Jeff:

I took a crack at expressing our thoughts on the exit strategy below.  I am
not really happy with it in either tone or content and would welcome your
input so that we can have more persuasive testimony tonight.

Gratefully,

Justin

Principles to Create a Healthy Competitive Electricity Market

The Silicon Valley Manufacturing Group is concerned by the absence of a
systematic and expedited exit strategy for the state from the power
business.  We are convinced that planning for and creating a competitive
electricity market is the most effective means to long-term stability and
cost-competitiveness for all consumers in California.

There are certain principles that, if followed, will help lead us to the
kind of stability and cost-effective power that Californians want.  We
recommend that follow-up legislation to AB1X provide the guidelines for this
exit strategy with the following concepts:

1. Keep the utilities solvent and spread out the payback of the CTC over
several years
2. Encourage the DWR to buy the least amount of power necessary to stabilize
the market for the least amount of time.  It does not take a lot of fixed
priced contracts to stabilize the market
3. Establish an objective trigger (based on credit worthiness) for the
utilities to assume long-term contracts.
4. Allow customers to have direct access and real choice while providing
necessary protections to assure the state that the bonds can be repaid )
5. Direct long-term customer contracts are beneficial for the State because
it lessens the burden of the DWR to obtain power, particularly at peak
demand times.
6. Remove barriers to on-site generation to meet customer needs and put
excess power onto the grid.

Even though we are in a crisis, we should not postpone accounting for
long-term and unintended consequences of our short-term measures.  Effective
energy policy should be based on sound economic principles.  Together, we
can accomplish this.




-----Original Message-----
From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com]
Sent: Thursday, February 08, 2001 11:41 AM
To: jbradley@svmg.org
Subject:


(See attached file: SVMG Talking Points--JBradley.doc)
 - SVMG Talking Points--JBradley.doc