Good Morning Jeff,

Catherine is out of the office until Tuesday 3/20/01.  Not wanting to keep 
you waiting for a reply, I thought it best to give you some feedback 
immediately.  

The great majority of CAD's customers in CA are core.  CAD does not knowingly 
terminate any current customer prior to their expiration date. The reasons 
why CAD's customers are turned back to the utility are as follows:

1) Upon receiving renewal pricing from the CAD rep,  the customer chooses to 
return to the utility.

2) Understanding that the current minimum margin per meter for our customers 
is approximately $300, those customers that have extremely low annual volumes 
are sent attrition letters and turned back to the LDC, at the end of their 
contract.  We cannot competitively price this type of customer versus the 
utility, and extract enough margin to support them. Currently in the 
California markets (PG&E, SDG&E, & SOCAL) , there exists approximately 50 
customers that have usages so low that given current market conditions, we 
will not choose to renew the contracts.  The expiration dates for these are 
between 5/30/2001 and 2/28/2005.

3) The customer initiates a request for termination prior to the end of their 
contractual expiration date.  As we are all aware, California customers, 
specifically those with either an index or NYMEX product, experienced a large 
swing in their pricing during the past few months.  CAD has been inundated 
with customers requesting to be returned to their LDC.  Although we seek to 
satisfy our customer to the best of our ability,  returning these customers 
to the utility is the LAST thing we want to do!!!!!!!  

The steps we have taken to address this issue is to:
 a) work with customer service/credit to offer extended payment options to 
ease the effect of the increase.
 b) offer to restructure the customer's contract, and reprice the customer on 
a fixed price product; minimizing their risk going forward.
 c) explain to the customer, in more detail, the reasons why this has 
occurred, and how, going forward, the index/NYMEX pricing has eased.  

Should you have additional questions, please reply or call.
-Jim




From: Jeff Dasovich@ENRON on 03/15/2001 04:50 PM CST
Sent by: Jeff Dasovich@ENRON
To: Catherine Woods/DUB/EES@EES, Dennis Harris/DUB/EES@EES, James D 
Foster/DUB/EES@EES
cc: Roger O Ponce/HOU/EES@EES, Catherine Woods/DUB/EES@EES, James D 
Steffes/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Karen 
Denne/Corp/Enron@ENRON, mpalmer@enron.com, Paul Kaufman/PDX/ECT@ECT, Harry 
Kingerski/NA/Enron@Enron, Peggy Mahoney/HOU/EES@EES, smccubbi@enron.com, 
smara@enron.com, Leslie Lawner/NA/Enron@Enron, Rebecca W 
Cantrell/HOU/ECT@ECT, Phillip K Allen/HOU/ECT@ECT, Richard B 
Sanders/HOU/ECT@ECT, Shelley Corman/Enron@EnronXGate, Mike D 
Smith/HOU/EES@EES 
Subject: More Inquiries From CA PUC re: Switching customers back to LDC

Greetings:
 
Recall that about 3 weeks we got a call from a CA PUC staffer asking whether 
we'd switched a particular gas customer (or two) back to the LDC.  We looked 
into it and discovered that we'd mistakenly switched the customer back due to 
a mix up about the fact that the customer had two active meters behind two 
different utilities.  We informed the PUC staffer of the mix-up and explained 
that the situation would be resolved.  

The questions from the staffer arose because the CA PUC made a bad decision a 
couple of months ago. When gas prices ran up at the California border a lot 
of large ("noncore") customers attempted to switch back to the utility tariff 
in the hope of lowering gas costs.  In response, SoCalGas filed with the 
Commission asking the PUC to prohibit customers from switching back.  The 
Commission agreed and put the prohibition in place.  The Commission is now 
concerned that if suppliers terminate their contracts with customers (for 
whatever reason), or choose not to renew the contracts when they expire, 
customers won't have the option of returning to LDC service.

Today, I received a letter from the President of the Commission asking me to 
respond to the following:

Have you "stopped selling and delivering natural gas to any non-core 
customers with whom you have an existing procurement contract, or...notified 
any of your non-core customers that you do not intend to renew an existing 
natural gas commodity procurement contract.  If your company has stopped or 
intends to stop serving non-core customers, the CPUC also needs to know

how many contracts you have terminated or expect to terminate
the natural gas volumes involved
the location of the non-core customer(s)
the reason(s) your company intends or has already acted to terminate those 
contracts."

There's a good chance that the letter from the President of the Commission is 
linked to the fact that we've recently switched our electricity customers 
back to utility service in California.  

Prior to deciding whether and how to respond to the Commissioner, I'm trying 
to get handle on whether we're re-sourcing any gas retail customers to the 
utility prior to expiration, choosing not to renew contracts once they've 
expired, etc.  Catherine, or Jim Foster, can you help out?  Thanks.

Best,
Jeff