Yesterday, Ken Lay spoke with MidAmerican CEO David Sokol regarding the 
attached new legislative amendment to provide a limited PUHCA exemption for 
companies with a high level of financial stability as determined by 
independent market analysts (i.e. "A" rating for Holding Companies or 
investment grade rating for utility companies).  This is not a permanent 
exemption as PUHCA would again apply should the company loose its high rating.

MidAmerican's lobbyist reported this conversation to me along with Ken Lay's 
reported commitment that we would review it as soon as we could.  Reportedly, 
Ken Lay was non-committal but not negatively disposed.

The utility strategy is to have Senator Bob Kerrey (D-NE) offer this as an 
amendment to a "must pass" piece of legislation during the waning days of 
this Congressional session.  This will be separate from the utilities' 
strategy to enact Private Use legislation (H.R. 4971, S. 2967 which includes 
tax language to exclude water and sewage connection fees from gross income as 
contributions to capital and language to increase the amount permitted to 
paid into nuclear decommissioning reserve funds primarily  for Commonwealth 
Edison) and to enact stand-alone Reliability legislation (S. 2071 and H.R. 
2944).

Senator Kerrey has already spoken to Senator Gramm (R-TX) about this PUHCA 
amendment and Gramm was reportedly  non-committal but not negatively disposed 
to the idea.  I will follow-up with Gramm's staff next week after they've 
reviewed it and convey their views to you.  According to MidAmerican,  the 
concept to insure stockholder protection along with consumer protection was 
Senator Kerrey's idea.  

It is possible that Congressman Dingell (D-MI) and Congressman Markey (D-MA) 
would still actively oppose this limited exemption, especially given the fact 
that Congressman Dingell (who would Chair the Commerce Committee should the 
Democrats regain control of the House) has recently said that whether or not 
he is Commerce Committee Chairman next Congress, that comprehensive 
electricity restructuring legislation including PUHCA repeal is "at least 
three years away from happening."

Steve and Rick, can we get a temperature gauge next week as to our position 
on this amendment?  As a reminder, Enron's position here-to-date has been to 
oppose stand-alone PUHCA repeal as this is the one provision utilities like 
Southern Company really want.  To date, this strategy has worked with the 
MidAmerican Utility Group willing to support our transmission open access 
provisions in turn for our PUHCA exemption support.