Message-ID: <28206847.1075844239805.JavaMail.evans@thyme> Date: Mon, 14 May 2001 13:50:00 -0700 (PDT) From: jeff.dasovich@enron.com To: paul.kaufman@enron.com, james.steffes@enron.com, richard.shapiro@enron.com, susan.mara@enron.com, sandra.mccubbin@enron.com, skean@enron.com, karen.denne@enron.com, mpalmer@enron.com, janel.guerrero@enron.com Subject: Summary of Today's Call/Agenda for Tomorrow's Call Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Paul Kaufman, James D Steffes, Richard Shapiro, Susan J Mara, Sandra McCubbin, skean@enron.com, Karen Denne, mpalmer@enron.com, Janel Guerrero X-cc: X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf FYI. ----- Forwarded by Jeff Dasovich/NA/Enron on 05/14/2001 08:47 PM ----- Jeff Dasovich Sent by: Jeff Dasovich 05/14/2001 08:47 PM To: sryan@aesc.com, hoffman@blackstone.com, bbailey@duke-energy.com, Lynn.A.Lednicky@Dynegy.com, john.harrison@elpaso.com, rachael.king@elpaso.com, clark.smith@elpaso.com, skean@enron.com, tom.allen@mirant.com, sonnet.edmonds@mirant.com, randy.harrison@mirant.com, alex.goldberg@williams.com cc: Maureen McVicker/NA/Enron@Enron Subject: Summary of Today's Call/Agenda for Tomorrow's Call Greetings: In order to keep everyone in the loop, the folks on today's call wanted to send out a brief summary of the call for the benefit of those who couldn't make it. Apologies for any omissions, inaccuracies, etc. Others who were on the call please chime in if I've gotten anything wrong, or missed anything. Best, Jeff SUMMARY Enron, Duke, El Paso and Williams were on the call, as was Michael Hoffman of the Blackstone Group (the Governor's financial advisors). On the subject of how the group would organize itself, it was agreed that the calls would be open to anyone who wanted to participate. A smaller group consisting of Duke, El Paso, Enron, and Williams would take the lead on walking the halls of Sacramento, meeting with policy makers, and advocating whatever plan the group develops. Folks agreed that achieving a comprehesive solution requires a tangible process; that is, the principals need to get in a room, face to face, for however long it takes to work out a resolution. It was agreed that the process should start no later than the beginning of next week, and that it should take place in Sacramento. It was decided that the Legislature and the Attorney General needed to be brought into the process as soon as possible, i.e., next week. There was some discussion regarding the release today of "Plan B." Plan B is a plan proposed by Democratic and Republican legislators as an alternative to the MOU that the Governor struck with Edison. After that call I received a copy of "Plan B." If you'd like a copy please send me your fax number. Folks on the call agreed to have the next "supplier-only" call-in meeting on Friday. Finally, Michael Hoffman said that they are hoping to have a "ratings agency level" presentation prepared by the end of the week. The goal of the presentation is to reassure capital markets that the bonds the state seeks to issue are solidly backed by retail rates. The Agenda for Tomorrow's Call with the Governor's Staff Item #1: The Credit Issue Michael Hoffman said that the Governor's office wants to start tomorrow's meeting discussing the creditworthiness issue. Hoffman said that the Governor's folks are hoping to have completed by the start of tomorrow's meeting a draft of an agreement between the California PUC and CDWR. The agreement is designed to ensure that DWR gets paid for power services delivered. If the draft is ready, they'd like to discuss on the call tomorrow. Item #2: Identify the Components of a Comprehensive Solution. It was agreed that our group should put on the table at tomorrow's meeting the universe of issues that need to be included in a comprehensive solution. Enron was asked to take a first stab at what those components are. The following is a brief outline, which is not intended to be definitive, but a starting point for discussion. Utility creditworthiness retail rates must reflect costs Increase supply streamline and otherwise reform the siting process Decrease demand establish real-time pricing implement demand buy-down and other conservation programs Create a real market Remove the State from the power-buying business as soon as possible (e.g., once new rates are in place and utilities are returned to creditworthiness; approximately 3-6 months) Return the procurement role to the utilities Reinstate Direct Access immediately for all customers Within 18-24 months, create a "core/noncore" market structure for electricity, similar to California's market structure for natural gas Keep the industry in the hands of the private sector Reject proposals calling on the State to take over transmission, generation, etc. Resolve outstanding legal claims, investigations, etc. Resolution requires certainty and prompt payment (understanding that discounts on receivables is on the table for discussion)