
Jeff
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