This communication is intended for signatories of the Comprehensive
Settlement Agreement, and is confidential under Rule 51 of the Commission's
Rules of Practice and Procedure.  Please do not forward this e-mail to other
parties.

During a meeting with Comm. Bilas today, he confirmed what we had been
previously advised, namely:  He did not communicate with any of his
colleagues regarding the PD, he is very disappointed at the limited scope of
the PD, and knows it does not go as far as it should; he would support an
alternate offered by another commission which adopted more or all of the
CSA.  He strongly urges parties to take their concerns about the PD to the
other commissioners.  He acknowledges it will be a tough sell.  However, he
does not have any communication from the Democratic commissioners on this
issue either way, so he cannot predict their reaction with any certainty.
The main reason for his issuance of the PD in this form appears to be that
he felt that a more aggressive PD issued by a Wilson appointee would attract
attacks simply because it was not offered by the new commissioner.

Additional data points:  Other key CPUC staff with access to President Lynch
that I spoke with today urged us to meet with her, and to emphasize that the
CSA does not result in a reduction in CPUC jurisdiction or regulatory
control (like AB 1890 did) and to take our best shot at convincing her and
Comm. Wood that customers, including core customers, may far much worse
under the interim than under the CSA (particularly in view of the interstate
capacity issues--as described by Mark Pocta of ORA on our recent conf.
call).  In addition, a fourth Commissioner (who will be around to vote next
year) suggested similar tactics and offered support for such an effort.

In light of this information, I suggest that we proceed to issue the letter
as planned, and ask that all parties, including SoCalGas, quickly review the
next draft to see if they can sign on.  We would like to have as many of the
CSA signatories as possible on the letter.  I hope to get the new draft out
today or early tomorrow.  Please respond by COB Thursday or early on Friday.

Next, I have asked for a meeting with Pres. Lynch.  I would like other
parties to attend as well (or schedule their own meetings).  As soon as I
get a date, I will advise.

Bottom line:  We urge parties to sign the letter and to file comments
supporting adoption of the CSA.  We need to meet with Lynch, and until and
unless we get a firm "no", we should not assume the settlement is dead.  We
should file comments on the PD on Monday which at least list our objections
to the PD and open the door for discussions on how to revive the CSA.

If possible, we will try to arrange a conference call on Friday.
Please call if you have any questions.

Mike Day