Re: FROM STEVE KEAN

I was on the call this morning with Steve when Sen Feinstein's office=20
indicated that they would welcome input from Enron on how to address the=20
immediate crises. However, they made it absolutely clear that they want=20
solutions that can remove the imminent threat of rolling blankouts that may=
=20
occur within the next 48 hours. The Senator is not very interested in=20
hearing about solutions that will require two years to implement. =20

I would like to take your suggestions and ideas and incorporate them in a=
=20
letter to the Senator.

Thanks

=09Mary Hain@ECT
=0912/14/2000 01:30 PM
=09=09
=09=09 To: Steven J Kean/NA/Enron@ENRON
=09=09 cc: Jeff Dasovich/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Jo=
e=20
Hartsoe/Corp/Enron@ENRON, James D Steffes/NA/Enron@Enron, Tom=20
Briggs/NA/Enron@Enron, Sarah Novosel/Corp/Enron@ENRON, Paul=20
Kaufman/PDX/ECT@ECT, Lysa Akin/PDX/ECT@ECT
=09=09 Subject: Re: FROM STEVE KEAN

Paul and I have started working on it and Lysa is setting up a conference=
=20
call for today after 12:00 Pacific time (Paul is at the OPUC this morning).=
=20

From: Steven J Kean@ENRON on 12/14/2000 12:12 PM CST
Sent by: Maureen McVicker@ENRON
To: Jeff Dasovich/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Joe=20
Hartsoe/Corp/Enron@ENRON, James D Steffes/NA/Enron@Enron, Tom=20
Briggs/NA/Enron@Enron, Sarah Novosel/Corp/Enron@ENRON, Paul=20
Kaufman/PDX/ECT@ECT, Mary Hain/HOU/ECT@ECT
cc: =20
Subject: FROM STEVE KEAN

I believe we need to prepare a letter to key decision makers regarding=20
western energy markets and the actions that we believe should and should no=
t=20
be taken by policy makers. I=01,ve recently spoken to rep from DOE, the ca=
l=20
senators=01, offices and FERC and am concerned that they continue to labor =
under=20
misconceptions about how the market is operating and what policy decisions=
=20
make sense. I have conveyed Enron=01,s point of view to each of these=20
representatives. Several have asked for a letter and I believe it would be=
=20
helpful to capture some of our views in writing. =20

Here are the key points I believe we need to make:

? we have a serious crisis in the energy markets in the western United Stat=
es.

? some of the policy reactions to this crisis have been helpful but many ha=
ve=20
been harmful

? every action the govt. takes in the crisis situation should be (1) inform=
ed=20
by discussions with market participants (and not simply taken on faith from=
=20
the utilities or the CAL ISO), (2) should be measured against this simple=
=20
standard: does the action actually increase supply or actually decrease=20
demand; if not, then it=01,s not helping.

? we should list examples of both the short term and long term remedies tha=
t=20
we believe satisfy this standard (e.g. in the short term things like having=
=20
the ISO buy demand reductions, providing government guarantees for ISO=20
purchases or having California lift emissions limits) and listing actions=
=20
that do not meet this standard (e.g. price caps orders to sell power to the=
=20
CAL ISO).

? list the actions that we have taken to increase supply or reduce demand.

? make ourselves available to discuss any of these matters.

I think we need to try to get such a letter prepared by the end of the day=
=20
today. =20

I am sending you a copy of the letter we sent to the commission regarding=
=20
price caps and a letter El Paso sent regarding gas markets yesterday. I am=
=20
asking Paul Kaufman to take the lead on pulling this together or to designa=
te=20
someone to pull a draft together.