To Energy Committee Members, Principal Officers and Liaison Representatives:

ENERGY UPDATE - June 26, 2001
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Conservation:
On Thursday, June 7 our Board Chair, Dr. James Woody signed on to the Energy
Conservation Declaration of Action on behalf of the Silicon Valley
Manufacturing Group.  Sponsored by the Bay Area Council, the Declaration
represents an outward commitment to conservation and the quality of life and
economic vitality of California.  More than 50 business organizations and
120 CEO's signed on to help make this campaign a success.
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Load Management:
On June 6 John Wilson of the California Energy Commission, along with his
consultants John Flory and Mike O'Sheasy, presented the CEC proposed RTP
Tariff to the Energy Committee and asked for our endorsement.  Members of
the Committee thoroughly reviewed the proposal and conducted case studies.
The Committee submitted three main caveats to the CEC, upon which our
endorsement depended.  The CEC was very receptive to our concerns and
amended the Tariff language to the Committee's satisfaction.  If adopted, we
are encouraged that many SVMG member companies can benefit from
participating in the Real Time Pricing program due to our influence.  Final
adjustments to the language are being prepared and the CEC is expecting that
this item will be heard by the California Public Utilities Commission on
Thursday, June 28.  We will let you know how this unfolds.

After months of effort, we have succeeded in putting together a Blackout
Notification System that will provide California employers, residents, and
public safety officers with adequate time to respond to an impending rolling
blackout.  This system provides not only a 1-hour advanced warning before a
blackout could occur, but also includes 48 and 24-hour notices that
blackouts might happen due to predicted hot weather conditions, and/or a
lack of energy supply, or planned and unplanned maintenance at generation
facilities.  The proactive approach will include a system by which residents
and employers can have their extensive contact information such as e-mails,
pagers, and cell phones listed in a database.  This will help us better
prepare for a blackout with more adequate time to power down assembly lines,
projects, and computers, and power up emergency generators.  We can also
help prevent blackouts by taking early action.
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Generation / Transmission:
Included in the attached Energy Matrix is a listing of the different
infrastructure projects that the SVMG has helped to endorse.  There is also
a link to our website where you can obtain more information on the projects.
You will also find a section that provides an update to project status.  The
SVMG will continue to review and support needed infrastructure projects as
they are presented to us.
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Legislation / Regulation:
For the past three weeks John Redding, Justin Bradley, and Derek Naten have
been representing the SVMG in a series of meetings in Sacramento with a
broad coalition of consumer, business/industrial, environmentalists, and
labor groups, and Southern California Edison Company to influence a proposed
regional energy plan.  Discussion convened daily in an effort to solve the
financial issues surrounding the SCE and DWR undercollections.  SVMG has
also been working with business groups to leverage our strength for a fair
and comprehensive energy plan for California that would consist of an
equitable (proportional) allocation of costs of utility and DWR
undercollections between all customer classes, the restoration of a market
with customer choice through direct access to bilateral electricity
contracts, and the removal of barriers to on-site generation.  We are
currently stalled at this stage of the negotiations due to the enormous
uncertainty of the terms and conditions of the DWR contract portfolio.  We
are encouraged, however, and will keep you updated.

On June 17 Justin Bradley, our Energy Director testified in front of the
House Budget Committee in Washington, DC advocating for research and
development funding through the National Energy Reliability Initiative.
Through his efforts we are aiming to influence a national energy policy that
will help California as we continue to look forward at our energy situation.
One way we will do this is to maintain a working and regular relationship
with our federal representatives.  Justin will be facilitating a bi-weekly
dialogue with representatives Honda, Lofgren and Eshoo to exchange
information about legislation and policy with our Legislative Subcommittee.
We will let you know more when Justin returns.
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Energy Committee News:
Please join us in welcoming the new co-chair of our Energy Committee.  Joe
Desmond, President and CEO of Infotility, has nearly 20 years of experience
in the energy field.  He is determined, bright, and enthusiastic about his
work.  Joe has a wealth of impressive experience in energy and leadership
and a thorough knowledge of energy and the associated issues facing the SVMG
companies. He has been an active and valued member of the Energy Committee,
and has provided much leadership on salient issues, including Blackout
Notification, Real Time Pricing, and Direct Access.  We are excited to
welcome Joe as our new Energy Committee co-chair and are confident that,
along with the talent and expertise of John Redding and the entire
committee, we will continue to lead as California resolves its energy
crisis.  Thanks to KC Mares for all his work as former co-chair and,
although he will continue to participate, KC we will miss you!
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Attached is our Energy Matrix.  Through this matrix we intend to keep track
of our activities on energy.  When new business is reported on, old business
will be added to the matrix, which will be updated weekly.  If you have any
questions, please call Justin Bradley at 408-501-7852.

 - Regulatory and Legislative Update.doc