Committee conference call

The committee had a lengthy conference call today. Let me touch on key
topics. First, the application to employ PriceWaterhouse is being
contested by both the debtor and the US trustee. There was a meeting today
with the debtor to narrow differences. The debtor will provide a list of
its key concerns and we'll see if we can deal with them. The UST just
believes that there is too much of a chance of conflict between roles in
the two cases. We'll be setting a hearing soon to get the issue resolved
on way or the other. Second, PGE has sought broad discovery from PX not
only of individual participants' claims against PGE but also underlying
trading information. PX contends that much of this information cannot be
disclosed under the tariffs. For that reason, PX hasn't even kprovided
this information to its participants. Eisenberg is opposing the discovery
for that reason as well as based on burden to the debtor. The PX committee
feels that Montali will accomodate discovery, at least to some extent.
Therefore, in the meet and confer this afternoon, the committee probably
will support disclosure if (1) participants get whatever of their
information as is disclosed to PGE, (2) substantial limitations are imposed
on the parties that will have access to the information and the use to
which it can be put and (3) PGE reimburses PX for a part of the cost. In
addition, the committee intends to file a motion in the PX case requesting
that the debtor be ordered to turn information over to individual
participants and to our accountants who will have the responsibility to
test numbers but not to make general disclosure of accounts of individual
participants. Third, Howard Weg believes that without some agreement on
the chargeback issue, FERC will take a long time to rule on whether PX
should return collateral. Accordingly, Weg wants the participants to come
to an agreement that for any specified period, shortfalls will be shared
prorata among participants. I asked Weg to send an email out to committee
members describing in detail his proposal and the basis for it so that we
could discuss it in detail during our next call. Fourth, the commandeering
matters are proceeding. The committee will complete interviews of
prospective counsel next Monday. In the meantime, the Victims Compensation
Claims Board should rule June 22. A summary denial is expected.
Interestingly, only about 30% of the participants submitted claims to the
board. PX's expert opinion was made available to the committee. He fixes
the value of commandeered contracts at $1.060 billion minus $350 million of
contract prices for a loss of just under $700 million. We are following up
to test these numbers. The committee's counsel has been negotiating a
stipulation for relief from stay in the PGE case. It's moving too slowly,
so our counsel is drafting a stay relief motion for our review. No one
seems inclined to start a commandeering suit until relief is granted.
Fifth, our counsel is having second thoughts about a stipulation with
Edison that would address the bond, the force majeur litigation and related
matters. The question that is under review is whether the proposed deal
could be unwound if SCE files its own cha;pter 11 case. On force majeur,
Judge Montali apparently rejected PGE's argument on that point. Sixth,
there is still no deal with the trade creditors' committee. They want
about double the $4 million we're offering. We expect any day a motion to
extend plan exclusivity by the debtor. Seventh, we discussed some
committee representation issues. The committee voted against adding Puget
Sound as a member. The committee agreed that it represented those who had
claims based on the scheduling coordinator role performed by PX for ISO.
The committee discussed whether it represented IOU's and concluded that it
did if they were owed in their role as sellers to the PX. Finally, the
next meeting was set at 10 pst on June 25. Feel free to call if there are
questions. Bob Nelson