fyi
---------------------- Forwarded by Richard B Sanders/HOU/ECT on 01/10/2000 
08:29 AM ---------------------------


Susan J Mara@EES
01/07/2000 05:50 PM
To: James B Fallon/HOU/ECT@ECT, Greg Whalley/HOU/ECT@ECT, Richard B 
Sanders/HOU/ECT@ECT, Richard Shapiro/HOU/EES@EES, Christian 
Yoder/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT, Elizabeth Sager/HOU/ECT@ECT, Joe 
Hartsoe@Enron, Mary Hain/HOU/ECT@ECT
cc: David Parquet/SF/ECT@ECT 
Subject: Conversation with John Flory-CalPX -- Attorney -client Privilege

As requested by Joe Hartsoe, I put in a call to John Flory yesterday.

John called me back today.  He said the view in the PX is that Enron is 
stalling.  I gave him the other side of the story.  He thinks nothing will be 
done until the next Market Monitoring COm meeting later this month (the PX 
web site does not list the date),  He says the matter will likely be 
discussed in Executive Session.  He also believes that the PX wants to meet 
with Enron and isn't likely to do anything publicly until after that meeting.

Unfortunately, from talking to John, the perception at the PX appears to be 
that this matter should be handled like the Chicago Board of Trade where they 
monthly release a list of offenders and what they have done, and nobody 
thinks much about it.  It's routine.  That's the wat they want these to be in 
the future, but they realize that this one -- the first -- will seem much 
bigger than that because it is first.

He said we got stuck because we did something significant and they really 
didn't have any process set up to handle these things.  He said the 
compliance staff has only gotten some real analytical skills as of Nov 
(although he mentioned outside consultants looked at our case).  We also 
aren't being picked on.  Other people are being investigated, but we're 
coming through first.  I asked about utility pressure.  He said he has been 
asked about the investigation by utility people, but doesn't believe it has 
caused any undue pressure on the PX.  He said, if they were being pressured, 
the investigation would have been completed by now.

He said that they don't want to give the matter any more significance than it 
has, but they can't ignore it.  A 3000MW schedule over a 30 MW line just 
can't be ignored, he said.

I didn't ask him for a heads' up on the public release of the letter, but I 
feel I can call him for updates at any time.