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From: "Ken Smith" <ken@kdscommunications.com>
To: "Sandra McCubbin" <smccubbi@enron.com>, <Janel.Guerrero@enron.com>, 
"Scott Govenar" <sgovenar@govadv.com>
Subject: Hertzberg Press Conference
Date: Tue, 29 May 2001 15:02:42 -0700
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Hertzberg Press Conference Announcing New  FERC Filing

Speaker Hertzberg began by announcing that he had  received word that the 9th 
Circuit Court of Appeals had rejected the  suit filed by Sen. John Burton and 
the Speaker asking FERC to impose price caps.  A story from KFWB radio in LA 
said that the 3-0 decision was that the issue  "does not warrant intervention 
of this court." 

The Speaker had received notice just moments before  entering the press 
conference and had no further details, nor had he talked to  lead counsel on 
the case.

Today,s announcement was regarding a request for  rehearing of FERC,s April 
26 order. He said the genesis for the request came  from discussions that 
occurred during his trip to DC following the order. Both  sides of the aisle, 
he said, indicated that there were opportunities to address  what he said 
were errors in the original order.

Speaker pro Tem Fred Keeley said these errors  included:

The April 26 order finds that wholesale electric  rates will not be just and 
reasonable absent commission intervention, but the  commission does not 
demonstrate that the price mitigation it orders will  ensure just and 
reasonable rates;
Limiting price mitigation to system emergencies  rather than on a 24/7 basis;
Prices were pegged to the oldest, dirtiest and  costliest plants, which 
continues to allow inappropriately high wholesale  prices;
There is no relation between costs and  pricing;
Tying price mitigation to establishing a Regional  Transmission Organization.

This is a request for a "different type" of order  that they characterized as 
"middle ground" with a "market approach" rather than  another request for 
price caps. He did not elaborate on how the filing takes a  market-based 
approach since it asks for intervention by FERC, but said FERC  commissioners 
had indicated that this would be a more "palatable" approach.  Hertzberg 
added that he had met with Republicans in the House dining room and  told 
them he was not proposing price caps.

Keeley said the April 26 order was a "toothless  tiger" that didn,t implement 
penalties for violation. The request for rehearing  asks for 100% penalties 
for any violations.

A copy of the filing and press release have been  forwarded to Houston and 
are also available by contacting Scott  Govenar.