Proposal to FERC on Allocation Methodology

Attached is the August 10, 2001 draft of the proposal to FERC regarding the
allocation methodology based on the latest comments from Lynn Miller.

As we discussed yesterday during the Official Committee conference call,
today I am circulating this draft to the Official Committee, the attorneys
for the Official Committee, the CalPX and the attorneys for the CalPX. I
would like to receive all comments back from this group by Weds, August 15,
at which point I propose to circulate the draft to the Unofficial Energy
Sellers Group, and the Coral FERC litigation group that initiated the
proceedings that resulted in the April 6 order from FERC rescinding the
chargebacks issued by the CalPX through March 5. PG&E also asked for an
advance opportunity to comment on the proposal, which we should consider
offering in light of PG&E's more cooperative approach. I propose to allow
several days for comments from the broader distribution group, and propose
thereafter to file appropriate proceedings concurrently before FERC and the
CalPX bankruptcy court seeking approval of the proposal, as we have
discussed. Approval from District Judge Moreno should follow after the
bankruptcy court approval is obtained.

As soon as the Official Committee's attorneys have prepared drafts of the
moving papers that will be submitted to FERC and the bankruptcy court, we
will circulate copies to the members of the Official Committee for comments.

Please let me have your comments as soon as possible. Thanks.

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- FERC Proposal Weg rev Aug 10 01.DOC