Message-ID: <3373203.1075840899832.JavaMail.evans@thyme>
Date: Mon, 25 Jun 2001 19:29:00 -0700 (PDT)
From: britt.whitman@enron.com
To: john.lavorato@enron.com, louise.kitchen@enron.com, david.delainey@enron.com
Subject: California Update 6/25/01
Cc: christopher.calger@enron.com, christian.yoder@enron.com, 
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EXECUTIVE SUMMARY
?=09California Budget Resolved
?=09FERC Ordered Energy Settlements Stall MOU/Plan B=20

BUDGET
California legislators in the House have once again established a tentative=
 reserve amount for the state's depleted budget.  Both sides are reportedly=
 uneasy with the $2.74B compromise and sources indicate that the four Repub=
lican votes needed to pass the budget  in the Assembly are likely far more =
obtainable than the one Republican vote needed in the Senate.  California's=
 current redistricting process may provide Republicans with future seats th=
at could translate into immediate bargaining power in energy and budget mat=
ters.  Adding to the frustration, sources indicate that consumer activist H=
arvey Rosenfield plans to pressure State  Treasurer Angelides into battling=
 with legislators for progress on the budget and revenue bonds.

ENERGY SETTLEMENTS
Today marked opening negotiations for California state energy officials and=
 the several large energy providers who are charged with price gouging Cali=
fornians.  Sources close to California State Sen. Burton report that the re=
sults from the15 days of negotiations before the FERC appointed Administrat=
ive Law Judge, Curtis Wagener, will significantly influence the state's eff=
orts in promoting any Plan B or MOU.  Burton indicated that FERC would need=
 to order between $3 and $4B in generator refunds before the state would fi=
nalize a SoCal bail-out.  Of that amount, SoCal would most likely be infuse=
d with $1B, however, without substantial contributions from power providers=
 that sold into California and currently fall outside FERC's jurisdiction (=
i.e. BC Hydro & LA DWP), a $3 to $5B refund would be impossible to achieve.=
  Regardless of legislators' desires, sources believe that  consistent with=
 the PG&E bankruptcy advisor's view, a multibillion dollar refund from FERC=
 is unlikely.  Sources will continue to monitor and report on these negotia=
tions.     