Problem: BODY: HELP STOP THE SHIFT OF OVER $600 MILLION OF POWER COSTS FROM S. CALIFORNIA TO N. AND CENTRAL CALIFORNIA RATEPAYERS. Please call the PUC at 415 703 2074 to voice your opposition to this unfair plan. Details and talking points are below. *********** According to the California Public Utilities Commission's (CPUC) draft decision on the California Department of Water Resources?s (DWR) revenue requirement (attached), the CPUC is proposing to shift over $600 million of unreviewed DWR power costs to PG&E?s customers from Southern California customers. If adopted by the CPUC, this would lock PG&E customers into 40-55 percent higher rates for DWR power over the next 10 years, compared to customers of Southern California Edison and SDG&E. It discriminates against PG&E?s customers and has not been subject to public review, due process, or cost justification by DWR or the CPUC. The CPUC has postponed the vote on the DWR cost shifting issue until later this month (Sept 20th, or sooner). Without a full public hearing at which all the cost and ratemaking issues can be aired, Northern and Central California customers will not have a full and fair opportunity to review DWR ?s multi-billion dollar rate demands and will be unable to influence these proceedings. The SVMG is strongly urging you to call the CPUC as well as your local legislators (contact information attached) to gain their support in opposing this unjustified and discriminatory rate shift. Main issues of concern are: 1)the unfair shift of over $600 million in costs from SCE customers to PG&E customers; 2)imposes higher Direct Access exit fees in Northern CA. than in Southern CA. ; 3)appears to fund a portion of SCE's debt repayment on the backs of PG&E customers without any justification from the CPUC (please find further talking points attached). We are asking that the CPUC conduct open public hearings so that public comment can be provided, and the DWR's basis for cost recovery can be reviewed. Thank you for your prompt support in this crucial effort.
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A: SUBJECT: VERY URGENT - $600million Cost Shifting to PG&E Customers

Problem: BODY: For questions or comments regarding this report please contact G. Britt Whitman at ex:5-4014 or Kristin Walsh at ex:3-9510. EXECUTIVE SUMMARY ? MOU Passes Assembly, Faces Fight in Senate ? CPUC Direct Access Delayed by Senator SoCal Developments As reported in the press this morning, the bailout passed the Assembly late last night by a 41-32 vote. It will now head to the Senate, where very significant opposition is expected. Along with his opposition to the changes made in the Assembly regarding the size of businesses that pay the dedicated rate component for the bailout, Senator Burton also has expressed privately that he is against paying twice book value for SoCal's transmission assets. Senator Places Hold on CPUC Direct Access Vote Regarding the CPUC's decision to delay its hearings on the rate order and various other bond implementation measures (which led Treasurer Angelides to announce that the bond issue will have to be re-timed), this delay is due to a bill by Senator Burton that passed the Assembly Appropriations Committee yesterday. Burton's bill would take the place of the current proposed rate agreement (from Governor Davis) and would require greater disclosure and transparency in DWR ratemaking, as well as separate the payment streams for the bonds from payment streams for power. In doing so, Burton's bill preserves more PUC authority than would be preserved under the rate order currently before the PUC - thus the delay in action. PG&E also supports Burton's bill, which is very likely to pass the Assembly and which the governor will likely have to sign. If this bill is signed, PG&E's legal challenges to the DWR and PUC may be canceled. The popularity of Burton's bill (as opposed to the rate agreement from the Governor) is leading many observers to conclude that Burton has replaced Davis as the most powerful, influential politician in California. Burton's goal is to ensure that any direct access that is offered to large users in 2003 (when there will be a dip in power procurement by DWR, resulting in a net short) is only temporary and does not turn into a "jail break." DWR's power procurement will rise again in 2004; Burton wants to ensure that businesses will have to return to purchasing power from DWR at that time. The CTMA is opposed to Burton's bill and to the bailout if no direct access is offered. The CTMA wants its members to be able to escape from buying power from the DWR (and therefore paying off the bonds) permanently in 2003.
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A: SUBJECT: California Update 9-07-2001

Problem: BODY: Paul Henry on the weather desk informed me that they have agreed with one of our counterparties to terminate a deal. I've asked for a copy of the confirm. Could one of you please e-mail to me this morning a form of dela termination letter that we can send to the counterparty? Thanks. Carol
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A:
SUBJECT: Cancellation of Weather Deal