Steve, Jeff, and others: .

Here are some of my thoughts:

Power price strip.  The power prices pulled together from the Davis-Lay 
meeting are based on a weighted average of off- and on-peak prices.  We can 
easily show on- and off-peak prices  separately.  We're making a FERC filing 
on Tues showing l-t prices so we can pull peak/off peak from that data.  
Note, however, that "baseload" power is equivalent to 24x7x365 power, which 
is what we provided him.

In terms of my other reactions:

Not enough DSM.  The best analysis of the West trading desk is that we are in 
a temporary, WSCC-wide energy shortage, not a capacity shortage.  Anything 
that reduces kWh demand will leave more water behind dams and natural gas 
storage.  This will translate into lower market prices.  Until more natural 
gas supply, generating capacity, and rainfall comes along, we will see high 
prices.  If Davis is unwilling to raise rates, he should be willing to take 
some extraordinary measures to cut demand.  At a minimum, there should be 
expanded pay-for-curtailment curtailment programs.

Voluntary Opt Out of Rate Freeze  I have not thought through all the EES 
implications but one thing that could be "sold" to customers is to give them 
the option of buying an interval meter and pay the current market price of 
power.  That would empower them to modify demand and not incur ongoing, 
increasing stranded cost liability.

Muni's need to get involved.  I assume that Enron won't take a position on 
requiring muni's to sell generation in California but Enron should support 
having muni's be cajoled to participate in demand reduction programs for the 
reasons noted above.  As recently as 12/23 Freeman said there was no need to 
conserve at LADWP.  Pretty irresponsible.

Tie Govt Backings with Move to Cost-Based Prices.  Securitization and state 
credit guarantees are great ways to lower the cost of money to the utilties 
in this crisis.  However, both are irresponsible actions unless there is  a 
plan to move retail rates to a level that covers the full cost of power.

Alan Comnes