Dear Market Participants:

On August 18th, we sent out the attached email asking all Participants for 
their
assistance in executing an Indemnity Agreement, which was a new document
associated with the recently completed Credit Redesign Project. We have since
taken feedback received from Participants and made some clarifying revisions 
to
the Indemnity Agreement.  Revisions were made in the following sections:

INDEMNITY SECTION
     Paragraph 1,3

GENERAL PROVISIONS SECTION
     Paragraph 7 (b)

Attached is the REVISED Indemnity Agreement which covers all CalPX-provided 
pool
performance bonds.  Additionally, we have attached a copy of the Core and CTS
Market Pool Performance Bonds.   We thank you in advance for your timely
handling of these materials, and we respectfully request that you complete the
enclosed by September 15, 2000.

If you have any questions or require further assistance, please contact Clark
Cheng at (626) 537-3243.


(See attached file: AIGINDEMNITYAGREEMENT_REV.doc)
IMPORTANT NOTE:  Please print Indemnity Agreement attachment on legal size
paper.



(See attached file: CPXFINALCOREMARKETBOND.doc)
(See attached file: CPXFINALCTSMARKETBOND.doc)






(Embedded image moved to file: pic04269.pcx)



August 18, 2000

Dear Market Participants:

The California Power Exchange has just completed a comprehensive credit
redesign.  Our new credit policies now incorporate new credit methodologies
similar to those used at major commodity exchanges. Specifically, CalPX now
recognizes more aspects of the actual market volatility and individual 
portfolio
risk in order to provide quantifiable management information on the collateral
accounts of participants while maintaining the integrity of our markets.  We
have also combined financial requirements for our CORE (Day-Ahead, Day-Of and
Real Time) and CTS (Forwards) markets.  The incorporation of a $20 million
default bond in our CORE market and a liquidity line up to $50 million in our
CTS market provide insurance protection in the event of a default and allow
timely management of cash flow in the markets.

Enclosed for your review are all the necessary documents pertaining to our
credit redesign, including a brief instruction sheet to assist you with the
completion of these documents.  We thank you in advance for your timely 
handling
of these materials, and we respectfully request that you complete the enclosed
by August 31, 2000.

If you have any questions or require further assistance, please contact Clark
Cheng at (626) 537-3243.




 - AIGINDEMNITYAGREEMENT_REV.doc
 - CPXFINALCOREMARKETBOND.doc
 - CPXFINALCTSMARKETBOND.doc
 - pic04269.pcx