Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854
----- Forwarded by Susan J Mara/NA/Enron on 07/30/2001 02:35 PM -----


	"Carol Hudson" <carol@iepa.com> 07/27/2001 02:18 PM Please respond to carol 	   To: "Bob Escalante \(E-mail\)" <rescalante@riobravo-gm.com>, "Jack Pigott \(E-mail\)" <jackp@calpine.com>, "John G. Larrea \(E-mail\)" <john.g.larrea@williams.com>, "Kate Castillo \(E-mail\)" <CCastillo@RioBravo-GM.com>, "'Mike Jines'" <mjines@reliant.com>, "Nam Nguyen \(E-mail\)" <nam.nguyen@powersrc.com>, "Roger Pelote \(E-mail\)" <roger.pelote@williams.com>, "Scott Sadler \(E-mail\)" <sadlersa@earthlink.net>, "'Sheryl Gussett'" <sgussett@reliant.com>, "Thomas R. McMorrow \(E-mail\)" <tmcmorrow@manatt.com>, "'Alex Sugaoka \(E-mail\)'" <alex.sugaoka@uaecorp.com>, "'Bill Woods \(E-mail\)'" <billw@calpine.com>, "'Bob Ellery \(E-mail\)'" <bellery@spi-ind.com>, "'Bob Gates \(E-mail\)'" <bob.gates@enron.com>, "'Carolyn A Baker \(E-mail\)'" <cabaker@duke-energy.com>, "Charles Linthicum \(E-mail\)" <charles.linthicum@powersrc.com>, "'Cody Carter \(E-mail\)'" <cody.carter@williams.com>, "'Curt Hatton \(E-mail\)'" <Curt.Hatton@gen.pge.com>, "'Curtis Kebler \(E-mail\)'" <curtis_l_kebler@reliantenergy.com>, "'David Parquet'" <david.parquet@enron.com>, "'Dean Gosselin \(E-mail\)'" <dean_gosselin@fpl.com>, "'Douglas Kerner \(E-mail\)'" <dkk@eslawfirm.com>, "'Duane Nelsen \(E-mail\)'" <dnelsen@gwfpower.com>, "'Ed Tomeo \(E-mail\)'" <ed.tomeo@uaecorp.com>, "'Eileen Koch \(E-mail\)'" <eileenk@calpine.com>, "'Eric Eisenman \(E-mail\)'" <eric.eisenman@gen.pge.com>, "'Frank DeRosa \(E-mail\)'" <frank.derosa@gen.pge.com>, "'Greg Blue \(E-mail\)'" <gtbl@dynegy.com>, "'Hap Boyd \(E-mail\)'" <Hap_Boyd@enron.com>, "'Hawks Jack \(E-mail\)'" <jack.hawks@gen.pge.com>, "'Jim Willey \(E-mail\)'" <elliottsa@earthlink.net>, "'Joe Greco \(E-mail\)'" <jgreco@caithnessenergy.com>, "'Joe Ronan \(E-mail\)'" <joer@calpine.com>, "John Stout \(E-mail\)" <john_h_stout@reliantenergy.com>, "'Jonathan Weisgall \(E-mail\)'" <jweisgall@aol.com>, "'Kelly Lloyd \(E-mail\)'" <kellyl@enxco.com>, "'Ken Hoffman \(E-mail\)'" <khoffman@caithnessenergy.com>, "'Kent Fickett \(E-mail\)'" <kfickett@usgen.com>, "'Kent Palmerton'" <kent.palmerton@williams.com>, "'Lynn Lednicky \(E-mail\)'" <lynn.a.lednicky@dynegy.com>, "Mark Fillinger \(E-mail\)" <mark.fillinger@enron.com>, "Marty McFadden \(E-mail\)" <mmcfadden@covantaenergy.com>, "Paul Desrochers \(E-mail\)" <nevedap@msn.com>, "Paula Soos \(E-mail\)" <PSoos@CovantaEnergy.com>, "'Randy Hickok \(E-mail\)'" <rjhickok@duke-energy.com>, "'Ross Ain \(E-mail\)'" <ain@worldnet.att.net>, "'Stephanie Newell \(E-mail\)'" <stephanie-newell@reliantenergy.com>, "Steve Iliff \(E-mail\)" <siliff@riobravo-gm.com>, "'Steve Ponder \(E-mail\)'" <steve_ponder@fpl.com>, "'Susan J Mara \(E-mail\)'" <smara@enron.com>, "Tony Wetzel \(E-mail\)" <tonywetzel@home.com>, "William Carlson \(E-mail\)" <wcarlson@wm.com>, "William Hall \(E-mail\)" <wfhall2@duke-energy.com>, "Carol Hudson \(E-mail\)" <carol@iepa.com>, "Jan Smutny-Jones \(E-mail\)" <smutny@iepa.com>, "Katie Kaplan \(E-mail\)" <kaplan@iepa.com>, "Sandra Moseley \(E-mail\)" <sandra@iepa.com>, "Steven Kelly \(E-mail\)" <steven@iepa.com>  cc:   Subject: FW: IEP Legislative Report (07/26/01)	



Dear All,

Attached is this week's legislative report for IEP.

Despite the summer break, leaders in the Assembly planned to call back their
side of the Legislature to debate and vote on a "rescue" plan for Southern
California Edison. The new effort was outlined in our Tuesday fax to each of
you.  In short, the new plan called for amending SB 78xx and AB 82xx to,
among other things, provide for a dedicated rate component to support a $2.9
billion bond financing by Edison, but would have prevented Edison from using
the funds to pay generators, PX and ISO invoices, directly or indirectly.
The $2.9 billion could be used to pay QFs.  The dedicated rate component for
repayment of the bonds would apply to all consumers for two years, and then
apply solely to non-core customers.  Additionally, under the plan, the 30%
haircut/trust account concept was deleted, the decision on a transmission
line purchase was deferred to settlement discussions between the state and
Edison, the RPS targeted a 10% growth in new generating capacity through
2010, and direct access would be permitted under certain circumstances
effective no earlier than January 1, 2002.  The Assembly leadership planned
on holding an informational meeting on the new plan on Thursday, July 26 and
committee and floor votes on the plan today, Friday, July 27.  However, the
leadership could not garner enough votes for this new plan this week, so no
informational hearing was held, nor will any votes be held today.  Even if
this new plan had been approved by the Assembly this week, Senator Burton's
office made it very clear that Senator Burton had no intention of bringing
his house back in to session to vote on the measure.  Accordingly, barring
the governor calling the legislature back into session, we do not expect any
other activity on this new plan before the legislature reconvenes on August
20, and perhaps not then either.

Other events this week include:

*	In Thursday's Los Angeles Times, S. David Freeman -- Governor Davis'
primary negotiator on the long-term contract deals -- authored an editorial
arguing that the state's long-term energy contracts were a primary factor in
the recent reduction in energy prices on the spot market.  You can find the
article at www.latimes.com.  It ran on the editorial page on Thursday, July
26.

*	It is our understanding that on Thursday Senator Byron Sher had
draft amendments prepared by his staff to amend SB 532 to address Renewable
Portfolio Standards issues.  The amendments are not yet public, but we are
hopeful that we will be able to obtain them when his staff returns next
week.  We will keep you apprised.

*	FERC ordered hearings on Wednesday to determine how much money
electric generators owe California for wholesale power overcharges.  With
California still insisting that it is owed $8.9 billion by generators, the
expected FERC decision on the refund amount is certain to fall short of the
state's expectations.  Lawsuits are expected to follow issuance of the
decision.  In a press statement earlier this week, the governor stated his
hopes that California will receive all $8.9 billion adding, "As for the
energy profiteers and pirates, let me make clear that I will not rest until
every dollar gouged from California businesses and residents returns to
California. If the FERC does not make California whole, we will see you in
court."

*	U.S. Energy Secretary Spencer Abraham unveiled a plan on Monday that
would expand California's power grid along Path 15 by attracting private
investment to cover the $300 million project.  He hopes by increasing the
transmission capacity by 1,500 MWs, this plan would alleviate the
"transmission bottleneck" that has proved "simply insufficient" for power to
flow freely throughout the state during times of peak usage.

*	According to Senator Dunn, Morgan Stanley destroyed key documents
"years ago" relating to the purchase of California power plants despite the
financial company's repeated promises to the Senate Select Committee to
Investigate Market Manipulation that they would turn them over, as reported
on Monday.  Meanwhile, the committee continued to move forward with their
contempt proceedings against Enron and Reliant for refusing to hand over key
documents to the committee.

*	Reliant Energy sued California on Monday, claiming "just
compensation" for the state's failure to adequately pay for long-term power
contracts that the governor seized from the Power Exchange in February.  The
state claims those contracts equal about $160 million while Reliant
calculates that the same contracts are worth more than $300 million.  A
judge is expected to oversee this dispute.


Best regards,
Tom McMorrow and Mike Martinez


 <<IEPA Legislative Report.DOC>>

 - IEPA Legislative Report (5).DOC