FYI.  It appears that the California Governor is working pretty hard to stop 
this market.  We are looking into the politics behind this letter, especially 
who in the administration drove this dramatic response.

Jim

---------------------- Forwarded by James D Steffes/HOU/EES on 07/28/2000 
07:29 AM ---------------------------


Jeff Dasovich on 07/27/2000 08:05:28 PM
To: James D Steffes/HOU/EES@EES, Sandra McCubbin/SFO/EES@EES, Susan J 
Mara/SFO/EES@EES, Mona L Petrochko/SFO/EES@EES, Richard Shapiro/HOU/EES@EES, 
Mary Hain@ENRON_DEVELOPMENT, Joe Hartsoe/Corp/Enron@Enron, Cynthia 
Sandherr/Corp/Enron@Enron, Paul Kaufman@EES, Dave Parquet@ENRON_DEVELOPMENT, 
Tim Belden@ECT, Robert Badeer@ECT, Mark Palmer, Karen Denne/Corp/Enron@Enron, 
Peggy Mahoney/HOU/EES@EES, Dennis Benevides/HOU/EES@EES, Roger 
Yang/SFO/EES@EES, Kathleen E Magruder/HOU/EES@EES
cc:  
Subject: California Governor Comes Out Hard for Price Caps

Just received by fax a press release and letters sent by Davis to Jim 
Hoecker, the Chair and the CEO of the ISO, the Chair and the CEO of the PX, 
the Pres. of the PUC, the Chair of the Energy Oversight Board.  The language 
is highly charged and negative.  Tim/Bob:  Note call for caps on PX 
equivalent to caps in ISO real time market.  In sum:

Letter to Chair and CEO of the ISO
Apply to FERC for extension of rate cap authority
Apply to FERC for finding that market is not competitive.
Reduce wholesale price cap to lowest reasonable level.

Letter to Chair and CEO of PX
Apply to FERC for bid caps in day-ahead and day-of spot markets equal to ISO 
caps in real time markets.

Letter to Pres of PUC
Wholesale electricity market lacks competition.
Support filings that he's asked the ISO and the PX to make at FERC.
File a petition with FERC requesting a finding that "no competitive market 
currently exists in California, and requesting an extenstion of the price cap 
authority..."
Refund immediately to SDG&E consumers the $100 million dollars SDG&E "found" 
in an account

Letter to Chair of Energy Oversight Board
Urge ISO to petition FERC for extension of price cap authority
Urge ISO to lower caps to lowest reasonable level
Urge ISO to file petition with FERC for finding that "no competitive market 
for energy exists in California"

Letter to Hoecker (cc'd are Clinton, Boxer, Feinstein, Farr, Lewis, Burton, 
Brulte, Hertzberg and Baugh)
"...there is virtually no price elasticity in this market, and little 
prospect of change in the short run."
If FERC's investigation finds abuse, FERC should order refunds to consumers.