Message-ID: <9021976.1075858672542.JavaMail.evans@thyme>
Date: Tue, 22 May 2001 22:48:00 -0700 (PDT)
From: jeff.dasovich@enron.com
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Subject: Burton Presentation and Press Conference
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X-From: Jeff Dasovich <Jeff Dasovich/NA/Enron@ENRON>
X-To: Alan Comnes <Alan Comnes/PDX/ECT@ECT>, Angela Schwarz <Angela Schwarz/HOU/EES@EES>, Beverly Aden <Beverly Aden/HOU/EES@EES>, Bill Votaw <Bill Votaw/HOU/EES@EES>, Brenda Barreda <Brenda Barreda/HOU/EES@EES>, Carol Moffett <Carol Moffett/HOU/EES@EES>, Cathy Corbin <Cathy Corbin/HOU/EES@EES>, Chris H Foster <Chris H Foster/HOU/ECT@ECT>, Christina Liscano <Christina Liscano/HOU/EES@EES>, Craig H Sutter <Craig H Sutter/HOU/EES@EES>, Dan Leff <Dan Leff/HOU/EES@EES>, Debora Whitehead <Debora Whitehead/HOU/EES@EES>, Dennis Benevides <Dennis Benevides/HOU/EES@EES>, Don Black <Don Black/HOU/EES@EES>, Dorothy Youngblood <Dorothy Youngblood/HOU/ECT@ECT>, Douglas Huth <Douglas Huth/HOU/EES@EES>, Edward Sacks <Edward Sacks/Corp/Enron@ENRON>, Eric Melvin <Eric Melvin/HOU/EES@EES>, Erika Dupre <Erika Dupre/HOU/EES@EES>, Evan Hughes <Evan Hughes/HOU/EES@EES>, Fran Deltoro <Fran Deltoro/HOU/EES@EES>, Gayle W Muench <Gayle W Muench/HOU/EES@EES>, Ginger Dernehl <Ginger Dernehl/NA/Enron@ENRON>, Gordon Savage <Gordon Savage/HOU/EES@EES>, Harold G Buchanan <Harold G Buchanan/HOU/EES@EES>, Harry Kingerski <Harry Kingerski/NA/Enron@ENRON>, Iris Waser <Iris Waser/HOU/EES@EES>, James D Steffes <James D Steffes/NA/Enron@ENRON>, James W Lewis <James W Lewis/HOU/EES@EES>, James Wright <James Wright/Western Region/The Bentley Company@Exchange>, Jeff Messina <Jeff Messina/HOU/EES@EES>, Jeremy Blachman <Jeremy Blachman/HOU/EES@EES>, Jess Hewitt <Jess Hewitt/HOU/EES@EES>, Joe Hartsoe <Joe Hartsoe/Corp/Enron@ENRON>, Karen Denne <Karen Denne/Corp/Enron@ENRON>, Kathy Bass <Kathy Bass/HOU/EES@EES>, Kathy Dodgen <Kathy Dodgen/HOU/EES@EES>, Ken Gustafson <Ken Gustafson/HOU/EES@EES>, Kevin Hughes <Kevin Hughes/HOU/EES@EES>, Leasa Lopez <Leasa Lopez/HOU/EES@EES>, Leticia Botello <Leticia Botello/HOU/EES@EES>, Mark S Muller <Mark S Muller/HOU/EES@EES>, Marsha Suggs <Marsha Suggs/HOU/EES@EES>, Marty Sunde <Marty Sunde/HOU/EES@EES>, Meredith M Eggleston <Meredith M Eggleston/HOU/EES@EES>, Michael Etringer <Michael Etringer/HOU/ECT@ECT>, Michael Mann <Michael Mann/HOU/EES@EES>, Michelle D Cisneros <Michelle D Cisneros/HOU/ECT@ECT>, mpalmer <mpalmer@enron.com>, Neil Bresnan <Neil Bresnan/HOU/EES@EES>, Neil Hong <Neil Hong/HOU/EES@EES>, Paul Kaufman <Paul Kaufman/PDX/ECT@ECT>, Paula Warren <Paula Warren/HOU/EES@EES>, Richard L Zdunkewicz <Richard L Zdunkewicz/HOU/EES@EES>, Richard Leibert <Richard Leibert/HOU/EES@EES>, Richard Shapiro <Richard Shapiro/NA/Enron@ENRON>, Rita Hennessy <Rita Hennessy/NA/Enron@ENRON>, Roger Yang <Roger Yang/SFO/EES@EES>, Rosalinda Tijerina <Rosalinda Tijerina/HOU/EES@EES>, Sandra McCubbin <Sandra McCubbin/NA/Enron@ENRON>, Sarah Novosel <Sarah Novosel/Corp/Enron@ENRON>, Scott Gahn <Scott Gahn/HOU/EES@EES>, Scott Stoness <Scott Stoness/HOU/EES@EES>, Sharon Dick <Sharon Dick/HOU/EES@EES>, skean <skean@enron.com>, Tanya Leslie <Tanya Leslie/HOU/EES@EES>, Tasha Lair <Tasha Lair/HOU/EES@EES>, Ted Murphy <Ted Murphy/HOU/ECT@ECT>, Terri Greenlee <Terri Greenlee/NA/Enron@ENRON>, Tim Belden <Tim Belden/HOU/ECT@ECT>, Tony Spruiell <Tony Spruiell/HOU/EES@EES>, Vicki Sharp <Vicki Sharp/HOU/EES@EES>, Vladimir Gorny <Vladimir Gorny/HOU/ECT@ECT>, Wanda Curry <Wanda Curry/HOU/EES@EES>, William S Bradford <William S Bradford/HOU/ECT@ECT>, Kathryn Corbally <Kathryn Corbally/Corp/Enron@ENRON>, Jubran Whalan <Jubran Whalan/HOU/EES@EES>, triley <triley@enron.com>, Richard B Sanders <Richard B Sanders/HOU/ECT@ECT>, Robert C Williams <Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT>, Greg Wolfe <Greg Wolfe/HOU/ECT@ECT>, James Wright <James Wright/Western Region/The Bentley Company@Exchange>, Dirk vanUlden <Dirk vanUlden/Western Region/The Bentley Company@Exchange>, Steve Walker <Steve Walker/SFO/EES@EES>, Jennifer Rudolph <Jennifer Rudolph/HOU/EES@EES>, Martin Wenzel <Martin Wenzel/SFO/HOU/EES@EES>, Douglas Condon <Douglas Condon/SFO/EES@EES>, wgang <wgang@enron.com>, Scott Govenar  <sgovenar@govadv.com>, Hedy Govenar  <hgovenar@govadv.com>, jklauber <jklauber@llgm.com>, Mike D Smith <Mike D Smith/HOU/EES@EES>, John Neslage <John Neslage/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT>, Janel Guerrero <Janel Guerrero/Corp/Enron@Enron>, Eric Letke <Eric Letke/DUB/EES@EES>, Richard B Sanders <Richard B Sanders/HOU/ECT@ECT>, gfergus <gfergus@brobeck.com>, Michael Tribolet <Michael Tribolet/ENRON@enronXgate>, Robert Frank <Robert Frank/NA/Enron@Enron>, Richard B Sanders <Richard B Sanders/HOU/ECT@ECT>, gfergus <gfergus@brobeck.com>, Susan J Mara <Susan J Mara/NA/Enron@ENRON>
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----- Forwarded by Jeff Dasovich/NA/Enron on 05/22/2001 07:46 PM -----


=09"Ken Smith" <ken@kdscommunications.com> 05/22/2001 07:27 PM Please respo=
nd to "Ken Smith" =09   To: "Hedy Govenar" <hgovenar@govadv.com>, "Mike Day=
" <MDay@GMSSR.com>, "Bev Hansen" <bhansen@lhom.com>, "Jeff Dasovich" <jdaso=
vic@enron.com>, "Susan J Mara" <smara@enron.com>, "Paul Kaufman" <paul.kauf=
man@enron.com>, "Michael McDonald" <Michael.McDonald@enron.com>, "Sandra Mc=
Cubbin" <Sandra.McCubbin@enron.com>, "Rick Shapiro" <rshapiro@enron.com>, "=
Jim Steffes" <james.d.steffes@enron.com>, "Alan Comnes" <acomnes@enron.com>=
, "Steven Kean" <Steven.J.Kean@enron.com>, "Karen Denne" <kdenne@enron.com>=
, <Harry.Kingerski@enron.com>, "Leslie Lawner" <Leslie.Lawner@enron.com>, "=
Robert Frank" <rfrank@enron.com>, "Janel Guerrero" <Janel.Guerrero@enron.co=
m>, "Miyung Buster" <Miyung.Buster@enron.com>, "Jennifer Thome" <Jennifer.T=
home@enron.com>, "Eric Letke" <eletke@enron.com>, "Mary Schoen" <Mary.Schoe=
n@enron.com>, "David Leboe" <David.Leboe@ENRON.com>, "Ban Sharma" <ban.shar=
ma@enron.com>, <Mark.Palmer@enron.com>  cc:   Subject: Burton Presentation =
and Press Conference=09


The following are summaries of today's appearance by Sen. John Burton to th=
e Sacramento Press Club and of his news conference this afternoon announcin=
g a lawsuit against FERC.
=20
John Burton held what amounted mostly to a Q&A session at a lunch with the =
Sacramento Press Club today. He started by talking about the Edison MOU, wh=
ich he said will be assigned to the Senate Utility Committee for review, th=
e Judiciary Committee will look at the legal elements, and the Natural Reso=
urces Committee will look at issues surrounding easements.  (One columnist =
commented that Burton would "love it to death," meaning it would get so muc=
h attention it will be hard for it to advance.)
=20
The MOU, he said, includes language that eliminates oversight by the PUC.  =
He said that will not be the case when it leaves the Senate.
=20
Burton is obviously troubled by the MOU; he said "some people" say it doesn=
't just make Edison creditworthy, it makes them whole.  He said the followi=
ng would have to take place for the MOU to be acceptable:
=20
Back debt must be verified;
All creditors must take a 30% "haircut";
The transmission lines would need to be purchased for an amount close to wh=
at the governor has mentioned;
$400 million (or more) must come from Edison's parent to pay back debt.
=20
When asked whether $400 million was enough, he said "no" and that he feels =
the parent should pay "a ton."  That led to a discussion of the dedicated r=
ate component, which he doesn't like. He used the example that if electrici=
ty costs $20 and the dedicated rate component is $5, if prices drop to $10 =
people will unnecessarily pay higher rates.  A larger infusion of cash from=
 Edison's parent could eliminate the need for the dedicated rate component.=
=20
=20
Burton called the dedicated rate component a "big problem" and said it coul=
d be the strongest argument for use in an initiative campaign.
=20
He said he planned to tell the governor this afternoon that the state shoul=
d set an acceptable purchase price for power and not pay anything more (not=
e:  this is a populist approach that is getting a lot of support from radio=
 talk shows and other media).  He later threw out the number $200.  The sta=
te is going to have blackouts whether or not it pays top dollar, he said, s=
o this is one way he sees to fight back.  It's tough medicine, but as he pu=
t it, "You've got to take castor oil and it tastes crappy, but two days lat=
er you're over it and your stomach's OK."
=20
Burton also used a quote from his late brother, Phil, on how he believe the=
 situation should be handled:  "The only way to deal with exploiters is to =
terrorize the bastards."
=20
Asked how long the committee process would take re: the MOU, Burton said th=
e MOU sets August 15 as a deadline but that if there is ongoing progress th=
ere are allowances that would let the process go as long as into December.
=20
=20
LAWSUIT PRESS CONFERENCE
=20
Shortly after the lunch, Burton held a press conference to announce a lawsu=
it against FERC was filed today in the U.S. Court of Appeals for the Ninth =
Circuit.  A copy of the brief and press release was faxed earlier this afte=
rnoon to Jim Steffes and should be available in his office.  If additional =
copies are needed, please contact me or Scott Govenar.
=20
The plaintiffs are Burton, individually and on behalf of the Senate; Bob He=
rtzberg, individually and on behalf of the Assembly; and the City of Oaklan=
d.  At the event were Burton, Hertzberg, Oakland Mayor Jerry Brown, atty. J=
oe Cotchett of Cotchett, Pitre & Simon (in Burlingame); atty. Clark Kelso, =
a constitutional scholar from McGeorge School of Law; Sen. Liz Figueroa; an=
d Joan Breuner, vice mayor of Oakland. =20
=20
The suit asks for FERC to respond within 7 days and a ruling within 21 days=
.
=20
Burton opened by explaining that they were suing FERC for not fulfilling it=
s statutory authority to maintain fair and justifiable rates.  Hertzberg ad=
ded that FERC had ignored the law and that they were compelled to file suit=
 for Californians' relief.
=20
Joe Cotchett said the suit is "very basic" and is based on the Federal Powe=
r Act, which he says limits power costs to "fair and justifiable" rates.  A=
 primary strategy in this suit is to present it as a "health and welfare" a=
nd public safety suit; he noted that there are 3 million disabled children =
and 12,000 convalescent homes in CA who can be adversely affected by blacko=
uts.  He said it is "not an economic lawsuit -- it's about senior citizens,=
 disabled kids and convalescent facilities."  Today also happened to be the=
 legislative day for the California Association of Health Facilities (the n=
ursing home trade assn.), and several nursing home workers were apparently =
asked to sit at the back of the room for effect.
=20
Cotchett said FERC has been told for 3 years that there were opportunities =
to exert market power.  He also claimed that a Redondo Beach facility (obvi=
ously AES) was fined $8 million by FERC for taking its plant off-line and s=
ubstituting higher rates.  He said, however, that this order had been seale=
d.
=20
He cited an industry report that predicts 260 hours of blackouts this summe=
r, which could mean four hours a day.  That could be, he said, "potentially=
 the ruination of a lot of medicine in refrigeration."  Cotchett noted that=
 only hospitals with more than 100 beds are exempt from blackouts, which do=
es not protect surgical centers or many health facilities.
=20
Jerry Brown added that "prices are unjust and people are suffering."  Conti=
nued high prices could mean "potential civic disruption," and that there wi=
ll be "more actions to mobilize" Western mayors.
=20
Liz Figueroa spoke briefly to reiterate the health aspects of the lawsuit.
=20
Burton had mentioned Clark Kelso, who regularly appears on TV here as a leg=
al expert and I believe was a colleague of Justice Anthony Kennedy, in his =
Press Club appearance.  He said Kelso had appeared regularly in the media e=
arly on to say that the state had no standing to file the suit. Burton's la=
wyer's sent him the brief, and Kelso thought enough of it to join the legal=
 team.
=20
Kelso reiterated that FERC has been aware of potential market power for thr=
ee years, and that the commission has delayed action unreasonably.  It has =
failed to define "fair and justifiable"; that failure, he said, violates th=
e Equal Protection and Due Process clauses of the Constitution.
=20
Kelso said this is not a partisan issue, and called upon "fellow Republican=
s" to support the effort.
=20
Joan Breuner (sp?), Oakland's vice mayor, said only that she believed that =
if the energy situation were happening in Texas rather than California, the=
 president and FERC would have acted long ago.
=20
During the Q&A session, Cotchett said the urgency filing is necessary becau=
se "5 generators supply 90%" of the electricity in CA and all five have rat=
e renewals before FERC.  He also said one of the cases that is relevant is =
Bush v. Gore, in which the Supreme Court found that failure to set standard=
s (regarding elections, obviously, in that case) violates the Equal Protect=
ion clause.  He also said six states have expressed interest in the case an=
d have requested briefs:  Oregon, Nevada, Arizona, Washington, Minnesota an=
d one other he didn't name.  None of these states has yet committed to join=
ing the suit.