Folks:

We're getting down to the wire.  The Legislature has failed to come up with a solution.  The Treasuer (Angelides) has been marketing the bond issuance.  The key component of his sales pitch to investors is his guarantee that the PUC will suspend DA at its August 23rd meeting, period.  Loretta's in a box with few options other than suspension.  

Attached is a proposal that Sue and I pulled together yesterday (all defects, errors, lapses of judgment, etc., included in the proposal are mine, not Sue's).  It's got two options:

Option A
Cap DA at the net short position for the next 12 months on a first-come-first-serve basis.  "New" DA customers would pay fixed charges for 1) utility past debt and 2) the bonds to cover DWR purchases from Jan to present.  "New" DA customers would be exempt from DWR long-term charges, however.  "Old" DA customers would be exempt from everything.  Absent legislation addressing DA, PUC would revisit in 12 months.

Option B
No cap on DA eligibility.  However, "New" DA customers would pay fixed charges for 1) utility past debt, 2) the bonds to cover DWR purchases from Jan to present, and 3) above-market costs of DWR contracts. "Old" DA customers would be exempt from everything.  Absent legislation addressing DA, PUC would revisit in 12 months.

Clearly, these are not "first best" DA constructs.  But the situation we face is arguably binary----DA suspended altogether, or a significantly compromised DA market, but a market, nonetheless.

Tomorrow is a meeting of the Direct Access Coaltion, where Sue and I intend to present the options and attempt to get "everyone" on board.  If successful, we would file the proposal (as a very large coaltion) with the PUC on Friday, accompanied by a noisy press release.

Please review and determine if there are defects in the options that would prevent us from going forward.

We'd like to discuss further on today's 1:30 (CDT) California call.

Best,
Jeff