Ken -- Thank you for making next Thursday, May 17 available for CEO meetings 
in California.  We are working to set up two meetings -- one in Los Angeles 
and one in Silicon Valley (we'll call on Scott McNealy's contact person to 
help pull the Northern California meeting together).   For the Los Angeles 
meeting, we'd like you to call Mayor Dick Riordan (213-847-3560) and ask for 
his help in pulling together a group of key, influential business leaders.   
As background, Riordan is a very wealthy Republican businessman who has been 
term-limited out and has not yet made public his future political aspirations 
(a bid for governor has been mentioned by insiders).

You might congratulate him on helping to settle the Writer's Guild strike and 
ask if he'd now like to resolve the energy crisis (He's in a bit of a spat 
with Dave Freeman over who can claim credit for LADWP's success during this 
energy situation -- see attached LA Times article).  You can say you've been 
told that he was one of the clearer heads during the deregulation process and 
were instrumental in keeping DWP out of the regulatory mess.

This is an opportunity for Riordan to help broker a solution, and that's why 
you're calling him.  You met with Robert Day (Trust Co of the West) who 
suggested that you call Riordan and enlist his support.  

Explain about our comprehensive solution -- business support is critical to 
garner political support.

You'll be in Los Angeles next Thursday.  Ask if he could invite and host a 
meeting of key business leaders and introduce you.  I've attached a suggested 
list of prominent businessmen, close associates and personal friends of 
Riordan's.  We'd like to position this meeting as an insider's conversation 
of what's going on with the energy situation.  This meeting should be for 
principals only.

Ask Riordan to identify someone in his office who we can work with to set up 
the meeting.  Enron's consultant in LA (Marathon Communications) will work to 
coordinate the event.

If Riordan is not available next Thursday, ask him if he would ask Eli Broad 
(chairman of Sun America and a Democratic billionaire) or Jerry Perenchio 
(chairman of Univision) to host the meeting.

Proposed Invitees

*Eli Broad - Chairman, Sun America
*Ron Burkle - Yucaipa Companies
Jeffrey Katzenberg - DreamWorks
Sherry Lansing- Paramount
Nelson Rising- Catellus
Bob Daly - LA Dodgers
Ray Irani - Occidental Petroleum
*Jerry Perenchio - Univison
Michael Eisner/Bob Iger - Disney
Ed Roski - Majestic Realty
Earvin Johnson/Ken Lombard - Johnson Development Corporation
Bruce Karatz - Kaufmann & Broad
Terry Semel - Yahoo!
Gary Winnick - Global Crossing
Henry Yuen - Gemstar
*Carl McKinsey
*Liam McGee - Bank of America
*Barry Munitz - Getty Trust
*Gordon Binder - Amgen (ret)
David Baltimore - Cal Tech
Danny Villanueva - Bastion Capital
Phil Anschutz - Qwest Communications, Staples Center
*Dennis Tito - civilian spaceman (former LADWP Commissioner)
Kent Kresa - Northrop Grumann


Sunday, May 6, 2001 
Riordan and Freeman's Feud Erupts in Public 
Power: Each questions the other's role in keeping the city free of 
California's energy crisis. 
By MICHAEL FINNEGAN, TERENCE MONMANEY, Times Staff Writers


?????With California mired in energy troubles, Mayor Richard Riordan and his 
former power chief S. David Freeman trumpet the extraordinary fortune of Los 
Angeles: no rate hikes and no blackouts. 
?????Yet Riordan and Freeman have sullied their mutual success story by 
waging bitter campaigns to discredit each other--at first behind the scenes 
but now in public. 
?????Pettiness, ingratitude, conflicts of interest, overblown claims of 
achievement: Such is the back and forth between two leaders who would seem to 
have good reason to pat each other on the back. 
?????To Freeman, who has resigned as general manager of the L.A. Department 
of Water and Power to become chief energy advisor to Gov. Gray Davis, it 
seems Riordan resents his high-profile role in trying to steer California out 
of the energy crisis. 
?????So the mayor, Freeman charged, has elbowed his way into energy issues 
that he is ill-equipped to handle and taken steps along the way that could 
harm the environment. 
?????"With all due respect, I have 25 years of experience and knowledge--and 
he has 25 days," Freeman said. "But he's the mayor, and he didn't like it 
that I didn't just say yes to everything he came up with." 
?????To Riordan, Freeman's efforts to fight air pollution have given short 
shrift to the threat of skyrocketing power rates in Los Angeles. The mayor 
said Freeman also failed to recognize potential conflicts of interest between 
his city and state roles in the power crisis. And he scoffed at Freeman for 
saying he had lifted morale at DWP. 
?????"Morale was terrible under him," Riordan said. "I mean, they are so 
relieved right now." 
?????The backbiting has left associates suspecting the clash is really about 
egos. City Councilwoman Ruth Galanter sees Riordan and Freeman as proud, 
successful men unable to say, "I couldn't have done it without X, Y and Z." 
?????"Each of them is used to being the boss and taking pleasure at being 
recognized as the boss," she said. 
?????Much of the conflict has taken place in private meetings. And the mayor, 
a Republican multimillionaire, has taken pains to play down his dispute with 
Freeman, a liberal Democrat from Tennessee who wears a cowboy hat and speaks 
with a Southern drawl. 
?????In an interview after his resignation, Freeman laid out the conflict 
point by point, often in terms bluntly critical of the mayor. One of his 
concerns, Freeman said, was that Riordan in his final two months as mayor 
could reverse the agency's progress in protecting the environment. 
?????Freeman cited Riordan's plans concerning coal-fired power plants in 
Nevada and Utah that are partly controlled by the DWP, the nation's largest 
municipal utility. The first is the Mohave Generating Station in Laughlin, 
Nev., a plant that has been blamed for spreading some of the haze that 
shrouds the Grand Canyon. The DWP had planned to sell its stake in the plant, 
but Freeman said Riordan ordered him to back out of the sale. 
?????He described the mayor's move as a sign that Riordan and his appointees 
on the board that oversees DWP were "completely insensitive to the fact that 
that power plant is one of the most environmentally troubling plants in the 
West." 
?????"I've worked real hard to try to build some environmental sensitivity 
into the DWP policy," Freeman said. "And I am concerned as to whether the 
current commissioners and the mayor have that sensitivity, and what they 
might do in the interim to basically overturn the progress we've made." 
?????The other plant is part of the Intermountain Power Project in central 
Utah. Riordan has proposed building a new coal-fired generating unit there, 
but Freeman said he objected because of the pollution it would cause. 
?????In both cases, Riordan said he was striking the appropriate balance 
between protecting the environment and meeting the energy needs of Los 
Angeles at an affordable cost. By keeping its share of the Mohave plant and 
expanding the Utah plant, Los Angeles can avert the astronomical price hikes 
of natural gas--and the sharp rise in ratepayers' bills that would follow, 
Riordan said. 
?????Natural gas, which provides 26% of the fuel for DWP plants, causes less 
air pollution than coal, which provides 51%. The rest is mainly nuclear and 
hydroelectric. Los Angeles has averted rate hikes and blackouts in part 
because the DWP relies less on natural gas than most other California power 
providers. 
?????"I favor clean air and more natural gas, but not to the point where 
we're going to destroy the economy of Los Angeles," Riordan said. 
?????On the Mohave plant, Riordan questioned the benefit of selling the 
city's share to a buyer that would simply continue running it. 
?????"It's still going to be coal-driven," he said. "How does selling it help 
the environment?" 
?????The tension between the two has built steadily as the state power crisis 
has worsened. With the charismatic DWP chief drawing favorable news coverage 
in stories on how L.A. has dodged the crisis, Riordan and the DWP 
commissioners began to view him as "too big for my britches," Freeman said. 
?????The conflict reached its peak on April 17, the day Freeman resigned to 
become the governor's advisor. The DWP board president, Kenneth T. Lombard, 
said the mayor told commissioners that day that "it made the most sense to 
release him immediately." 
?????"All we were doing, frankly, was release him from his responsibilities, 
and then whatever time he needed to clean out his office was fine with us," 
Lombard said. 
?????From Riordan's standpoint, Freeman needed to be stripped of his 
authority right away because of a potential conflict of interest: The city 
utility sells surplus power to the state, so Freeman would be on both sides 
of the sales. 
?????Freeman, who had voluntarily bowed out of a DWP meeting on the state 
power crisis earlier that day, was outraged at his sudden release, in part 
because he was denied the chance to say goodbye to agency employees. In an 
interview, he called the conflict of interest assertion "complete malarkey." 
?????"The insinuation that I have done anything less than protect the 
interests of the city of Los Angeles is bordering on slanderous, considering 
what I've accomplished here," he said. 
?????Brian D'Arcy, who heads the union local that represents 6,000 DWP 
employees, agreed that Riordan and his commissioners "kind of ran him out of 
here. For David to be summarily jettisoned out of here without even a 
howdy-do is absolutely tacky," D'Arcy said. 
?????Riordan said Freeman deserves "an A-plus" for his work at DWP. The mayor 
conceded that he knew of nothing that Freeman had done "to hurt Los Angeles." 
But, he added, "when you have a conflict of interest, you have to act before 
anything happens." 
?????Freeman has long bridled at the oversight of DWP, not just by the mayor, 
but by the agency's board and the City Council. In 1998, he called for City 
Charter amendments to consolidate authority in a more independent board of 
directors. The proposal went nowhere. 
?????Freeman's concerns were echoed in a report to be released Monday. The 
Rand Enterprise Analysis report was commissioned by the DWP. It calls for 
restructuring DWP management much the way Freeman proposed. But Riordan and 
Galanter, who chairs the Council's Commerce, Energy and Natural Resources 
Committee, rejected the concept. Copyright 2001 Los Angeles Times