We have looked into the issue of whether Enron should be able to keep the
merger credits or whether they must be passed through to the customer.

The Commission decision (D. 98-03-073) which approved the merger and
directed SDG&E and SoCalGas to share the merger savings with "each" of their
customers through annual bill credits does not directly mention direct
access customers or how (or if) those credits must be passed through to DA
customers by their ESP.  The intent of the Commission's directive appears to
be that all of SDG&E's and SoCalGas' customers  share in the savings.

In the advice letter filed by SDG&E to implement the credits, it states,
with respect to residential customers, that they will receive a fixed amount
"per active meter".  An active meter is defined as that receiving service on
the day a one-time scan of the customer data base is performed.  With
respect to non-residential, the bill credit is based on billed them and Kwh
usage.  SDG&E states very specifically with respect to non-residentials that
"a  customer's bill credit will not be affected should the customer opt for
direct access."

Given the ambiguity in the Commission's decision, and the fact that SDG&E
made no specific directive with respect to how the credit should be handled
for residential DA customers, an argument could be made that the ESP should
be allowed to keep the credit.  However, given the current political
environment down in San Diego, we do not believe that keeping the credit,
rather than passing it through to the residential consumers, is in the long
term interest of Enron.

Jeanne Bennett