We went into the FERC proceeding believing that the Chief ALJ was not
likely to give us a good decision.  During the course of the proceeding, we
convinced ourselves that he would rule our way due to the vast evidence in
our favor and the relatively inept presentation of El Paso and El Paso
Merchant Energy.  Well, despite the voluminous record in support of our
position, the judge ruled that it was "not at all clear" that El Paso
exercised market power.  The good news for your affiliates is that, if the
Commission does not find the exercise of market power in this case, it
never will.  We hope when the Commission reviews the entire record,
including the "protected material", they will change the ALJ's finding.  On
some level we believe that the ALJ just does not like California.  He is
the judge, after all, who told Harold Ray in the electric generation
settlement discussions that he was "an asshole".  The ironic part of the
decision is that we felt that a determination by the ALJ that defined the
market in such a way as to preclude EPME having market power would be
difficult to overcome at the Commission level.  Instead, he defined the
market as we suggested and found that El Paso had market power; he simply
failed to be convinced that they were withholding capacity despite the fact
that they utilized their capacity 54% of the time when everyone else was
utilizing their own capacity at a capacity factor of between 85% and 90%.
Go figure.

I am still less than enchanted with the NGS settlement  after SoCalGas
tailored it to their interests but am glad that the Commission is at least
considering opening up the system ala PG&E.   I think that they are
reasonably aware that SoCalGas was not blameless in the runup in gas prices
that took place last December.   Having said that we are having a hell of a
time in the GCIM simply trying to investigate what really happened.
SoCalGas latest excuse for not giving us info is that we will "competitors"
with them (as a result of the filed rate litigation) for gas hedges.  I
must have misunderstood; I did not realize there was a limited supply of
hedges available and that there was competition for those "available"
hedges.   Anytime Enron wants to help on these GCIM issues, we would
welcome it--might make you look less like a Texas robber baron.

Douglas Porter, Senior Attorney
Southern California Edison Company
(626)302-3964
(626)302-3990(fax)
douglas.porter@sce.com


                                                                                             
                    "Dasovich,                                                               
                    Jeff"                  To:     <porterdk@sce.com>                        
                    <Jeff.Dasovich@        cc:                                               
                    enron.com>             Subject:                                          
                                                                                             
                    10/12/01 03:18                                                           
                    PM                                                                       
                                                                                             
                                                                                             




Hi Doug:
Hope all is well.  Congratulations to you folks on your agreement with
the PUC.  Must be a relief.

 I was writing to get your reaction to the judge's proposed order in the
El Paso case.  You think the Commission is likely to adopt it?  Change
it?  Judge's proposal fatally flawed on the market power issue?
Appreciate your insights.

AND did you hear Bilas issued the our gas settlement as his proposed
decision for adoption by the Commission at its 10.25.01 meeting!?!?!
What next?

Best,
Jeff


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