Chris --

I am not too optimistic that we are going to get either the CPUC or the 
California Legislature to provide for competitive default supply.   I don't 
think that the utilities would want it nor do I think that with all of the 
other problems in California this will occur within the next 12 months.

The best chance is simply to get the utilities to recognize (as the call from 
SCE appears to indicate) that there is price risk with their residual load 
and to seek to forward contract.  We are working (and I think that there is a 
strong sentiment amongst most California electricity wonks) to remove any 
barriers to utilities contracting forward.  This should put EPMI on a level 
footing to compete to manage the UDCs price risk with other people in the 
industry.

Government Affairs met today in SF to discuss our goals for the upcoming 
Legislative session (which promises to be very interesting).  Competitive 
default supply is on the agenda, but I would put it behind utility forward 
contracting on the list of priorities.

Jim





	Chris H Foster@ECT
	11/30/2000 11:30 AM
		 
		 To: Tim Belden/HOU/ECT@ECT, Christopher F Calger/PDX/ECT@ECT
		 cc: Susan J Mara/NA/Enron@ENRON, James D Steffes/NA/Enron@Enron, Jeff 
Dasovich/NA/Enron@Enron, Mary Hain/HOU/ECT@ECT, Alan Comnes/PDX/ECT@ECT, Paul 
Kaufman/PDX/ECT@ECT, David Parquet/SF/ECT@ECT, Laird Dyer/SF/ECT@ECT
		 Subject: Edison Full Requirements

Jill Horswell, the head of trading at SCE, just called.  She said the CEO of 
SCE asked her to call around and see if energy marketing companies would be 
interested in offering the "Duke SDG&E Structure," (i.e full requirements at 
$60/MWhr) to SCE.  I told her that that would be a big bite for anyone, and 
that the price would be well north of $60, but we would be interested in 
coming up with a structure for their consideration if they wanted to take 
this a step further.  

We decided in the case of SDG&E that we didn't have an interest in a true 
full requirements deal given the size (3,000 MW) and the difficulty in 
managing the load fluctuations, credit risks, etc.  The size and scope of a 
similar deal with SCE (20,000 MW) would be even more daunting.  

Is this an opportunity to propose a new market structure for serving load to 
try to build part of the solution to California's energy woes?  How should 
the default provider be determined?  How can credit and load fluctuation 
risks be managed?  Can we build a consortium of market support amongst our 
fellow defendants (i.e Duke, Southern, et al)?

Let me know what you think.

Chris