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Date: Thu, 1 Mar 2001 07:05:00 -0800 (PST)
From: susan.mara@enron.com
To: hgovenar@govadv.com, sgovenar@govadv.com, bhansen@lhom.com, 
	ksmith@kdscommunications.com
Subject: Temporary Media Points on ISO Report on Unjust Prices
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Here are some quick and dirty ideas on the ISO report and FERC filing.  I'm 
just reading it, so something more will come later.

Gov Davis is trying to divert attention from his bad public policy ideas.  
A significant reason that prices are high and continue to be high is that the 
ISO is expecting people to sell when they have no idea whether they will be 
paid.  
The Governor, the ISO and the EOB have all failed to acknowledge that simple 
fact.  When there is a huge risk of receiving payment, a rational seller 
would include some risk premium in the price. Like a bank offering credit 
cards at higher interest rates to people with shakey credit. 
The ISO is not paying its bills and has lost its creditworthy status.
THE ISO REPORTAND FERC FILING DO NOT HAVE ONE WORD IN THEM ABOUT THIS CREDIT 
ISSUE.
The ISO's report evaluates components of sellers' "costs" and calculates 
purported "unjust and unreasonable" prices, all without mentioning the 
creditworthy status of the ISO or the risk of doing business with a 
non-creditworthy party.
Of course, this whole problem could have been avoided or greatly reduced, if 
Governor Davis had taken action when it was first identified as a problem in 
August, 2000. 
Governor Davis has still not addressed this very basic and pressing issue. 
His idea to purchase the transmission system doesn't solve the problem and 
takes time and resources.  Lots of them.
By the way, the ISO's statement that it is entitled to the data is really a 
FERC issue and FERC will decide.  FERC did not order this and the ISO wants 
FERC to order it.  We don't usually hold press conferences about FERC issues 
of this nature.
This whole debate/disagreement does nothing to (1) increase supply, (2) 
decrease demand or (3) solve the creditworthy status of the ISO or the 
utilities. So, why are we spending time on it?

Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854