To follow up on my previous notes:

A copy of the press release from the Controller's office is attached.

The release clarifies the charts I mentioned.  The point was that less than
1% of all payments for energy purchases to date have gone toward long-term
contract deals.  The governor's plan calls for 11% of all purchases made
between January 1 and June 1 of this year to be from long-term contracts.
Connell's point was that 30% of all future purchases would have to be under
long-term contracts to meet that goal, which she apparently believes is
unlikely.
----- Original Message -----
From: "Scott Govenar" <sgovenar@govadv.com>
To: "Hedy Govenar" <hgovenar@govadv.com>; "Mike Day" <MDay@GMSSR.com>; "Bev
Hansen" <bhansen@lhom.com>; "Jeff Dasovich" <jdasovic@enron.com>; "Susan J
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Sent: Monday, May 21, 2001 2:31 PM
Subject: Kathleen Connell


> The following notes are from Ken Smith from State Controller Kathleen
> Connell's press conference today:
>
> California State Controller Kathleen Connell held a press conference
> today.  Although the Dow Newswire said it would be to disclose long-term
> contracts, the event focused on what she believes will be an additional
> need for borrowing beyond the energy bonds.
>
> She anticipates an additional $4 billion in borrowing will be needed in
> February to meet expected costs.  The borrowing should, she said, be
> done as Revenue Anticipation Notes (RANs), short-term notes at a lower
> interest rates (about 4%) that must be paid back by the end of the year,
> rather than as additional energy bonds.  She categorized the current
> budget situation as "the same kind of environment as a bad budget year,"
> and said California should maintain at least a 3% reserve.
>
> She did not comment on individual contracts except to say there are 17
> different contracts.
>
> Charts her office had prepared showed that $5.136 billion had been spent
> on energy purchases through 5/17/01; about 99% of that went to spot
> market purchases.  There was also a chart that showed projected
> expenditures under the Governor's plan to be $8.349 billion for the
> period January 1-June 1, 2001, with about 89% of that going to spot
> market purchases.  How these numbers work together was confusing - I
> checked with a reporter, who said he was also unclear.  I'll try to get
> this cleared up this afternoon.
>
> An easel held a large photocopy of a $533 million check to Mirant, which
> is the largest energy check written to date.   More has been paid to
> Reliant - she put it at about 25% of total expenditures - but "we have
> never written a check to Reliant over $500 million" because of the way
> they invoice.
>
> She said the Governor's financial assumptions for power "do not fit into
> the most likely scenario" and that summer conditions will greatly affect
> the actual spending needs.  She noted that DWR estimates it will spend
> $9.2 billion through June 30, 2002, although the PUC has only authorized
> $7.5 billion.
>
> The other significant announcement was that she plans to use her
> authority with the Board of Equalization to hold hearings to determine
> whether power plants sold by utilities have been properly assessed for
> property taxes.  Apparently, they are still on the tax rolls at previous
> rates, but she believes the profits recorded by some generators means
> the plants may be more valuable than their current assessments.
>
> A press release was not distributed at the event, although there may be
> one issued later today.
>
>
>

 - Connell release.pdf