Summary of the activities since Friday:

Overall, it's 50-50 or better that the Legislature will finish up the budget 
and recess until August 20th, without having passed some form of an "Edison 
MOU." Will have a better view of the chances of getting an MOU agreed to and 
passed through both houses by COB Monday.  

In the Senate:
The "Edison MOU":
As previously reported, on Friday, SB 78---the Senate's version of the Edison 
MOU--passed out of the full Senate and was sent to the full Senate.
The bill sticks 100% of suppliers' debts with Edison's shareholders but pays 
QFs and other creditors.
The authors believe that suppliers can't force Edison into bankruptcy because 
the claims are with the PX, not Edison, which in their view means that the 
suppliers can't reach Edison.  Our lawyers need to assess whether the tactic 
is strong from a legal perspective. 
The bill creates an option to buy the transmission system, but rejects the 
Goernor's MOU, which buys it outright.
Though there's some uncertainty, the bill appears to end Direct Access.
Information we have indicates that the Assembly does not support and will not 
pass SB 78 in its current form.
Enron (and the marjority of market participants) opposes 78.

The "Dunn Investigation":
Dunn released his report regarding contempt charges against Enron on Saturday.
The report recommends that the Senate fine us, beginning with $1,000 the 
first day, and doubling everyday thereafter until Enron "complies."
Dunn announced on Saturday that he would attempt to bring the report to the 
full Senate for a vote on Saturday.
In response, our lobbyist in Sacramento spoke to a leader of the Republican 
party in the Senate (Ross Johnson), and persuaded Johson to negotiate the 
date of the vote with Burton and Dunn.
She was successful---Johnson went to Burton and got him and Dunn to agree not 
to vote on the report until the Senate returned from its recess on August 
20th.
If the Senate returns early, it could vote prior to the 20th, but the 
likelihood of that happening appears low at this time.

The budget:
The Senate passed the budget at about 1 AM Sunday morning.
The Senate adjourned for recess after the vote and is not expected to return 
until August 20th.
That leaves the Assembly alone in Sacramento to do its part regarding the 
budget and the Edison MOU.

The Assembly
In short, leadership within the Assembly is extremely weak and without much 
influence over its own party--the Democrats.  
The Speaker is viewed as having botched both the budget and the energy issue.
Unable to do a deal, the Assembly recessed Saturday night and has not 
reconvened. 
It has therefore not taken the votes needed to finish up with the budget.
The Assembly also has not passed its version of an Edison MOU, which it says 
it intends to do.
Best information we have right now is that the Assembly does not plan to go 
back into session until Tuesday morning.
Late Saturday night, the Assembly Speaker released yet another version of his 
Edison MOU (AB 82XX), but it does not appear at this time that he has enough 
votes among Assembly Democrats to pass it.
Enron--together with business customers--opposes the version of 82XX released 
on Saturday night because it does not adequately ensure Direct Access.

Best,
Jeff