The letter looks good.  A couple of comments for your consideration:

On page three we describe the change to the definition of Public Utility and then argue that we don't fit into it.  Would it be worth explaining why that makes sense?  Specifically, the New Jersey restructuring law, like most efforts of its kind in other markets, is designed to separate the competitive from monopoly elements of the power (and gas) businesses.  Economic regulation would then be restricted to the remaining monopoly elements of the business (eg distribution).  The competitive market can not be solely relied upon to "regulate" the behavior of monopoly asset owners, such as distribution utilities.  Therefore, regulators continue to be called upon to set pricing and other terms of service.  What those regulators decide matters a great deal to those monopoly utilities and it consequently makes sense for lawmakers to be concerned about attempts by such entities to use campaign contributions to tacitly influence decision makers.  The same public policies simply do not apply to that portion of the market which is competitive.  The generation and sales business has a competitive structure (i.e. relatively low barriers to entry, multiple competitors etc.).  These components of the power and gas business can be "regulated" by the market with respect to rates and terms of service.  They do not require economic regulation any more than grocery stores, department stores, appliance sellers or other "retailers" (who presumably are not prohibited from making contributions.  Competition and markets discipline behavior and establish competitive prices and terms of service.  Because regulators don't set the prices and terms of service for such sellers, there is no reason to be concerned about campaign contribuitions from such organizations.  Indeed, the legislation, and the legislative history, clearly conform to this underlying policy rationale.
As a former practicing lawyer, I certainly understand the value of pleading in the alternative.  But, I question how certain of our arguments woud be perceived by the public if they ever came to light (which these documents have a habit of doing).. .  I can just see the press seizing on Enron's claim of "ignorance or mistake" or the fact that we pled for the favorable exercise of "prosecutorial discretion".  I suggest that we add whatever we feel is necessary to the very solid looking intent argument, not make specific reference to "ignorance or mistake", and not plead for the favorable esxercise of PD.  If we feel we need to write about this last item, perhaps we could suggest that it would be a waste of the public's resources to pursue a claim under such circumstances.