Revised CESG Outline

A revised CESG outline is attached, updated to reflect Friday's
discussion. While we discussed much greater detail, I have continued to
try to keep the outline more general to avoid generating a treatise at
this point. Particularly, we discussed much greater detail around the
rate stabilization plan than is reflected in the attached outline.

SCE has committed to providing some sort of percentage or tiered term
structure for forward contracting to complete that section of the
framework (section 2). Obviously, PG&E's ideas in this area would also
be welcome.

In Section 4 (undercollections) I have thrown in the numbers provided to
the Chronicle for the Saturday morning article describing the extent to
which the utilities may have already committed to Governor Davis to
absorb undercollections. (Which leads to the question for John and Dan,
again, whether we are wasting our time with this exercise given the
media coverage describing the state of the IOU deal.)

Delaney has committed to provide a call-in number for tomorrow's 3:30
conference call. Thank you all again for your efforts.

- CESG Working Draft 121700.doc