some quantification on hedge and rate increase.  (In Tamara's summary point # 
2, I think she meant Oct 1 2001).
----- Forwarded by Harry Kingerski/NA/Enron on 03/02/2001 02:19 PM -----

	Scott Stoness@EES
	03/02/2001 09:58 AM
		 
		 To: Harry Kingerski/NA/Enron@Enron
		 cc: 
		 Subject: CPUC Filing PG&E / SCE

Harry.  We want later surcharge, lower surcharge, less recovery of utility 
shortfall.

I hope this helps in defining our strategy for evidence.
---------------------- Forwarded by Scott Stoness/HOU/EES on 03/02/2001 09:56 
AM ---------------------------


Scott Stoness
03/01/2001 07:04 PM
To: Tamara Johnson/HOU/EES@EES
cc:  
Subject: Comments????


Summary:
Unwinding our hedge in 2002 and beyond results in a $326m gain.  Assuming 
that our position is hedged beyond 2001.
Reseting our PG&E / SCE curves to increase $15/MWh increase in October 1, 
2002, in addition to the current $10/MWh surcharge,  results in a $309m loss.
Netting 1,2 setting our curve, with a $15/MWh increase in Oct, in addition to 
the current $10/MWh surcharge, results in a $17m gain.

Sensitivity:
Our position is heavily weighted toward today - (MWh short T&D) 
A later recovery of current year shortfall is to our advantage.
An increase in surcharge from $10 to $25/MWh in Oct 1, 2001 results in a net 
$17m gain.  (Base Case)
An increase in surcharge from $10 to $25/MWh in March 30, 2001 results in a 
net $36m loss.
An increase  in surcharge from $10 to $25/MWh in Jan1, 2002 results in a net 
$44m gain.
Keeping the surcharge flat at $10/MWh results in a net $170m gain.
A longer recovery period is to our advantage:
Oct 1, 2001 to end of 2011, requires a $23.2/MWh surcharge.  Results in a 
$35m gain.
Oct 1, 2001 to end of 2009, requires a $26.9/MWh surcharge. Results in a $2m 
loss.
Oct 1, 2001 to end of 2006, requires a $27.9/MWh surcharge.  Results in a 
$12m loss.
The surcharge is heavily dependent on how much recovery of current utility 
shortfall is allowed.
PG&E's surcharge would be reduced by $7/MWh if they were not allowed to 
recover their $6b current shortfall.  Results in a $70m gain.

Our customers, on average are paying $81/MWh, all inclusive today (including 
the $10/MWh surcharge).  So 15/81 is a 19% increase.

If I was forced to choose today, I would:
Put the mid at Oct 1, 2001, $25/MWh surcharge.  Taking a $17m gain.
Readjust the rates by rate class.
Put the Bid at Jan 1, 2001, $13/MWh surcharge.
Put the Offer at Mar 30, 2001, at $15/MWh surcharge.
Hedge 37% MWh declining to 10% by 2002.
Hedge 24% mmntu declining to 10% by 2002. 
Hedge 5% tons coal from today until the end of 2011..