Thanks Harry.  This is very helpful.  Sue and I participated in an ARM 
meeting where a proposal for default provider was developed.  I will forward 
to business folks, and to you, to see whether we can support it.



From: Harry Kingerski@ENRON on 09/21/2000 03:54 PM CDT
To: James D Steffes/HOU/EES@EES, Paul Kaufman/PDX/ECT@ECT, Jeff 
Dasovich/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Susan J Mara/SFO/EES@EES
cc: Richard Shapiro/HOU/EES@EES, Roger Yang/SFO/EES@EES 
Subject: 

I met with Dennis Benevides, Jim Wood and Scott Gahn about the PG&E strategy 
we discussed and the EES perspective.  Suggestions:

Endorse the recent CAL ISO report on causes of the problem (no utility 
forward buying, no demand responsiveness, etc) and say, with a few tweaks, 
their proposals were on target.

Get CTC roll-off no earlier than Spring '01.  Retroactive roll-off would be 
devastating.

Use PG&E $15 billion exposure as leverage to get competitive default supplier 
in place (get them out of merchant supply).

Impose a stair-step shape on the rate increase, to prompt customer migration.

Keep PG&E somewhat at risk for wholesale cost recovery, delay recovery of 
under-recoveries until out years. 

Keep rate freeze (which is preferable to rate cap) to as short a period as 
possible, post '01.

Here is a rework of Jim's bullet points to incorporate these thoughts:
  Keep in mind the numbers are all just placeholders and are not meant to be 
definitive.  Once we start to hone in on the concept, we can develop the 
right numbers.

From a retail perspective, this blends protection of the book with 
advancement of new market opportunity.  I may still get more feedback from 
the EES guys, but wanted to give you what I got so far.