Re TURN wants to end AB1890 Feb 1.

This hurts us because we would not get Px credit for SCE for the month of 
February.

Furthermore, I am not sure that it does not hurt TURN because:
Existing settlements would have a large part of the savings related to 
nuclear going to the shareholder if AB1890 does not end.
Similar issues related to existing coal units
10% of the benefits of hydro go to utilities.

In addition we should argue that:
Ending AB1890, before the valuation of existing generation is contrary to law.
Retroactive rate making is contrary to law.

Scott


From: Jeff Dasovich@ENRON on 02/12/2001 01:23 PM
Sent by: Jeff Dasovich@ENRON
To: Alan Comnes/PDX/ECT@ECT, Angela Schwarz/HOU/EES@EES, Beverly 
Aden/HOU/EES@EES, Bill Votaw/HOU/EES@EES, Brenda Barreda/HOU/EES@EES, Carol 
Moffett/HOU/EES@EES, Cathy Corbin/HOU/EES@EES, Chris H Foster/HOU/ECT@ECT, 
Christina Liscano/HOU/EES@EES, Christopher F Calger/PDX/ECT@ECT, Craig H 
Sutter/HOU/EES@EES, Dan Leff/HOU/EES@EES, Debora Whitehead/HOU/EES@EES, 
Dennis Benevides/HOU/EES@EES, Don Black/HOU/EES@EES, Dorothy 
Youngblood/HOU/ECT@ECT, Douglas Huth/HOU/EES@EES, Edward 
Sacks/Corp/Enron@ENRON, Eric Melvin/HOU/EES@EES, Erika Dupre/HOU/EES@EES, 
Evan Hughes/HOU/EES@EES, Fran Deltoro/HOU/EES@EES, Frank W 
Vickers/HOU/ECT@ECT, Gayle W Muench/HOU/EES@EES, Ginger 
Dernehl/NA/Enron@ENRON, Gordon Savage/HOU/EES@EES, Harold G 
Buchanan/HOU/EES@EES, Harry Kingerski/NA/Enron@ENRON, Iris Waser/HOU/EES@EES, 
James D Steffes/NA/Enron@ENRON, James W Lewis/HOU/EES@EES, James 
Wright/Western Region/The Bentley Company@Exchange, Jeff Messina/HOU/EES@EES, 
Jeremy Blachman/HOU/EES@EES, Jess Hewitt/HOU/EES@EES, Joe 
Hartsoe/Corp/Enron@ENRON, Karen Denne/Corp/Enron@ENRON, Kathy 
Bass/HOU/EES@EES, Kathy Dodgen/HOU/EES@EES, Ken Gustafson/HOU/EES@EES, Kevin 
Hughes/HOU/EES@EES, Leasa Lopez/HOU/EES@EES, Leticia Botello/HOU/EES@EES, 
Mark S Muller/HOU/EES@EES, Marsha Suggs/HOU/EES@EES, Marty Sunde/HOU/EES@EES, 
Meredith M Eggleston/HOU/EES@EES, Michael Etringer/HOU/ECT@ECT, Michael 
Mann/HOU/EES@EES, Michelle D Cisneros/HOU/ECT@ECT, mpalmer@enron.com, Neil 
Bresnan/HOU/EES@EES, Neil Hong/HOU/EES@EES, Paul Kaufman/PDX/ECT@ECT, Paula 
Warren/HOU/EES@EES, Richard L Zdunkewicz/HOU/EES@EES, Richard 
Leibert/HOU/EES@EES, Richard Shapiro/NA/Enron@ENRON, Rita 
Hennessy/NA/Enron@ENRON, Robert Badeer/HOU/ECT@ECT, Roger Yang/SFO/EES@EES, 
Rosalinda Tijerina/HOU/EES@EES, Sandra McCubbin/NA/Enron@ENRON, Sarah 
Novosel/Corp/Enron@ENRON, Scott Gahn/HOU/EES@EES, Scott Stoness/HOU/EES@EES, 
Sharon Dick/HOU/EES@EES, skean@enron.com, Susan J Mara/NA/Enron@ENRON, Tanya 
Leslie/HOU/EES@EES, Tasha Lair/HOU/EES@EES, Ted Murphy/HOU/ECT@ECT, Terri 
Greenlee/NA/Enron@ENRON, Tim Belden/HOU/ECT@ECT, Tony Spruiell/HOU/EES@EES, 
Vicki Sharp/HOU/EES@EES, Vladimir Gorny/HOU/ECT@ECT, Wanda Curry/HOU/EES@EES, 
William S Bradford/HOU/ECT@ECT, Kathryn Corbally/Corp/Enron@ENRON, Jubran 
Whalan/HOU/EES@EES, triley@enron.com, Richard B Sanders/HOU/ECT@ECT, Robert C 
Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Greg Wolfe/HOU/ECT@ECT, James 
Wright/Western Region/The Bentley Company@Exchange, Dirk vanUlden/Western 
Region/The Bentley Company@Exchange, Steve Walker/SFO/EES@EES, Jennifer 
Rudolph/HOU/EES@EES
cc:  
Subject: 
Quick Update

On the various matters currently before the California PUC:
The Commission order stating that the utilities should absorb any difference 
between DWR's cost of power and the retail rate freeze is still technically 
in effect.  (The order only applies, however, to the power purchased under 
the Governor's emergency order giving the State the authority to buy power.)
The utilities have petitioned to modify the decision telling the Commission 
that the easiest way to remedy the problem would be to vacate the order 
altogether, but if the Commission didn't want to vacate the order, it would 
need to change the decision so that the IOUs don't eat any shortfalls.
The Commission can act on the petition to modify whenever it chooses.  In 
addition, it has a continuation meeting scheduled for this Thursday and a 
regularly scheduled business meeting next week.  So the opportunity to act 
and fix the Order is there if the Commission wants to take it.
With respect to the cost of utility generation (i.e., retained generating 
assets and QF contracts), the Commission has a set up a schedule that 
foresses a Commission decision adopting an "interim" procurement charge on 
March 27th.  There is another "workshop" scheduled for tomorrow to discuss 
the utilities' proposals, after which the utilities will be required to file 
formal "advice  letters" with the Commission.  Those advice letters will form 
the basis of the process that the Commission will use to ultimately arrive at 
a decision on the 27th.
Everyone participating in the workshops takes the view that  customers will 
see a separate line item on their bills to cover the going forward costs that 
DWR incurs to buy power.  Everyone participating in the workshops also takes 
the view that customers will be on the hook for DWR's costs and the 
Commission will, if necessary, raise rates to ensure that DWR is made whole.  
(Unfortunately, the Commission is not currently sending signals to show that 
it concurs with the folks participating in the workshops.  And until there is 
clarity on whether the Commission will agree to "pass through" those costs, 
Enron and others will continue to have problems with DWR's credit as it 
applies to the RFP that we and others responded to last week.)
Next week begins the hearings to address the issues that Commission started 
to examine began in the emergency hearings held over the holidays, i.e., the 
utilities financial position, TURN's proposal to "net out" the utilitities' 
generation-related revenues with the undercollection caused by the rate cap, 
the date on which the rate has (or will) end, etc.    Recently, TURN modified 
its testimony in response to the passage of AB1X.  TURN's new position is 
that the Commission should find that the rate freeze ended on February 1st, 
the effective date of AB1X.   EES will need to quickly determine how and if 
it wants to respond to TURN's latest stance on the end of the rate freeze.
We continue to try to persuade stakeholders and the Commission that DA 
customers must be compensated for the fact that they paid for the utilities' 
stranded generating assets.  That compensation could come in one of two 
forms:  1) access to a proportionate share of the utilities' retained, 
cost-based generating assets, or 2) a credit representing the difference 
between the "market" value of the retained generating assets and the book 
value of those assets.  We are not getting much traction thus far.
The Commission is scheduled to issue a separate decision addressing the rate 
freeze issue, the issue of whether to net out generating-related revenues 
against the undercollection, etc. on March 27.  So both sets of issues (the 
procurement charges and the "end of the rate freeze) are scheduled to be 
"finalized" on March 27, albeit in separate orders.
With respect to the Block Foward issue, our lawyers had a pretty good meeting 
on Friday with the DWR general counsel and other DWR lawyers.  However, it 
has become clear that despite those efforts, FERC's decision on "charge 
backs" will have a significant effect on the resolution of the Block Forward 
issue.

Best,
Jeff