
Date: Tue, 19 Jun 2001 04:22:00 -0700 (PDT)
From: john.shelk@enron.com
To: steven.kean@enron.com, richard.shapiro@enron.com, james.steffes@enron.com,
linda.robertson@enron.com, tom.briggs@enron.com,
tim.belden@enron.com, alan.comnes@enron.com, kevin.presto@enron.com,
robert.johnston@enron.com, sarah.novosel@enron.com,
joe.hartsoe@enron.com, ray.alvarez@enron.com,
carin.nersesian@enron.com, paul.kaufman@enron.com,
susan.landwehr@enron.com, pat.shortridge@enron.com,
chris.long@enron.com
Subject: NEWS FLASH ON THIS MORNING'S SENATE HEARING
Cc: tallen@buckham.com, karlgallan@aol.com, bandrews@quinngillespie.com,
dlugar@quinngillespie.com, michaellewanco@worldnet.att.net,
edgillespie@quinngillespie.com
Bcc: tallen@buckham.com, karlgallan@aol.com, bandrews@quinngillespie.com,
dlugar@quinngillespie.com, michaellewanco@worldnet.att.net,
edgillespie@quinngillespie.com

This morning, all 5 FERC commissioners testified before the Senate Energy
Committee on yesterday's order and on the pending Feinstein/Smith legislation
to impose cost-of-service rates on wholesale power.  Highlights and analysis
are as follows:

1. Sen. Feinstein, the chief sponsor of Senate price cap legislation, called
FERC's order "a giant step forward" and said she is "very grateful" for what
the commission did.  Senators Gordon Smith and Barbara Boxer agreed.  Sen.
Feinstein said that she and Sen. Smith would now recommend to Chairman
Bingaman that next week's mark up of their price control bill be postponed
"for the time being" pending how the order plays out in practice.  Chairman
Bingaman said he would follow their advice and cancel next week's mark up.
(Responding to a question, each of the five commissioners said that Congress
should NOT act to pass Smith/Feinstein, at least at this time -- this
included Comr. Massey, who has favored legislation in the absence of
"stronger" action by the commission.)

2. However, it is very important to point out that House Democrats in
California and elsewhere out West have not been as supportive of FERC's order
as have the Senators.  House Democrats are still expected to attempt to offer
a price control amendment to the supplemental appropriations bill when it
comes before the House later this week.  Of course, the reaction of the
Senate may undercut the House Democrats's argument, at least at this time.
Furthermore, should prices go up and the FERC order is seen as not working,
price control advocates, including Sens. Feinstein, Smith and Boxer, will no
doubt pick up where they left off.

3. It will be very interesting to see how Senator Lieberman and Gov. Davis
react to the FERC order at the Senate Governmental Affairs Committee hearing
tomorrow morning.  While this committee does NOT have legislative
jurisdiction over the Feinstein/Smith legislation, this hearing will be well
covered by the news media.  Sen. Lieberman is a cosponsor of the
Feinstein/Smith legislation.

4. In my view, the political and public pressure will now shift in large part
