Attached is a draft document that I believe reflects our discussion this morning concerning the "rate plan" condition for the Oregon proceeding.  
 
Pamela Lesh and I had a discussion this morning following our conference call.  She made three key points in response to the changes we made to the plan:
 
(1)  RE:  using six years for the "rate freeze," rather than using know and measurable financial indicators (debt coverage + debt/equity ratios, etc.) as the trigger for a rate case (or implementaiton of a fixed rate credit).  Pamela understands that it is simpler to use six years rather than a financial indicator trigger.  However, she stated that by using the financial indicators we may be able to allign customers' interests with our interests.  The trick would be in using the proper financial indicators.  It makes some sense to see if there are objective indicators that allign Enron's interests with ratepayer interests.  
 
(2)  RE:  keeping any A&G savings allocated to PGE's Generation.  Pamela stated that their current rates include a "Resource Valuation Mechanism," which calculates the value of their generation resources every year.  The Commission has not yet resolved how O&M and A&G will be calculated in the RVM.  Staff is pushing for an annual determination of these numbers--which would subject us to the risk of an annual clawback of synergies allocated to generation.  By fixing a "credit" from the synergies, we can avoid the annual determination being pushed by staff.  I'll check with Pamela to determine when the next RVM determination is scheduled.  We could be facing this issue before the transaction closes.  
 
(3)  RE:  determining the annual "credit" should we choose to fix the credit as in (2) above.  Pamela pointed out that the parties are going to be pushing to get all of the synergies--i.e., all ~$30 million.  They won't care if most of the synergies are dedicated in our models to servicing the debt.  
 
Put in terms of the analogy we were using today, the net synergies produced by the financial model are a hamburger and the parties don't want a hamburger.  They want a filet, the spinach salad, the bottle of cabarnet, the port and the fancy dessert.  
 
So, even if we're planning to go to the full Commission for a decision, Pamela believes we need to offer all of the net synergies (after debt service) identified by the financial model.  We can pass through the synergies through the RVM mechanism.  Pamela strongly believes that the offer of the hamburger up front will keep the OPUC from ordering the filet, the desert and a good bottle of wine.  
 
Note that the document attached does not reflect my conversation with Pamela.  Let's talk again about this issue.