---------------------- Forwarded by Richard Shapiro/NA/Enron on 12/06/2000 
12:36 PM ---------------------------


Hedy Govenar <hgovenar@govadv.com> on 12/06/2000 12:30:19 PM
To: Mona L Petrochko <mpetroch@enron.com>, Sandra McCubbin 
<smccubbi@enron.com>, Paul Kaufman <paul.kaufman@enron.com>, Harry Kingerski 
<harry.kingerski@enron.com>, Sue Mara <smara@enron.com>, Rick Shaprio 
<rshapiro@enron.com>, Bev Hansen <bhansen@lhom.com>, Jeff Dasovich 
<jdasovich@enron.com>, Karen Denne <kdenne@enron.com>, Marcie Milner 
<mmilner@enron.com>, Jim Steffes <james.d.steffes@enron.com>, Alan Comnes 
<acomnes@enron.com>, Mike Day <mday@gmssr.com>, Scott Govenar 
<sgovenar@enron.com>
cc:  

Subject: Last evening's conversations (CONFIDENTIAL)

Hello everyone:

Last evening there were several receptions in Sacramento which allowed
us to chat with some interesting folks about the energy situation.

Bob Foster said Edison is very close to declaring bankruptcy.  He said
maybe it would be the best thing if the Federal court were involved
anyway because he was not having much influence on policy discussions
and legislative decisions.

An hour and a half discussion with Steve Peace can be summarized as
follows:
    1.  He believes Enron has done a masterful job of manipulating the
market.
    2.  He believes it may not be too late for Enron, specifically Ken
Lay, to use the Federal government to stabilize the market.  Lay's
influence with Bush could set up a system with true competition (perhaps
publicly-owned generation could be a competitor) and fair and just
prices.
    3.  Peace himself will not be a major player in energy solutions.
He'll be in Puerta Vallarta with his wife for half of January to prove
the point.
    4.  He suggests having Jim Brulte, Senate Minority Leader and Bush
campaigner, get involved to promote a proactive solution which includes
Ken Lay and President Bush.  (I'm calling Brulte today to get a
reaction)
    5.  He believes there is a good chance that the Sempra, Edison and
PG&E go into bankruptcy.  Ultimately that would be very bad for Enron
for a variety of reasons which I could not follow and/or retain.

The Director of the Department of Consumer Affairs said her office
received a call yesterday afternoon from the Governor's office directing
them, and all other state agencies, to turn off all computers by 4:00
p.m.  The Governor wanted to light the capitol Xmas tree and was
concerned there would be too much drain on the power system.  He didn't
want to be accused of adding to the electricity shortage, so the trade
off was no state compputers would be used while the tree was lit.  The
tree was turned off after half an hour.  Sandi has this morning's
Sacramento Bee article which described the incident in somewhat
different detail.