Update Day 1 Second Session FERC CA Settlement

In the Room

Conference attended by all in-state generators, a few munies, the IOUs and a
few others. One attorney from CPUC, but on phone. Barbara Barkovich attended
for CA Large Consumers. Nader sent someone. No other consumers. One other
ESP -- Strategic Energy (only operates in San Diego).
Judge reports that only 6 offers have been submitted to FERC for sales to the
IOUs (note; Enron submitted one of the offers). The offers total 2000 MW. The
prices are quite divergent. He expresses concern at the little offered.
Generators suggest that more could be offered if FERC could be more flexible
on terms (FERC required 24/7 offers).
IOUs and others press judge to seek offers from others not present (e.g.,
BPA, other marketers, SW utilities), but judge does not offer to do so.
Barkovich says can't throw large customers into non-core market now.
Everyone agrees that we are all looking for a blended wholesale rate (part
existing gen, part OFs, part forward contract and part spot) that meshes with
the IOUs' ability to recover the costs in rates -- so tied to CPUC rate
increase.
Discussion of CPUC PD -- not enough
Enron able to take low profile.
SDG&E suggested terminating the settlement talks at FERC, saying nothing
could be achieved.
Not much happens until 4:30 pm, when judge blows up -- judge directed
epithets at SDG&E and SCE. SCE had refused to cooperate from the beginning.

Out of the Room

Separate talks between PG&E and SDG&E and some of the generators.
Late in the day, Judge meets with IOUs.
Parties agree informally that forum does not work well given lack of CPUC
involvement, but some believe that FERC is only hope for a workable
resolution.

Next Steps -- The Judge Speaks

Judge asked everyone to consider how to "Share the Pain" for Thursday's
meeting and said not to expect any "win:win" scenario. His view is that FERC
is better than the CA legislature or bankruptcy court.
His focus will be on Wolak proposal to share the pain, as submitted in
12/1/00 comments to FERC -- forces all sellers to CA to sell most of its
supply (either generation or marketer offers) as cost-based rates in forward
contracts, or lose ability to sell at market-based rates. Generators oppose
this, I believe.
Enron planning to continue low profile but to discuss options with ENA.