Why does Edison care about DWR stranded costs?  Are these the costs of the bonds or the above market long-term contracts?

Jim

 -----Original Message-----
From: 	Dasovich, Jeff  
Sent:	Monday, October 01, 2001 5:07 PM
To:	Steffes, James D.
Subject:	RE: Meeting with Edison (John Fielder) re: Getting Edison to Pay Us What We're Owed for the PX Credit

In terms of our proposal, went over it with Wanda and Michael last week, and they, I believe, ran it by Swain.  The real issue is what (if anything) we do about Edison's desire to lock down undercollection and DWR stranded costs as part of the deal (which they likely view as a pretty good hedge, since it's looking less than 50-50 that the Legislature isn't going to pull it off).

Best,
Jeff

 -----Original Message-----
From: 	Steffes, James D.  
Sent:	Monday, October 01, 2001 5:03 PM
To:	Dasovich, Jeff
Subject:	RE: Meeting with Edison (John Fielder) re: Getting Edison to Pay Us What We're Owed for the PX Credit

We need to discuss the economics of this on our book (assuming that these costs hit our pocket and not our customers).

Jim

 -----Original Message-----
From: 	Dasovich, Jeff  
Sent:	Monday, October 01, 2001 3:56 PM
To:	Kean, Steven J.; Shapiro, Richard; Steffes, James D.; Mara, Susan; Kaufman, Paul; Mellencamp, Lisa; Curry, Wanda; Tribolet, Michael
Subject:	Meeting with Edison (John Fielder) re: Getting Edison to Pay Us What We're Owed for the PX Credit

Talked to John Fielder (SVP at the utility) this morning in an attempt to determine if Edison will come around and pay us the PX credit they owe us.

Summary of our offer:
Edison pays us 90% of what they owe us as of 01.17.01.
Payment structure: Edison pays us 10% immediately, with an agreed to (speedy) payment schedule for the remaining 90%.
In return, we drop our complaint against Edison at the PUC.
In return, we agree to a bottoms-up approach retroactive to March 1 to replace the current PX Credit/Residual CTC framework.

Fielder said that he didn't see any show-stoppers in our proposal, but had to check back on his end.  However, there were three additional issues that he wanted to add to any deal:
Some agreement regarding payment of Edison's undercollection (this would cover any of our DA customers who were bundled services customers pre-January 17). We agreed that this would only be an issue to the extent that the Legislature and/or the PUC agreed that Edison should get authority to recoup its undercollection in rates.
Some agreement on DWR stranded costs.  John expressed the view that DWR bought power under the assumption that the customers who've recently gone DA would be there to take the power, and now that they've left, they should contribute in some way to any stranded costs. I told John that this issue is a hornet's nest, that we were better off leaving it out, but we'd consider his proposals.
Some agreement on forebearance.  I told John that if Edison agrees to pay us, it didn't seem that forebearance would be off the table.

We agreed to touch base at the same time Wednesday morning.  The idea is that he'll get back to me with Edison's reaction to our proposal; and we'd get back to him on Edison's proposals.

Might be useful to determine whether we want to continue the discussions.  While John seemed very inclined to work something out, all signals are that the Legislature isn't inclinded to bail Edison out next week.  In which case, Edison could be in bankruptcy in a couple of weeks, which would presumably nullify any agreement we might reach with them. On the other hand, if the Legislature pulls a rabbit out of a hat, an agreement might have real value.

Any comments folks have on 1) Edison's proposals and 2) whether it makes sense to continue discussions on Wednesday are appreciated.  Seems that, at a minimum, if we agree to consider Edison's proposals, then our payment should go from 90 cents to 100 cents on the dollar.

Best,
Jeff