Subject: Comments on Dennis' Declaration in UC/CSU Lawsuit
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Date: Wed, 21 Mar 2001 02:43:00 -0800 (PST)

Mike:  Here are my comments.  Apologies for the fact that they are quick and 
dirty.

All Enron's public statements that I have read, including, I think, 
statements made to financial analysts, state that our exposure in California 
is not "material."  Dennis' declaration says that the situation in California 
has been a "financial disaster," that "Enron has lost over $300 million," and 
that "Enron stands to lose millions more."  The losses are described as 
"huge."  Perhaps this is information that has since been communicated to the 
market, but I'm not aware of it.  And if it hasn't, it could represent a 
significant conflict with previous statements.  Seems prudent to run this by 
IR and perhaps others before releasing.
Regarding the statements about our hedging strategy.  It would seem prudent 
to run this through the organization for comment and discussion prior to 
making public.
Very minor technical point--I don't think that AB 1890 was passed 
"unanimously."  I think that there was 1 nay vote.
The statement is made that "the utilities were required to sell off most of 
their generating capacity."  The utilities were only required to sell off 1/2 
of their fossil-fired plants (which I think at the time may have amounted to 
about .2-.25 of their total gen assets).  They chose voluntarily to sell of 
the remainder of their fossil-fired plants.
It is stated that stranded costs are "investments in imprudent power 
generation facilities."  These investments were in fact found in the past to 
be prudent by the PUC.  Would therefore not seem accurate to call them 
imprudent now.
Is it now "virtually impossible to manage commodity risk" in California?  
Just wondering if judge might view the statement as overstating the situation 
somewhat.
From a PR perspective, I'm wondering if we want to characterize re-sourcing 
UC/CSU in the following manner, "It was actually a relatively easy decision 
to make."  Makes Enron sound perhaps excessively hard-nosed.

Best,
Jeff