From: robert.johnston@enron.com
To: greg.whalley@enron.com
Cc: gary.hickerson@enron.com, bryan.seyfried@enron.com, markus.fiala@enron.com, paul.pizzolato@enron.com, jeff.kinneman@enron.com, michael.bradley@enron.com, d..cisneros@enron.com, john.greene@enron.com, danielle.romain@enron.com, erin.willis@enron.com, todd.litton@enron.com, scott.tholan@enron.com
Date: 2001-07-27 11:32:47+00:00
Subject: FW: California Update 7/26/01 p.3



Senator Burton spoke with the Speaker  Wednesday  night and urged him not to convene an Assembly session during the scheduled recess, since the Senate is not going to interrupt their vacation. Burton's request, in conjunction with the Speaker's trouble in getting enough of his members to return on their own dime (he didn't want the Assembly to pay for people to fly back from European vacations for 48 hours - and few members were willing to pay for it themselves), means there will probably not be a hearing on Hertzberg's Edison bailout plan tomorrow.
Since Hertzberg plan is different from the bill the Senate passed, Burton wants Hertzberg to include the Senate in discussions on a solution that can get passed in both houses. Since  there is not expected to be any hearing on any bills/Edison bailout before both houses return from the summer recess on August 20th - we look  for negotiations to occur on extending the MOU's Aug 15th deadline.


 State of the Negotiations-- Issues to Be Covered 

Below are the current provisions Keeley and Hertzberg are wanting to pass into legislation (when they return from recess).  Currently, they are not sure if all of these amendments would be wrapped up into one bill or if they would just amend bill SB78XX while introducing a new bill SB_XX.  Working under the assumption that they would amend bill 78XX and introduce a new one, the following issues are a reflection of their current positions.  If they decide to introduce one new bill than the issues below would be included into one piece of legislation.  Please remember, these issues are only their current thoughts and are such to change.  There are important differences in the proposals with significant implications for a SoCal voluntary filing--these include whether to include a bond bailout; conservation easement; a rate-payer benefit account; neither bill offers a transmission line purchase or any kind of trust to assist SoCal. 

SoCal Debt
SB _XX
No provision for debt.
SB 78XX (amended)
Approximately $2.9B through corporate bond financing supported by a Dedicated Rate Component (DRC) over a period of time sufficient to pay the bonds (10-15 years).  Final debt amount to be established by the PUC and the State Auditor.

Core vs. Non-Core
SB _XX
For purposes of paying the SoCal debt, creates a Core program for consumers with a peak demand of less than ?Kw and Non-Core customers of ?Kw or more.  They would share in the cost of SoCal debt retirement: (1) all consumers share pro rata for the first two years, (2) Non-Core pay 100% after two years.
SB 78XX(amended)
No Provisions.

Transmission System Purchase
SB _XX and SB 78XX
No purchase of transmission assets.

Conservation Easements
SB _XX
No conservation easements.
SB 78XX(amended)
Specific conservation easements and other land arrangements described in bill for about 24,000 acres per the Governor's MOU.

Direct Access
SB _XX
Removes regulatory constraints on a Direct Access program effective January 1, 2002 and permits customers to buy power if there is a net short after SoCal native generation, bilateral contracts, and DWR contracts.  Residential and small commercial customers may use direct access from renewable energy sources.
SB 78XX(amended)
No provisions for Direct Access.

Ratepayer Benefit Account
SB _XX
Deposits in the account any refunds or net cash resulting from (a) any refunds ordered by FERC or from litigation, and (b) any positive DWR Power Fund revenues; all to be refunded to ratepayers through either bill credits or rate reductions in proportion to the March, 2001 PUC rate increase.
SB 78XX(amended)
Does not create a Ratepayer Benefit Account.

Electric Supplier Claims Settlement Trust
SB _XX and SB 78XX
Does not create a Trust or trustee to negotiate reductions.

Renewable Energy
SB _XX
Creates a Renewable Portfolio Standard (RPS) to achieve a target of 10% of all new generating capacity additions through 2010 and overall 20% of statewide total generating capacity by 2010.  Munis have been exempted from the RPS.
SB 78XX(amended)
No provisions for renewable energy.