I agree 400% - I look forward to your plan.
---------------------- Forwarded by David W Delainey/HOU/ECT on 08/04/2000 
04:38 PM ---------------------------


James D Steffes@EES
08/04/2000 03:13 PM
To: Steven J Kean/HOU/EES@EES, Tim Belden/HOU/ECT@ECT, Richard 
Shapiro/HOU/EES@EES, David W Delainey/HOU/ECT@ECT, John J 
Lavorato/Corp/Enron@Enron
cc: Mary Hain/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@ENRON, Paul 
Kaufman/PDX/ECT@ECT 
Subject: SDG&E Complaint vs. Sellers into Calif ISO / Calif PX

SDG&E filed a Complaint with the FERC that requests an "emergency order 
capping at $250 per MWh the prices" for all parties selling into the Calif 
ISO and the Calif PX.   SDG&E claims that the Calif ISO and the Calif PX are 
"fundamentally flawed and inherently incapable of producing workable 
competition".

EPMI is directly impacted by this Complaint.   Even though FERC has approved 
EPMI's Market-Based Rate certificate after a finding that we had no market 
power, this Complaint would restrict us from selling at above $250 per MWh 
into the Calif ISO and Calif PX.

Government Affairs is responding in two ways --

1. A direct response from EPMI to FERC responding that there has been no 
finding that EPMI has market power and therefore we should not lose our 
market-based rate authority.

2. A response through WPTF (Western Power Trading Forum) and EPSA to argue 
more broadly the facts of what is going on in California (bad hedging by 
SDG&E) and poor market structure rules.

The fundamental problem is that the FERC is running scared about price spikes 
and may, without any real thinking, approve such a Complaint.  SDG&E has 
asked for expedited treatment and a decision could be out as early as mid 
August.

This issue again highlights how important the on-going FERC Investigation in 
Market Issues is for Enron.  We are putting together a detailed plan of how 
Enron will present our recommendations to FERC in this Investigation and will 
discuss this with you.

Call with questions.  

Thanks,

Jim