Bruno --

We should contact Mike Day as soon as possible and have him prepared to draft 
legislative fixes for any bill that would come out looking like the Wood 
Draft Decision consistent with the issues you outlined below.  I want to make 
sure that we are prepared for this possibility.  

FYI, given the information I have, the Wood Draft Decision is more favorable 
for Enron's attempt at becoming the wholesale supplier to SDG&E.  It looks 
pretty tough to beat the Duque Decision.

Jim








Bruno Gaillard
08/22/2000 09:02 PM
To: Edward Hamb/HOU/EES@EES, Jennifer Rudolph/HOU/EES@EES, Chris 
Hendrix/HOU/EES@EES, Greg Cordell/HOU/EES@EES, Harold G Buchanan/HOU/EES@EES, 
Martin Wenzel/SFO/HOU/EES@EES, Douglas Condon/SFO/EES@EES, James M 
Wood/HOU/EES@EES, Gary Mirich/HOU/EES@EES, Dennis Benevides/HOU/EES@EES, 
Roger Yang/SFO/EES@EES, David Parquet@ECT, mday@gmssr.com, SF Directors, Paul 
Kaufman/PDX/ECT@ECT, Marcie Milner/Corp/Enron@ENRON, Mary Hain@Enron, Harry 
Kingerski/HOU/EES@EES, James D Steffes/HOU/EES@EES, Richard 
Shapiro/HOU/EES@EES, Peggy Mahoney/HOU/EES@EES, Karen Denne@Enron, Mark 
Palmer/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron
cc:  
Subject: Daily Update/Information on CA Legislative Activity  

The events described below represent what has happened today. The situation 
is in constant flux. However, we need to know our position in case any of the 
bellow does occurred.
 
Scott Baugh, Republican Assembly Leader, had a press conference in which the 
republicans declared that:

They accept Duque's Decision as is. 

They are going to, request a special legislative session starting September 1

The legislative session is going to look into supplementing focusing on 
granting the Governor emergency power for supply side issues and streamlining 
sitting. Furthermore, they will propose to provide relief in addition to 
Duque's decision, by providing  an extra $300 MM, retroactive to June 1, 
2000,  to schools, hospitals and local government in the form of a tax credit 
or cut and from the general fund.  

They do not support the Davis/Alpert Bill (SDG&E Rate Freeze). (However, the 
San Diego Republicans will probably vote for it).

This also seems to take some wind out of the Pescetti bill (Freeze Extension).

This seems to be a political play. We do not believe that the republicans 
think that the Governor will actually declare a special session. The Alpert 
bill will  most likely be heard tomorrow. We do not know in which form and 
whether or not it will be amended.

There also is a current rumor that a new bill may be introduce that would put 
the Wood Draft Decision into a bill. Our comments on the Wood decision focus 
mostly on the recovery mechanism, limiting the application of the cap to 
bundled customerrs, and insuring that only those that benefited from the cap 
paid for the costs associated with  the cap.

Attached is a brief summary of Woods proposal.
caps the energy component of bills for residential, small commercial and 
street lighting customers at 6.5 cents/kwh
creates a balancing account to ensure that SDG&E is "made whole"
uses all revenues generated by SDG&E-owned or managed assets (e.g. qualifying 
facilities, San Onofre Nuclear Generating Station, bilateral and interutility 
contracts) to finance the cap (large customers likely to feel cheated by this 
provision)
offers large customers a voluntary "bill smoothing" option (but no caps)
states that purchases made by SDG&E from the PX are no longer per se 
reasonable and indicates that the Commission will investigate SDG&E,s past 
procurement practices (seems to counter previous promises of keeping SDG&E 
&whole8)
goes through December 2003

Please provide comments as to our position on Wood's proposal