Our structuring and risk groups have "entered" the executed CDWR contracts into Enpower.  We have included executed contracts but not letters of intent.  There were a few contracts that did not have sufficient information to model.  We believe that we have captured 80 percent to 90 percent of value.  The attached spreadsheet shows the results by company.  The data comes directly from information released by the California state treasurer.  Since we are using Enpower to calc these deals, we can update them easily.  Let me know if you want anything else on this.

 -----Original Message-----
From: 	Comnes, Alan  
Sent:	Wednesday, July 11, 2001 3:04 PM
To:	Dasovich, Jeff; Thome, Jennifer; Shapiro, Richard; Steffes, James; Mara, Susan; Perrino, Dave; Sharma, Ban; Belden, Tim; Alvarez, Ray
Subject:	DWR Stranded Cost Update

Using information pulled together by Jennifer and BAN, I requested West Tradings Risk/Structuring Group do a more careful analysis of the above-market costs associated with the DWR contracts.  Attached is their analysis.

In this analysis we examined only the executed contracts and NOT the agreements-in principle.  (Only executed contracts were released by the state in the last few weeks.) Also, gas-indexed contracts were examined on their nongas costs only.  Since gas costs are a pass through on some contracts, we excluded them as a conservatism; i.e., we did not ascribe costs to the gas portion of the contracts since they will float with market costs over time.  These contracts were marked to market using current, applicable curves.  Finally we discounted at the LIBOR rate, which is around 4%/year.

The stranded cost under these assumptions  is approximately $10 billion.  The spreadsheet shows the overmarket costs by contract.  Note: a negative "mark-to-market" equals a positive stranded cost.

As before, this analysis is based upon Enron's confidential forward curves.  Approval from Tim Belden is needed before this analysis can be released.

Alan Comnes