Message-ID: <20666062.1075840901430.JavaMail.evans@thyme>
Date: Fri, 11 May 2001 18:00:00 -0700 (PDT)
From: kristin.walsh@enron.com
To: john.lavorato@enron.com, louise.kitchen@enron.com
Subject: California Update 5/11/01
Cc: phillip.allen@enron.com, tim.belden@enron.com, jeff.dasovich@enron.com, 
	chris.gaskill@enron.com, mike.grigsby@enron.com, 
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	steven.kean@enron.com, rob.milnthorp@enron.com, 
	kevin.presto@enron.com, claudio.ribeiro@enron.com, 
	richard.shapiro@enron.com, james.steffes@enron.com, 
	mark.tawney@enron.com, scott.tholan@enron.com, 
	britt.whitman@enron.com, lloyd.will@enron.com
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?=09The extraordinary session is expected to close early next week, after t=
he governor has signed SB 28X, a power plant siting bill.  Yesterday, the g=
overnor signed bond financing bill SB 31X.  Once the extraordinary session =
is closed, a new extraordinary session is expected to be opened immediately=
.  However, sources report that no one is certain if the bills from this se=
ssion will have the same numbers in the next session.  The legislature repo=
rtedly is trying to arrange so that the bills will not have to be heard aga=
in in committee.

?=09The MOU still does not have a sponsor.  Governor Davis hopes to reach a=
 deal with Sempra for the state to purchase San Diego Gas and Electric's tr=
ansmission assets.  He reportedly feels that by having deals in place with =
SoCal and SDG&E, enough momentum might be added to push the MOU through the=
 legislature.  He then could go to the bankruptcy court and propose adding =
PG&E's assets, since he would have two of the three pieces in place.  The v=
alidity of this logic seems questionable at best.  Sources are skeptical th=
at adding SDG&E to the MOU would increase the chances of the deal going thr=
ough the legislature.  Also, the governor has claimed to be close to having=
 a deal with SDG&E for several weeks, but such a deal has not yet been fina=
lized.  The governor stated that he will have a sponsor for the MOU by next=
 week when the bill will be introduced.  The MOU might be introduced in the=
 legislature, then amended to indicate a lesser amount for the transmission=
 asset purchase.  This still would not assure passage since so many legisla=
tors reportedly are against the MOU.

?=09The windfall profits tax bill has not been set for hearing on the Assem=
ble floor. =20

?=09State Legislature, Elizabeth Hill, published a report earlier this week=
 regarding an analysis of state revenues.  The report stated that revenues =
for this year would be $3.4B less that was expected in January 2001, not in=
cluding electricity costs.  She predicts that ongoing state programs will h=
ave to be cut by approximately $1.7B.

?=09Moody's has put California's credit rating under review for another dow=
ngrade.  Sources report that Moody's, S&P, and MBIA have all informed Calif=
ornia that "the only way the state will improve its credit rating and look =
better to investors is to get out of the power business and resolve the und=
ercollected."