Re: Interventions in Tuscon Complaint Proceeding

Is this a final decision or are you still considering your options? Ron

<<< <Alan.Comnes@enron.com< 03/15/01 06:06PM <<<

Jim, Ron:

We're leaning toward plain-vanilla (1). The commercial attornies like the
devil they know (CDWR) more than the devil they don't (whomever would pick
up the contracts if Tuscon prevailed and the BFMs were sent back to the
PX).

I have asked to sit down with Chris Yoder and Steve Hall to go over our
positions in these charge back dockets more carefully.

Alan

From: James D Steffes@ENRON on 03/15/2001 09:53 AM CST

To: Christian Yoder/HOU/ECT@ECT, Alan Comnes/PDX/ECT@ECT
cc:

Subject: Interventions in Tuscon Complaint Proceeding

What is your take on filing?

Jim

----- Forwarded by James D Steffes/NA/Enron on 03/15/2001 09:41 AM -----

"Ronald
Carroll" To:
<rcarroll@brac cc:
epatt.com< Subject:

03/15/2001
09:30 AM

Just a reminder that interventions and comments in this proceeding are due
next Monday, March 19th. This case concerns a complaint filed by Tuscon
Electric challenging Governor Davis' and the state of California's
commandeering of the BFM contracts of SCE and PG&E. The complaint argues
that the contracts belong to interstate markets and are beyond the reach of
the state's eminent domain powers.

While the complaint is consistent with arguments that we have made in the
past on many issues, I am not clear whether, on a commercial level, EPMI is
upset that the Governor commandeered the contracts. My surface analysis is
that the state is unlikely to pay fair value for the contracts and thus, if
this is the only consideration, we would be better off if the contracts are
returned to the PX to use as collateral on SCE's and PG&E's defaults
(thereby mitigating chargeback exposure). I am not in position, however,
to evaluate whether EPMI sees a commercial advantage in buying these
contracts from DWR as opposed to buying them back from the PX under the
liquidation procedures announced by the PX before the contracts were
commandeered. FYI, the PX's procedures gave counterparties (such as EPMI)
first opportunity to buy the contracts; when SCE protested this method, we
intervened in support of the PX's proposal.

We have three courses of action: (1) file a plain vanilla intervention;
(2) intervene and file short comments in support of the complaint; or (3)
do nothing. Since interventions and comments are due on Monday, please
advise as soon as possible which course you prefer. I am available in my
office (202-828-5872) to discuss.

Thanks. Ron