NOTICE OF MEETING

REGARDING SECTION 390 OF AB 1890

(transition of Short Run Avoided Cost to the PX Clearing Price)

On May 7, 1998, Southern California Edison Company ("SCE"), Pacific Gas and Electric Company ("PG&E"), San Diego Gas & Electric Company ("SDG&E"), Independent Energy Producers Association ("IEP"), California Cogeneration Council ("CCC"), NRG Energy Inc. ("NRG"), and Enron Capital & Trade Resources ("Enron") (collectively "the Parties") entered into a Settlement Agreement regarding restructuring of QF contracts and establishment of a participatory process to discuss Public Utility Code Section 390 and other suggestions to achieve ratepayer benefits. (Notice of the Settlement Agreement was previously provided to the service list for the industry restructuring proceeding but I have enclosed another copy for your convenience.) On July 6, 1998, the Parties met for the first time to discuss Section 390 issues. At that meeting, the Parties agreed to meet again on July 27 and 28 in San Francisco, and to invite the participation other interested parties.

The purpose of the two-day meeting is to engage in confidential discussions regarding how and when short run avoided cost ("SRAC") energy payments should transition to the PX Clearing Price as identified in Section 390. The ultimate goal of these discussions is to reach a consensus among the broadest possible number of parties that can be submitted to the California Public Utilities Commission for its review and adoption.

On July 27, the Parties are planning at least a half-day session to hear various presentations on the operation of the new market. Currently, we are expecting presentations from representatives of the ISO and PX and a utility panel discussion regarding the integration of QF contracts into the new market. Following these informational presentations, the Parties will engage in a discussion regarding the appropriate PX market clearing price(s) to use as the SRAC proxy. Lastly, the Parties will discuss their views regarding a "properly functioning" market within the meaning of Section 390, subpart (c). A detailed agenda will be forwarded to all interested parties prior to the meeting.

The Parties have agreed that their discussions associated with the participatory process will be conducted on a confidential basis. As such, the Parties are in the process of entering into a confidentiality agreement. Prior to any party participating in the Section 390 discussions with the Parties, such party will be required to execute this confidentiality agreement.

The following are the details for the upcoming meeting:

WHERE: Pacific Gas and Electric, 77 Beale Street, Room 300

WHEN: July 27 and 28 from 9:30am to 4:30pm

DRESS Business Casual

Any party who wishes to attend the July 27 and 28 meeting should contact Elsie Harker at SCE. Elsie’s telephone number is 626-302-8514. A copy of the confidentiality agreement can be obtained from Elsie.

Jim Scilacci