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Based on APS Billing information and information from ABAG POW ER's review of the DA Credit's owed by PG&E, ABAG POWER has concluded that the likely total exposure is approximately One Million Six Hundred Thousand Dollars ($1,600,000). LEGAL ANALYSIS PG&E applies UDC charges to individual accounts based on the amount of electricity consumed. As noted above, streetlight accounts are uniquely billed by PG&E. In the case that has come to ABAG POWER's attention, we believe that the Member has been billed twice for the same UDC charges. Other Members with streetlight accounts may encounter the same situation. C. ISO ESCROW DEPOSIT AND PX ESCROW DEPOSIT Descriotion of Risk The PX Escrow Deposit and ISO Escrow Deposit held by NCPA on behalf of ABAG POWER are subject to reduction or nonrefund. In the case of PX Escrow Deposit, all of the funds may be consumed in the course of settling the PX's bankruptcy claims. The ISO Escrow Deposit is subject to adjustments based on FERC ordered energy price rollbacks (see detailed description in Section D below). The FERC ordered rollbacks can both increase and decrease the ISO Escrow Deposit. ABAG POWER bought electricity for use by the Electric Program and sold excess capacity into the marketplace at various times. At those instances in which ABAG POWER was purchasing electricity, the FERC ordered price reductions will generate a refund and an. increase in the ISO Escrow Deposit. In those instances in which ABAG POWER sold energy into the marketplace, the FERC ordered rollbacks can reduce the amount available from the ISO Escrow Deposit. Based on ABAG POWER's review of the total amount of power sold during the period under consideration by FERC for price reductions, we conclude that the likely reductions do not exceed the amounts currently in the ISO Escrow Deposit. Under these circumstances, we believe the risk is nominal. D. DIRECT ACCESS CREDITS Description of Risk ABAG POWER is distributing to each of its Electric Program Members a proportionate share of the funds received from PG&E as settlement of ABAG POW ER's claim against PG&E for Direct Access Credits incurred during 2000 under the deregulated energy market in California. The Direct Access Credit is a result of the application of a rate formula adopted by the CPUC. The formula includes contemporaneous energy prices and the Direct Access Credit is a by-product of high electricity prices in 2000.1 The FERC has been engaged in a proceeding to determine whether wholesale prices charged by electricity generators and marketers during 2000 in California were "just and reasonable." FERC has already found that at certain times such prices were not. The FERC ~ For a detailed description of Direct Access Credits, see Appendix A, "Direct Access Credit." Wind Up Agreement-Attmt D- 4-28-04 Al]