BEFORE THE PUBLIC UTILITIES COMMISSION
	OF THE STATE OF CALIFORNIA

Application of SOUTHERN CALIFORNIA		)
EDISON COMPANY to Report on the 		)
Valuation Process for Certain 			)		A.98-05-014
Generation-Related Assets Pursuant			)
to D.97-11-074.					)
_____________________________________	)

Application of PACIFIC GAS & ELECTRIC	)
COMPANY to Report Assessments of 		)
Inventory Balances and to Address 			)		A.98-05-022
Appraisal of Retained Generation			)
Assets.							)
____________________________________	)

	COMMENTS OF ENRON CORP.
	ON DRAFT DECISION OF ALJ PATRICK

								Michael B. Day
								Jeanne M. Bennett

								GOODIN, MACBRIDE, SQUERI, 
								RITCHIE & DAY, LLP

								505 Sansome Street, Suite 900
								San Francisco, CA  94111
								Telephone (415) 392-7900
								Facsimile (415) 398-4321
	
								Attorneys for Enron Corp.

October 4, 1999

	BEFORE THE PUBLIC UTILITIES COMMISSION
	OF THE STATE OF CALIFORNIA

Application of SOUTHERN CALIFORNIA		)
EDISON COMPANY to Report on the 		)
Valuation Process for Certain 			)		A.98-05-014
Generation-Related Assets Pursuant			)
to D.97-11-074.					)
_____________________________________	)

Application of PACIFIC GAS & ELECTRIC	)
COMPANY to Report Assessments of 		)
Inventory Balances and to Address 			)		A.98-05-022
Appraisal of Retained Generation			)
Assets.							)
____________________________________	)

COMMENTS OF ENRON CORP.
ON DRAFT DECISION OF ALJ PATRICK

			Pursuant to Rule 77 of the Commission's Rules of Practice and Procedure, Enron Corp. ("Enron") comments on the September 13, 1999 Draft Decision ("DD") of Administrative Law Judge Patrick in the above captioned proceeding.  Through the DD, Pacific Gas and Electric Company ("PG&E") is directed to file an "application to value remaining generation and generation related assets pursuant to Sections 216(h) and 377 of the Public Utilities Code."   In this respect, the DD states that while "PG&E may propose any method for valuation[,] it must identify the value of hydroelectric assets separately."   “The primary purpose of the application, as acknowledged in the DD, is to establish market values for remaining assets in order to determine how they may affect ratepayer liability for transition costs and the timing of the end of the existing rate freeze ordered by Assembly Bill 1890."  While Enron supports the DD's directive to PG&E, Enron submits that in addition to pursuing a final market valuation of PG&E' remaining generation assets, the issue of interim valuation of those assets should, in an effort to an effect an expeditious end to the rate freeze, be squarely placed before the Commission.  
	In addition, the Commission should continue to require PG&E to submit a proposal to value all remaining generation-related assets which are not contemplated to be part of its proposed auction.  This would include the value of approximately 1,000 MW of generation capacity which is under contract to PG&E.
(this may belong below)	The DD acknowledged the importance of achieving a valuation on a timely basis.  In fact, the DD states that the decision was driven by an interest in “a timely review of asset values and their impact on achieving an end of the rate freeze.  Indeed, delaying the process of establishing a market value for these assets could artificially extend the rate freeze.”  As the completion of some methods of valuation, including auction, may require the balance of the time allotted for the recovery of transition costs, resulting in such an artificial extension of the rate freeze, the Commission should consider interim valuation of a means of alleviating such a result.  (this may be more appropriate below.

	COMMENTS
		The Commission is under a statutory obligation to effect a final valuation of all remaining utility generation assets by December 31, 2001.  In accord with Public Utilities Code Section 367(b), such a final valuation cannot be "rescinded, altered, or amended."  There is, however, no statutory prohibition against effecting an interim valuation of the assets for the purposes of gauging whether an early end to the rate freeze in PG&E's territory can be achieved.  As recognized by the DD, because the value of PG&E's hydro-electric facilities is so high, their valuation will likely have a substantial impact on the date the rate freeze ends.  Indeed, during the last legislative session PG&E placed a market value of $3.3 billion on these assets.  With the application of $3.3 billion to PG&E's transition cost balancing account, the end date for PG&E's rate freeze has been estimated to be August/September 2000 -- one and a half years prior to the mandatory statutory end date.  Ratepayers should not continue to shoulder the burden of continued CTC payments through the extension the of the rate freeze but for the valuation of PG&E’s remaining generation assets.
		To this end, Enron notes that PG&E, on September 30, 1999, filed an application with the Commission setting forth a plan to market value its hydro-electric facilities through an open competitive auction.  Thus, while it appears as though  PG&E has already complied with the directives contained within the DD's  (i.e., it has proposed a method for valuation of some of its hydroelectric facilities), PG&E should continue to be required to submit a proposal which represents a comprehensive valuation of all of its generation assets, including its contracts. 
	PG&E should also  submit a proposed interim value for its hydro assets, which can be used, in conjunction with ORA’s analysis, in deteriming  the basis for establishing an interim valuation for the purposes of ending the rate freeze, while PG&E pursues final valuation through its elected auction process. 
		Wherefore, the above stated reasons, the Draft Decision should be adopted, modified to the extent necessary to ensure that interim valuation of PG&E's remaining generation assets will be squarely addressed by the Commission and to require PG&E to submit by November 15 a valuation proposal for all assets not subject to its auction application.       

      								Respectfully submitted,
								GOODIN, MACBRIDE, SQUERI, 
								RITCHIE & DAY, LLP

								Michael B. Day
								Jeanne M. Bennett

								By   ________________________
									Jeanne M. Bennett

								505 Sansome Street, Suite 900
								San Francisco, CA  94111
								Telephone (415) 392-7900
								Facsimile (415) 398-4321
	
								Attorneys for Enron Corp.

October 4, 1999

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