THIS AMENDED AND RESTATED ADDENDUM TO SUMMARY OF MATERIAL TERMS OF FINANCING DOCUMENTS, dated as of August 8, 2002 (the "Addendum"), is a supplement to the Summary of Material Terms of Financing Documents ("Summary of Material Terms") which was attached to a memorandum dated February 21, 2002 from Department of Water Resources ("DWR") to the California Public Utilities Commission ("CPUC") as Attachment A. This Addendum amends and restates the Addendum dated July 17, 2002 previously submitted to the CPUC. After approval by the CPUC on February 21, 2002, a Rate Agreement was executed by the CPUC and DWR on March 8, 2002 (the "2002 Rate Agreement").

The amendments to the Addendum reflected herein address issues identified during discussions with the rating agencies reviewing the Bonds, including increasing the authorized principal amount of Bonds and making other provisions for an increase to the "Minimum Operating Account Expense Available Balance" in the Operating Account to be established under the Indenture. The Department has determined that these changes will enable the Bonds to receive more favorable credit ratings than would otherwise be available and result in substantially lower overall debt service costs associated with the Bonds (taking into account the present value of costs and benefits of the changes contemplated hereby) and the Department will implement such changes only if the Department determines that such substantially lower overall debt service costs are achieved.

It is anticipated that DWR will enter into a Trust Indenture among DWR, the Treasurer of the State of California as Trustee, and U.S. Bank, N.A., as Co-Trustee (the "Bond Indenture") in connection with its issuance of Power Supply Revenue Bonds, Series 2002. All undefined terms in this Addendum shall be defined by reference to the 2002 Rate Agreement and the Bond Indenture.

1. Maximum Amount of Bonds Authorized.

The maximum aggregate principal amount of Bonds which may be issued may be increased from $11,100,000,000 but may not result in net proceeds of more than $11,950,000,000. Such increase is intended to permit the Department to increase the Minimum Operating Expense Available Balance and the initial deposit to the Operating Account as described below. As used in the paragraph "net proceeds" means the aggregate principal amount of Bonds issued, plus original issue premium, less original issue discount.