Subject: Yesterday's Events
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Date: Fri, 4 Aug 2000 07:30:00 -0700 (PDT)

As you are probably aware, the CPUC voted 5-0 to reject instituting retail 
rate caps in San Diego and instead adopted SDG&E's proposal to refund over 
$100 million.  The Commission also approved SCE and PG&E's motion to enter 
into bilateral agreements and schedule those transactions through the PX 
using the bilateral-option market.  These transactions will be confidential 
and will be disclosed only to the Commission's energy division, for purposes 
of reasonableness.  The Commission did not act upon San Diego's advice letter 
(#1242) to facilitate customer awareness of competitive alternatives.  That 
advice letter will not be acted upon until the next Commission meeting in 
September.

The Commission has also opened an investigation into the role of the utility 
as a default provider and will explore how the utility should pass along its 
costs to the customers.  It will also address whether SDG&E should be 
authorized to participate in bilateral contracts in addition to PX 
purchases.  It also opens the door to consider alternative exchange.  This is 
a fast track investigation, so I will set up a call to discuss early next 
week.

Sandi McCubbin and I were in Sacramento yesterday meeting with several of the 
key legislative offices.  There was also an interested party meeting (AB 1890 
Implementation Group).  From those meetings, it was apparent that Steve Peace 
is interested in legislation to institute rate caps in San Diego, re-vamp the 
governance structure of the ISO and PX boards, having market participants 
(generators, marketers, utilities) share in some of the pain that San Diego's 
consumers feel, extend the rate freeze, etc.  Although, most of the other 
legislative offices saw this proposal as a total morass.

The legislative offices that we met with, while interested in providing some 
political cover to DeDe Alpert (Senator from San Diego in a close political 
race), were not interested in pursuing sweeping changes to the current 
structure, although this could change.  However, it should be noted that DeDe 
Alpert said herself that she would introduce rate cap legislation in San 
Diego when the legislature reconvenes on August 7.  Most of the discussion 
with the other offices was on what can be done by next summer and focused on 
bringing on peaking plants and expanding demand responsive programs.

Sandi and Dave Parquet also met with John Stevens, of the Governor's Office.  
He stated that the Governor did not want any major changes to the current 
structure to come across his desk, but that the Governor needed our help in 
preventing such changes from getting there, otherwise he may be politically 
compelled to sign the legislation.  Sandi will send out more information 
later, she's having computer problems.

There will be a hearing next week of the Senate and Assembly Energy 
Committees on San Diego issues on August 10.

We, in GA, will keep you updated on developments.