Response

Jeff, we need to add some discussion focused on QF issues in California and
how resolution to certain items would enhance QF ownership and provide the
utilities with optimal performance of the QF's and perhaps encourage new
capacity development at existing QF locations.

The utilities should be motivated to enter into buyout, buydown, blend and
extend, negotiate fixed energy prices and other restructuring transactions
with the QF's.
The utilites have the ability to hedge the floating price currently being
paid to the QF's. They should be motivated to look into these structures.
Utilities should provide some clarification to the energy prices under QF
PPA's. There is alot of risks around SRAC and PX that affect both the
utilities and the QF owners. It seems like resolution to that risk is
beneficial to both the utility as well as the QF.
QF's should have the ability to move excess capacity and energy into either
the market and/or to the utility. That would create additional economic
incentives for the QF's to run and perhaps increase their capacity.

Frank