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----- Forwarded by Jeff Dasovich/NA/Enron on 05/22/2001 07:46 PM ----- =09"Ken Smith" <ken@kdscommunications.com< 05/22/2001 07:27 PM Please respo= nd to "Ken Smith" =09 To: "Hedy Govenar" <hgovenar@govadv.com<, "Mike Day= " <MDay@GMSSR.com<, "Bev Hansen" <bhansen@lhom.com<, "Jeff Dasovich" <jdaso= vic@enron.com<, "Susan J Mara" <smara@enron.com<, "Paul Kaufman" <paul.kauf= man@enron.com<, "Michael McDonald" <Michael.McDonald@enron.com<, "Sandra Mc= Cubbin" <Sandra.McCubbin@enron.com<, "Rick Shapiro" <rshapiro@enron.com<, "= Jim Steffes" <james.d.steffes@enron.com<, "Alan Comnes" <acomnes@enron.com<= , "Steven Kean" <Steven.J.Kean@enron.com<, "Karen Denne" <kdenne@enron.com<= , <Harry.Kingerski@enron.com<, "Leslie Lawner" <Leslie.Lawner@enron.com<, "= Robert Frank" <rfrank@enron.com<, "Janel Guerrero" <Janel.Guerrero@enron.co= m<, "Miyung Buster" <Miyung.Buster@enron.com<, "Jennifer Thome" <Jennifer.T= home@enron.com<, "Eric Letke" <eletke@enron.com<, "Mary Schoen" <Mary.Schoe= n@enron.com<, "David Leboe" <David.Leboe@ENRON.com<, "Ban Sharma" <ban.shar= ma@enron.com<, <Mark.Palmer@enron.com< cc: Subject: Burton Presentation = and Press Conference=09 The following are summaries of today's appearance by Sen. John Burton to th= e Sacramento Press Club and of his news conference this afternoon announcin= g a lawsuit against FERC. =20 John Burton held what amounted mostly to a Q&A session at a lunch with the = Sacramento Press Club today. He started by talking about the Edison MOU, wh= ich he said will be assigned to the Senate Utility Committee for review, th= e Judiciary Committee will look at the legal elements, and the Natural Reso= urces Committee will look at issues surrounding easements. (One columnist = commented that Burton would "love it to death," meaning it would get so muc= h attention it will be hard for it to advance.) =20 The MOU, he said, includes language that eliminates oversight by the PUC. = He said that will not be the case when it leaves the Senate. =20 Burton is obviously troubled by the MOU; he said "some people" say it doesn= 't just make Edison creditworthy, it makes them whole. He said the followi= ng would have to take place for the MOU to be acceptable: =20 Back debt must be verified; All creditors must take a 30% "haircut"; The transmission lines would need to be purchased for an amount close to wh= at the governor has mentioned; $400 million (or more) must come from Edison's parent to pay back debt. =20 When asked whether $400 million was enough, he said "no" and that he feels = the parent should pay "a ton." That led to a discussion of the dedicated r= ate component, which he doesn't like. He used the example that if electrici= ty costs $20 and the dedicated rate component is $5, if prices drop to $10 = people will unnecessarily pay higher rates. A larger infusion of cash from= Edison's parent could eliminate the need for the dedicated rate component.= =20 =20 Burton called the dedicated rate component a "big problem" and said it coul= d be the strongest argument for use in an initiative campaign. =20 He said he planned to tell the governor this afternoon that the state shoul= d set an acceptable purchase price for power and not pay anything more (not= e: this is a populist approach that is getting a lot of support from radio= talk shows and other media). He later threw out the number $200. The sta= te is going to have blackouts whether or not it pays top dollar, he said, s= o this is one way he sees to fight back. It's tough medicine, but as he pu= t it, "You've got to take castor oil and it tastes crappy, but two days lat= er you're over it and your stomach's OK." =20 Burton also used a quote from his late brother, Phil, on how he believe the= situation should be handled: "The only way to deal with exploiters is to = terrorize the bastards." =20 Asked how long the committee process would take re: the MOU, Burton said th= e MOU sets August 15 as a deadline but that if there is ongoing progress th= ere are allowances that would let the process go as long as into December. =20 =20 LAWSUIT PRESS CONFERENCE =20 Shortly after the lunch, Burton held a press conference to announce a lawsu= it against FERC was filed today in the U.S. Court of Appeals for the Ninth = Circuit. A copy of the brief and press release was faxed earlier this afte= rnoon to Jim Steffes and should be available in his office. If additional = copies are needed, please contact me or Scott Govenar. =20 The plaintiffs are Burton, individually and on behalf of the Senate; Bob He= rtzberg, individually and on behalf of the Assembly; and the City of Oaklan= d. At the event were Burton, Hertzberg, Oakland Mayor Jerry Brown, atty. J= oe Cotchett of Cotchett, Pitre & Simon (in Burlingame); atty. Clark Kelso, = a constitutional scholar from McGeorge School of Law; Sen. Liz Figueroa; an= d Joan Breuner, vice mayor of Oakland. =20 =20 The suit asks for FERC to respond within 7 days and a ruling within 21 days= . =20 Burton opened by explaining that they were suing FERC for not fulfilling it= s statutory authority to maintain fair and justifiable rates. Hertzberg ad= ded that FERC had ignored the law and that they were compelled to file suit= for Californians' relief. =20 Joe Cotchett said the suit is "very basic" and is based on the Federal Powe= r Act, which he says limits power costs to "fair and justifiable" rates. A= primary strategy in this suit is to present it as a "health and welfare" a= nd public safety suit; he noted that there are 3 million disabled children = and 12,000 convalescent homes in CA who can be adversely affected by blacko= uts. He said it is "not an economic lawsuit -- it's about senior citizens,= disabled kids and convalescent facilities." Today also happened to be the= legislative day for the California Association of Health Facilities (the n= ursing home trade assn.), and several nursing home workers were apparently = asked to sit at the back of the room for effect. =20 Cotchett said FERC has been told for 3 years that there were opportunities = to exert market power. He also claimed that a Redondo Beach facility (obvi= ously AES) was fined $8 million by FERC for taking its plant off-line and s= ubstituting higher rates. He said, however, that this order had been seale= d. =20 He cited an industry report that predicts 260 hours of blackouts this summe= r, which could mean four hours a day. That could be, he said, "potentially= the ruination of a lot of medicine in refrigeration." Cotchett noted that= only hospitals with more than 100 beds are exempt from blackouts, which do= es not protect surgical centers or many health facilities. =20 Jerry Brown added that "prices are unjust and people are suffering." Conti= nued high prices could mean "potential civic disruption," and that there wi= ll be "more actions to mobilize" Western mayors. =20 Liz Figueroa spoke briefly to reiterate the health aspects of the lawsuit. =20 Burton had mentioned Clark Kelso, who regularly appears on TV here as a leg= al expert and I believe was a colleague of Justice Anthony Kennedy, in his = Press Club appearance. He said Kelso had appeared regularly in the media e= arly on to say that the state had no standing to file the suit. Burton's la= wyer's sent him the brief, and Kelso thought enough of it to join the legal= team. =20 Kelso reiterated that FERC has been aware of potential market power for thr= ee years, and that the commission has delayed action unreasonably. It has = failed to define "fair and justifiable"; that failure, he said, violates th= e Equal Protection and Due Process clauses of the Constitution. =20 Kelso said this is not a partisan issue, and called upon "fellow Republican= s" to support the effort. =20 Joan Breuner (sp?), Oakland's vice mayor, said only that she believed that = if the energy situation were happening in Texas rather than California, the= president and FERC would have acted long ago. =20 During the Q&A session, Cotchett said the urgency filing is necessary becau= se "5 generators supply 90%" of the electricity in CA and all five have rat= e renewals before FERC. He also said one of the cases that is relevant is = Bush v. Gore, in which the Supreme Court found that failure to set standard= s (regarding elections, obviously, in that case) violates the Equal Protect= ion clause. He also said six states have expressed interest in the case an= d have requested briefs: Oregon, Nevada, Arizona, Washington, Minnesota an= d one other he didn't name. None of these states has yet committed to join= ing the suit.
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