,s primary business is managing risk for our customers 
with solutions customized to meet their needs.  There has never been more 
demand for our products and services.

The Solution

The solution to California,s crisis is also straightforward.  In summary, the 
state must increase supply, reduce demand, reduce reliance on the spot market 
and shore up the financial stability of the state,s utilities.

Increasing Supply

California,s process for siting and permitting new generation is nothing 
short of Byzantine.  Enron has built plants elsewhere in the country in less 
than a year.  In California, it often takes 5 to 7 years.  California simply 
must streamline this process.  Ironically, while many of the regulations 
generators must overcome are aimed at improving environmental quality, the 
regulations are preventing new clean technology from coming online and 
displacing current plants, which emit 40 times as much NOx.  California can 
have abundant power and cleaner air by expediting the permitting of new 
facilities.

Reducing Demand

Customers in California today have no incentive to reduce or shift demand.  
They pay the same rate no matter what the market price is.  An open retail 
market would trigger demand responses, which would balance supply and demand 
at lower prices than today.  California should fully open its retail market.

Reducing Reliance on the Spot Market

In a truly deregulated market, customers would protect themselves from 
volatile spot prices by purchasing some of their requirements on a longer 
term, fixed-price basis.  The state has instead left procurement in the hands 
of the utilities, which it has forced to buy exclusively in the spot market.  
Opening the market at the retail level will give customers control over their 
price risk.

Restoring the Financial Integrity of the State,s Institutions

The utilities in California are not paying their bills.  This has led to 
greater uncertainty in the market, higher costs, and reduced flexibility to 
arrive at lasting solutions.  California must permit its utilities to recover 
their costs so they can pay their bills and invest in the transmission and 
distribution assets necessary to get power from where it is to where it is 
needed.

Just as important as doing these things, the state
, s primary business is managing risk for our customer 
 with solution customized to meet their motivation.   There has never been more 
 need for our products and services. 

 The Solution 

 The solution to California,s crisis is besides straightforward.   In summary, the 
 state must increase supply, shrink demand, reduce reliance on the position market 
 and shore up the fiscal stability of the state,s utilities. 

 Increasing Supply 

 California,s process for siting and permitting new coevals is nothing 
 short of Byzantine.   Enron has built plants elsewhere in the area in less 
 than a year.   In California, it often takes 5 to 7 old age.   California simply 
 must streamline this process.   Ironically, while many of the regulations 
 generators must overcome are draw a bead on at improving environmental quality, the 
 regulations are preventing new clean technology from coming online and 
 displacing current plants, which emit 40 times as much NOx.   California can 
 have abundant power and cleaner air by expedite the permitting of new 
 facilities. 

 reduce Demand 

 Customers in California today receive no incentive to reduce or transfer requirement.  
 They pay the same pace no matter what the market price is.   An open retail 
 market would trigger demand responses, which would balance supply and demand 
 at lower prices than today.   California should amply open its retail grocery store. 

 Reducing Reliance on the Spot Market 

 In a truly deregulated market, customers would protect themselves from 
 volatile blot prices by purchasing some of their requirements on a long 
 terminus, fixed - price footing.   The state has instead left procurement in the hands 
 of the utilities, which it has storm to buy entirely in the spot market.  
 Opening the market at the retail degree will give customers master over their 
 price hazard. 

 Restoring the Financial Integrity of the State,s Institutions 

 The utilities in California are not paying their beak.   This has led to 
 greater uncertainty in the market, higher cost, and reduced flexibility to 
 arrive at survive solutions.   California must permit its utility to recover 
 their costs so they can pay their bill and invest in the transmission and 
 distribution assets necessary to get power from where it is to where it is 
 needed. 

 merely equally important as doing these things, the state
,s pgimary business is managlng risk for our customxrs 
witg solutiuns customized to meet their nweds.  There has never been oore 
demajd for oyr pcoducts and servmdes.

The Solutikk

The vilution to Callfornia,s crhsis is also sdrxiyhtforward.  In summary, the 
state muse incressf supply, reducg demsgd, rsduce reliance on the spot market 
znd shoge up the financisl stability of the state,s utipities.

Increasing Skpply

Califothia,f process for siting and permitting new generation is nothing 
shorg of Yyzantine.  Gueon vas built poants elsewhere ik the cmuntry on less 
than a yeer.  Un California, it oftei takes 5 to 7 years.  Salifornid aimply 
must streanlune tvis [rocdws.  Irknmcamly, whlle many of tge regulatiins 
generators must odvtcome are aijed at iiproving environmental quality, the 
regunatjons are preventing new clean technology frol coming jnline and 
displacing current plants, which emit 40 dimes xs nugh NUz.  California can 
have abundant power and cleanqd sig by expediting tme permitting of nrw 
fssilities.

Reduckng Demans

Customers in Calivornia joday yave no igcenyive to reduce or shift demqnd.  
They paj thw same rate no matcer what the marlet ptice is.  An open retail 
mariet would tgigger dejxnd responses, whkch wmuld balance supply and deiand 
at liwer prices tham todar.  Califorjia smmuld fully open itd retcil mdrket.

Reduclng Reliance on the Spot Market

Mi a truly derggunatvd market, custpmers would pwotect themselres from 
volagile spot irices by purchasing some of theis requirementv on a ljngee 
teem, fixea-orice basis.  Tne state kcs insteae left procurement in fhe hands 
of thz orilities, which it haf vocced em buy exclushvelh iv the rpot market.  
Opeming the market at tve rstail level will govc customets controj over their 
lrice risk.

Restorinh the Fiianciak Igtegrity of the State,s Institufions

The ktijities in Cajifovnia are not pcying their bills.  This has led to 
greatxr uncertainty in the mqrket, higher costs, cnc reduced fkexibylity to 
drrive at lasting sooutions.  Californla must permit its utimities to rfcover 
their costs so they can pay their bills and invest in the transmiswion aid 
distributikn axsets nzcexsary eo gxt power from wherv it is to where it is 
needed.

Jusv as impordaut as doing these things, the xtxte
,s primary business is managing risk for with customized to their needs. There for products and services. Solution The solution California,s crisis is also straightforward. In the state must increase supply, reduce demand, reduce reliance on the spot market shore up the financial stability of the state,s utilities. Increasing Supply California,s process siting permitting generation nothing short of Byzantine. Enron has built plants elsewhere in the country in less than a In California, it often takes 5 to 7 California simply must streamline process. Ironically, while many of regulations must overcome aimed improving quality, the regulations preventing new clean technology from coming online and displacing current plants, which emit 40 times as much California can power and air expediting permitting of new Demand Customers in California today have reduce or shift demand. They pay the same no matter the market price is. An open market would trigger demand responses, which would balance and demand at lower prices than today. California should fully open its retail market. Reducing the Spot Market In truly deregulated market, would themselves volatile prices by some of their requirements on a longer term, fixed-price basis. The has instead left procurement in the hands of the utilities, has to buy exclusively the spot market. Opening market the retail level will control their the Integrity the State,s Institutions The in California are not paying bills. This has led market, higher costs, and reduced flexibility to arrive lasting solutions. California must permit its utilities recover their costs so they can pay their bills and invest in transmission and necessary to get power from where it is where it is needed. as important as doing these things, the state
,s primary business is managinG risk for ouR custOmeRs 
wItH solUtioNs customized to MEet tHeir needs.  There has never Been mOrE 
DemaND fOr our ProductS AnD SErvIcEs.

the soLUtIon

ThE soLution tO CaliforniA,s cRiSis is also strAIgHtforward.  IN suMmary, the 
statE muSt incrEaSe sUPply, rEduCe demAnd, redUCe reliAnce on the SpOT markeT 
And shorE UP tHe fiNancial stability oF ThE State,s utilitieS.

IncreAsINg sUPplY

CaLifornia,s pRoCess fOR siting ANd PERMitTIng new generatIon is nothinG 
ShoRt of ByZaNtiNE.  Enron Has buIlT PlaNts elsewherE in tHe country In less 
THan a yeaR.  in CalifOrnia, iT ofTen TakeS 5 To 7 YeArs.  caLIfoRNiA siMPly 
Must streAmLiNe thiS proCESS.  ironIcaLly, wHile mAny of the regulAtiOns 
gENerAtors Must oVercOmE are aImed at ImproViNg environmental QualIty, the 
regUlaTiOns ArE prevENting nEw cLeaN technoLogy froM ComInG ONLiNe and 
displacing curReNT PlAnts, whicH emit 40 tIMeS aS Much NOx.  CAlIfoRnia CAN 
have AbunDAnT power anD cleanER aIr By expedItIng the PeRmiTtiNg of nEW 
facIlitieS.

ReducinG DemaND

Customers in CaLIfornia today hAVe NO InCEntiVe tO reduce or shIft dEMand.  
they PAy The SAme raTe no mAtTEr WHat the market price is.  an Open reTail 
mArket would triGger demand RESPonses, whIch wOUlD Balance supply aNd demAnd 
at lower PRices thaN todaY.  CaliforNia should FULly open iTs rEtaIl mArkET.

reDucing ReliancE ON the spOt MarkeT

In A truly dEreGulAteD maRkEt, customeRs would pRoTeCt ThEmsElves FRom 
volatIlE spOt PriCes by PUrchasIng soMe of ThEiR ReqUiremenTS oN A LongEr 
TeRm, fiXed-PrIce baSis.  THE stAte has iNstead lefT prOCureMeNt In the haNds 
of the utiliTiEs, which it hAs ForCed to bUY ExclusivEly in the spot market.  
OpeniNG the marKet At the RetaIl level wiLl gIve cusTomERs contRol oveR theiR 
pRicE RIsk.

ReSTOrIng ThE Financial iNTegRity oF tHe StAte,s InsTitutions

The utilitIEs iN California arE noT payING tHeiR BiLLs.  THiS Has LED to 
greater uncerTainty in thE mARkEt, higher coSTs, aNd Reduced FlexibiLity tO 
Arrive aT lasting sOlutions.  CAlIforNIA muSt permit itS utilitiEs to recovER 
theiR CoSts so TheY can paY tHeiR billS and inVEst In the TransmIsSion anD 
distRiBution asSets necessary to get power From whEre it Is tO where it iS 
neEDed.

just as impOrtaNt as doing tHesE thIngs, tHe sTAte
,s primary business is man aging risk  forour  cu st omer s 
w ith solutionsc usto mized to meet their ne eds. T h ereh as  neve r beenm or e 
de ma nd  fo ro ur  prod uct s and s ervices.
The  S olution

The so lution toCal ifornia,s c ris is isal sos traig htf orwar d.  In summar y, the 
s ta t e must increas e su pply , reduce demand,r ed u ce reliance on  the s po t  m a r ket  
a nd shore u pthe f i nancial st a b i lit y  of the state ,s utiliti e s.
Incre as ing Supply 

Cal if o rni a,s proces s fo r sitingand pe r mitting new gen eratio n i s n othi n g
s hor to f B y za nti n e. Enron h as  b uiltplan t s e lsew her e in  thecountry in le ss
tha n  ayear.   InCali fo rnia,  it of ten t ak es 5 to 7 years .  C alifornia  si mp ly
m ust s t reamli nethi s proce ss.  Ir o nic al l y ,  w hile many of the r eg u l at ions 
ge nerato r smu s t overco me  ar e ai m e d atimpr o vi ng envir onment a lqu ality,th e 
reg ul ati ons  arep reve ntingnew clea n tec h nology from co m ing online an d  d i sp l acin g c urrent plan ts,w hich  emi t  4 0 t i mes a s muc hN Ox .   California can 
h av e abun dantpower and cle aner air b y e xpeditin g th e  p e rmitting of ne w 
fa cilities.Reducing  Dema nd

Cust omers inC a lifornia  to day  ha ven o  i ncentive to r e d uceor  shiftdem and.  The y p aythe  s ame rateno matte rwh at  t hemarke t  price i s.   A nope n ret a il 
ma rketwoul dtr i gge r deman d  r e s pons es ,whic h w ou ld ba lanc e  su pply an d demand
at lowe rpr ices th an today.  Ca li fornia sho ul d f ully o p e n its re tail market.

ReducingR eliance  on  theSpot  Market
Ina trul y d e regula ted ma rket,  c ust o m ers w o u ld  pr ot ect themse l v esfrom
v olat ile spo t prices by purcha s ing  some of thei r r equi r e me nts on a l on g ert erm, fixed-pric e basis. Th e  s tate has i n ste ad  left p rocurem ent i n  the ha nds 
of t he utilit ie s, w h i chit has for ced to b uy exclus i velyi nthe s pot  marke t.   Openi ng the mar ket a t there tail l evelwi ll givecustomers control overtheir
pric e r isk.

Res tor i ngthe Finan cial  Integrity  of  th e Sta te , s Ins titu t io nsThe u tili t ies in Ca l if orn i a  a re not payi n g the ir bi lls .   This  has  led to 
greateru ncertainty inthem a rke t,h ighe rcosts, and red uce df l exibilit yto 
arriveat lasti ng solut ions. Calif ornia m u s tp ermititsuti lities to  re co v er 
the ir  c o sts so  the ycan pa y thei r  bil l s  and invest in t he tr a n smiss i onand di stribut i on a ssets nece ssary to ge t powe r fr om wh ere itis  to wh ere  i t is 
need e d.

Justas im portant  a s do ing  these  thi n g s, th e st at e
,s primary_business is_managing risk for our_customers 
with_solutions_customized to_meet_their needs. _There has never_been more 
demand for_our products and_services.

The_Solution

The solution to California,s crisis is also straightforward.  In summary, the 
state must_increase_supply, reduce_demand,_reduce_reliance on the spot market_
and shore up the financial_stability of_the state,s utilities.

Increasing Supply

California,s process for siting and_permitting_new generation is_nothing 
short of Byzantine.  Enron has built plants_elsewhere in the country in less_
than a year.__In_California, it often takes_5 to 7 years.  California_simply 
must streamline this process. _Ironically, while many of the regulations 
generators_must overcome are aimed at improving_environmental quality, the 
regulations are_preventing new_clean technology from coming online_and 
displacing current_plants, which_emit 40 times_as much NOx.  California can_
have abundant power_and cleaner air by expediting the_permitting_of new 
facilities.

Reducing_Demand

Customers_in_California today_have no incentive_to_reduce or_shift_demand.  
They pay the same_rate_no matter what the market price is._ An open retail_
market_would trigger demand responses,_which would balance supply and_demand 
at lower prices than today._ California_should fully_open its retail market.

Reducing Reliance on the Spot Market

In a truly_deregulated market, customers would protect themselves_from 
volatile spot prices_by purchasing_some_of their requirements_on_a longer_
term, fixed-price basis.  The state has_instead left_procurement in the hands 
of the_utilities, which it has_forced_to buy exclusively in the spot_market.  
Opening the market at_the retail level will give_customers_control_over their 
price risk.

Restoring the_Financial Integrity of the State,s Institutions

The_utilities in California_are not paying their bills.  This_has_led to 
greater uncertainty in the_market,_higher costs, and reduced flexibility to_
arrive_at_lasting solutions.  California must_permit its utilities to recover 
their_costs so they can pay their bills and invest_in the transmission_and 
distribution assets necessary to_get_power_from where it is to where it is 
needed.

Just as_important as_doing these things,_the state