Tax Review of California Assembly Bill No. 128

Attached please find a Tax Review of California Assembly Bill No. 128 ("AB
128X"). The Tax Review sets out the practical implication (increased cost to
purchasers) and constitutional deficiencies of AB 128X.

The third paragraph of the Tax Review details the mathematical computation of
the tax and the resulting purchaser price increase. The computation sales
price, $300/MWh, reflects the SP15 (Southern California) weighted average
index price ($302.88), rounded to the nearest hundred, as reported in
Megawatt Daily's May 8th MarketReport. However, it may be more effective to
present the mathematical computation with a price closer to the proposed base
price of $60/MWh. We are available to assist in presenting the computation
utilizing whichever numbers you deem appropriate.

The California Senate has passed SB 1X, Windfall Profits Tax on Electric
Generators. We will forward a similar memorandum addressing SB 1X.

We are available to address questions and/or comments. Thanks.

Ed Coats - 713.853.6369
Steve Douglas - 713.853.0938
Gavin Russo - 713.853.6296
Matt Gockerman - 713.853.3979