Richard, Howard seems to acknowledge that the FERC proceedings could themselves, within several months, could bring us to the point of knowing the amount of our claim against PGE even without the benefit of the formula suggested by Weg's proposal.  That raises the question of what we get from the Weg settlement.  Although he has not specifically articulated the benefits, Howard would tell you that his settlement would avoid the cost of litigating the splits, would avoid the delay attendant to inevitable challenges of a contested FERC order and would get our collateral back sooner rather than later.  I'm still not entirely clear about the procedure he intends to adopt to get his deal done and whether there are potential impediments.  He has characterized the deal as a bankruptcy compromise between PX, the debtor, and the participants.  If all the participants go along, that characterization is ok.  If some participants (Mirant/SCE) oppose, the only way you can bind them to the deal in the PX bankruptcy is through a reorganization plan, and that itself will take time.  Weg seems to think that most participants will go along.  I'm sure Edison would oppose.  Although they aren't a favored party in the PX case, they could have the ability to stymie a settlement.  Next, the settlement also impacts PGE and its bankruptcy.  If PGE doesn't go along, it can argue that its bankruptcy court has jurisdiction to fix the claims against PGE, not the PX bankruptcy court.  Then the settlement needs to be presented to and adopted by FERC---again an opportunity for parties to object.  These procedural hurdles may not have to be dealt with, but I've received no good exposition of how they would be if they in fact materialize.  Are you comfortable proceeding on the assumption that everyone will go along?  Bob Nelson

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Subject: RE: Proposal re CalPX Methodologies
Date: Mon, 20 Aug 2001 20:34:54 -0700
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It seems to me that FERC's July 25 Order required Judge Birchman to make
findings about the exact amounts owed by each buyer to each seller.  The
proposal to establish methodologies does exactly that, among other things.
Therefore, it seems to me that it needs to be part of the the pending
California proceedings.

That is not to say, however, that it should not also be part of the
Chargeback proceedings under the April 6 FERC order.  It should also be
applicable to those proceedings.

Therefore, we need to develop a strategy to make it part of both
proceedings.  Timing is obviously critical, and I am soliciting the
Chargeback movants' views on that subject along with the substance of the
proposal.  I would like to point out that I have learned from the settlement
proceedings before Judge Wagner that we must submit the proposal early in
the proceedings to ensure that they are considered and can have an impact.

I sent an email to Ron Carroll letting him know that I am available for a
conference call at the following times:

Weds Aug 22 after 11 am Pacific time,
Thurs Aug 23 prior to 1 pm Pacific time,
Fri Aug 24 anytime except 1130 am to 2 pm Pacific time

Please let me know when we can discuss this further.  Thanks for your help.