Brief in Rate Stabilization Proceeding

Despite the fact that the hearings will probably continue into Wednesday of
this week, the briefs in Phase I of the Rate Stabilization Proceeding are
still due this Friday the 2nd. One of the issues before the ALJ is the use
of interim versus final market valuation to end the rate freeze. I am very
hesitant to say that the rate freeze cannot end on the basis of a Commission
approved interim valuation as Enron has, in previous proceedings, taken the
position that it can. Please let me know right away if you feel different
about this. Along these same lines, the issue of the value of the assets is
somewhat at play (at least on an interim basis). Do we want to take a
position that the assets need to be market valued (rather than book) thus
increasing the rate base for the purpose of cost of service regulation which
the assets are now under? Increased generation rate would mean an increased
DA credit. However, it may also hurt our claim that we should get a piece of
the retained generation. Again let me know as soon as possible about your
position.

Jeanne Bennett