CA Instrate Gas matters

This is to quickly summarize our call on July 11 on California gas intrastate
matters and set a direction for future activity.

Unbundling: PG&E has a Gas Accord in effect through 12/31/03, which is
generally positive. We will participate in the development of a successor
plan, and attempt to improve it if we can.
SoCalGas attempted its own version of a gas accord, but the CPUC refused
to approve. We will attempt to resurrect this accord and obtain CPUC
approval.

Hedging: No proceeding currently exists to address gas hedging by LDCs.
(draft legislation does exist on the electric side to allow hedging and
passthrough of costs). Jeff has recommended that we approach the LDCs to
begin discussing the issue and developing a strategy to take to the CPUC. I
suggest we develop an ENA-EES hedging proposal for CA and then take that to
the LDCs. I will attempt to put this is writing.

Infrastructure: CPUC has undertaken a proceeding to determine the need to
improve infrastructure. SoCal Gas and PG&E are responding with proposals.
We want to revitalize the infrastructure and ensure real markets exist and
can develop. Our task is to participate in these proceedings.

(Please let me know who I left off the mailing list).