----- Forwarded by Sheila Tweed/HOU/ECT on 01/04/2001 08:13 AM -----

	EFeo@milbank.com
	01/03/2001 10:18 PM
		 
		 To: 
		 cc: 
		 Subject: Summary of CPUC All-Party Meeting 1/3/01




Summary of Oral Arguments and All-Party Meeting before the CPUC taking place 
on January 3, 2001: 

Oral Arguments were held at the CPUC today for purposes of commenting on 
today's draft final order.? The oral arguments were presided over by ALJ 
Walwyn.? The All-Party Meeting, which was presided over by Commissioner Wood, 
was not eventful.? Many of the participants left after the Oral Arguments and 
those who remained mostly responded to comments made during the Oral 
Arguments.? 

Both SCE and PG&E argued that the CPUC erroneously failed to address an end 
to the rate freeze, recovery of past undercollections, and right to recover 
their full future procurement costs.? Both also argued that the surcharge 
will be inadequate to satisfy the financial community.? In addition, SCE 
requested that the CPUC relieve it of the obligation to procure power for its 
customers which is priced above the amount that they can recover from their 
customers.? PG&E argued the proposal failed to provide certainty for recovery 
of costs and criticized the CPUC's focus on accounting arguing that changes 
to the accounting methods were not a solution. 

The Office of Ratepayer Advocates (CPUC Division) ("ORA") suggested several 
additional solutions for the CPUC to consider as a final solution:? (1)? 
encourage the utilities to issue revenue bonds; (2) reduce utilities' return 
on equity by one-half; and (3) encourage energy conservation which addresses 
the alleged price gouging.? ORA also argued that the utility companies needed 
to do more to cut corporate costs.

The California Industrial Users ("CIU") generally supported the proposal but 
criticized it for discriminating against larger customers and argued that the 
CPUC needs to look out for the welfare of all customers, not just smaller 
customers.? Both Reliant and Enron argued that the current situation is a 
short term problem and should be addressed with only interim relief.? Both 
also argued that the surcharge is not adequate and should be re-examined.? 
Enron complimented the CPUC on its decision not to lift the rate freeze.

The citizen advocates and consumer advocates (Greenlining Institute, Aglet 
Consumer Alliance, Golden State Power Cooperative, California Farm 
Federation) were generally satisfied with the proposed final decision.? They 
commended the CPUC for not lifting the rate freeze and for insisting on 
thorough and continuing investigations but argued the CPUC also needs to 
study the impact rate increases would have on the California economy, not 
just its affect on the utility companies.? TURN blamed the marketers and the 
utility companies for the crisis and argued that consumers shouldn't be 
forced to bail out the utility companies for their own bad decisions.? 

A private attorney from San Diego who filed a lawsuit against out of state 
generators to recover alleged windfall profits suggested the CPUC not grant a 
rate surcharge until the utility companies actually declared bankruptcy and 
argued that filing for bankruptcy could provide an incentive for the utility 
companies to press their case against the marketers.? Commissioner Wood 
however expressed concern about the implications of bankruptcy on labor 
contracts and QF contracts. 

Regards, 
Ed 

________________________________ 
Edwin F. Feo 
Milbank, Tweed, Hadley & McCloy LLP 
601 South Figueroa Street, 30th Floor 
Los Angeles, CA? 90017 
efeo@milbank.com 
http://www.milbank.com 
(213) 892-4417 - Direct Dial 
(213) 892-4717 - Direct Fax 
(213) 629-5063 - General Fax 
(213) 446-3206 or (310) 968-0670 - Mobile 


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