Here's a new legislative strategy in Sacremento idea based on the attached 
e-mail   --

1. Let other's worry about SDG&E fixes.  First, even if the legislature 
doesn't do anything, the CPUC fix is already in place.  SDG&E doesn't need 
any statues to "do the right thing".  We should just leverage the CPUC.  
Second, it looks like the Dems and Reps are going to reach conclusion on a 
SDG&E bill; our language is in the mix.  Let's not be too close in case 
something blows up.

2. Finish the Williamson Act.  Dave Parquet says that having the fixes now is 
probably worth $10MM because he can flip the property this year instead of 
next year (need 4Q00 earnings).

3. Cut a deal with SCE / PG&E / CMA.  The big issue in California is to make 
money in the place where the market is the biggest.  Also, we need to protect 
(a) EES' book and (b) ENA's ability to buy and sell in CA without wholesale 
price caps (this takes no retail rate volatility).    Maybe we could get 
these parties to agree on some key going forward issues for the market - 
natural gas restructuring, wholesale market with Flowgate model, deal on key 
FERC Unresolved Issues, maybe something commercial with PG&E?   The deal is 
to have the retail rate cap extended, but not the CTC collection, until 
12/31/03 with a CPUC opener to 12/31/04.  Not sure if this sales or if 
they'll let us in the tent, but would be interesting to discuss with Sandi.  
From what I can tell we seem to be preventing this bill.  Let' remember that 
this is just going to be an issue next Summer and so why not deal with it now.

Please let me know your feedback.

Jim


---------------------- Forwarded by James D Steffes/HOU/EES on 08/29/2000 
06:52 PM ---------------------------


Jeff Dasovich
08/29/2000 06:50 PM
To: James D Steffes/HOU/EES@EES
cc:  
Subject: 

FYI.  According to Roger, if the freeze is extended out toward 2004 for PG&E 
and Edison, his book makes BIG money.