Greetings Laura and Marybeth:

Laura:
If you have the time and the inclination, I'd like to spend a half-hour
briefing you on the energy situation. I apologize for the brevity of this
note, but can fill you in more if you think that there's value in chatting.

In a nutshell, there's a concerted effort underway----one last big push----to
try to get a comprehensive solution in place for California that works for
the majority of constituencies (i.e., broad coalition right and left of
center).

The deal would be bi-partisan.

If successful, the deal would:

Put rates in place that reflect and cover costs, repay debts, send the right
price signals for efficiency, but fall short of "shock therapy."
Return the utility to creditworthiness as a result of the new rates.
Use the minimum amount of State- and utility-backed bonds to finance the
solution
Turn the procurement role back over to the utilities (and away from the
State) once creditworthiness is established---3-6 months following the rate
changes.
Establish the competitive market structure that California was promised but
never got---consumer choice for all customers; 18-24 months later, large
industrial would be required to procure electricity needs from the market.
NOT include government takeovers of the industry (e.g., sale of utility
transmission assets to the State would not be part of any deal).
Include a contribution from large players, e.g., utilities and suppliers.
Resolve the myriad lawsuits, investigations, etc.

Those involved still believe that there is a need for a group of "wise
persons" to help get the deal done. L. Summers is willing; others are being
considered. Your name has come up. But that issue can be addressed later.
The goal of a phone call would be to bring you up to speed on the events,
which are breaking quickly.

Hope all is well and hope to talk to you soon. Congratulations on Haas' #7
ranking in US News and World Report.

Best,
Jeff

Office 415.782.7822
Pager 888.916.7184
Home 415.621.8317
Cell 415.505.6633