EXECUTIVE SUMMARY
?	DWR Contracts Being Negotiated
?	California Legislature Comment on Plan B

Long Term Contracts
Sources report that the state's lawyers are currently examining how to break the recently negotiated long term power contracts.  Assemblyman Fred Keeley has directed his staff to go through and look for any loopholes and sources also believe that the state is looking for ways to "hold the generators to the contracts they want to keep, but break those contracts that they want to break."

Sources gathered the following information on Plan B through private interviews with California legislatures Sen. John Burton and Assembly Speaker Robert Hertzberg.  
Speaker Robert Hertzberg:
?	Speaker Hertzberg has spent most of his time lately on the budget, but continues to make efforts related to the Plan  B.  Hertzberg is very aware how unlikely it is that he will succeed in putting any plan through the  legislature, particularly the Senate.  (He believes it will be possible to put a Plan B through the Assembly).
?	Hertzberg is personally committed to at least attempting to put a Plan B  through the legislature.  This is because he is close to business and wants to see SoCal saved.  He "wants a win under his belt before he leaves the Senate next year" so that he can take that win into whatever he does next.   Davis has laid the burden of bailing out SoCal on Hertzberg.  Hertzberg is determined  to put a piece of legislation on the floor.  However, he does not, at this time, know when this will happen, nor does he know what the share of the dedicated rate component will be for businesses and ratepayers, which remains a key sticking point.
?	When asked about Plan B's chances of passing the Senate, Hertzberg responded  that, "miracles can happen."
?	Hertzberg defended his idea of setting aside a  trust as part of Plan B for the generators to litigate over.  He stated  that his bankruptcy attorney believes that it will work, despite what Goode (the  governor's attorney) has said.
 
Sen. John Burton:
?	Burton is aware that Hertzberg is trying  to put together Plan B legislation and when asked about Hertzberg's efforts, Burton stated that in the Senate "Plan B has no Republican votes, and there are, at a minimum, 6 Democrats that will vote against it."   Burton said that for a Plan B bailout to pass the Senate, it would have to have three elements:
?	Businesses would pay the entire dedicated rate component.
?	The Edison parent company would have to give the state $1 B.
?	ALL creditors would have to  take a 30% haircut.
?	Burton wants Senator Bowen to hold hearings on the Plan B that will run for at least 3 days,  then have a "long caucus."  At that point the Senate will either "hold an  up-or-down vote on whatever comes from the Assembly or add amendments [stating the three provisions above]."  Burton wants "all Senators to know exactly what they're voting for or against."
?	Burton stated that he would "bet against" a Plan B passing. "This is not gonna happen," he stated. Burton believes that a bailout deal would be bad for the Democratic Party.