Sue and I attended an ARM meeting on Friday in which we focused on default 
provider role for the utilities.  The outline of the proposal is attached.  
As SDG&E (and believe it or not, PG&E) have indicated an interest to be a 
wires only company, the structure proposed for default provider may have some 
potential.  Essentially, it is modeled after the gas industry:

1.  No utility default for large customers (need to define, 50 kW and 
above?);  UDC provides a PLR role only.
2.  Default for res and small commercial is a fixed price.  Utility has 
unlimited ability to hedge.  No ex-poste reasonableness review.
3.  Create a phase-in for competitive default provider.

What it does:

1.  Creates a more competitive environment for large C&I.  (EES)
2.  Provides stability for res/commercial with a transition period to full 
competition.  (ENA)
3.  Provides the utility with more certainty around regulatory treatment 
(live and die by the fixed price)
4.  May also provide a mechanism for limiting exposure for SCE & PG&E for 
uncollectibles, going forward.  Does not solve existing balance.  Needs 
further discussion.

Please review and comment.  This is a strawman.  May be useful in our 
strategy development.

Mona

---------------------- Forwarded by Mona L Petrochko/SFO/EES on 09/18/2000 
10:15 AM ---------------------------


"Leslie, John" <jleslie@LUCE.com>@LUCE.com> on 09/18/2000 10:01:35 AM
Sent by: "Johnson, Roseann" <RJohnson@LUCE.com>
To: "ARM Members (E-mail)" <ARM@phaser.com>, "Leslie, John" <jleslie@LUCE.com>
cc:  
Subject: Proposal for Transition to New Default Service Provider



To ARM Members:

 I have enclosed two documents that are based upon our discussions at
Friday's ARM meeting.  First, I have enclosed a reproduction of the
flip-charts that we created during the meeting.  Admittedly, these are a bit
difficult to understand.  Second, I have drafted an outline of the proposal
to provide a transition mechanism to bring on new default service providers.

 Please circulate your comments on the proposal by Wednesday,
September 20.

    -John


 <<#1556435 v1 - SES-ELECTRIC - Discussion at 9-15 ARM meeting.doc>>
<<#1556343 v1 - SES-ELECTRIC - Transition Proposal (9-18-00).doc>>
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 - #1556435 v1 - SES-ELECTRIC - Discussion at 9-15 ARM meeting.doc
 - #1556343 v1 - SES-ELECTRIC - Transition Proposal (9-18-00).doc