LEGISLATIVE ALERT: CA QF Legislative Matters/Section 390

Mr. Keeley's office has indicated a desire to move a QF bill modifying
Section 390 early next week, with a goal of passing out a bill from the
legislature by Wed. Accordingly, QF interested parties should be prepared
to mobilize beginning Monday for legislative outreach. Nothing of
legislative substance is expected to occur in the legislature over the
weekend as they have all gone home.

Presently, we do not know the extent to which the IEP, CCC, PG&E joint
proposal will be the template for Mr. Keeley's bill. We do know that Mr.
Keeley's office believes (1) passing a QF bill which results in providing
headroom to the utilities is critical to the success of AB 1-X, and (2)
there is a high likelihood that one or more of the utilities will not be
able to "solve" (I am borrowing a Lars term) the QF generation portfolio
within the 7.8 cent/kWh average "box" sought by the legislative leadership.

We will continue our "prescheduled" IEP conference calls for 5:00 p.m. (PST)
beginning Monday, 5. Carol will circulate the call-in number.