EXHIBIT 99.3

DRAFT

October 24, 1997

California Independent System Operator Inc.
Attn.  Mr. Jeffrey D. Tranen
       President and Chief Executive Officer
151 Blue Ravine Road
Sacramento, California 95630

Re: Allegation of Conflict of Interest


Dear Mr. Tranen:

This letter is in response to your letter dated October 22, 1997, and our
earlier telephone discussion regarding your allegations that associates of Perot
Systems Corporation discussed "inside information" with a third party in
purported breach of the Scheduling Applications, Scheduling Infrastructure and
Business Systems Contract between the ISO Alliance and the ISO Restructuring
Trust dated as of March 14, 1997 (the "Contract"), or that we may have a
conflict of interest in pursuing certain sales and marketing activities.

First, I'd like to assure you unequivocally that no "inside information" of the
ISO has been, or will be, disclosed by Perot Systems or any of its associates to
anyone, except as permitted by the Contract. The confidentiality of our client's
affairs is a cornerstone of our business, and we will not tolerate any such
breach of client's trust.

I have spoken to Ed Smith, Paul Gribik and other members of our team about your
letter and have satisfied myself that no inappropriate disclosures of "inside
information" have occurred. At no time has Perot Systems offered to assist
anyone to exploit "potential weaknesses and shortcomings in the ISO's system,"
or suggested that our involvement in developing the ISO's system would allow us
to exploit any knowledge we have about the ISO's system. Without discussing this
matter further with you, we can only speculate that someone has not
distinguished between the ISO's business protocols and the systems that
implement these protocols.

I can also assure you that neither Perot Systems nor, to our knowledge, the ISO
Alliance has introduced any changes or modifications other than those specified
by the ISO Contract, the Detailed Statement of Work (DSOW), or documented change
orders. The introduction of surreptitious code into the ISO System, or the
unauthorized disclosure or use of any legitimate functionality of the ISO
System, by




Mr. Jeffrey D. Tranen
24 October 1997
Page 2

any Perot Systems associate or subcontractor would violate our Standards of
Ethical Practices that would result in immediate, unequivocal disciplinary
action.

As you know, Perot Systems has long been involved in the public process leading
to the deregulation of California's electricity markets. In particular, Paul
advised the group that developed the business protocols under which the ISO will
allocate and price congested transmission - long before the ISO Alliance and
Perot Systems were engaged by the ISO. In addition, Paul and many others have
publicly suggested strategies for participants to optimize their operations and
maximize their profitability under these protocols. In response to your question
about the use of the term "gaming", I found that it was used in context as a
mathematical process for business optimization, not in context as a gambling
term or manipulative process. Perot Systems markets consulting services based on
our collective understanding of these new business protocols and the related
markets. I have enclosed a white paper that sets forth the essence of our sales
presentation and a copy of the slides recently used by Paul in his sales
presentations for your information. At your convenience, Ed, Paul, Ken Scott and
I will make ourselves available to meet with you to discuss in detail our
marketing activities with respect to the California electricity markets.
However, we will be able to discuss the details of any discussions we may have
had with a specific client or potential client only with their prior consent.

Second, I would like to address your concerns about a potential conflict of
interest under Article 31 of the Contract. After reviewing your letter and
discussing the matter with Ed, Paul, and other associates, I am convinced that
no material conflict of interest exists between our activities for third parties
and our obligations to the ISO under the Contract.

Section 31.2 of the Contract (in conjunction with the subcontract between the
ISO Alliance and Perot Systems) requires Perot Systems to use "reasonable care
and diligence to prevent any actions or conditions which could result in a
conflict of interest." Section 31.1 describes two basic scenarios in which a
conflict could arise: (i) a relationship, contract or employment which could
result in a material conflict with the best interests of ISO, or (ii) a
relationship, contract or employment which could in any way materially
compromise the Work to be performed under the Contract.

The existence of a conflict of interest in violation of the Contract is
refutable under either scenario. With respect to the first, the Contract
contemplates the ability of Perot Systems to perform services for third persons.
Section 31.3 of the Contract requires only that Perot Systems "will not accept
any employment or engage in any work which creates a material conflict of
interest with (ISO) or in any way materially compromises the Work to be
performed under the Contract, within the context of (Perot Systems') policies
and rules relating to business ethics." Perot Systems is in full compliance with
its policies and rules relating to business ethics, and, therefore, the
Contract. With respect to the second scenario, no conflict that could compromise
the Work exists because, in part, neither Ed Smith nor Paul Gribik are currently
engaged on a day-to-day basis with the Work to be performed under the

Mr. Jeffrey D. Tranen
24 October 1997
Page 3


Contract. In fact, the Work is progressing substantially in accordance with the
terms of the Contract.

With respect to your request that Perot Systems cease offering its consulting
services to potential ISO market participants, we have concluded that the
Contract contains no such requirement and that doing so could harm our business
prospects.

We hope that this letter satisfactorily resolves your concerns in this matter.
Accordingly, we are declining to provide you with additional information you
have requested at this time.

I hope that you will take the opportunity to meet with Ed, Paul, Ken Scott and
me to develop a more thorough understanding of our service offerings and our
approach to this new market. Perhaps, this will allow our companies to avoid any
disagreements based on incomplete or erroneous information and will allow the
good relationship that we have established to date with the ISO to continue to
develop.

Perot Systems and each of the individuals named in your letter would appreciate
receiving a retraction of your allegations, since your publication of these
allegations to the participants in the ISO Alliance, your law firm and possibly
other, could cause considerable damage to our and their reputations. We would
appreciate your attention to this task and would be glad to assist you in any
way to facilitate this.

Thank you for calling me when you had concerns about our performance. Only by
such direct and clear communication can we keep on track and provide the best
service level to the ISO. As always, all of us on the Perot Systems team stand
ready to help you whenever we can.

Sincerely,

H. Ronald Nash
Vice President