Subject: AG letter - privileged and confidential: request for legal advice.
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Mon, 9 Jul 2001 02:56:00 -0700 (PDT)

The letter looks good.  A couple of comments for your consideration:

On page three we describe the change to the definition of Public Utility and 
then argue that we don't fit into it.  Would it be worth explaining why that 
makes sense?  Specifically, the New Jersey restructuring law, like most 
efforts of its kind in other markets, is designed to separate the competitive 
from monopoly elements of the power (and gas) businesses.  Economic 
regulation would then be restricted to the remaining monopoly elements of the 
business (eg distribution).  The competitive market can not be solely relied 
upon to "regulate" the behavior of monopoly asset owners, such as 
distribution utilities.  Therefore, regulators continue to be called upon to 
set pricing and other terms of service.  What those regulators decide matters 
a great deal to those monopoly utilities and it consequently makes sense for 
lawmakers to be concerned about attempts by such entities to use campaign 
contributions to tacitly influence decision makers.  The same public policies 
simply do not apply to that portion of the market which is competitive.  The 
generation and sales business has a competitive structure (i.e. relatively 
low barriers to entry, multiple competitors etc.).  These components of the 
power and gas business can be "regulated" by the market with respect to rates 
and terms of service.  They do not require economic regulation any more than 
grocery stores, department stores, appliance sellers or other "retailers" 
(who presumably are not prohibited from making contributions.  Competition 
and markets discipline behavior and establish competitive prices and terms of 
service.  Because regulators don't set the prices and terms of service for 
such sellers, there is no reason to be concerned about campaign 
contribuitions from such organizations.  Indeed, the legislation, and the 
legislative history, clearly conform to this underlying policy rationale.
As a former practicing lawyer, I certainly understand the value of pleading 
in the alternative.  But, I question how certain of our arguments woud be 
perceived by the public if they ever came to light (which these documents 
have a habit of doing).. .  I can just see the press seizing on Enron's claim 
of "ignorance or mistake" or the fact that we pled for the favorable exercise 
of "prosecutorial discretion".  I suggest that we add whatever we feel is 
necessary to the very solid looking intent argument, not make specific 
reference to "ignorance or mistake", and not plead for the favorable 
esxercise of PD.  If we feel we need to write about this last item, perhaps 
we could suggest that it would be a waste of the public's resources to pursue 
a claim under such circumstances.