----- Forwarded by Jeff Dasovich/NA/Enron on 12/28/2000 07:12 PM -----

	Roger Yang@EES
	12/28/2000 05:26 PM
		 
		 To: Jeff Dasovich/NA/Enron@Enron
		 cc: Scott Stoness/HOU/EES@EES
		 Subject: Questions for PG&E Witness's

Attached is my proposed line of questioning for PG&E and SCE, incorporating 
Scott's.  We need to talk it over.


---------------------- Forwarded by Roger Yang/SFO/EES on 12/28/2000 12:15 PM 
---------------------------


Scott Stoness
12/28/2000 09:53 AM
To: Jeff Dasovich/NA/Enron@Enron
cc: Roger Yang/SFO/EES@EES 
Subject: Questions for PG&E Witness's

Roger: Please clean up this line of questioning that shows that PG&E is 
fishing for a windfall.  And that their liquidity problem is contrived or at 
least overstated.

Q.  How many MW of generation do you have related to Nuclear?

[Expect answer] About 2160 to 2300MW

Q. What market value have you put on these assets?

[Expect much waffling and an answer close to $0, Under the settlement, PG&E 
recovered in excess $3.3 billion for sunk costs]

Q.  Would you accept, based on testimony filed by PG&E on page 2-2 of Chapter 
2 Supplemental Testimony subject to check, that 12 month forward contracts 
for CA 2001 are trading at $180/MWh?

A [Expect much wafffling but a high number]

Q.  What is the variable (non capital related costs) of nuclear units in the 
next year?

A [Expect $20/MWh]


Q.  Is it true that:

$180/MWH minus $30/MWh = $150/MWh

Q. And that 

2160 MW at 80% availability factor and 8760 hours per year = 15,137,280 MWh

Q.  And that 

15,137,280 MWh times $150 = $2.3 billion for 2001 

Q.  And would you accept subject to check that PG&E would get to keep as 
income $1.1 billion of this amount under the nuclear settlement in 2001, even 
though PG&E would defer recovery pursuant to its proposed mechanics of its 
Unrecovered Cost of Service Account?

Q.  And would you expect there to be more value in 2002 and beyond?

A Expect lots of weaseling and yes

Q.  Given this estimate for just 2001, do you believe that Diablo Canyon has 
a market value of zero?

A.  No.

Q.  How much did you value your hydro assets at this summer in your previous 
filing?

A.  Expect 2.8 b, but revised to $4.3 billion

Q.  Based on the $150/MWH gap between hydro operating costs and market prices 
for a similar amount of output in 2001 for PG&E hydro units of roughly 4000 
MW, which would result in a similar $2.3 billion amount in 2001, do you 
believe that these market value assessments for PG&E's hydro units are 
correct?

A.  I do not know.

Q.  Has PG&E determined the market value of its retained fossil generation, 
namely Hunters Point and Humboldt, under current market conditions?

A.  No

Q.  Once PG&E completes its CTC recovery for its fossil generation, what will 
be the remaining book value of these assets?

A. Zero

Q.  So is the assumed market value of these fossil assets zero?

Q.  In calculating its Unrecovered Cost of Service Account, does PG&E expect 
any revenues above costs from its fossil assets as stated in Chapter 6 Eratta 
and Updated Testimony?

A.  Yes

Q.  Do you believe that PG&E has generation assets on its books that upon 
market valuation could possibly reduce the amount of total undercollections 
PG&E has and may continue to accrue or even result in a determination of net 
stranded benefits?

A.  I do not know.

Q.  Doesn't recovery of undercollections without properly market valuing 
retained assets and netting the market value of these assets compound the 
impact of passing through current market prices to large customers, as 
proposed by PG&E?

A.  Yes

CROSS EXAMINATION FOR SCE

Q.  In Table IV-2 in Chapter 4 Amended Testimony, SCE calculates its TCBA 
Overcollection on December 31, 2000, is this correct?

A.  Yes

Q.  In footnote 2 to the entry "Going-Forward Account Transfers" in that 
table, SCE states, "Reflects ending August 31, 2000 balance plus interest 
calculated through December 31, 2000, is this correct?

A.  Yes

Q.  Why has SCE omitted overcollection amounts for September through December 
2000?

A.  SCE believes that these amounts rightfully belong to SCE shareholders?

Q.  What assets are recorded in the Going Forward Accounts?

A.  Hydro and fossil generation.

Q.  What are the net overcollections in September through December 2000, that 
SCE proposes to not transfer to the TCBA?

A.  I don't know. ($300 million for fossil and $150 million for hydro for 
September through November for fossil)

Q.  What is SCE's current market value of its fossil plants, namely Mohave 
and Four Corners?  (I understand we have sensitivities with respect to Mohave)

A.  SCE has a sell pending to AES and Pinnacle West Energy to sell SCE's 
share of Four Corners and Palo Verde Nuclear for $550 million and Mohave for 
$533 million for a total of $1.1 billion.

Q.  Is this the market value that SCE assumes for these plants and basis its 
proposal to retain the going forward net market revenues until the closing of 
the sell of these plants?

A.  Yes

Q.  What is the net overcollection as of November 30, 2001 in SCE's PX 
Revenue Memorandum Account for its fossil plants?

A.  $670 million

Q.  What has been the difference between Palo Verde Incremental Cost and 
market revenues recorded in the TCBA through November 2000?

A.  $240 million

Q.  How much capacity is SCE entitled to from Palo Verde and Four Corners?

A.  590 MW for Palo Verde and 710 MW for Four Corners?

Q.  Assuming an 80% capacity factor for 1300 MW of capacity for 2001, a 
market price of $180 for 2001 and operating costs of $30, does this result in 
net operating revenues of $1.4 billion for 2001?

A.  Yes

Q.  Would you agree there is more value in 2002 and beyond?

A.  Yes

Q.  Is it true under your proposal, such value would accrue to SCE's 
shareholders until the sell of the plant closes, when such value and all 
future will be transfered to the purchaser of the plant?

A. Yes

Q. What is the overcollection in the Hydro Generation Memo Account through 
November 30, 2000?

A. $531 million

Q.  What is SCE's current market value of its hydro generation?

A. shy of $1 billion

Q.  Does SCE anticipate an overcollection in 2001?

A.  Answer should be yes if 2000 is any indication

Q.  What ratemaking treatment does SCE propose for hydro overcollections in 
2001?

A.  Pursuant to the settlement, overcollections and undercollections are 
netted over a three year period.

Q.  Are you saying that any overcollected amounts in 2001, 2002, and 2003, 
will not be returned to ratepayers for three years upon ending the rate 
freeze and implementing the proposed settlement?

A.  Yes

Q.  If we assume that SCE's hydro assets generate 4 million mWHs in 2001 at a 
margin of $150 per mWH, would this roughly equal $600 million overcollection 
in one year?

A.  Yes, if you do not take into account the rate base impact.  

Q.  What is the market value SCE has assessed for SONGS?

A.  SCE has not assessed a market value for SONGS?

Q.  What will be the net book value of SONGS upon completion of CTC recovery 
and the end of the rate freeze?

A.  Zero

Q.  Approximately how much energy is SCE entitled to from SONGS?

A. Over 12 million mWH

Q.  If we assume 12 million mWhs in 2001 at a net profit of $150 per mWh, 
doesn't this roughly translate to a value of $1.8 billion for 2001?

A.  Yes

Q.  Would you expect more value for 2002 and beyond?

A.  Yes