From: jeff.dasovich@enron.com
To: j..kean@enron.com, richard.shapiro@enron.com, karen.denne@enron.com, .palmer@enron.com, paul.kaufman@enron.com, susan.mara@enron.com, d..steffes@enron.com
Date: 2001-10-11 17:37:03+00:00
Subject: Conversation w/Jerry Hirsch of LA Times

FYI.  Hirsch apparently is a business reporter for the Times who got my name from people.  He's doing a story about the contracts.  Something like "they bought way too much for too high a price.  Now what?"  I told him that I would talk to him under the following conditions:

No attribution to Enron specifically
No attribution of the "unnamed sources" sort, "industry sources" or sort, etc.
If, when the story's further along, he wants to try to get a quote from us, I'd put him in touch with our PR folks.

We talked generally about DWR, the CA Power Authority, the contracts, the Edison deal with the PUC, etc.

More specifically, he asked me "are there any alternatives to deal with this mess."  I outlined the following proposal, which we've talked about internally, and which we've been quietly shopping behind the scenes.  I did not bring up the "green only" DA for small customers piece of the proposal (slipped my mind).

I also gave him names of other folks I thought he should talk to.  He said he might get back to me.  If he calls back, I'll let you know.  

Please let me know if anyone has any concerns 1) about talking to him on a backgound only basis, and/or 2) the proposal outlined below. Thanks.

Best,
Jeff

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 -----Original Message-----
From: 	Dasovich, Jeff  
Sent:	Tuesday, October 09, 2001 10:53 AM
To:	Shapiro, Richard; Steffes, James D.; Mara, Susan
Subject:	

Rick:
Based on your voicemail, here's a quick-and-dirty synopsis of a proposal that I've been quietly discussing with a select few out here in California (e.g., John White, large customers).  It could include more bells and whistles, but the intent of this proposal is to get DA back as soon as possible.
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Reduce DWR L-T contract volumes by at least 33-50%
To "back fill" increase in net-short created by contract reformation, permit noncore customers (20 KW and above) to elect to go DA to fill the position
DA provides a significantly more efficient hedge against price volatility than DWR contracts
Election is first-come, first-serve, capped at the aggregate net short position
Customers decision to go DA will constitute a 3-year commitment to stay DA (i.e., can't go back to IOU for 3 yrs; must stay in the market)
If a net short position remains after noncore customers have elected DA (i.e., not enough elect to fill the net short), then the IOUs will hold an auction to fill the net short
The auction would seek a portfolio of 3 month, 6 month, 1 year and 3 year deals (both peak and off-peak) to fill the net short.
Noncore customers choosing DA would not escape costs of DWR power consumed when the customer was receiving utility service (i.e., prior to electing DA)
Likewise, if the noncore customers choosing DA was a utility customer during the period when the utility accured its "undercollection," (i.e., when wholesale prices exceeded the retail cap), the customer would not escape those costs by virtue of electing DA status
Noncore customers would not bear responsibility for recovery of DWR L-T contracts.
Potential add-on to deal:  Core customers (less than 20 KW) could choose "green only" DA, but, like, noncore customers could not escape costs for which they are responsible.