Weekly Report of 3/1/02

California:

CPUC - Com. Richard Bilas of the California Public Utilities Commission announced his resignation this week from the Commission effective March 8, 2002 due to health reasons. Com. Bilas was appointed by Gov. Pete Wilson in 1997 and served as Commission President from Feb. 1998 until March 2000.

PG&E Plan of Reorganization - U.S. Bankruptcy Judge Dennis Montali ruled that the Commission may file its alternative plan of reorganization in the PG&E bankruptcy case and that PG&E does not hold the exclusive right to propose a plan and solicit creditor support. He gave the Comission until April 15, 2002 to file its plan and draft disclosure statement. Based on Judge Montali's previous ruling regarding conformance to state laws, PG&E is filing a revised plan of its own on March 7, 2002. Additionally the Judge has appointed a panel of two mediators to conduct mediation between PG&E, the CPUC and the state Attorney General. Mediation is expected to be conducted during March.

CA Power Contracts. Earlier this week the CPUC and the state's Electricity Oversight Board (EOB) filed a complaint with FERC under Section 206 of the Federal Power Act which requires that FERC ensure that all wholesale power contracts are "just and reasonable" with respect to both price and terms and conditions. The complaint addresses 32 contracts with 22 sellers which the CPUC and EOB want terminated as they claim the contracts which are worth $43 billion, were agreed to under duress during a period in which the market was being manipulated. In the filing the PUC's preliminary calcuations indicate that collectively the contracts are approximately $21 billion above reasonable prices. Other provisions challenged include, payment priority over bond repayment, evasion of FERC review of the contracts, credit treatment equality, favored nation clauses and termination rights. Among the sellers, some of the largest include Calpine, Mirant, Williams and Dynegy.